One Country, Two Condo Markets: Why Toronto and Vancouver Are Drifting Apart in 2025

Toronto vs Vancouver condo markets – Canada’s two biggest real estate giants—Toronto and Vancouver—have long dominated national conversations about housing markets. Often treated as equals in price movements, investment demand, and development trends, these cities are now showing sharply diverging paths, particularly in the condominium sector.

What once seemed like parallel growth stories are now unfolding as distinct narratives, with Vancouver’s condo market cooling amid affordability pressures and Toronto’s rebounding condo demand surging due to immigration, employment growth, and downtown revitalization. Despite being governed under the same federal policies and interest rate cycles, regional factors, population dynamics, development pipelines, and buyer sentiment are causing a fundamental split between these two markets.

In this blog, we will explore:

• How and why the condo markets in Toronto and Vancouver are diverging

• What macro and local factors are driving the split

• How investors, developers, and buyers should adapt their strategies

• Where opportunities and risks lie in 2025 and beyond

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Canada’s Dual Condo Economy: The Changing Landscape

Despite national interest rate decisions and federal housing policies affecting all provinces, the condominium markets in Toronto and Vancouver have been evolving in opposite directions over the past 18 months. What began as subtle discrepancies in early 2023 has now matured into a clear divergence by mid-2025.

Vancouver is showing signs of buyer fatigue, with rising inventory, slower absorption rates, and softer price growth. Meanwhile, Toronto—once burdened by an oversupplied downtown—has turned a corner, driven by booming immigration, infrastructure development, and revived investor interest.

This divergence is no longer anecdotal—data confirms the trend.

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Key Market Metrics (2025 Year-to-Date)

Why the Toronto Condo Market Is Rebounding

1. Immigration-Driven Urban Growth

Toronto continues to be the largest landing zone for new immigrants in Canada. As of 2025, the city receives more than 140,000 newcomers annually. A significant portion of these arrivals settle in downtown and midtown, where condo rentals are the most accessible housing type.

This sustained demand for rental housing is encouraging investor re-entry, with pre-construction condo sales increasing steadily since Q3 2024. Investors are once again confident in achieving positive rental cash flow and long-term appreciation, particularly in core neighbourhoods like Liberty Village, Canary District, and Yonge-Eglinton.

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2. Infrastructure and Transit Expansion

Projects like the Ontario Line, Eglinton Crosstown LRT, and SmartTrack are transforming the accessibility of Toronto’s urban core. This is shifting buyer preferences back to vertical living, where proximity to transit equals convenience and time savings.

New development projects near these transit corridors are enjoying faster sell-through rates, especially among young professionals and first-time buyers priced out of low-rise homes.

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3. Diminished Low-Rise Affordability

With detached homes averaging over $1.5 million in the GTA, condos remain the entry-level ownership product for many buyers. As affordability continues to erode in suburban freehold housing, the condo market becomes the default purchase path for middle-income households.

This keeps the demand for condos high, even as interest rates hover around 4.5–5%.

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Vancouver’s Sluggish Momentum in Condos

1. Affordability Reaching Breaking Point

While Toronto’s prices are high, Vancouver remains the most expensive housing market in Canada. The average condo price—hovering near $800,000—no longer aligns with local income levels. This is especially challenging for first-time buyers, many of whom are turning to suburban alternatives or postponing ownership altogether.

The result is a growing inventory of unsold units in downtown Vancouver, particularly in high-rise luxury segments.

2. Weakened Investor Confidence

Vancouver investors are facing stagnant rents, tighter provincial regulations on short-term rentals, and higher property taxes on vacant or underutilized homes. These deterrents are pushing many mom-and-pop investors to sell units or delay purchases.

The foreign buyer ban, though partially lifted, has left a lingering chill in Vancouver’s investor base. This is particularly visible in the pre-construction sector, where several projects are being paused due to poor absorption.

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3. Surge in Completions Without Absorption

In recent years, Vancouver saw a boom in development approvals. Now, as those projects complete, a flood of new inventory is entering the market—much of it without secured buyers or tenants. Developers are offering incentives, discounts, and even extended deposit structures to attract purchasers.

This has caused price flattening in several once-high-demand neighbourhoods, including Mount Pleasant, False Creek, and parts of Burnaby.

