If you bought a condo in Toronto in recent years banking on rental income, chances are you’re feeling the squeeze.

One Scarborough owner recently revealed he lost around $140,000 on his investment once mortgage payments, legal fees, and maintenance costs were factored in. Renters weren’t willing to pay enough to cover the costs, and he eventually had to cut his losses.

He’s not alone. According to the CMHC, condo sales in Toronto — including resale, new builds, and pre-construction — have plummeted by 75% compared to the peak years. Meanwhile, rents are sliding, leaving many small investors unable to bridge the gap between carrying costs and rental income.

Experts say the problem is structural. Many condos purchased between 2020 and 2022 were priced at over $1,150 per square foot, making the “mortgage math” almost impossible for mom-and-pop investors who lack deep financial cushions. Adding to the pressure, tens of thousands of new units are hitting the market over the next 18 months, while immigration — a key driver of rental demand — has slowed.

On the flip side, analysts like John Pasalis argue that falling rents and condo prices are a step toward restoring affordability, even if investors see it as a crisis. After all, housing was never supposed to be a speculative play.

The big takeaway? For now, the condo market is shifting away from quick-profit investment and back toward actual homes for people to live in.