• Substantial Decline: The asset value dropped by approximately 39.9% from its peak in September 2021 to the most recent sale in November 2025. If the September 2021 Buyer of Suite 2609 were to list today, they would have to anticipate taking a financial hit of $275,000 + their buying & selling costs, which are in the range of $50,000, to be in the same value range as the unit featured in The Globe & Mail.
• Accelerated Loss: While the price dipped slightly between 2021 and 2022 (- 7.4% over an 11-month time span), the most significant drop occurred with the most recent sale. Between October 2024 and November 2025, the value of this unit type fell by $130,000 (- 24%) in just over one year. The growing supply is forcing motivated Sellers to make bigger price cuts, while the small pool of active Buyers is negotiating more aggressively and submitting lower sums.
• Price Trajectory: The data reflects a consistent downward trend, with price declines accelerating as Seller fatigue sets in. The price per square foot for this newly completed and registered condo in May 2021 has plummeted from $ 1,400/square foot to $842/square foot over the span of 4 years, more closely aligning with resale condo prices, which have also fallen.
• Falling Rents, Increasing Costs & Cap Rate: The average rent for this unit type has dropped 15% over the past 2 years from $2400/month in 2023 to $2210/month in 2025, while the monthly common fee increased 15% from $367.87 in 2021 to $434.26 in 2025. With annual taxes of $2500, annual common fees of $5211.12, and annual rents of $26,520, the average net income in 2025 is $18,808. The recent $415,000 sale will yield a 4.5% cap rate. This cap rate is becoming the new baseline demanded by investors.

The condo market is really a tale of two markets, and this sale bridges the gap between the new condo market, where Buyers purchase units preconstruction and wait about four years for the developer to deliver the completed project, and the resale condo market, where one purchases an existing unit and typically closes within 30 to 90 days.  The new condo market saw prices soar, becoming untethered from the resale condo market and from the rate of return one would reasonably expect from an income investment because the dominant Buyer profile of new condos was investors who, over several years, often followed the same developer and purchased units in successive projects. Typically, the increase in value from the point of purchase to completion of the new condo boosted investors’ net worth, allowing them to continue building their investment portfolios. Because the value gains on paper were substantial over the four years the condo was under construction, investors absorbed the added expense of negative carry, which occurs when rental income falls short of carrying costs after putting 20% down. This, by definition, made the investment more speculative.

Unfortunately, when the Bank of Canada began raising interest rates, the cost of carrying debt rose while appraised values for all properties began to decline. This has been particularly painful for new condo Buyers, because their purchasing decision four years ago is not coming home to roost. And because it’s happening as investors are demanding higher cap rates, the losses are greater. In this instance, it’s translated into a 40% discount from 2021 market values to secure a reasonable (not amazing) cap rate. Buyers, whether investors or end users, should not purchase if the condo’s cap rate is below 4.5%, and they should anticipate that investors will want cap rates to move into the 5%+ range. Another takeaway is that, regardless of how aggressive the list price is, we have not hit the bottom of the market, so all condos are at risk of further price declines. Do not be the October 2024 Buyer of ‘2209’ in 33 Helendale Avenue who probably thought they scored a win because they paid $145,000 less than peak value, only to realize now had they waited 13 months, they would not be down $130,000, which is the equivalent of a 30% down payment on the new lower $415,000 valuation. Furthermore, purchasing prematurely in a declining market could effectively trap you in a ‘too small for 2 and baby makes 3’ unit, impacting your future mobility. The stakes may be much higher than you realize.

Although the number of properties sold by lenders under Power of Sale is small, we’re starting to see their numbers increase. Here’s a recent piece in The Globe & Mail:‘Power of Sale’ Becomes A More Frequent Sight In The Toronto Housing Market. Although the lender listing a property under Power of Sale is obliged to try to get the highest price possible, if there are sales like the $415,000 condo above already serving as barometers of value, then they will be sold accordingly.

