Estimated reading time: 5 minutes
In Toronto’s emotionally reactive real estate market, sentiment and confidence remain powerful drivers of value.
These psychological factors are often underestimated, but continued socio-economic, political, and environmental disruptions have both confused and exhausted the market, inhibiting sales activity.
Despite this instability, we continue to recognize trends — particularly the weakness of the condominium sector and relative stability in purpose-built rental housing .
Our guidance for 2025 will be familiar: seek value and minimize risk. In fact, this has always been our ethos.
2024 in Review: More Listings, Cautious Buyers
As predicted, new listings outpaced sales throughout much of 2024.
Sales activity saw a slight uptick of 2.6%, while new listings surged by 16.4% year over year. This sustained oversupply provided buyers with greater choice — particularly in the condominium segment — and reduced what little upward pricing pressure remained.
First-time buyers were cautious, while experienced buyers with equity were more willing to transact.
Investors with smaller portfolios tended to conserve cash, while active investors recognized opportunities to pursue more aggressive deals.
With many brokerages predicting a “return to growth,” such optimism, in our view, may be premature. Opportunities still exist, but they are becoming more difficult to identify.
Shifting Focus: The Changing Landscape of Toronto Real Estate Investment
A paradigm shift among investors is being felt across both the condominium and single-family segments.
For many years, investors competed with end users for new condominium launches. Many purchased multiple suites with the expectation that substantial appreciation would occur before closing.
That strategy has become less reliable.
Rising ownership costs, pressure on lease rates, and weaker resale values have left many investors trying to unload underperforming assets.
By January 2025, condominium listings had increased substantially compared with the previous year, reinforcing the sense of oversupply.
Purchasing a condominium unit purely as a short-term appreciation play is therefore much more difficult to justify than it was during previous market cycles.
The same principle applies to single-family houses and townhouses, where values have largely plateaued across many parts of the city.
The strategy of “buy and flip” is increasingly becoming “buy and hold.”
With housing supply and sustainability becoming central themes in policymaking, we see a stronger long-term case for purpose-built rentals and higher-density multi-family properties.
Staying on Track: Focused, Informed Strategies
Our investment philosophy remains grounded in one principle: prioritize characteristics that objectively add long-term value while avoiding those that detract from it.
Investors may not always prioritize emotional appeal, but properties still need characteristics that distinguish them in the market.
Unique architecture, period details, efficient and thoughtful use of space, functional layouts, and strong locations can all contribute to lasting value.
These qualities matter regardless of whether the property is a condominium, house, or multi-unit building.
The opposite can be seen in parts of the condominium market: large numbers of similarly designed units competing against one another with relatively little to distinguish them beyond price.
The Days of “Condo as Investment” Are Changing
Toronto historically saw a substantial share of condominium units purchased by investors. If a significant number of those owners choose to exit, the shift will take time to work its way through the market.
In our assessment entering 2025, the era in which almost any condominium could be treated as a straightforward appreciation investment is largely behind us.
That does not mean every condominium is a poor investment.
Investors determined to acquire one should focus on assets with characteristics that are difficult to replicate: larger spaces, distinctive floorplans, coveted buildings, hard loft conversions, boutique projects, and strong neighbourhood locations.
The same logic applies to single-family homes. Look for properties that are distinctive but also functional, comfortable, and located in neighbourhoods with durable demand.
From Single-Family Homes to Multi-Residential Properties
Over the past several years, our team and clients have had success converting single-family properties into multi-residential housing.
We believe this represents a constructive direction for Toronto's housing market.
The City's evolving multiplex housing framework gives property owners more opportunities to create additional homes on low-rise residential lots.
For investors, this creates the possibility of generating value through improved land use and rental income rather than relying exclusively on market appreciation.
Our 2025 Outlook: Seek Value and Minimize Risk
Toronto's real estate market remains difficult to predict, and investor confidence is unlikely to return evenly across every property type.
Rather than trying to forecast short-term price movements, our preference is to focus on assets with durable characteristics and investment strategies that do not depend on rapid appreciation.
That means looking carefully at location, property quality, functionality, income potential, development opportunities, and long-term demand.
Market conditions change. The underlying principle does not: seek value and minimize risk.
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