You’ve seen the glossy condo ads, perhaps toured a sleek model suite, and felt your imagination wander: “What if this were my investment? What if I could own something in the city, collect rent, and ride a wave of appreciation?” But is that dream still viable in 2025?
In this post, we’ll walk you through the current landscape, compare condos with other assets (stocks, houses), and help you see when and where a condo can make sense — or when it’s just a money pit in disguise.
Key Takeaways
- The condo market in many Canadian metro areas is cooling; inventory is rising and price growth is under pressure.
- Many units, particularly in more generic or speculative condos, are generating negative cash flow.
- Investor sentiment has softened, and resale risk is real.
- That said, in some localized pockets or in ultra-prime buildings, the potential for upside remains — but you’d better do your homework.
What’s The Current Condo Market Like In Canada?
When someone asks whether condos are a “good investment,” the first step is: where and when. The dynamics today are decidedly different from those of a decade ago.
Oversupply, Weak Demand, & Investor Skepticism
One of the core challenges right now is oversupply. Too many new condo units were initiated during past boom times; now, many are completing, and demand hasn’t kept pace. In markets like Toronto, inventory is rising, sales are down sharply, and some owners who bought at peak prices are seeing steep paper losses.
To put a number on the sentiment: a recent survey found about 30 percent of Canadians now believe condos have lost their status as a reliably good investment. Another related stat: only 11 percent of respondents said they would buy a condo specifically as an investment.
So, investor confidence is cooling. It’s not just idle talk — some real money is already moving away from condo bets.
Carrying Costs & Negative Cash Flow
One of the harsh realities many condo investors are running into is that the unit is income-negative, meaning your expenses exceed your rental income. In Toronto, for instance, the math is brutal:
- Mortgage + interest
- Property taxes
- Maintenance / condo fees
- Vacancy, repairs, insurance
Even in a relatively modest one-bedroom unit, the sum of those costs can outstrip what you can realistically charge rent. Some analyses show a monthly hole of $500 to $700 (or more) before accounting for vacancies and repairs. That “cash flow drag” is a risk many speculators ignored in past cycles.
Moreover, condo fees and reserve fund assessments are structurally set to rise. The harder it is to maintain and repair communal elements of a building — like the roof, elevators, facade, plumbing — the more pressure on owners to chip in.
Learn more: How Much Should Your Strata Fees Be?
Market Sentiment, Resale Risk, & Correction Potential
Because so much of condo investment in recent years was built on momentum (pre-construction flips, expectation of constant price rises), a market reversal can be punishing. Many investors who expected to hold units for a few years and flip them are instead seeing delayed sales or forced discounts. In some cases, sellers who bought at peaks may not recover their principal.
On the bright side, in certain cities with supply constraints or with strong fundamentals, condos may still hold value. But those tend to be niche, premium, or extremely well-located units, not run-of-the-mill high-density towers.
Condos Vs. Stocks: Which Investment Makes More Sense?
We often compare real estate to stock market investing. Let’s break down various factors and which investment comes out the winner for each.
Liquidity & Flexibility
One of the biggest advantages stocks hold is liquidity. You can buy or sell within minutes (during trading hours), and you don’t have to worry about showings, tenants, or condo boards.
With a condo, the timeline is months (prep, list, find buyer, close). If markets turn, being stuck in an illiquid asset is a real danger.
Diversification & Concentration Risk
If you put a large chunk of capital into a condo, you are concentrated in one real estate asset in one location. If that city or submarket weakens, you’re vulnerable.
Stocks allow easier diversification (geographies, sectors). A well-balanced portfolio would rarely risk a huge percentage in one single property.
Returns & Appreciation
Historically, real estate has offered inflation hedging and decent long-term returns. But stocks, particularly broad index funds, have also delivered strong returns over decades. The question is: will the condo appreciate enough to overcome your carrying costs, taxes, fees, and risk premium?
In many recent condo cases, thanks to slower price growth and high costs, the net return can be weak or even negative. Also, with stocks, you can reinvest dividends, rebalance, and adjust allocations easily. With a condo, you’re locked in unless you sell or refinance.
Cash Flow Considerations
If a condo were truly cash flow positive — meaning your rental income comfortably covers your mortgage, condo fees, property taxes, and upkeep — it would be a compelling case for ownership. Steady, predictable income is every investor’s dream.
However, in today’s market, many condos struggle to achieve that balance, leaving owners with monthly shortfalls. Stocks, on the other hand, can generate regular dividends or capital growth that can be reinvested or accessed easily, offering flexibility without the burden of ongoing property expenses or tenant management.
Learn more: How To Invest In Real Estate In Canada
Leverage & Risk
One of the attractions of real estate has been the ability to use leverage: you may invest 20% to 30% down and borrow the rest. That magnifies gains, but also magnifies losses. If property values drop or interest rates rise, your downside is large.
Stocks can be bought outright (no debt), or in limited leverage in some contexts, but not to the same extreme risk.
| Summary: Stocks Often Win In Many Scenarios For many investors, especially those who prefer lower hassle, greater liquidity, and better diversification, stocks (or ETFs) will outperform a risky condo play—unless the condo is exceptionally well-placed and managed. A lot of the romantic appeal of condo investing comes from leverage and local love—but the math needs to hold up. |
Condos Vs. Houses: Which Is A Better Investment?
If you’re considering real estate at all, the comparison often pivots between condo and house (or townhouse). Here’s how they stack up.
Land Ownership & Control
One of the core advantages of houses is that you own the land beneath it. Land tends to appreciate (or at least not decline as rapidly) and gives you more flexibility — expansions, landscaping, etc.