4 Talking Points On The Toronto Real Estate Market Going Into 2026

1. The real estate market works in cycles. And these cycles expand and retract over time. Toronto is currently sliding into a market trough triggered 44 months ago, when the Bank of Canada began raising interest rates in an effort to control inflation in March 2022. Prior to that, Toronto property prices had been in a sustained upward trend since 2000, partly because the population was growing, partly because interest rates were falling, and partly because, as Toronto boomed, it attracted more local and global speculation (and, money laundering, etc). In 2000, the majority of 5-year fixed-rate mortgages had interest rates over 6%. By 2010, 5-year fixed mortgages had dropped to under 5% and over the decade, they would decline to near 2% in 2020. The decline in interest rates increased Buyers’ purchasing power, which helped fuel property prices over that 20-year time frame. For context, the pace and increase in interest rates that began 44 months ago (10 increases totalling 475 basis points from March 2022 to July 2023) were greater than the changes in interest rates over 2 decades. The subsequent decrease in interest rates, which began 18 months ago (9 decreases totalling 275 basis points from June 2024 to October 2025), is still working through the housing market. At the time of writing, interest rates are 250 basis points higher than they were during the pandemic, and this may not change significantly. This would mean peak price recovery is not imminent.

2. Real estate is emotional on so many levels, and that impact, too, is profound. During the boom, it was common for Buyers to submit preemptive offers or compete against other Buyers in bidding wars for precedent-setting sums. At the time, Buyers at the start of their search quickly realized the premiums Sellers were garnering were setting the bar for the next sale of a similar property in the same geography. Given the pace at which real estate values were escalating, the longer it took them to secure a property, the less they would get.  Today, emotions remain high, often among Sellers who bought during those heady times. Attached to values from the market peak a few years ago, the lack of Buyer interest, the increasing number of days it’s taking for properties to sell, and the lower sums Buyers are willing to pay means Sellers are feeling disappointment, sadness and for some, a sense of failure, given their experience isn’t measuring up to what they thought was the norm in Toronto real estate. Unfortunately, what many people believe was the norm was a bubble.

3. The value of real estate is a function of interest rates, and borrowing costs have not been this high in 15 years (a 5-year fixed mortgage today has an annual interest rate of 4.4% to 4.8%). Although the Bank of Canada began cutting interest rates in June 2024, a Bank of Canada analysis found that 60% of Canadians renewing their mortgage in 2025 or 2026 will see their payments increase 15-20%, with the biggest mortgage shock for owners renewing their five-year fixed rates locked in around 2.5–3.0% during the pandemic. Higher borrowing costs not only limit the purchasing power of first-time buyers but also squeeze existing homeowners who want to climb the property ladder. It’s important to understand that a rate cut may influence Buyer sentiment, but it doesn’t flip a switch from ‘bad’ to ‘good’. It generally takes 12 to 24 months for a change in interest rates to materialize into an economic impact. And that’s for people who have capital and liquidity. In 2025, around 31,400 new condos were completed, with about 18,000 units in the pipeline for completion in 2026. The majority of these sales are not only worth the price these Buyers paid, but they’re worth less than the 20% down payment held in trust pending completion. There’s also a large number of households renewing their mortgage in the next 12 months who will face higher rates, and everyone who renewed their mortgage in the recent past who is adjusting to these higher costs. The impact of this market correction will continue to affect household finances and housing demand for much longer than the interest rate cycle itself.

4. The fact is, as with any commodity, the market ultimately dictates value. Along with the economic uncertainty of US tariffs and shifting trade alliances, and the rising cost of food and carrying debt, home affordability itself remains a significant issue in Toronto. All of these factors have seen the supply-demand dynamic tilt hard in favour of the Buyer, creating an entirely different reality for Sellers. With data showing Toronto real estate values have dropped for the ninth consecutive month, not only has this removed any sense of urgency on the part of Buyers, but more of them are asking their realtors whether the price of what they’d like to buy, based on where it is, might see further depreciation. After years of FOMO pushing prices up, it’s now the lack of urgency that is fuelling the sustained price drop.

All of this is happening to Sellers right now, who are experiencing the emotional toll of yesterday’s perceived values in today’s market realities. It’s time for a real estate reality check. This is not to be insensitive to the emotional challenges for everyone involved in the market right now, but to review the facts and explain why today is different than yesterday, and how one can recalibrate and right-set one’s emotions.

What Does This Mean?

1. The real estate market works in cycles. And these cycles retract and expand over time. We are currently in a market trough in Toronto, triggered by the Bank of Canada raising interest rates in an effort to control inflation starting in March 2022. Prior to that, Toronto property prices had been in a sustained upward trend since 2000, partly because the population was growing, and partly because interest rates were falling. In 2000, the majority of 5-year fixed-rate mortgages had interest rates over 6%. By 2010, 5-year fixed mortgages had dropped to under 5% and over the decade, they would decline to near 2% in 2020. The decline in interest rates increased Buyers’ purchasing power, which helped fuel property prices.

