Does it make sense to buy a condo in Toronto in 2026? The math, line by line

The case study

The buyer is a household with $150,000 in combined income looking at a resale two-bedroom of about 800 square feet in Toronto for $600,000. They plan to live there for five years, the length of one fixed mortgage term, and then sell. I ran it two ways: the legal minimum down payment with CMHC insurance, and 20% down with no insurance. Every number below comes from published October 2026 rates and data, listed at the end.

First, the question everyone asks: will the bank lend it? Yes. With 5% down, the stress-test payment at 6.34% is about $3,628 a month, which puts this household at roughly 34% of gross income for housing, under the 39% limit. The bank saying yes is not the same as the deal making sense.

Step 1: The cash you need on day one

Land transfer tax on $600,000 is $16,950 before rebates ($8,475 to Ontario and $8,475 to Toronto). First-time buyers get up to $4,000 back from Ontario and $4,475 from Toronto. Not a first-time buyer? Add $8,475.

Two costs don’t show up in that cash total. The CMHC insurance premium on a 5%-down, 30-year mortgage is 4.2% of the loan, or $23,730, which gets added to the mortgage, so you pay interest on it for 30 years. And the 30-year amortization that keeps the payment manageable means you pay down very little principal in the first five years.

Step 2: What it costs to own, every month

Rent is the City of Toronto average for a two-bedroom condo ($3,154, TRREB, Q2 2026). In the five-year model, condo fees rise 5% a year, property tax 4%, maintenance 3% and rent 2.5%. Rents are actually falling right now, so the 2.5% assumption favours buying.

“But part of the mortgage payment is savings.” True, and the model counts it. Over five years the 5%-down buyer pays down about $53,700 of principal. They also pay about $121,100 in interest, which is gone for good.

Step 3: The money you never get back

The fairest comparison is the money you never get back on each side. Rent is 100% unrecoverable. For an owner, it’s interest, property tax, condo fees, insurance, maintenance, closing costs, the CMHC premium and the cost of selling. Over five years, with the price flat:

With 20% down, the unrecoverable cost drops to about $3,930 a month. But $120,000 of your savings is tied up in the unit instead of earning anything. At a 4.5% GIC rate, that’s another $540 a month you give up, so about $4,480 a month in total.

The pre-listing repairs and staging line is the one I know best. A condo listed tired sells for less, and in a market with this much supply, buyers notice every scuffed wall and dated light fixture.

Step 4: The renter invests the difference

The renter doesn’t spend the money the owner sinks into the condo. On day one, they invest what would have been the down payment and closing costs. Every month after that, they invest the gap between the cost of owning and their rent. I ran four portfolios, all inside a TFSA or FHSA so returns aren’t taxed:

• Low risk: a 5-year GIC at 4.5%, today’s best rate. Guaranteed.
• Medium risk: a diversified global index ETF at 7% a year, roughly its long-run average. Not guaranteed.
• High risk, AI-heavy: a portfolio concentrated in AI and big tech at 12% a year. Possible, but these stocks can drop 30% to 50% in a bad year.
• AI bust: the same high-risk portfolio, but it goes nowhere for five years (0%).

Step 5: Who is ahead in 2031?

Net worth from this decision after five years. For the owner, that’s the sale price minus selling costs and the mortgage left.

Here is the number that matters: how much the condo has to rise for the buyer to tie with the renter.

Read the first row again. Even if the stock market returns nothing for five years, a 5%-down buyer needs the condo to rise 13% just to break even. Against a plain index fund, it needs about 3.5% a year, every year. GTA condo prices fell 7.7% in the last twelve months alone.

My view: prices fall 10% to 20%, then go flat

This section is opinion. It comes from what I see on job sites, in buildings and in the market, and you should weigh it as one person’s judgment. I think resale condo prices have another 10% to 20% to fall, and the best case after that is years of stagnation. Here’s why.

• The investor buyer is gone. For 20 years prices only went up, and everyone priced in that it would last forever. Foreign buyers were shut out by the federal ban (extended to January 1, 2027) and Ontario’s 25% non-resident speculation tax. Local investors can’t make the numbers work either: rent on a $600,000 condo, after fees, tax and maintenance, yields about 3.9%, below the 4.34% mortgage rate. Pre-construction sales fell to 60 units in Q3 2026. At some point locals can’t afford the next leg up, and the market hits a wall.
• Oversupply. Completed, unsold new condos hit 5,127 units in Q3, up 40% in a year. Bulk buyers are picking up unsold units at about $763 per square foot, roughly 40% below what the original buyers paid in the same buildings. That sets the comparable for your resale unit.
• Population growth has reversed. Canada’s population fell in back-to-back quarters for the first time on record at the end of 2025, and fell again in early 2026, as non-permanent residents left faster than new arrivals came. Fewer renters means fewer investors and softer rents. GTA two-bedroom condo rents are already down 1.7% year over year.
• Fees keep rising. Condo fees climb every year, and older buildings face big repairs to windows, garages and mechanical systems. When the reserve fund falls short, owners pay a special assessment.
• Units are too small. Much of what was built in the last decade is 500 to 700 square feet. These units don’t suit families, so the pool of end buyers is thin once investors walk away.
• Jobs, tariffs and inflation. Toronto unemployment is around 7%, tariffs are hitting Ontario manufacturing (and, for renovators, cabinet and vanity prices), and inflation rose to 3.1% in September. That makes it harder for the Bank of Canada to cut rates.

What could prove me wrong. Construction has collapsed. New condo starts are about 82% below their 10-year average, and completions will drop sharply after 2026. If immigration picks up again from 2028 onward, there may not be enough new units, and prices could recover faster than I expect. Rate cuts would also help buyers. I don’t think either changes the five-year math above, but I could be wrong on timing.

