Rising Costs, Shifting Demand, and What Owners Need to Consider in 2025
Toronto condos have long offered an affordable entry point, strong rental yields, and easy resale, making them popular with first-time buyers and investors. But as taxes rise and market dynamics shift, the investment case for condos is no longer as clear-cut.
For many entering the housing market, condos have served as a natural starting point. With small down payments and more manageable monthly costs, young professionals and newcomers often began their real estate journey in a condo, later moving up to Townhomes or Detached housing as their finances improved.
This made condos not only a practical housing solution but also a liquid asset class, easy to rent, sell, and recycle within investment portfolios.
However, Toronto’s real estate landscape today looks very different from just a few years ago. Recent policy changes have sharply increased the cost of owning a condo, including:
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Land Transfer Tax in the city has been hiked.
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Property taxes have increased by 10% annually in the past two years.
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Carbon taxes now add $70–80 to many monthly utility bills.
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Vacancy taxes have jumped from 1% to 3% for unoccupied units.
These increasing overheads, combined with a softening rental market and rising supply, have created mounting cash flow pressure, particularly for highly leveraged investors.
Another factor reshaping the condo landscape is population dynamics. Canada is reducing the number of temporary residents by 500,000 per year and cutting permanent resident targets from 550,000 to 390,000. Since many condo tenants have been students, work permit holders, or newcomers, this drop in rental demand is already evident.
Additionally, Toronto is expected to add around 100,000 condo units over the next three years—including a growing portion of rent-controlled affordable units, Further pressuring resale values and rents in older condos. If you’re a condo owner, you may wonder: Is it time to sell? The answer depends on your financial position and investment horizon.
If you’re cash flow negative, with monthly losses around $1,000 or more, early exit may be wise, especially if you bought during peak prices in 2019–2022.
Selling a condo, however, will require some preparations.
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Condos can be sold year-round; they’re not as seasonally dependent as detached homes.
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Staging helps showcase limited space better; furnished units often feel larger.
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If tenanted, it’s crucial to discuss with tenants to explain their rights and secure cooperation for showings.
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Always prepare the status certificate in advance to avoid delays or losing buyers.
One critical consideration is the reserve fund—which reflects how well a condo corporation is prepared for future repairs. Properties with weak reserve funds or looming special assessments often scare off buyers or trigger price drops.
For those willing to weather short-term losses, forecasts suggest that condo supply will peak by 2028, potentially setting the stage for a rebound by 2029–2030.
Toronto condos have shifted from easy-entry investments to more complex financial instruments. They still offer stability, liquidity, and lower absolute costs compared to houses, but today’s investors must strategize smartly, manage leverage, and stay ahead of market trends. Whether you’re holding for the long term or planning an exit, now is the time to reassess your goals, cash flow, and timing. As with any investment, understanding the bigger picture is key to staying profitable in the face of change.