With condos, you own your unit but share communal areas and are subject to condo board rules, common repairs, and assessments.
Appreciation Potential
Houses often appreciate more because they are scarcer (land is finite), and improvements (adding rooms, finishing basements, exterior upgrades) can directly increase value. Condos are more standardized, and your ability to “add value” is limited to interior finishes — less leverage for upside.
Learn more: How Inflation Affects Your Mortgage
Carrying Costs & Maintenance
With a house, you’re responsible for everything: roof, yard, gutters, exterior, systems. That’s both a risk and an opportunity (you choose when and how to do upgrades).
With a condo, you pay condominium fees that cover some shared maintenance, but you lose control: your costs may be dictated by collective decisions and inflation in materials. If your building mismanages reserve funds, you might face surprise assessments.
In some cases, condos impose fewer maintenance responsibilities on you. But that benefit must be weighed against fees and the risk of mismanagement.
Cash Flow For Rental
Because houses typically command a higher rent (and often allow more units or rooms), the margin for positive cash flow is often better. Houses can also attract families who stay longer, reducing turnover.
Condos, especially smaller units, may depend on singles or couples, leading to more frequent tenant shifts, wear, or vacancy risk.
Access, Liquidity, & Market Cycles
In downturns, condos often suffer more. Buyers are more cautious. Houses retain appeal to a broader buyer demographic (families, people wanting yards). Also, in many markets, single-family homes are more liquidity-resilient.
However, houses come with higher entry costs, property taxes, and maintenance burden. For many, a condo is a more accessible path to real estate, but you have to accept the tradeoffs.
| Which Makes More Sense Depends On Your Goals If your priority is long-term equity, stability, and control, a house likely offers more upside. If your constraint is capital, or you want in-city living, a condo can be a compromise — but you must pick carefully. |
When Does a Condo Make Sense As An Investment?
Having painted a somewhat bleak picture, condos are always bad. There are scenarios where they can be smart plays. Here’s how to tilt the odds in your favour:
1. Prime Location & Strong Fundamentals
If the condo is in a location with constrained supply, transit access, desirable neighbourhood trends, and limited future competition, that gives you a tailwind. Units near transit, in vibrant districts, or tied to major infrastructure can defy weaker market trends.
2. Ultra High-End Or Luxury Niche
Premium condos with unique amenities, architecture, and exclusivity often behave differently than mass-market ones. Wealthy buyers prize status, views, and design. Those units can weather downturns better (though they have their own risks).
3. Intent To Hold Long Term, Not Flip
If your strategy is to lock it and hold it for decades — even through cycles — the appreciation and inflation hedging might work out. But you have to be able to absorb negative cash flows in intervening years.
4. Very Low Interest Rates Or Favourable Financing
If you can secure a low fixed rate, long amortization, and avoid excessive leverage, the downside risk is muted. The more favourable your borrowing terms, the more room you have.
5. Strong Building Management & Reserve Funding
You want a building with good governance, healthy reserve funds, transparent financials, and competent management. A crumbling condo corporation can be a money trap. Do your due diligence.
6. Mixed-Use Or Amenitized Properties
Condos attached to retail, offices, or amenities (hotels, coworking) often benefit from diversified usage and foot traffic. That can help value retention and attractiveness.
If you can check off several of these boxes, the condo route becomes less scary.
Risks You Can’t Ignore (Even If You Want To)
Any serious investor must know what could go wrong. Here are the big ones:
- Special Assessments: Unexpected building repairs (elevator overhaul, facade work, plumbing) can result in large bills for owners.
- Rising Condo Fees/Inflation In Materials: Maintenance, services, and upkeep costs tend to rise faster than general inflation sometimes.
- Vacancies, Turnover, & Demand Shifts: If population growth slows, jobs decline, or remote work changes demand, your rental market shrinks.
- Building Defects & Structural Problems: Examples like the “leaky condo” crisis in BC remind us that water infiltration, poor design, or construction faults can devastate value.
- Regulation, Taxation, & Rent Controls: Local policy changes can upend your cash flow projections.
- Market Corrections: If the broader real estate cycle turns, your ability to sell at a gain may vanish — or you may need to discount heavily.
- Illiquidity: You might want to sell in a downturn, but lack buyers or need to sell at a discount.
- Concentration Risk: All your value is in one place; you don’t have the flexibility of spreading risk.
These risks don’t kill every deal, but they demand respect. Too many investors chase glamour without stress-testing “what if scenarios.”
Putting It All Together: Is A Condo A Good Investment?
The honest answer is: sometimes. But only if several conditions align. For many buyers in many markets today, condos are a tougher, riskier play than they were a decade ago.
Here are some tips to consider:
- Start by running the full numbers. Mortgage, maintenance, vacancy, taxes, fees. If it’s negative cash flow, make sure your upside compensates.
- Choose markets you understand and believe in long term. Consider job growth, demographics, transit, and others.
- Avoid speculation-driven units. These are built for flips without demand for living there.
- Be conservative in your projections. Don’t assume rent skyrockets or that interest rates fall drastically.
- If you can, treat the condo like a passion — a part lifestyle, part investment — but don’t assume guaranteed profit.
In many cases, a safer path is to invest in a diversified portfolio of equities or real estate funds or REITs. And if you want exposure to real estate, pick a house or multi-family property with stronger cash flow.
Final Thoughts
Condos can be a solid investment in Canada, especially in urban centres with high demand and limited housing supply. However, factors like condo fees, market saturation, and potential restrictions on rentals should be weighed carefully. As with any investment, success depends on timing, location, and your long-term goals.
