Toronto's Condo Market: How Banks Are Influencing Property Valuations

The Toronto condominium market is undergoing significant challenges, with recent practices by Canadian banks playing a pivotal role in shaping its current landscape.

Understanding Blanket Appraisals

In 2024, a notable trend emerged in Toronto's real estate sector: the use of "blanket appraisals" by major banks. This practice involves banks appraising new condominium units at their original purchase prices, even when current market values have declined.

For instance, buyers who purchased condos at peak prices found that upon completion, their units were valued significantly lower. Instead of requiring buyers to cover the difference, banks offered mortgages based on the initial, higher prices. This effectively resulted in zero-down-payment mortgages, as the loan matched the current, lower market value of the property.

Royal Bank of Canada has acknowledged employing such blanket appraisals to assist buyers in securing financing for devalued units.

Implications for Buyers and the Market

While this approach provides immediate relief for buyers, it raises concerns about long-term market stability. By maintaining inflated property valuations, there's a risk of perpetuating an overvalued market, potentially leading to financial strain for homeowners if property values adjust downward in the future.

Current Market Trends

As of early 2025, the Toronto condo market continues to face headwinds. Royal LePage's Market Survey Forecast indicates that while the aggregate price of homes in the Greater Toronto Area is expected to rise by 5% year-over-year, condo prices are projected to decline by 1% in the same period. This divergence is attributed to an oversupply of condo units and changing buyer preferences.

Opportunities Amidst Challenges

For prospective buyers, the current market conditions may present unique opportunities. The combination of increased inventory and easing interest rates could make condo ownership more attainable. However, it's crucial to approach such investments with a clear understanding of the potential risks and long-term implications.

Navigating the Condo Market

Given the complexities of the current market, seeking expert advice is essential. As a seasoned mortgage professional, I can provide insights tailored to your financial situation and guide you through the nuances of purchasing a condo in today’s environment. Whether you're a first-time buyer or looking to invest, understanding the interplay between bank practices and market trends is key to making informed decisions.

For personalized guidance and to explore your mortgage options, feel free to contact me. Together, we can navigate the evolving Toronto condo market to find opportunities that align with your goals.

References:

• Move Smartly. (2024). Canadian Banks Are Propping Up Toronto’s Crumbling Condo Market. Retrieved from: https://www.movesmartly.com/articles/canadian-banks-are-propping-up-torontos-crumbling-condo-market

• CTV News Toronto. (2025). Toronto Home Prices Set to Rise in 2025, But Condo Market on Different Trajectory: Royal LePage Report. Retrieved from: https://toronto.ctvnews.ca/toronto-home-prices-set-to-rise-in-2025-but-condo-market-on-different-trajectory-royal-lepage-report-1.7134553

Note: This information is based on market data and reports available up to February 21, 2025. Market conditions are subject to change, and it's advisable to consult with a mortgage professional for the most current advice.