For the first time in years, bachelor and one-bedroom condos in Toronto list below $400,000, drawing renters into the market. However, experts caution that rapid sales of this inventory could trigger a future housing shortage as new construction slows.
Falling Prices Spark Buyer Interest
Declining prices across the Greater Toronto Area (GTA) housing market encourage renters, long priced out, to explore homeownership. Realtor James Milonas, managing director at The Agency Toronto West, assists a client who rented for eight years while saving. “He has been renting for the last eight years, just saving his money,” Milonas noted. “We had a chat pre-Christmas, and he asked, ‘What do you think? Is this the right time for me?'”
Milonas fields similar inquiries from multiple renters and advises most to proceed given current conditions.
Key Market Data Shows Price Drops
Toronto Regional Real Estate Board (TRREB) reports reveal the average condo selling price in the GTA fell 5.1% year-over-year in the fourth quarter of 2025. One Toronto neighborhood averaged $384,333 in listing prices during that period. Citywide, Toronto’s average condo price dropped to $690,607 from $715,920 the previous year.
Condo sales totaled 3,880 units, a 15% decline from the prior year. Jason Mercer, TRREB’s chief information officer, attributes lower prices to strengthened buyer leverage. “People have had more negotiating power over the last year than they did two or three years ago,” Mercer stated.
Supply Risks from Fewer New Builds
Mercer warns that sustained low prices threaten long-term supply, particularly with reduced new construction matching weaker demand. “We’ve heard stories about low pre-construction sales,” he said. “Eventually, that translates into fewer starts and completions. Policymakers must address how to fill that gap.”
Without intervention, another shortage looms in coming years.
Investor Sell-Off Boosts Inventory
Realtor Anya Ettinger with Bosley Real Estate explains that many affordable units stem from investor properties flooding the market. “With the rental market down, investors avoid condos as they lack positive cash flow,” she observed. “These investor-built condos now sit unsold, inflating inventory.”
While bargains aid first-time buyers, recent non-investor purchasers face losses. “Those people are getting burned,” Ettinger said. “They never aimed to profit but used the market as a stepping stone. Now they decide: sell at a loss or hold and adapt?”
Expert Advice for Renters
Milonas urges renters to compare costs. “If your rent and mortgage payments align closely, why not build equity instead of funding someone else’s mortgage?” he advised, recommending realtor consultations despite the challenge.
Ettinger advocates caution: “Step back, review your numbers, and ensure it fits your situation.”
