With prices sliding, rents softening and some buyers forced to walk away, one leading broker says long term players still see Toronto condos as a solid investment
It’s the big question facing Canadians with a stake in Toronto’s condo market: When will the gloomy outlook shrouding the sector finally pass?
It doesn’t look like a rebound is in store for the city’s beleaguered condo space anytime soon, with most experts and commentators expecting the current malaise – falling prices, plunging demand, and appraisal nightmares – to stretch beyond 2026.
But while most of the next three years might look bleak for the condo market, some mortgage industry members are more bullish about the long-term picture and see reason to believe that it will reemerge as a solid option for investors.
Among that number is Joanna Lang (pictured top), managing partner at Outline Financial, who told Canadian Mortgage Professional she sees the sector riding out the current turbulence and returning to better health eventually – even though it could take a few years.
“I think the mood in general is that clients feel the Toronto condo market is going to turn around. I’m not saying this year or next year,” she said. “Long term, end users want to close on the deals if they can afford to carry the property, which is a little bit of a challenge considering that rents have come down as well.
“But they generally will figure out the way to make it work because they believe that long-term, the values will rebound.”
Solutions ready for some buyers, thin on the ground for others
For investors who’ve been left in the lurch by rental properties suddenly turning cashflow-negative, pulling out equity from other properties they own to make up the difference – if they’re able to – is often a way of managing that payment shock, according to Lang.
But others with a smaller portfolio who can’t rely on tapping into other rental properties are still facing a conundrum, as are buyers who purchased a preconstruction condo with the intention of selling for a profit on assignment.
“The ones that are really getting in trouble are the ones that weren’t preapproved three or four years ago when they bought it. They never intended to actually close on the deal,” Lang said. “They were drinking the Kool-Aid of bad advice: ‘You buy this contract and then you assign it for more at closing.’
“They put all their eggs in the basket of being able to flip the condo instead of actually having to go through any of the effort of owning it. And now they’re seeing the negative consequences of that.”
Still, Lang highlighted Urbanation data showing that about 3,000 units – approximately 10% of pre-sold new condos registered in 2025 – were taken back by developers, a percentage she described as surprisingly small and likely representing mostly buyers who purchased and intended to flip the property.
“I think more people are in a situation where they’ll do whatever they can to work it out,” she said. “In some cases, they might even go to family for help and they say, ‘If I can afford the payments and I can wait five years and recoup, I’m going to try to do anything I can to close on a deal.’”
Some investors still see condos as a solid bet
Among the indications that investors are still confident in the condo market’s long-term outlook, according to Lang, is the fact that a big institutional buyer is snapping up cut-price units in the city, per a report in the Toronto Star.
Provincial government fund Building Ontario Fund also says it plans to purchase and convert unsold condo inventory into rental housing, partnering with High Art Capital and allocating up to $300 million in mezzanine debt financing for that purpose.
“When do you see pension funds and other institutional investors coming to buy condos in bulk if they don’t think that they’re making the right investment for end users down the road?” she said. “So those kinds of things are proof that there’s trust in our market long-term.”
With new condo construction set to plummet in the coming years, those trends will also gradually push supply down, Lang said.
“I think a lot is being done to protect our market from all different angles,” she said. “Personally, I’m a strong believer in the condo market and I think in the long run, we’ll be OK and the market will do well.
“It just goes back to the fact that people need to understand their risk when they’re investing in anything. And you need to be able to withstand difficulties, maybe even for an extended period of time. And most clients are doing that.”
Looking ahead, she sees a market without most of the speculative frenzy that characterized the boom years of the early 2020s.
“I think it’s going to be a more realistic market in the sense that a portion of borrowers just went out there and didn’t really have full facts,” she said. “I think that people are going to pause more and really try to figure out what they can afford in what kind of scenario.”
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