Toronto Condo Sales Slump 20% As Would-Be Buyers Turn To Renting

Condo listings in the Greater Toronto Area (GTA) are up substantially from 2023 and sales are down, according to the Toronto Real Estate Board’s (TRREB) Q2 findings. Meanwhile, the region's condo rental segment is seeing plenty of demand.

TRREB President Jennifer Pearce explained in a release that with the GTA experiencing record population growth in Q2 2024, demand for condo apartment rentals has increased. "The affordability challenges associated with high mortgage payments for ownership housing also continued to be a driver of rental demand, especially given that we have seen some relief in rents over the past year," Pearce also said.

Even so, demand for rentals wasn't enough to offset the significant jump in new listings, resulting in a continued trend of lowering rent prices.

There were 17,400 condo apartment rentals reported through TRREB’s MLS® System in Q2 2024 – up 25.2% compared to 13,896 rentals in Q2 2023. But this increase was overshadowed by a 51.3% leap in condo rentals listed in Q2 2024 compared to the same period in 2023.

This abundance of listings pushed the average rent for a one-bedroom condo apartment down to $2,452, representing a 3.1% decline compared to $2,529 in Q2 2023. The same went for two-bedrooms, which saw a 1.9% decrease from $3,239 in Q2 2023 to $3,178 this quarter.

This trend has meant lower rents and a wider variety of choices for renters, but Chief Market Analyst at TRREB Jason Mercer warned that these conditions won’t last if inventory falls off.

“Demand for rental housing will be very strong for the foreseeable future,” he said. “While the increase in available inventory over the past year has resulted in slightly more affordable rents, it is important to understand that this relief could be short-lived if we don’t see a steady stream of new rental units coming online, both in terms of purpose-built rental and investor-owned condo rental units.”

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With borrowing rates remaining high, rents edging enticingly lower, and owners refusing to budge on high listing prices, condo sales have taken a hard hit, TRREB's data also revealed. There is simply a huge lack of incentive for would-be buyers besides the prospect of owning itself.

Condo sales dropped a substantial 19.8% in Q2 2024, totalling 5,474, compared to last year’s 6,824 sales. On top of that, condo listings jumped 36.5% year-over-year to 16,917, meaning standing inventory remains high.

“The condo market is very sensitive to interest rates, given that this segment is a traditional entry point into homeownership,” said Pearce. “With monthly payments remaining high and average rents edging lower over the past year, many would-be buyers remain on the sidelines. However, over the next year, an improving affordability picture will see a growing number of first-time buyers enter the condo market.”

Listing prices dipped slightly in response to an intensifying buyers' market, but sellers remained mostly firm on their prices, with the average selling price in Q2 2024 down to $729,005 — only a 1.2% decrease from $737,925 in Q2 2023. In Toronto, average selling price dropped 0.5% down to $765,963.

For Mercer, this unremarkable decrease reflects the firm position of sellers, but also the possibility for conditions to move back into their favour pending future rate cuts.

“Despite a much better supplied condo market over the past year, selling prices have remained relatively flat, especially in Toronto,” said Mercer. “This suggests that sellers are holding relatively firm on their listing prices. This may be in anticipation of improved market conditions as borrowing costs continue to trend lower this year and next.”