What to know
- Toronto’s average home price fell 2.7 per cent year over year to $993,410 in August, while overall home sales declined 2.1 per cent.
- GTA condos under 500 sqft. lost 12.2 per cent in value between 2020 and 2025, compared with a 6.2 per cent decline for units between 500 and 700 sqft.
- An oversupply of smaller condos, combined with weaker demand, is putting pressure on prices and rents for micro units.
- The decline does not necessarily mean condos are suddenly affordable, as prices still vary significantly by location and unit size.
- Buyers may find opportunities in smaller condos, but owners looking to sell or rent out these units could face more challenges in the current market.
Toronto’s real estate sales continue to decline, with smaller condos appearing to be facing the largest drops, but it doesn’t necessarily mean these units are suddenly cheap.
On Thursday, the Toronto Regional Real Estate Board revealed that home sales have noticeably dropped this August compared to last year.
Overall sales fell by 2.1 per cent year-over-year, and by 1.3 per cent compared to July. Meanwhile, listings also fell by 14.1 per cent from last year, with only 12,075 new units entering the MLS system.
The decline in sales was also reflected in average prices, which fell under $1 million for the second time this year after remaining above that value for over five years. The average selling price in August was $993,410, which is down 2.7 per cent from $1,021,300 last August.
Smaller Toronto condos dipping faster in value
While the decline was seen across the market, another recent report from real-estate platform Wahi revealed that smaller condo units are taking the biggest hit, with micro condos losing value about twice as much as larger condo units.
According to the report, Greater Toronto Area condos under 500 sqft. have decreased in value by 12.2 per cent between 2020 and 2025, while those between 500 and 700 sqft. went down by 6.2 per cent in the same period.
Over the course of 2025 alone, micro condos under 500 sqft. lost an average of $152 per square foot year over year. Last year also marked the deepest decline in condo value over the past five years.
Larger units faced less with devaluing, with those between 900–1,200 sqft. dropping $79 per square foot in 2025, and those over 1,200 sqft. growing by $33 in value in 2025.
Why are condos getting devalued?
In a city where large apartment buildings cover a significant portion of the downtown core and new units constantly popping up, what could be driving the decline?
Wahi Economist Ryan Mclaughlin tells Now Toronto that the problem in fact lies on unbalanced supply-and-demand.
Right after COVID, from 2021 to 2023, condo units were in high demand in Toronto, driving developers to increase investments and projects for new apartments in the city. As smaller condos are cheaper to build than larger units, developers and investors also saw an opportunity to meet this demand and increase their profits by later selling or renting these units out.
However, now that the units are ready to move in, the demand for small condos has significantly dipped.
Although there may be many reasons for the decline, the economist said a leading cause could be the decline in immigration levels, as the federal government has adjusted its immigration policies.
“A lot of new recent immigrants may prefer these smaller units… [Three bedroom-plus units] are much more expensive units, and they may be more suited for long-term [residents] that have been in Canada longer term, since they just have more time to establish themselves,” Mclaughlin said.
“These studios may be more often used by students and [temporary residents], which has kind of disappeared.”
Under these conditions, developers are now facing a market where a lot of condo units are available, but the demand for these kinds of units has significantly dipped, leaving them sitting in the market.
With that, many have had to put selling prices and rent down to try to get them off the market.
According to Mclaughlin, this process can also be known as condo correction.
Vancouver condo prices increasing
Although Toronto’s real-estate market is often compared to Vancouver’s, as both sit on the more expensive side, and are situated in larger urban areas, the west-coast city’s market reveals a different condo situation.
According to the Wahi report, Vancouver condos under 500 sqft. have actually grown in value by 4.9 per cent between 2020 and 2025, while those between 500 and 700 sqft. increased by 19.4 per cent.
These micro condos units have only started decreasing in value in 2025, when they fell by $382 per square foot., while this devaluing has also reflected in larger units, including those above 1,200 sqft., which dropped by $59 per square foot in value in 2025.
Although the drop was much less significant in Vancouver, Mclaughlin said that the condo correction, which started in Toronto, later spread to the west-coast city.
“Toronto and Vancouver are the epicenters of the condo correction, so both of them are soft. Toronto has always been more, not always, but in recent years has been softer than Vancouver,” he said.
“The correction is fundamentally Toronto-based, or Toronto was like the starting point.”
A series of factors could be behind the difference in both markets, including the fact that Toronto is usually a more popular immigration destination than Vancouver. Hence, the decline in immigration levels could have had a more significant impact in Toronto than in Vancouver.
“The GTA’s economy is a little bit weaker than some of the other parts of Canada. So, B.C.’s economy has been a little bit stronger lately relative to Ontario’s,” he added.
Is it a good time to buy in Toronto?
Although the declining demand also comes with smaller price tags, Mclaughlin said the decline in condo value doesn’t necessarily mean that it’s suddenly become cheaper to buy a condo in Toronto.
Those looking to get better deals might still depend on the region of the city where they intend to buy and the size of the unit they want. While areas farther from the centre and smaller units like studios and one-bedroom apartments might be significantly cheaper, those at the city’s epicenter and larger ones might still be on the higher end.
“The reason that they are cheap is because there’s not as much interest in them. So, in some way, it’s almost like the buyers aren’t benefiting because these are not products that they want,” the economist said.
“If you’re really interested in a studio in Brampton, you can certainly get a good price at the moment. It depends on the buyer.”
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However, this doesn’t mean condos are no longer a good investment.
As explained by Mclaughlin, a lot of buyers might still benefit from studios, including students looking to rent or first-time homebuyers who want to get their feet in the door. However, those looking to sell or rent out the units might find a bit more trouble right now.
“For the average person who’s actually living in the unit: don’t panic. Most of the declines that have happened have already happened. There are some potential signs of the market picking up a little bit, but it’s not clear what direction things will go from there.”
