Record inventory, frozen launches, and fragile confidence point to slow recovery ahead
The Greater Toronto and Hamilton Area’s condominium market remained under intense pressure in the first quarter of 2026, with a prolonged downturn now entering its fifth year and pushing sales to their weakest level in decades.
New condo transactions fell to just 246 units during the quarter, a 52% drop from a year earlier and 94% below the 10-year average for Q1. The slowdown has become so severe that no new projects were launched—marking the first time in at least 30 years that developers have halted new supply introductions entirely.
Even as activity stalled, the supply overhang continued to build. Completed but unsold inventory climbed to a record 4,295 units, more than doubling year-over-year and rising nearly fivefold compared to two years ago. Based on recent absorption levels, the market now holds roughly 92 months of supply—equivalent to more than seven years—highlighting a significant imbalance between supply and demand.
An additional 8,600-plus units under construction also remain unsold and are expected to come online in the next few years, adding further pressure to an already saturated market.
Developers have started adjusting pricing in response. Average asking prices for unsold units declined to $1,189 per square foot, down 5% from last year and 13% below peak levels seen three years ago. However, resale condos have seen steeper corrections, with comparable units averaging $859 per square foot—25% lower than their 2022 peak.
This divergence has left a historically wide pricing gap of 38% between new and resale units. A temporary full HST rebate announced for one year could reduce new condo prices by about $100,000 on average, narrowing the gap to roughly 20%, though a meaningful disconnect would still remain. Eligibility criteria apply and investors who already own a home may not qualify if it has been their primary residence in recent years.
While oversupply continues to weigh on the market today, future pipeline risks are beginning to emerge. Condo completions, which had surged to nearly 30,000 units annually in 2024 and 2025, are now trending lower. A total of 7,201 units were delivered in Q1, down 21% year-over-year, with full-year completions projected to fall to 21,850 units in 2026 and decline further to just over 13,000 units by 2028.
Beyond that, the development pipeline thins significantly, with only about 2,000 units currently scheduled for completion in 2029—raising the prospect of a future supply shortfall once demand stabilizes.
Developers are also increasingly pivoting away from traditional condo projects. Although 1,254 units began construction in Q1—a six-quarter high—much of that activity was tied to a single project. At the same time, 963 units were cancelled during the quarter, all of which are being converted into purpose-built rental housing.
Since early 2024, more than 11,400 condo units have been cancelled, resulting in a net reduction of over 7,300 units after accounting for those shifted into rental development. This trend signals a broader strategic shift as builders respond to weaker ownership demand and more stable rental fundamentals.
“After the condo market sank to a new multi-decade low in the first quarter, it was encouraging to see a number of new initiatives announced that should help improve sales, reduce inventory and get more construction underway. However, with market confidence still very fragile and demand fundamentals slowing down, the recovery process is likely to begin slowly.”
