Prices are on the way down, but a plummeting pace of construction could have big consequences
When prices started to fall – and kept on sliding – in Toronto’s condo market, some hopeful buyers saw it as the break they’d been waiting for.
The deep freeze that’s set in over the city’s condo sector has marked the first improvement in affordability for years, offering a reprieve for plenty who’d been squeezed out of the market by soaring property values, frenzied competition and bidding wars over the past decade.
But while that correction has been good for Toronto buyers and renters in the short term, it’s unlikely to bring about a permanent sea change in the city’s affordability outlook – and could even weigh against homebuyer prospects over the long run.
That’s because a growing number of developers are cancelling condominium projects in Toronto (and Vancouver, which has seen a milder slowdown) amid that plummeting demand, meaning there are likely to be far fewer cranes in the sky in the coming years.
In 2023 and 2024, Toronto condo apartment completions hovered around the 25,000 mark each year, according to Canada Mortgage and Housing Corporation (CMHC), and are expected to soar this year.
But they’ll drop again in 2026 – and slide further to about 15,000 by the end of 2027, the national housing agency predicts.
For now, there’s a wave of condo inventory on the Toronto market (58 months’ worth, CMHC believes). Still, if it takes years for condo construction to ramp up again, that supply-demand gap will eventually narrow, and hopeful buyers and renters down the line could begin to face similar challenges to those seen before the downturn.
Number of projects being shelved ‘worrisome’
Even with the current wave of available supply, Canada is still well short the number of homes it needs to improve affordability by 2030. And condo construction is moving lower at a time when housing starts need to accelerate.
“A lot of projects are being put on ice,” Tania Bourassa-Ochoa (pictured top), CMHC’s deputy chief economist, said. “And this is worrisome when we think about long-term supply.
“While [the prolonged correction] might sound like good news for the potential first-time homebuyer who’s been waiting for that price to climb, it’s actually discouraging new construction. And with less construction, fewer developments breaking ground, this might lead to housing supply shortages down the road.”
Housing minister Gregor Robertson said average home prices must fall as the government works to expand non-market housing. Economists like CIBC’s Benjamin Tal argue policy missteps and record immigration worsened affordability pressures.https://t.co/ODWpx4GZH1
— Canadian Mortgage Professional Magazine (@CMPmagazine) October 22, 2025
That could ultimately strengthen a trend of dwindling supply while demand begins to climb again, she said, potentially putting upward pressure on prices and weighing against affordability for homebuyers.
And while there’s little sign of improvement yet in Toronto’s condo crisis, CMHC isn’t expecting the situation to deteriorate into a full-blown meltdown.
Why the current downturn is different from the 1990s
The correction has sparked comparisons with the 1990s crash in the city, but the national housing agency sees key differences between the two – meaning prices look unlikely to fall completely through the floor this time around.
“We get asked very often, ‘Is this the equivalent of the crash in the 1990s? Is it going into something similar?’ The answer is no,” Bourassa-Ochoa said. “There are a lot of different variables at stake. One of them is regulation – the regulation is much stronger today than it was in the 1990s for the borrower, but for the developer as well.”
In the 1990s, developers could secure a loan and start building a product with only 50% of units sold. Nowadays, that requirement has jumped to 70%, with some talk that it could be raised even higher.
“And remember, despite what we’re seeing right now, the supply shortage is still very present,” Bourassa-Ochoa said. “We’re not anticipating such a deep correction as we saw in the 1990s. Something softer is to be expected.”
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