Record standing inventory and a one-year HST break set up a slow reset
Urbanation’s latest numbers showed how far Toronto’s new condo market has fallen by early 2026, even as conditions quietly set the stage for a future supply squeeze.
The Greater Toronto Hamilton Area (GTHA) saw just 246 new condo sales in Q1 2026, a 35-year low and 52% below the same period last year. There were also no new project launches during the quarter, a first in at least three decades.
Over the five-year downturn, completions surged while buyers stepped back under higher rates and economic uncertainty.
Urbanation reported a record 4,295 completed but unsold units as of Q1, more than double the level a year earlier and nearly five times that of two years ago. Based on the recent sales pace, that represented 92 months of completed new condo supply.
“What stood out here was that there was for the first time in decades zero new project launches; the market basically came to a standstill,” Shaun Hildebrand, president of Urbanation, said.
“It’s probably safe to say that we’ve hit the bottom.”
Pricing pressure grew most acute where developer units met the resale market.
Developers lowered asking prices on standing inventory to an average of $1,189 per square foot (psf) in Q1, down 5% year over year and 13% from the peak three years ago.
Resale units in comparable buildings that registered in the past three years averaged $859 psf in Q1 2026. That's a 25% slide from Q1 2022, leaving a record 38% price gap between new and resale product.
The newly announced one-year full HST rebate on qualifying new homes up to $1 million – proposed from April 1, 2026 to March 31, 2027 – is expected to cut prices on unsold new condos by roughly $100,000 on average and narrow that gap to about 20%.
Hildebrand said some developers are already cutting prices to or below cost to move inventory, while others are cancelling presale projects and converting thousands of units to purpose-built rental.
Completed supply, which hit almost 30,000 units annually in 2024 and 2025, is projected by Urbanation to fall to 21,850 units in 2026 and to roughly 14,600 and 13,000 units in 2027 and 2028, with only about 2,000 completions scheduled for 2029.
“That’s the biggest drop in supply we’ll ever experience,” Hildebrand said.
Market participants widely expect any recovery to be slow.
“This market, to me, is more problematic than the last one,” Leor Margulies, partner and head of commercial real estate at Robins Appleby LLP, told Canadian Mortgage Professional.
“It was horrible, the last one. It shook out a lot of lenders and fringe developers, as this one will. But the causes were easy to correct.
“This one’s different. We have low inflation. We have lower interest rates. We have excellent lending and very stringent lending criteria. But we still have the intrinsic issue of cost. We have people that want to buy – but the cost to build it can’t match it.”
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