For decades, condo investors have been a critical pillar of Toronto’s real estate market. Many of the city’s condo buildings exist because investors were willing to buy pre-construction units long before a shovel hit the ground. In fact, Toronto’s development rules require roughly 70% of units to be sold before construction can begin. Without investors stepping in at that early stage, far fewer buildings would have been built—and Toronto’s housing shortage would be even more severe today.

Historically, investors have made up about 70% of buyers in pre-construction condo projects. Once those units entered the resale market, typically five years later, that share would fall to under 50% as end-users gradually took over.

That dynamic is now changing.

Today’s condo investor looks very different than they did three to five years ago. And while 2026 will likely remain a transitional year, the shift underway is not cyclical—it’s structural. Here’s how the condo investor landscape has fundamentally changed.

So Long to the Flipper

Condo flipping was once a common strategy, particularly from the late 1990s through the mid-2010s. Investors would buy pre-construction, wait for completion, and sell into a higher market. Buy for $200,000, sell for $300,000, subtract fees and taxes—and pocket the difference.

That model has largely disappeared.

Pre-construction condo sales in 2025 were the lowest on record, and the buyers who remain are increasingly end-users rather than investors. Long-term pre-construction projects now carry more risk and longer recovery timelines, making them far less attractive for short-term resale strategies. As a result, condo flipping is unlikely to return in any meaningful way anytime soon.

Bigger Units, Fewer Investors

For years, developers catered to investors by building smaller and smaller units—often under 500 square feet. Smaller units were cheaper to purchase, easier to rent, and made sense in an investor-driven market.

But what works for renters doesn’t always work for end-users.

While tenants may tolerate compact living in the short term, many buyers are reluctant to purchase ultra-small units for their own use. As investor demand fades, future condo projects are likely to feature larger units designed for people who actually plan to live in them.

In many ways, this shift is overdue. Over the past 20 years, Toronto has added more condo units than almost any other North American city—and a disproportionate number of them have been small. Expanding the range of unit sizes will help the city better serve different demographics and long-term housing needs.

The Government Pivot

Policy has also played a major role in reshaping the investor landscape.

After the housing downturn that began in 1989, governments reinforced the 70% pre-sale requirement, creating an environment where investor participation was essential. Developers, in turn, designed projects and incentives to attract those buyers.

Today, priorities have shifted.

Governments now actively incentivize purpose-built rental housing to improve housing security. In response, many developers have pivoted away from condominiums and toward rental construction. As a result, while condo starts have declined, purpose-built rental construction has increased.

This comes with trade-offs.

Instead of individual “mom-and-pop” investors owning one or two units, more rental housing is now controlled by large corporate landlords. At the same time, Ontario’s landlord-tenant system has become increasingly strained, with hearings often taking up to eight months. For small investors, a single problem tenant can cause significant financial stress. Large corporate landlords, by contrast, simply price in a certain level of delinquency across hundreds of units.

Perspective for Investors

For Toronto condo investors, all of this can feel discouraging. And yes—there will likely be fewer investors in the future, particularly in pre-construction projects. But that doesn’t mean the investor is disappearing altogether.

The condo market will recover.

Construction levels have fallen so sharply that future supply shortages are almost inevitable. While purpose-built rentals are increasing, they are not being delivered in sufficient volume to offset declining condo starts. At the same time, rising taxes, development charges, construction costs, and volatile supply chains mean condos are unlikely to become significantly cheaper to build.

Many developers will simply wait for prices to rise before launching new projects.

For some small investors, today’s market feels less like real estate and more like a stock market at a low point: uncertain, uncomfortable, but potentially full of opportunity. Timing the rebound is never easy—but history suggests it will come.