Still, OSFI is closely monitoring commercial market risk: 'I'd be disingenuous if I said we weren't concerned'
Toronto's tanking condo market is drawing headlines across Canada as its crisis deepens by the month, but the country's top banking regulator said this week it shouldn't be a major cause of concern for big lenders – and may even open some doors for previously frozen-out first-time buyers.
Peter Routledge, who heads the Office of the Superintendent of Financial Institutions (OSFI), said at the Scotiabank Financials Summit in Toronto this week that the national banking system appeared well equipped to deal with the struggles of the condo market, which is cratering in Toronto and struggling in Vancouver as investors and new buyers rush to the sidelines.
Banking system capitalization is "sufficient" to deal with that ongoing challenge and other commercial market distress, he said. “So, if you’re talking about systemic stability, we’re OK with it.”
Condo oversupply weighs on prices
Data from the Toronto Regional Real Estate Board (TRREB) released on Thursday showed that average condo prices across the wider 905 region slumped by 10.6% last month.
Condo sales also fell again, dropping by 3.4% in the city centre year over year and by 7.7% in the suburbs. Year to date, condo sales have plummeted by 16.6% overall compared with the same period in 2024, TRREB said.
But Routledge suggested a jump in listings could be good news for some buyers. “When you talk about in one of our largest cities, a bit of excess inventory in condominiums, which are starter places for younger Canadians who want to get into the real estate market, you know that there’s a little bit of excess supply and prices are coming down off all-time highs," he said.
Still, he said the regulator was closely watching developments. "We've been talking about commercial real estate risk in our annual risk outlooks for a number of years now, so I'd be disingenuous if I said we weren't concerned," he added.
Toronto’s condo market in flux
Industry analysts have noted that Toronto’s condo market faces ongoing headwinds, with prices showing “no signs of stabilizing” and demand for new units plunging. While this presents challenges for investors and developers, the increased supply and falling prices may offer a long-awaited entry point for first-time buyers.
“I have a few condo buyers, but there’s really no rush for that,” Tango Financial mortgage agent and Rates.ca mortgage and real estate expert Victor Tran told Canadian Mortgage Professional.
“There’s inventory there. The thing is that if you know something’s going to go on sale in a couple of weeks or even a month, you might as well just wait it out.”
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