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This week I was featured on CBC’s The National to discuss the increased buzz among first-time home buyers about whether now is the right time to buy.

The panic buying psychology that drove Toronto housing for a decade finally died. Buyers can breathe again.

But here’s what everyone celebrating the $600K condo “deals” is missing: the numbers tell a completely different story about where prices are actually headed.

Yes, prices dropped $150K from peak. Yes, rates stabilized at 4-4.5%. The surface metrics look encouraging.

I’m seeing something else entirely when I run the real economics.

Toronto rents collapsed alongside housing prices. One-bedroom condos now rent for $2,200 monthly after falling 9.4% annually.

This creates a mathematical floor that most buyers haven’t calculated.

Here’s the investor break-even reality: $2,200 monthly rent minus $600 condo fees minus $200 property taxes leaves $1,400 for mortgage payments. At current rates, that supports roughly a $300K mortgage.

Add a 20% down payment and you get a theoretical price floor around $360K to $400K for those same condos selling at $600K today.

That’s potentially another 30-40% drop from current levels.

I don’t expect we’ll see that full decline, but it reveals massive downside pressure still building in the market. While everyone’s celebrating bargains, basic investment economics suggest we’re catching a falling knife.

Even at today’s “improved” prices, the financial barriers remain brutal for most buyers.

That $600K condo still requires roughly $100K annual income with 20% down. But buyers consistently underestimate three critical cost areas that determine whether homeownership actually makes financial sense.

Costs to buy: Beyond your down payment, expect land transfer tax, lawyer fees, appraisals, mortgage insurance premiums, moving costs, and home setup expenses.

Costs to own: Your mortgage payment is just the beginning. Property taxes, condo fees, utilities, insurance, and maintenance create ongoing financial pressure that many first-time buyers haven’t properly budgeted for.

Costs to leave: If the condo isn’t a long-term solution, getting out becomes expensive fast. Realtor fees and land transfer taxes can easily cost $30K-50K on a $600K property.

These costs haven’t improved just because purchase prices dropped.

The “Toronto housing market” doesn’t exist as a single entity. Every segment behaves differently right now.

I’m seeing downtown single-family starter homes in the $1.1M to $1.4M range still generating multiple bids with short market times. Supply remains severely limited in this segment.

Meanwhile, downtown condos face completely different dynamics. One-bedroom and bachelor units show abundant supply, longer market times, and sales below list price with minimal buyer competition.

This segmentation creates dramatically different strategic opportunities depending on what you’re buying and where.

Here’s what the psychological shift from “buy now or never” actually creates: breathing room to make strategic decisions based on your specific financial position and needs.

The advantage isn’t just lower prices. It’s time to properly assess properties, watch market direction, and understand the true costs of ownership versus renting for your particular situation.

Take time to understand how your target segment is performing. Study neighbourhood-by-neighbourhood trends. Compare the financial optimization of owning versus renting for your specific circumstances.

In the abundant condo supply downtown, buyers now have real negotiating leverage. You can negotiate purchase price, closing dates, and often include conditions for financing, inspections, or even sale of your current property.

This represents a fundamental power shift that hasn’t existed in Toronto’s market for over a decade.

Before celebrating improved affordability, consider why mortgage delinquencies surged 71.5% in Ontario to 0.24% in Q1 2025.

Many of these delinquencies stem from buyers who purchased at peak market values and peak interest rates. But they also reflect a slowing economy and challenging employment environment across Canada.

The increase brings delinquency rates back to longer-term historical trends after years of artificially low levels. This serves as a crucial reminder to thoroughly assess your financial position and potential negative scenarios before purchasing.

Make sure you’re on solid financial foundation that can handle employment disruptions or unexpected financial pressures.

The market psychology finally allows for strategic thinking instead of panic buying. Use that advantage wisely by running the real numbers, not just celebrating the surface improvements.

The breathing room is real. The opportunities exist. But they require understanding the actual economics beneath the optimistic headlines.