Toronto’s real estate downturn deepened last month, and new homes weren’t spared. Data from industry group BILD shows September sales hit a record low for the month, worse than the 1990s real estate crash. Most of the data looked ominous, but there was a curious detail—condo prices climbed, defying the demand collapse. That divergence may be less a sign of recovery and more a red flag. Let’s break down the numbers.
Toronto New Home Prices Diverge: Low Rise Plunges, Condos Rise
Source: Altus Group.
Greater Toronto’s new home prices are diverging, despite similar supply and demand trends. Single-family homes fell 1.7% (-$24,900) to $1,437,400 in September, down 8.2% (-$127,600) from last year, and sit 25.7% (-$496,500) below the July 2022 peak. That drop alone is the price of a home in most countries—yet prices remain out of reach for most in the region.
Condos moved in the other direction. A typical condo climbed 0.4% (+$4,500) to $1,033,300 in September, and sits 0.8% (+$7,800) higher than last year. Prices remain 17.5% (-$219,200) below their March 2022 peak. Let’s put a pin here. We’ll circle back after the sales data.
Greater Toronto New Home Sales Sink Below 1990s Crash Levels
New home sales across Greater Toronto just had the worst September on record. Just 438 new homes sold—down 29% from last year and 80% below the 10-year average. Even BILD stated it’s worse than the 1990s crash, which took decades to recover in real terms.
Single-family homes made up 283 of those sales, down 16% year-over-year and 61% below the norm. But condo sales were even weaker: just 155 units, down 44% from last year and 90% below average. That collapse gets more extreme in the City of Toronto.
Only 53 new condo apartments were sold in the City last month, down 63% year-over-year. Just 5 single-family homes moved. Not ideal for the city—crowned North America’s high-rise construction crane capital—and with an epic flood of inventory on the way.
Greater Toronto Inventory Remains High—Especially For Condos
New home inventory in Greater Toronto hit 21,749 units in September. Condos made up 73% of that supply, yet single-family homes outsold them nearly 2:1—highlighting a growing mismatch.
The gap is most visible in standing inventory: completed condos that remain unsold, held by developers. That number surged 154% from last year to 1,699 units—the highest in nearly a decade. The pressure is set to intensify, with 91,100 new homes currently under construction in the region, with an expected delivery within the next two years.
Those rising condo prices make even less sense with more context, don’t they? There may be a good reason.
Toronto Condo Prices Rising May Not Reflect Market Reality
Condo prices are rising despite collapsing demand and rising inventory. When the narrative and data are mismatched, our advice is to check the methodology, and verify they’re measuring what you expect. There are three factors that are likely compounding that explain the disconnect: size, volume, and methodology.
Size: Benchmark prices are rising, but so are unit sizes. Since mid-2024, the average condo size has climbed to 784 sqft—not a palace, but the largest since 2023. Unit price climbed, but price per square foot is down 6%, meaning buyers are paying for more space, not more expensive real estate.
Volume: Price signals are unreliable when volume collapses. Just 53 units sold in Toronto last month—that’s not a market, some pre-construction launches were doing that in a weekend just a few years ago. With such lofty inventory levels building, this doesn’t reflect the market price but the price a few dozen buyers are willing to pay. Optimistically, but we’ll get to that.
Methodology: The benchmark isn’t based on transactions, like the CREA or National Bank benchmark prices. The Greater Toronto new home benchmark is based on developer asking prices, not the sold price. It doesn’t include incentives, unadvertised discounts, or failed closings. In a normal market, prices adjust until supply and demand balance. But this isn’t a normal market—it’s propped up by valuation schemes.
Condo prices peaked in March 2022—right at the first rate hike. A 0.5% overnight rate isn’t enough to deter end-users, but it’s enough to pop the speculative mindset. Investors—who made up over 70% of new condo buyers—are far more sensitive to rates, impacting their leverage and yield.
Many now face appraisal shortfalls as prices fall, eroding the down payment they agreed to years ago. Some can’t close, resulting in lenders increasingly relying on a once obscure tool—blanket appraisals. Blanket appraisals recognize the original sale price, regardless of market value, which can be significantly lower at closing.
If reality returns and market prices become known, it risks repricing everything—including the developer’s assets. It’s unclear whether last month’s buyers paid anywhere near asking prices or got deep incentives. Either way, paying sticker price is a bet against gravity.
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