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Toronto vs. Vancouver: Demand Drivers Breakdown

The Investor Perspective in 2025

1. Where Capital Is Flowing

Investor capital is clearly flowing back to Toronto condos. Private equity groups, REITs, and syndication platforms are purchasing multi-unit floors in pre-construction projects, especially near transit. The expectation is that with ongoing immigration and rising rents, appreciation will return in the next 24–36 months.

Meanwhile, Vancouver’s investor base is thinning, with capital shifting toward suburban townhomes or markets like Victoria, Kelowna, and Calgary, where affordability and yield are more attractive.

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2. Rent vs. Mortgage Gap Analysis

In Toronto, rent for a 600 sq. ft. condo at $4.10/sq. ft. equals $2,460/month. A typical mortgage (with 20% down at 5% interest over 25 years) costs around $2,900/month. While this is still negative cash flow, it’s narrowing—and investors believe future rent increases will close the gap.

In Vancouver, a similar unit rents for $2,310/month but may cost over $3,400/month in mortgage payments. This sustained negative spread is deterring new investors.

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What Developers Are Doing Differently

Toronto:

• Launching more mid-rise and transit-oriented condos

• Returning to phased releases to control supply

• Offering stacked incentives like capped levies and early move-in options

Vancouver:

• Delaying launches and selling inventory off-plan

• Focusing more on rental-only developments

• Targeting suburban markets like Surrey, Langley, and Coquitlam

Buyer Psychology: Confidence in Toronto, Hesitation in Vancouver

Toronto buyers are regaining confidence. Interest in new launch events, assignment sales, and resale condos is rising. This is partially due to a growing belief that the market has bottomed and that ownership is a hedge against future rent hikes.

In contrast, Vancouver buyers are more cautious. Many are opting to rent longer or wait for further price drops before committing. This psychological divide is deepening the split in momentum between the two cities.

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Regional Policy Impacts

Toronto:

• Modular housing initiatives, green building bonuses, and incentives for mid-rise intensification are encouraging developers to build in line with demand.

• Recent city council changes to inclusionary zoning timelines have increased developer confidence.

Vancouver:

• The city’s aggressive empty homes tax, rental-only zoning changes, and tight development permit process are limiting investor appetite and slowing down project timelines.

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Looking Ahead: The Next 12–24 Months

Toronto Condo Market Forecast:

• Continued rent growth driven by immigration

• Strong pre-construction sales in core and midtown

• Gradual price appreciation (3–5% annually)

• Likely interest rate stabilization, boosting affordability perception

• Investor return fueled by long-term capital gain

Vancouver Condo Market Forecast:

• Rising standing inventory in the short term

• Slow pre-construction market recovery

• Buyers favoring peripheral markets

• Modest to flat price movement (0–2%)

• Developers pivoting to rentals and lower-density projects

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Strategic Recommendations

For Investors:

• Toronto: Focus on transit-accessible, mid-priced pre-construction units in 2025–2026 completions. Look for projects with extended deposit structures and assignment flexibility.

• Vancouver: Re-assess return potential in downtown condos. Consider suburban rental investments or resale opportunities with deep discounts.

For End-Users:

• Toronto: Lock in current pricing before the next interest rate drop cycle. Target buildings with high walkability scores and efficient unit layouts.

• Vancouver: Bargaining power is on your side. Negotiate extras, incentives, and upgrades when buying pre-construction.

For Developers:

• Toronto: Phase project launches and align pricing with rental fundamentals. Target downsizers and dual-income professionals.

• Vancouver: Explore partnerships with institutional rental operators. Consider shifting to purpose-built rentals or suburban intensification.

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Final Thoughts: One Country, Two Condo Futures

Toronto and Vancouver are no longer moving in sync when it comes to condo market performance. As of mid-2025, Toronto is gaining investor and buyer momentum, while Vancouver is treading cautiously through a phase of recalibration.

For those involved in Canadian real estate—whether buying, investing, developing, or advising—the message is clear: local fundamentals matter more than ever. A national headline doesn’t tell the whole story. What’s happening on the ground in each city is what truly shapes outcomes.

Understanding these dynamics and adapting your strategy accordingly is the key to thriving in this new, bifurcated real estate market.

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