If you own an investment condo in Toronto, 2025 presents some unique challenges and opportunities. With changing market conditions, economic and political uncertainties and evolving rental dynamics, you’re probably wondering: Should I sell my investment condo in 2025?
Here’s our comprehensive analysis of what to consider.
Market Realities in 2025
- Condo prices have softened in many Toronto neighborhoods
- Rental rates remain strong but are showing signs of stabilization
- Interest rates, while on a downward trajectory, are significantly higher than when many investors purchased.
- Property tax and maintenance fee increases are outpacing inflation
- There’s a lot of political and economic uncertainty
Hold or Sell? Key Factors Affecting Your Decision
Financial Factors
Mortgage Renewal Reality
- 1.2 million fixed-rate mortgages are up for renewal in 2025, meaning many condo investors will soon face significantly higher mortgage payments. While interest rates came down significantly last year, they’re still a lot higher than the ultra-low COVID-era rates.
Example: In 2020, an investor bought an $800,000 condo with a 20% downpayment. Fixed mortgage rates at the time were around 2%, so the monthly mortgage payment was $2,710.
Now it’s 2025 and that mortgage is up for renewal. Current interest rates (as of writing) are 4.5%. The new mortgage payment? $3,569.
That’s $859 more per month.
Over that same time, if the same tenants remained for that same full five-year period (and the unit fell under rent control), rent for the unit could have only been increased each year by 0% (2021), 1.2% (2022), 2.5% (2023) and 2.5% (2024). This would not come close to offsetting the above mortgage cost increase alone.
If your fixed-rate mortgage is coming up for renewal this year, talk to your lender ASAP to see how the current rates will affect you.
Operating Costs
- It’s not just mortgages that are more expensive:
Property Taxes
Since 2020, municipal taxes in Toronto have increased by 19% – with another 6.9% increase proposed for 2025.
Example: Let’s assume that condo is assessed at $800,000. In 2020, you would have paid $4,797.63/year in municipal taxes. If the 2025 tax increase is passed, you’ll owe $5.722,21 this year.
That’s an extra $924.58 annually, or $77 per month.
Condo Fees
Condo maintenance fees vary by building and are based on the size of the unit, the amenities in the building and what is included in the monthly fee (eg. heat, hydro,etc). In Toronto in 2020, the average condo fee was $0.73 per square foot; in 2024 it had risen to $0.81.
Example: Let’s assume our condo is 800 sqft and experienced the average increase. In 2020, condo fees would have been $584 per month; in 2024, they would have risen to $648.
That’s an extra $64 per month.
Other Costs
Inflationary pressures over the last 5 years have also increased the cost of insurance, maintenance and repairs.
Market Factors
Supply and Demand
- In 2025, the condo investor segment of Toronto’s real estate market will be affected by:
- New condo completions: The GTA expects to see a record 30,793 new condos completed in 2025. While that’s great news for a city with a chronic housing shortage, it will likely put downward pressure on rents.
- New condo (preconstruction) sales: According to Urbanation, new condo sales in 2024 were down 64% hear-over-year and down 78% compared to the 10-year average. Unsold inventory in preconstruction projects is 50% higher than the 10-year average.
- Purpose-built rental buildings: While it’s been decades since Toronto built purpose-built rental buildings, there are currently 12 under construction, expected to add more than 3,000 apartments to the mix.
- International students and immigration: Newcomers to Toronto are important. Our rental market will undoubtedly be impacted by recently announced policy goals intended to slow immigration and the number international students. In 2024, Toronto welcomed more than 128,000 immigrants and 200,000 non-permanent residents.
Supply and demand for rental units does not necessarily track the sale market, so an analysis of the rental market—what’s renting and what’s not—should also factor into your planning.
Price Trends
- Toronto’s condo market has had a rough couple of years. Lower buyer demand, coupled with a doubling of the inventory, means prices have been softening. Certain condo submarkets are struggling more than others (for example, the sub-500 sqft condo), while in-demand neighourhoods and buildings seem to be retaining their value.
