The Toronto new condo market is experiencing a noticeable shift. Historically dominated by investors and speculators, the landscape is evolving as a growing share of end users — those who intend to live in the units they purchase — enter the market.

Short-term investors played a pivotal role in shaping the condo market in Canada’s largest cities, particularly during the low-interest-rate environment following the financial crisis. Many investors purchased condominium apartments to rent, sell speculatively, or both. In response, developers built large volumes of small, affordable units to meet this surge in demand, cementing condos as the dominant form of urban housing.

While many long-term investors continue to find promise in Toronto’s condo market, highly leveraged, short-term investors and speculators face a number of challenges. A combination of difficulty finding buyers at desired margins and high mortgage payments has forced some property owners to sell at a loss or rent out their properties to offset carrying costs while waiting for stronger re-sale demand. For these precariously positioned individuals, the business model of purchasing condos as a speculative investment vehicle has become inaccessible and risky.

As a result, end users and other long-term investors are now driving a greater share of condo demand in Ontario’s capital. Even if speculators win back market share as interest rates fall, it is anticipated that end users will remain an influential demographic in Toronto moving forward. Condo developers and investors alike must consider a number of factors to capitalize on this market trend.

How condo features will evolve

In recent decades, developers primarily designed smaller units with investors in mind. These properties were seen as high-yield opportunities, generating rental income from a steady stream of tenants. End users, on the other hand, are more likely to purchase condos for long-term living and raising families. With single-family homes out of financial reach for many homebuyers, demand for more accommodating condo layouts has risen.

While some still see smaller units as an affordable entry point, developers and investors must pay close attention to this shift. As more buyers view condos as a long-term housing solution, rather than merely the first step on the property ladder, demand for thoughtfully designed units in premium buildings will rise. Tapping into the opportunities this shift presents can allow builders to stand out in challenging markets.

That said, investment potential will still shape condo demand. Although some end users are less focused on generating rental income or flipping for quick gains, their purchases will likely still play a crucial role in their long-term financial goals. To maximize resale potential, end users are increasingly prioritizing features that signal lasting value, such as uncrowded boutique buildings, ample outdoor space, walkability, transit access, and well-designed, spacious layouts. Whether for livability or investment, lifestyle-enhancing amenities and prime building locations will only grow in importance for condo owners.

Equiton is in the process of enhancing layouts at several development projects, including Equiton Developments’ Kingston Road project in Toronto, where unit layouts are being reconfigured to better reflect buyers’ changing preferences. There, Equiton has received approval for an additional floor and plans to include layouts designed with end users in mind. As these and other projects launch in the coming years, we anticipate strong demand.

How developers can deliver value for end users and investors

Innovative developers, municipalities, and the market appear to be strongly aligned on the need to build highly livable housing that offers long-term value. This marks a departure from the speculative practices of the past, emphasizing housing designed for lasting investment and livability.

To achieve this, builders must prioritize developing homes within established, desirable neighbourhoods. In targeting speculators, many developers built towers at urban boundaries or within dense development corridors, often leaving residents underserved in terms of amenities, walkability, and social connectivity. By contrast, smaller developments in character-rich areas can provide an attractive mix of livability and value.

However, getting these homes built requires more strategic capital-raising efforts. Developers must focus on efficiency, balancing the need for scale with expedient timelines that satisfy investment returns. While high-rise developments can deliver a large number of units, they come with heightened risks, particularly in financing, and may be less appealing to end users wary of dense living environments.

Mid-rise developments, on the other hand, offer a more balanced solution. They provide shorter completion timelines, leading to quicker results, while still delivering a substantial number of units to meet demand. Recognizing this, some municipalities like Toronto have signalled their support for mid-rise development through proposals that could see mid-rise apartments become the default along the city’s busiest streets.

Growing influence of end users requires real estate investors to think strategically

As interest rates continue to decline and investor activity rebounds, the market will become more competitive once again. However, the growing influence of end users and other long-term investors is undeniable.

Developers who want to stay ahead of the curve must recognize the long-term impact this demographic will have on the Toronto new condo market and adjust their strategies accordingly. Condos are no longer just an investment vehicle for short-term gains — they are becoming homes for a growing number of end users, and this shift will have lasting effects.