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The Real Estate Disconnect: Why the Market Feels Cold But CMHC Says We’re in Crisis
At a glance, Toronto’s real estate market doesn’t feel like a city in crisis.
Listings are up, sales are sluggish, rents are slipping, and buyers seem hesitant. The headlines are full of talk about oversupply.
So when CMHC reports that Toronto is facing one of Canada’s worst housing shortages, it raises a fair question: How can we have both too many listings and not enough housing at the same time?
The answer lies in the mismatch between what’s available and what people actually need. And understanding this disconnect is key if you’re a real estate investor trying to make the right move in 2025.
Home Prices Are Still Outpacing Incomes — Even After the Market Slowed
Let’s look at price growth. From 2004 to 2019, Toronto home prices soared by an average of 7.6% per year—nearly double the national average.
After 2019, the pace eased to 6.7%, mostly due to rising mortgage rates. But let’s be clear: even at that lower rate, prices are still rising far faster than wages. That means affordability has only continued to get worse, just more quietly.
Rents tell a similar story. From 2004 to 2019, rental prices in Toronto increased at a modest 2.7% per year, roughly in line with inflation.
But after 2019, that growth nearly doubled to 4.8% annually. The reason is simple: as homeownership became less affordable, more people were forced into the rental market, and the supply wasn’t ready for that surge in demand.
Affordability Is Officially Broken — And It’s Not Getting Fixed Anytime Soon
The CMHC tracks affordability using a metric called the homebuying affordability ratio — the percentage of a household’s income that goes toward owning a home.
In 2019, that number was already a red flag at 59%. But by 2024, it had exploded to 74%. That means the average Toronto household now needs to spend nearly three-quarters of their income just to afford a home. For context, a healthy market typically sits below 30%. We’re more than double that.
CMHC’s latest forecast doesn’t even try to bring Toronto back to the 30% ideal. Instead, the new “goal” is to claw our way back to 2019 levels—still unaffordable by any standard. The key issue? Population growth is relentless, and we’re not building homes fast enough to catch up.
The Real Supply Shortage: We’re Not Building the Right Homes
CMHC projects that Toronto needs to build an extra 32,000 homes every year, on top of what we’re already delivering, just to get affordability back to 2019 levels. And even if we meet that target, prices will still rise—just at a slower rate of 2% annually, roughly in line with inflation.
If we keep building at our current slow pace, CMHC warns that Toronto is on track to experience the fastest home price growth in the country over the next decade—a projected 63% increase between 2024 and 2035. That works out to more than 5% per year—more than double the growth of income or inflation. Long story short: the affordability crisis is real, and it’s not going anywhere.
So Why Does the Market Feel Cold Right Now?
The resale market is bloated—but not with the housing people actually want. What’s sitting on the market are mostly investor-owned condos and small units. These aren’t ideal for growing families or long-term end users.
Meanwhile, starter homes in decent condition? They’re still moving—quietly but quickly. This is proof that demand is still there, but it’s concentrated in areas where inventory is scarce.
Pre-construction condo units are also flooding the market as developers offload inventory to avoid carrying costs. That’s pushing down rental prices for small condos, but it’s not easing the affordability crisis where it matters most: family-sized, long-term housing.
What Investors Need to Know: Prices Are Stuck, But Not Dropping
Despite the soft market, prices haven’t collapsed. That big correction already happened during the early rate hikes. Since then, resale home prices have mostly held steady.
Construction costs remain high, which creates a pricing floor under both new builds and resale inventory. Sellers aren’t desperate to drop prices. Buyers are cautious. So the market is stuck, not sliding.
But underneath that stillness, demand is quietly building. Immigration may have slowed in 2025, but Toronto’s population is still trending upward. People still want to live here. Once confidence returns, demand will show up fast—and supply won’t be ready.
Why This Could Be a Rare Window for Smart Investors
While the headlines scream “buyer’s market,” this moment could be a rare opportunity—especially for investors focused on the right kind of housing.
We’re seeing turnkey Toronto multiplexes around $1M generating over $2,000/month in positive cash flow. These kinds of deals weren’t around a year or two ago, but they’re here now for buyers who know where to look.
As the city’s housing supply falls further behind, these cash-flowing properties are likely to become even more valuable—both as income assets and as appreciating equity plays.
Need Help Buying or Selling in This Market? Let’s Talk.
We’re not just another sales team — we’re investors too. At Elevate Realty, we specialize in Toronto multiplex investing.
Whether you’re buying your first rental, expanding your portfolio, or looking to sell strategically, we bring real numbers, hands-on experience, and full-cycle support from analysis to renovation to property management.
Want to see what’s possible for you? Book a strategy session with us here.
What Toronto Real Estate Investment Is Right For You?
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