Toronto Condo Market Update: Too Many Listings, Not Enough Buyers, What's Next?

A few days ago, the Bank of Canada cut the interest rate again by another 25 basis points, bringing the overnight interest rate to 2.75%.

But here’s the problem, rate cuts are losing their impact on the real estate market.

Thanks to Donald Trump.

His on-again, off-again trade war threats are throwing global markets into uncertainty.

Stock markets have been swinging up and down dramatically.

And that’s only making things worse for our already struggling housing market.

You have probably seen the headlines: Toronto home sales were down 27.4% in February compared to last year, while the number of active listings went up 76%.

And the biggest problem?

Condo inventory is piling up.

Indeed, the most common questions I get nowadays are:

“Should I sell my condo now or should I continue to rent it out?”“I need to sell now, how can I get it sold?”

Today, we are going to focus on downtown condos with data from MLS.

So you will find out which unit type is the easiest to sell in the current market and which ones are sitting on the market.

And if you want to turn to the rental market, how is it performing?

By the end of this video, you will be able to make a clear decision.

As usual, when I say core downtown Toronto, I’m referring to the C01 and C08 areas.

From January 1 to March 10, only 631 units were sold in the core downtown area, compared to 860 units during the same period last year.

Out of the 631 units, how many were studios?

Just 20.

Selling studio units in the current market is very challenging.

Over the past 2 years, 1 bedroom units have become more affordable and end-users naturally prefer more space.

The studios that were sold had one key advantage: pricing.

Most were priced around $400,000, which also happens to be the median price for studios.

What about 1 Bedroom units?

149 units were sold with a median price of $530,000.

1+Den, 206 units were sold with a median price of $625,000.

2 Bedroom, 218 units were sold with a median price of around $810,000.

Do you see a trend here?

Bigger units are in higher demand.

Investors typically aim for the smallest units possible, focusing on budget and rental demand to maximize returns.

But in today’s end-user-driven market, buyers are taking advantage of lower prices to buy as much space as they can afford.

Right now, the sweet spot is between $600,000 to $800,000, where 1+Den and 2 Bedroom units are selling the most.

But as prices push past the one million dollar mark, demand starts to drop.

There were only 38 Three-Bedroom units sold, with a median price of around $1.2 million dollars.

Now let’s take a look at the months of inventory for each type of unit.

This number tells us how long it would take to sell all available listings at the current sales level.

A market with 4 to 6 months of inventory is generally considered balanced.

Anything above 7 months signals a buyer’s market, where supply exceeds demand, forcing sellers to compete on price.

Studios:  13 months of inventory, making them the toughest to sell.

1 Bedroom: 8 months, indicating sluggish demand.

1+Den: 5.5 months, in a balanced market.

2 Bedroom: 6.8 months, marginally balanced.

3 Bedroom: 9.2 months, challenging because of the higher price point.

That said, if you have a 1+Den unit priced around $630,000 or a 2 bedroom unit around $810,000, you are still in a decent selling position compared to other unit types.

But unless you have a better use for the money after selling, you are likely better off renting out your unit instead of fighting with weak demand and high inventory.

Despite the challenges in the sales market, the rental market is actually still doing pretty well.

From January 1 to March 10, a total of 4,119 units leased in the core downtown area, up 14% compared to the same period last year.

Here’s a breakdown of the number of units leased by type, along with their median rents.

1 Bedroom units remain the most in-demand in the rental market.

Now, let’s take a look at the months of rental inventory.

Studios: Only 2 months of rental inventory, a huge contrast to the 13 months of inventory in the sales market.

1 Bedroom: 1.8 months

1+Den: 1.7 months.

2 Bedroom: 2 months.

3 Bedroom: 3 months.

You see, the rental demand is absorbing available supply much faster than the resale market.

For studio owners, who typically have a smaller mortgage balance, the decision is clear.

Instead of struggling to sell at $400,000, you’re likely better off collecting $1,900 per month in rent while waiting for the market to recover.

So yes, despite the sluggish sales, the rental market remains strong.

If you are thinking of selling, pricing aggressively and positioning your unit strategically will be crucial.

I’ve put together my exact 4-step formula for selling a unit fast, be sure to check it out here.

And if you want to see how our selling and marketing strategies make a difference, watch this cinematic showcase I filmed for a unit.  This is the kind of marketing you need to make your property stand out in today’s market.

But If you don’t have a strong reason to sell, the rental market offers a solid alternative.

Collecting rent while waiting for better selling conditions might be the smarter move in today’s market.

At the end of the day, this is a data-driven market, understanding the numbers is the key to making the right decision.

If you want a personalized analysis of your condo’s position, schedule a call with me.