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For the better part of two decades, the Canadian condo market ran on a simple, self-reinforcing engine: developers launched projects, investors bought units in presale, banks used those presales to unlock construction financing, and the cycle continued. It worked, spectacularly, until borrowing costs doubled, immigration slowed sharply, and the investors who had fuelled every launch quietly walked away.
That engine has now stopped. And the two markets that built their real estate economies most heavily around it, Toronto and, to a lesser extent, Montréal, are dealing with consequences that will define the industry through 2026 and into 2027.
This isn't a correction in the traditional sense. It's a structural reconfiguration. And understanding what's happening in each market, and what comes after, is the difference between a developer who positions for the recovery and one who doesn't survive long enough to see it.
Toronto's condo market is experiencing something that has no real precedent in the city's modern history: too much supply today, and a severe shortage coming in two to three years. Both of these things are true at the same time, and it's the combination that makes this moment so disorienting for operators.
The present: oversupply at historic levels. As of Q1 2026, there were a record 4,295 completed but unsold condo units in Toronto, more than double the level a year ago and five times higher than two years earlier. Based on current sales pace, that represents 92 months of supply. Another 8,629 unsold units are under construction and expected to complete over the next several years.
Source: Urbanation, Q1 2026 Condo Market Report, reported by Real Estate Magazine and Canadian Mortgage Professional
Developers have responded by cutting asking prices for standing inventory to an average of $1,189 per square foot, down 5% year-over-year and 13% below the market peak three years ago. Resale units in comparable buildings have fallen even further, averaging $859 per square foot, creating a record 38% price gap between new and resale product.
Source: Canadian Mortgage Professional, April 2026
Zero new condo projects launched in Q1 2026. Not a slowdown: zero.
The future: an acute supply crunch. Completions peaked at roughly 30,000 units annually in 2024 and 2025. Urbanation projects those figures will fall to 21,850 units in 2026, approximately 14,600 in 2027, and roughly 13,000 in 2028. Condo starts have already fallen 88% below their 10-year average.
Source: Urbanation, via Global News and Toronto Star, April–May 2026
RBC Economics described the dynamic directly: the timing mismatch between today's inventory abundance and tomorrow's supply shortage will likely extend the market's adjustment period well beyond what historical precedents suggest. Their base case calls for renewed pre-construction demand in the second half of 2026, with more robust activity in 2027 as inventory begins to clear.
Source: RBC Economics, Navigating Toronto's Frozen Pre-Construction Condo Market
The Bank of Canada identified the core structural problem: a massive mismatch between what the market built (thousands of small, investor-grade micro-units) and what buyers and tenants actually want (larger, liveable, family-oriented units). Developers who launched projects to capture short-term investor demand are now holding inventory that the end-user market doesn't want at current prices.
Source: Bank of Canada, Sparks — Toronto Condo Market Analysis, February 2026
In this environment, smart capital is moving fast. Montréal-based developer Jesta Group has launched a $500M program to bulk-acquire unsold condo units in Toronto at $700–$800 per square foot and convert them to rentals. A government-backed fund, High Art Capital, has formed to purchase 2,200 units for affordable rental conversion. Institutional buyers are stepping into the gap that individual investors have vacated.
Source: The Globe and Mail, May 2026
Montréal tells a different story, one of relative stability, but with its own fault lines forming.
Unlike Toronto and Vancouver, Québec's housing market has remained broadly above its historical averages in both sales and starts. Home prices in the Greater Montréal Area are forecast to rise approximately 5% in 2026, supported by local demand and relative affordability compared to other major cities. Québec City is projected to see price growth of 12%, the strongest in Canada.
Source: True North Mortgage, Housing Market Forecast 2026–2029; Royal LePage, Québec Market Forecast
But the condo segment in Montréal is showing the same structural pressure visible in other markets. Condominiums for sale surged 20% year-over-year in early 2026, pushing condo supply to slightly above its 10-year average. Condo sales fell 7.3% year-over-year in April 2026. The median price of Montréal condos has essentially flatlined — up just 0.1% year-over-year to $425,000 — even as single-family home prices rose 7% in the same period.
Source: WOWA.ca, Montreal Housing Market Report, April 2026; Nesto, Montreal Housing Market Outlook, 2026
The deeper trend in Montréal is one that PwC and CMHC both flagged explicitly: virtually no new condo projects are expected to break ground in Montréal in 2025 or 2026. Rental construction has taken over completely, accounting for over 80% of all new housing starts — a record that reflects both developer pragmatism and the strength of government incentives. Québec's rental tribunal approved the highest allowable rent increase in at least 30 years (5.9% where heat is not included), making rental development even more attractive.
