The condo outlook is also darkening in Vancouver, but the city looks likely to be spared the alarming slowdown that's taken hold in Toronto
Once Canada’s most lucrative market for real estate investors, Toronto has borne the brunt of a deep correction in the condo sector in 2025 as sales plunge and prices slide.
The city’s crisis, which could see unsold condo inventory swell even further in the months ahead, has grabbed most of the headlines about housing market pain over the past year. But Vancouver market watchers are waiting with bated breath to see whether their city could experience the same sharp downturn as Toronto – and whether the worst is over, or still to come.
Concerns about a possible condo market contagion spreading from Toronto were strengthened when the national housing agency, Canada Mortgage and Housing Corporation (CMHC), highlighted Vancouver alongside Toronto as a cause for concern because of a dramatic slowdown in condo sales activity in recent years.
In Toronto, condo market purchase activity has plummeted by 75% between 2022 and the end of this year’s first quarter, a CMHC report issued this month showed, while Vancouver has seen a milder – but still noteworthy – decline of 37%.
More than 2,000 new condos were sitting unsold and unoccupied in Vancouver in April, according to Greater Vancouver Realtors (GVR), with listings surging to their highest level in over a decade.
But while that glut of inventory has sparked fears of a crisis in Vancouver, the city’s condo market is still in better shape than Toronto, where over 20,000 unsold condo units (including pre-con and under-construction apartments) are sitting vacant.
That means for now, Vancouver is unlikely to witness as severe a correction as Toronto, according to Vancouver-based mortgage broker Anthony Zhang (pictured top) of DLC Clear Trust Mortgages.
“I think it’s a bit more difficult in Toronto than here,” he told Canadian Mortgage Professional. “I see there’s some challenges on the supply side, and people are struggling to sell. But I think the problem is getting even worse in Toronto.
“On the supply side, it’s just a lot of pre-sale coming up [for completion] but comparing it Toronto, we’re still OK for the supply side. But I do see people that have been challenged to sell, especially condos.”
It remains unclear exactly how much of Vancouver’s condo market is made up of the so-called “dog crate” units seen in Toronto: tiny studios built purely for rental purposes whose popularity is cratering.
Zhang, though, doesn’t believe the condo sector in Vancouver became as overly reliant on those units as Toronto. “I do sometimes see this type of product, but it’s still not the main product,” he said. “I only see a small portion of the inventory that actually goes into the studio side. Here, the main product is still something over 500 square feet.”
Home affordability deteriorated in eight of 13 major Canadian cities during May as recovering home prices offset the benefits of stable mortgage rates, according to a new report from Ratehubhttps://t.co/7nLFM9Uo3c
— Canadian Mortgage Professional Magazine (@CMPmagazine) June 21, 2025
Hopes high for a brighter second half of the year
Climbing interest rates since 2022 and economic volatility this year have weighed down the national housing market across most property types, with those factors burning condo investors particularly badly.
Zhang expects that turbulence to ease eventually, and views little chance of a prolonged meltdown in the Vancouver market – whether in the condo space or otherwise.
While some hopeful buyers might have stepped out of the market as tariff fears ramped up, those potential clients won’t stay on the sidelines forever, he said. That means while investor appetite may remain muted, people purchasing a condo to live in are likely to see some opportunity.
Falling interest rates likely to ease some of Vancouver’s market pain
The overall housing market picture remains positive in the long term, according to Zhang. “Whether they’re buying their first home or upsizing… if they really need to get into the market, I assume that this is a good time for them since there’s not much competition. It’s a buyer’s market,” he said. “So I would say we’ll see an increased number of transactions in the second half of the year.”
What’s more, interest rates look likely to fall further in the second half of the year. The Bank of Canada has paused its rate-cutting cycle, but is expected to reduce its benchmark rate before the end of 2025 – potentially as early as September.
That spells good news for hopeful buyers in Vancouver – and potentially investors, too. “I do foresee that there will be another two or three rate cuts,” Zhang said. “I don’t see the economy running as well in the second half of the year, and we definitely need some cuts to help with that.
“So with some buyers coming up, I do feel optimistic for the second half of 2025 in terms of the number of transactions – even though there are some long-term problems.”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
