Navigating the Toronto Real Estate Slump: Income Requirements for First-Time Condo Buyers
For years, many Torontonians felt condo ownership was out of reach as prices climbed and bidding wars dashed hopes. Now, with prices falling sharply from their pandemic-era peak, some renters are starting to take a second look.
“We have lots of people that were decade-long renters that we’ve helped buy their first condo this year because now they can afford it,” says Tom Storey, a sales representative at Royal LePage.
The monthly condo payments weren’t the issue holding them back, Storey adds; it was coming up with the down payment and qualifying for a large mortgage. “A lot of them had just given up,” he says.
Toronto’s condo market is now a little easier to enter, with Torontonians requiring $17,320 less in household income to qualify for the average condo than they did in March 2022, when prices peaked and low interest rates drove demand across all home segments.
According to data collected by Ratehub, the average Toronto condo price in March 2022 was $831,351, requiring a household income of $156,320. As of May 2026, the average condo price has dropped by roughly 19 per cent, to $673,841, requiring a household income of $139,000.
“Affordability is now comparable to where it was in about 2019 for condos,” says Robert Hogue, assistant chief economist at the Royal Bank of Canada. Hogue says Toronto is now in a housing correction, where housing prices experience a decline after a period of rapid growth, rather than a housing crash. But he’s still careful to note that the market remains unaffordable for many.
Despite the lower barrier to entry, not all potential buyers are jumping off the sidelines. There was more demand during 2022, partly because interest rates were much lower, says Penelope Graham, mortgage expert at Ratehub. “When interest rates are really low, it tends to really spark a fervour in the market. People really get that sense of fear of missing out.”
However, as interest rates rose at the tail end of 2022, combined with high housing prices, first-time buyers — a major consumer segment — got priced out, Graham says.
Small condos, often referred to as shoebox units, have borne the brunt of the market correction. Traditionally popular with investors, these units have become less attractive as higher interest rates increased ownership costs and a softer rental market reduced potential returns, Graham says.
Hogue says a decline in the number of younger international students has further weakened rental demand, making condo investing less appealing than it was during the pandemic housing boom.
Storey adds that there’s also an influx of purpose-built rentals, providing more choice for Torontonians who aren’t ready or able to own.
Buyers have more negotiating power
Lower prices aren’t the only reason some buyers are revisiting the market. Some buyers may find they have more choice and more bargaining power than they did during the pandemic condo boom.
As condo inventory builds, buyers are able to find better deals and amenities, or more square footage for their dollar, than was previously found on the market, Graham says.
Toronto condos, on average, are also selling at about 96 per cent to 97 per cent of the last asking price, Storey says. For example, a condo listed at $500,000 that sells for 96 per cent of its asking price would go for $480,000.
Buyers hold the cards not only in negotiation but also conditions that go in the buyer’s favour, Storey adds. With most condo offers, you’ll have a condition on reviewing the building status certificate. Now, Storey is also seeing more condo inspection clauses in offers, which weren’t as common a few years ago.
Look beyond the purchase price
Lower prices don’t necessarily mean a condo is affordable.
“The biggest mistake first-time buyers make when buying a condo is maxing out their budget,” Graham says, meaning they take out the maximum mortgage they qualify for, leaving little room for financial flexibility.
She also recommends looking beyond the mortgage payment. Condo fees should be factored into the monthly budget, and buyers should be aware those fees can rise over the lifetime of a building.
Before making an offer, buyers should research the building and work with a realtor who understands condos. Graham recommends reviewing the building’s status certificate and financials to determine whether they’re in good shape.
“Is there a possibility that I might get hit with a special assessment over the next five to 10 years?” Graham says, is a question buyers should ask. Special assessments, which are one-time charges to cover repairs or unexpected costs not covered by the building’s reserve fund, can cost tens of thousands of dollars.
Buyers should also consider whether the building is in good repair and has a healthy reserve fund. If a building has had a troubled history with repairs, insurance premiums can become expensive, Graham says, which can turn into higher condo fees for residents.
Should you buy now?
For anyone considering whether condo ownership is within reach, Storey recommends speaking with a mortgage broker and getting pre-approved.
“It doesn’t mean you have to buy anything or you’re under any obligation,” he says.
Even with lower condo prices, however, renting is still less expensive for many Torontonians.
Storey says many renters are still paying significantly less each month than they would if they bought a condo, even with a decent down payment. Those savings can be invested, helping renters get ahead.
The decision to buy is often driven by other factors, such as stability, particularly for renters who have been evicted from their rentals a few times.
Hogue says current market conditions suggest condo prices will likely continue to correct as supply outpaces demand. However, he expects the pace of price declines to moderate later this year or sometime next year as affordability improves.
For buyers, “time is on their side,” he says. “The longer they wait, the lower the price.”
This article was first reported by The Star