You’d be hard pressed to find a real estate expert predicting a rebound in the condo market in 2025 (or even 2026) – there’s just too much inventory and too many uncertainties. Most experts predict condos prices will either decline in the short-term, or stay where they are.
BUT…..
There is hope! The supply and demand factors (see above if you skipped that part) point to long-term opportunities in the condo market. With 3 years of significantly below-average preconstruction projects and the ongoing housing shortage, we can expect the condo market to rebound – but it’s going to take a while. In the medium-term (4-6 years), condos owners may be the envy of us all.
Risk Assessment
In deciding whether to hold or sell your investment condo in 2025, you’ll also need to consider:
Short-Term Risks
- Political Risks: Trump’s back in the White House. Trudeau is out and a federal election is on the horizon. Maybe a provincial one too. How might that affect your investment?
- Economic Risks: Where are interest rates headed? Will there be a trade war with the US? What will happen to the dollar, employment and inflation?
- Regulatory Risks: Our city and province recognize the need to urgently build more housing; any regulatory changes are likely to be beneficial to investors.
- Tax Risks: Depending on the results of the federal election, we may see changes to capital gains taxes that will affect investors.
Long-Term Considerations
- Building Health: How old is your building? What major repairs and maintenance will be required? Is the reserve fund adequate to pay for upcoming repairs to major systems? Is the property management company effective?
- Market Position: What’s happening in the neighbourhood? Any planned changes to transit or amenities? New developments?
Condo Investors: Your Options for 2025
Option 1: Hold and Maintain
Advantages:
- Continue building equity
- Maintain rental income stream
- Potential for long-term appreciation
Disadvantages:
- Higher carrying costs
- Ongoing management responsibilities
- Market uncertainty
Option 2: Sell and Exit
Advantages:
- Lock in any existing gains
- Eliminate future market risk
- Free up capital for other investments
- Reduce personal liability
Disadvantages:
- Loss of rental income stream
- Capital gains tax implications
- Miss potential future appreciation
- Transaction costs of selling
Option 3: Refinance and Optimize
Advantages:
- Potential to access equity
- Restructure debt
- Maintain investment with adjusted strategy
Disadvantages:
- New mortgage terms may be less favorable
- Potential for higher monthly costs
- Extended investment timeline needed
- Market risk remains
So What Should You Do?
Consider these key questions:
Financial Health Check
- Can you absorb higher carrying costs?
- Is your rental income covering expenses?
- Do you have adequate reserves for emergencies?
- What are your other investment opportunities?
- What’s your plan if your tenant doesn’t pay rent or the unit is vacant in between tenants?
Property Assessment
- How does your unit compare to new inventory?
- What’s the building’s maintenance outlook?
- Are there upcoming special assessments?
- How strong is rental demand in your building?
- What’s happening in your neighbourhood?
Personal Circumstances
- What’s your investment timeline?
- Do you need access to equity?
- How hands-on can you be with management this year?
- What’s your risk tolerance?
If You Decide to Hold:
Optimize Your Investment
- Review and potentially adjust rental rates (if you can legally do it)
- Evaluate refinancing options
- Build a larger emergency reserve
- Consider professional property management
Protect Your Investment
- Review and update insurance coverage
- Plan for major maintenance or repairs in the unit
- Stay informed about market conditions
If You Decide to Sell:
- Review tenant agreements
- Engage your REALTOR
- Find out how much your condo is worth
- Calculate potential capital gains tax
- Consider timing around tenant turnover
- Set a strategic price and strategy to get it sold
Related: Pricing a Condo in a Cooler Market
Related: Selling Your Investment Condo
The Bottom Line
The decision to hold or sell your investment condo in 2025 requires careful analysis of multiple factors. While the Toronto real estate market has historically rewarded long-term investors, current conditions present unique challenges that need to be carefully evaluated.
Need help analyzing your specific situation? Contact us for a detailed Investment Property Review.
