(Bloomberg) -- Sales of new condo units in Toronto hit the lowest level since 1996 as the individual investors who have powered the market for decades pull back.
Transactions of new condos in Canada’s biggest city fell 64% in 2024 from a year earlier, the third straight annual decline, according to a report released Thursday by market research firm Urbanation.
Historically, mom-and-pop investors have been a key force in the market for new condo projects, which normally line up buyers before construction starts. But with rents falling and interest rates considerably higher than they were three years ago, many of these investors are losing money on the properties they already have.
“The new condo market just experienced its toughest year in three decades,” Shaun Hildebrand, Urbanation’s president, said in a statement. “Expectations for the market remain low this year as investors, the primary driver of presale activity, continue to deal with negative cash flow, difficulties arranging financing and declining prices and rents.”
Among the 1,829 units that launched for presale across six projects in the last three months of 2024, only 10% found buyers, compared with the 52% sales rate typical of the period in the last 10 years, the Urbanation data shows. That’s brought the number of unsold units currently in development around Toronto to a record high of 24,277 units.
Since many developers lean on presales to help kick off projects, weaker demand means the amount of new housing supply hitting the market in years to come could wane. Total condo construction starts in Toronto fell to their lowest level since 2002 last year.
“The drop in presale activity will continue to cripple construction starts in 2025, causing a massive decrease in new supply beginning in 2026-2027,” Hildebrand said in the report.
In the meantime, the Toronto market must deal with a glut of existing condos. Developers racing to close out projects they’d already begun pushed the number of finished condos hitting the market to a record 29,800 units in 2024, with that number expected to go even higher next year, the Urbanation report shows. That surge in new supply has in turn weighed on prices in the resale market.