Source: CMHC Spring 2026 Housing Supply Report; PwC / ULI Emerging Trends in Real Estate® 2026; CMHC Housing Market Outlook 2026
The Georges Bardagi assessment from RE/MAX du Cartier captures the nuance well: Québec has a more resilient market than the rest of Canada, but that resilience is increasingly concentrated in segments other than condominiums.
Source: Bardagi / RE/MAX du Cartier, Why Québec Stands Out in the Real Estate Market in 2026
The data tells a clear story about what the next 18 months will demand from real estate teams.
👉 Phase 1 (Now through late 2026): Clear the inventory. In Toronto, the priority is moving completed and near-complete units before the HST rebate window expires March 31, 2027. The federal and Ontario governments have temporarily removed HST on qualifying new homes intended for rental, a rebate worth roughly $100,000 on an average Toronto unit. Developers sitting on standing inventory have a closing window to activate this incentive — but it requires aggressive sales and marketing execution, lead management, and the ability to pivot between end-user buyers and institutional bulk purchasers in real time.
👉 Phase 2 (Late 2026 into 2027): Reposition for the recovery. RBC's base case has pre-construction demand returning in the second half of 2026, with more robust activity in 2027 as inventory clears and the supply pipeline thins dramatically. Developers who are ready to launch when that window opens — with product designed for end-users rather than investors, in the right locations, at prices the market can support — will have a structural advantage over those still working through legacy inventory.
👉 Phase 3 (2027–2028): The supply crunch arrives. BMO Economics characterizes the current period as "prolonged consolidation" rather than temporary correction, with national housing prices unlikely to surpass 2022 levels until 2029. But the construction collapse happening right now is seeding an acute supply shortage that will emerge in 2027–2028, when completions fall below 14,000 units annually in the GTA alone. The operators and developers who have built their operational capabilities, portfolio management, tenant experience, leasing infrastructure — in the quiet period will be the ones able to scale when demand returns.
Sources: BMO Economics, RBC Economics, Urbanation, CMHC Housing Market Outlook 2026
The single most dangerous posture in this market is operating on instinct and historical precedent. The rules have changed, fast. And the developers who are getting ahead of this cycle are the ones who have built real-time visibility into what the market is telling them.
That requires three things that are inseparable from technology:
A CRM that tells you who your buyers are right now. Not who they were in 2022. The investor buyer is gone. The end-user buyer has different motivations, different price sensitivities, different decision timelines, and different unit preferences. A CRM that tracks lead behavior, segments by buyer profile, scores based on current engagement signals, and surfaces which leads are actually moving toward a decision is not a nice-to-have in this market. It's how you know where to focus your sales team's energy when pipeline is thin and every conversion counts.
Market study tools that make the data actionable. Unit mix decisions, pricing strategy, launch timing, all of these depend on reading the market correctly at the moment you need to act, not based on data from six months ago. The developers launching successfully in 2027 will be the ones who can answer, with data: what product type does this submarket actually absorb? What price per square foot is the market supporting today? What does the competitive landscape look like within a two-kilometre radius? That analysis can't live in a spreadsheet. It needs to be embedded in the platform your sales and strategy team uses every day.
Research infrastructure that tracks the recovery signal. The window between "inventory is clearing" and "presale demand returns" will be narrow and won't announce itself. The developers who recognize it early, because their platform is tracking absorption rates, lead velocity, and conversion trends in real time, will be the ones who get product to market before the competition. Those who wait for the headlines to confirm the recovery will be launching six months late into a market that's already tightening.
Toronto's condo market is at rock bottom, and building toward a supply crisis simultaneously. Montréal's market is more stable, but its condo segment is under structural pressure and its new construction pipeline has pivoted almost entirely to rental. Québec as a whole remains Canada's relative outperformer, but even here, the product mix is shifting and the market is fragmenting by segment and location faster than ever.
For developers and operators in these markets, the next 18 months are not a time to wait. They're a time to build the operational infrastructure, CRM, market intelligence, leasing systems, data pipelines, that will determine who leads the recovery and who watches it happen to someone else.
The developers who survive downturns are the ones who use the quiet to get better. The ones who emerge from them are the ones who had the data to move first.
Book a demo and see how Onyx gives your team the CRM, market insight tools, and operational infrastructure to navigate the cycle, from where we are today through the recovery ahead.
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