We’ve all seen bad headlines on the state of the condo market, with sales hitting lows – just 319 units sold across the Greater Toronto Area (GTA) in Q3 2025, the weakest in 35 years. Inventory piles up, prices soften, and a recovery looks far off. Beneath the surface noise, Toronto’s housing story is still one of resilience and untapped opportunity. At Tembo, we’re keen students of the long-term trends in Toronto’s housing market. We’ve studied its ups and its downs. One outcome is clear, we always recover. While the ownership side stumbles, the rental sector is roaring back with record demand. And for savvy investors eyeing purpose-built rentals? This dip is a moment of opportunity. Over the next few years, as demographics shift and economic tailwinds build up, conditions will favour a longer-term recovery.

While condo sales languish, absorption rates tell a different tale of vitality. Through the first half of 2025, the GTA clocked an impressive 27.9% yearly absorption rate for condos – a figure that underscores steady demand even amid uncertainty. But the real headliner? A staggering 30,951 condo leases signed in that same period, smashing records and clocking in 58% above the 10-year moving average. That’s not a fluke; it’s a signal. Young professionals, newcomers, and downsizers aren’t fleeing the city – they’re renting in droves, drawn by Toronto’s unbeatable mix of jobs, culture, and convenience. Lower prices mean young professionals and newcomers, especially single people, can now afford their first condo. As their housing equity builds up over time, they’ll shift into larger properties when they start building their families. The Canada Mortgage and Housing Corporation (CMHC) echoes this, noting that “strong demand remains evident in the rental market” despite broader condo woes. In Q2 alone, 20,417 units were leased via the Toronto Regional Real Estate Board (TRREB) MLS system, proving the city’s rental engine continues to hum, as it has for over 20 years now.

Sure, rents have dipped – down about 4.5% from 2024 peaks, with average one-bedrooms hovering around $2,017 as of October. point to this as proof of oversupply and despair. But zoom out: over the past three years, rents are up 6.2%, outpacing inflation and reflecting the inexorable pressure of population growth. Toronto’s metro area welcomed over 100,000 new residents last year alone, and with federal immigration targets holding steady, that influx shows no signs of slowing. Mid-year CMHC data highlights advertised rents softening 2-8% in Q1, but that’s a classic market correction after years of double-digit spikes – not a collapse. By late 2025, forecasts from realtors peg one-bedroom increases at 6-8%, fueled by this demographic tide. The softening? It’s creating breathing room for tenants today while priming the pump for tomorrow’s gains. Tembo has been helping many clients finance renovations to their houses to accommodate rental units for years now, there will always be opportunities to rent out property in the GTA.

For builders under pressure, keep this in mind, when has the math for land acquisition, hard costs, and tax incentives been this compelling in Toronto? Land prices have eased with the broader downturn – think 10-15% off 2024 highs in key corridors, per recent TRREB insights – while construction costs stabilize post-supply chain snarls. Incentives that make purpose-built rentals a no-brainer. The City of Toronto’s new multi-residential property subclass for 2025 slashes municipal tax rates, easing the long-term carry. Federally, the HST rebate on new rental builds – effectively zeroing out the 13% sales tax for eligible projects – turns what was once a headwind into a tailwind. Add in the Home Buyers’ Plan flexibility and First Home Savings Account perks for investors and owners, and the equation tilts heavily toward “yes.” In a market where borrowing costs are tumbling, thanks to the Bank of Canada’s aggressive rate cuts, locking in now means yields that could hit 5-7% stabilized by delivery.

Of course, timing is everything. Buy land today, and you’re looking at shovels in the ground by 2027, keys turning in 2030 or 2032 at the latest. By then? The “negative market” benefits bargain-basement entry points and incentives will be relics. Demand will have rebounded hard. REMAX’s Fall 2025 outlook paints buyers as increasingly optimistic, with improved affordability drawing them off the sidelines. Sales surged 8.5% post-rate cut in recent months, the biggest jump since last October. Population projections from Statistics Canada forecast Toronto’s households growing 1.5% annually through 2035, pressuring rents upward as supply lags. Economic recovery with tech, finance, and green jobs leading will amplify this. The condo ownership slump? It’s pivoting investors toward rentals, creating a virtuous cycle of stability and appreciation.

Toronto’s challenges, high inventory, affordability strains, economic jitters, are real, but they’re temporary chapters in a blockbuster story. This city has weathered recessions, pandemics, and booms before, emerging stronger each time. The data screams opportunity: record absorption, resilient rents, unbeatable incentives. Don’t let the crowd’s chorus drown out the signal. Act now, build for the future, and position yourself for the upswing.