Posthaste: Canada’s ‘other’ condo meltdown could be the worst on record

Toronto might be the poster child for a condo collapse in this country, but there’s another market that’s also headed for a historic meltdown, economists predict.

For almost four years, prices in Vancouver’s condo market have been either flat or falling, and, according to a report from TD Economics , it’s “still searching for a floor.”

“If it wasn’t for the Greater Toronto Area (GTA), Vancouver would probably have the dubious honour of hosting the softest major condo market in Canada,” said TD economist Rishi Sondhi and economic analyst Paul Kim.

Vancouver condo sales fell 16 per cent in the first four months of 2026 from a year ago, hitting their lowest level, outside the pandemic, since 2018.

That, if you remember, is when Vancouver’s housing market was hit not only by Bank of Canada interest rate hikes and tighter mortgage stress tests, but also by provincial measures designed to cool the market.

Today the Greater Vancouver Area’s economy is challenged on a number of fronts. The tariff war with the United States has hit manufacturing, wholesale and retail trade and transportation and warehousing, resulting in a pullback in hiring, said Sondhi and Kim.

Finance, insurance and real estate have also suffered because of the depressed housing market , pushing the unemployment rate in the region up to 6.7 per cent.

Climbing mortgage rates since the start of the Iran war have likely also dampened demand, said the report. According to TD modelling, British Columbia is historically the province most sensitive to interest rate increases in the country.

TD forecasts Vancouver condo prices will fall another 8 per cent this year before flattening out in 2027. That will add up to a 15 per cent drop from their peak in 2023, the steepest decline since at least 2005, which is the first period of available data, they said.

As bad as that sounds, Vancouver is still better off than Toronto, mainly because the two cities have very different markets.

Toronto’s condo market, largely driven by investors, has been struggling with a historic supply glut as owners put their properties up for sale because of falling rents and higher carrying costs.

“The one-two punch of chilly demand and high supply has sent GTA condo prices down about 25 per cent from their peak,” said Sondhi and Kim.

In Vancouver more people buy condos to live in them as the higher-priced housing market makes apartments an attainable entry point for ownership. End users are a less volatile base for demand than investors and listings have not climbed to the heights seen in Toronto.

Nonetheless, it will be a long road to recovery. TD expects conditions to improve “modestly” in 2027 as hiring picks up and lower prices entice more buyers, but soft population growth and a still “muted” labour market will temper gains.

“Together, these factors point to only a gradual and modest strengthening in sales over the next 12-18 months. Indeed, sales are likely to hold well below 10-year averages through next year,” said the report.

When the dust settles, Vancouver condo prices will still remain above pre-pandemic levels, which beats Toronto, where prices are expected to fall “meaningfully” below pre-pandemic benchmarks.

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The net worth of Canadian households rose 1.3 per cent in the first quarter of 2026 to $18.6 trillion, with real estate adding to that wealth for the first time in a year.

After three consecutive quarters of declines, the MLS Home Price Index rose by 1.3 per cent.

“This reversal provides a welcome respite from the persistent drag on household wealth, though momentum remains fragile,” said Royal Bank of Canada economist Rachel Battaglia.

Canada’s equity gains remained positive, but quarterly growth was the slowest in a year.

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Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com .

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