How big was the bubble?

Here’s how far prices have fallen from the peak:

• New, completed, unsold units are asking $1,157 per square foot, 20% below the Q2 2023 peak of $1,446 (Urbanation).
• Resale condos in the GTA averaged $724 per square foot in Q3 2026, down 5.7% in a year.
• UBS’s 2026 Global Real Estate Bubble Index puts Toronto’s real (inflation-adjusted) price decline at roughly 10% over the past year.
• The average GTA condo apartment sold for $605,257 in September 2026, down 7.7% year over year (TRREB).

A falling market isn’t automatically a bargain. The price is only cheap once the cost of owning comes back below the cost of renting, and in this case study it’s still about $950 a month above it.

The risks most buyers don’t price in

1. Negative equity. With 5% down, a 10% drop wipes out your equity and selling costs push you underwater. You can’t move without bringing cash to the closing.
2. Special assessments. A $10,000 to $30,000 bill for building repairs can arrive with a few months’ notice. Read the reserve fund study before you buy.
3. Renewal in 2031. Nobody knows the rate you’ll renew at. A one-point increase on the remaining $535,000 adds about $300 a month.
4. Liquidity. With about 7,000 active condo resale listings in the GTA competing for buyers, selling can take months, and you carry the full cost the whole time.
5. Concentration. With 5% down, almost your entire net worth sits in one unit, in one building, run by one board.

So who should still buy?

If you’re going to buy, the setup I’d look at is an older, larger resale unit at a real discount, plus a renovation you control. Buildings from the 1980s to 2000s often have 900 to 1,200 square feet, better layouts and lower prices per square foot than new towers. You pay for space, not for a developer’s margin, and the renovation is the part of the value you create yourself. It only works if:

• the status certificate and reserve fund study are clean;
• the price per square foot is well below new-build comparables in the area;
• you’ll stay long enough (I’d say 7 to 10 years) to absorb the costs of buying and selling;
• the renovation budget is real before you firm up the offer. Our published price ranges are a starting point, and a walkthrough before the offer is better.

For everyone else, the math says rent, invest the difference and keep your options open. If you want to buy later, an FHSA lets you put away $8,000 a year (up to $40,000), tax-deductible going in and tax-free coming out for a first home.

How I ran the numbers

Price $600,000, about 800 sq ft. Mortgage rates are the best published 5-year fixed rates on October 26, 2026: 4.34% insured, 4.69% for an uninsured big-bank mortgage. Canadian semi-annual compounding, 30-year amortization, sold at the end of the five-year term. CMHC premium 4.00% plus 0.20% for a 30-year amortization. Property tax uses Toronto’s 2026 residential rate of 0.767311%. Ontario still bills on 2016 assessments, so a $520,000 assessed value is an assumption. Condo fees are $0.80 per sq ft, rising 5% a year. Moving costs are left out because both the buyer and the renter move. Investment returns are assumptions, not predictions, and assume the money sits in a TFSA or FHSA. This is a case study, not financial advice. I’m a builder, not a financial advisor. Run your own numbers or talk to a fee-only planner before you buy.

Sources: TRREB Market Watch, September 2026, and Rental Market Report, Q2 2026; Urbanation Q3 2026 Condominium Market Survey (via REMI Network, October 21, 2026); Ratehub mortgage and GIC rates, October 26, 2026; City of Toronto 2026 property tax rates; Statistics Canada CPI, September 2026, and quarterly population estimates; UBS Global Real Estate Bubble Index 2026; UrbanToronto, October 20, 2026.

Quick answers

Is it cheaper to rent or buy a condo in Toronto in 2026?

Renting is cheaper. In our case study, a $600,000 two-bedroom bought with 5% down costs about $4,126 a month in year one (mortgage at 4.34%, property tax, condo fees, insurance and maintenance). A comparable two-bedroom condo rents for about $3,150. Counting only the money you never get back (interest, tax, fees, maintenance, closing, CMHC and selling costs), owning costs about $4,600 a month over five years against about $3,340 for renting.

How much does a Toronto condo need to go up in value for buying to make sense?

Over five years, a buyer with 5% down needs the condo to rise about 13% if the money they would otherwise invest earns nothing, about 16% against a 4.5% GIC, and about 18.5% against a 7% index portfolio. That means a $600,000 condo has to be worth roughly $680,000 to $710,000 in 2031 just to tie with renting.

What are the closing costs on a $600,000 condo in Toronto?

For a first-time buyer of a resale condo: about $8,475 in Ontario and Toronto land transfer tax after first-time buyer rebates ($16,950 without them), about $2,500 for legal fees and title insurance, $100 for the status certificate, about $450 for an inspection and about $800 in tax and fee adjustments. With 5% down, add about $1,900 in PST on the CMHC premium. Total: about $14,200 on top of the down payment.

Will Toronto condo prices keep falling?

Nobody knows, and this is opinion, not a forecast you should bet on. My view is that resale condo prices fall another 10% to 20% and then stay flat: investor demand is gone, completed unsold inventory is up 40% in a year, rents are falling and population growth has stalled. What could prove me wrong is the construction collapse. New condo starts are about 82% below their 10-year average, which could tighten supply from 2028 onward.

Who should still buy a condo in Toronto?

In my view, the buyer with the best odds is someone buying an older, larger resale unit at a real discount and renovating it, rather than paying new-build prices per square foot for a small unit. Check the reserve fund study and status certificate first, and only buy if you plan to stay long enough to absorb the transaction costs.

Related reading: Already own a condo? What to renovate before you sell. The complete guide to renovating a Toronto condo.