2. Real estate is emotional on so many levels, and that impact, too, is profound. During the boom, it wasn’t unusual for Buyers to submit preemptive offers for precedent-setting sums. Their rationale was often based on their experience competing against other Buyers in bidding wars, whereby the premium the Seller garnered set the bar for the next sale of a similar property in the same geography. Prudent Buyers recognized that proactively securing a purchase by paying top dollar at the start of their dwell hunt would cost them less in the long run than chasing properties which were increasing in value as much as 1 to 2% a month. Today, emotions continue to run high, but it’s mostly with Sellers, who, still attached to values during the market peak a few years ago, are experiencing disappointment, sadness and often a sense of failure, given today’s level of Buyer interest, the pace at which property’s sell, and the prices Buyers are willing to pay don’t measure up to what they thought was the norm in Toronto real estate.

3. The value of real estate is a function of interest rates, and borrowing costs have not been this high in 15 years (a 5-year fixed mortgage today has an annual interest rate of 4.4% to 4.8%). Although the Bank of Canada began cutting interest rates in June 2024, a Bank of Canada analysis found that 60% of Canadians renewing their mortgage in 2025 or 2026 will see their payments increase 15-20%, with the biggest mortgage shock for owners renewing their five-year fixed rates locked in around 2.5–3.0% during the pandemic. Higher borrowing costs not only limit the purchasing power of first-time and move-up Buyers, but they’re also squeezing existing homeowners.

4. The fact is, as with any commodity, the market ultimately dictates value. Along with the economic uncertainty of US tariffs and shifting trade alliances, and the rising cost of food and carrying debt, the supply-demand dynamic has tilted hard in favour of the Buyer, creating an entirely different reality for Sellers. With data showing Toronto real estate values have dropped for the ninth consecutive month, not only has this removed any sense of urgency on the part of Buyers, but more of them are starting to ask their realtors whether the price of what they’d like, based on where it is, might see further depreciation. After years of FOMO pushing prices up, it’s now the lack of urgency that is fuelling the sustained drop in prices.

All of this is happening to Sellers right now, who are experiencing the emotional toll of yesterday’s perceived values in today’s market realities. It’s time for a real estate reality check. Not tough love, not to be insensitive to the emotional challenges for everyone involved in the market right now, but to review the facts, as to why today is different from yesterday, and how one can recalibrate to right-set these emotions.

Sellers Are Focused On Price Instead Of The Exit

Last Spring, I represented a Seller who enlisted our services to sell a 785sf 1-bed + solarium boutique downtown condo built in 1987 that he had inherited.  The property had been on the market with a different broker for 4 months the year before, initially at $699,999, and after a series of price reductions, the listing expired at $599,000. During that period, not one Buyer crossed the threshold.

When the Urbaneer team brought the property to market a year after it was first listed, we had invested time, energy, and capital in refreshing the suite with one of our Style Enhancements. Our improvements included new window coverings, painting the kitchen and washroom cabinets, installing a backsplash and new tile flooring in the kitchen, upgrading the outlets and switch plates throughout, adding new lighting and a custom headboard, and furnishing the suite.

Our list price was $489,000. Not only had the market declined since the property was last listed, but there were also five other 1-bedroom units for sale in the boutique complex when we listed the property. Adding to the challenge was that each unit was competing with a similar suite having the same unit number and layout, but on a different level. Because all of the Sellers had owned their units for decades and were effectively cashing out, their realtors had carefully priced their units relative to the other units, save for improvements and betterments, or for the benefit of deeded parking. No one wanted to list too low, forcing other owners to reduce their prices, so that we could all chase each other to the bottom.

Throughout our listing journey, I counselled our Seller to let go of being attached to a specific price and just cash out of the market. The decline in condo prices was coming with each sale, so it didn’t make sense to hold out for an optimistic sum. It was better to secure a sale so he could invest the capital in a more liquid asset that offered a better return.

Although our initial list price was fair in my opinion, four of the six listings had sold at discounted prices over the course of 5 weeks since we first came to market. My Seller had also received an offer during this time, but it was really a low sum. I was confident I could do better, in part because a property that has received a failed offer is psychologically more desirable than one that has not. So after 46 days, we terminated the listing and relisted it for $40,000 less, at $449,900. To my delight, the price drop prompted two Buyers to compete for the property, and it sold firm and binding 72 hours later for $450,000.