The March existing home sales report brought "more grim news" for Ontario homeowners, particularly in the Greater Toronto-Hamilton Area, where the price correction has now entered a fifth year, said Bank of Montreal (BMO) in an overnight note.
One reason is the "massive overhang" of unsold new condos, which stood 40% above the long-run average as of Q4 2025, noted the bank.
"With interest rates holding steady, the only quick way to clear this glut is through price cuts and possibly large ones, given competition from a much cheaper resale market (that's now largely within reach of the median income earner)", said BMO.
BMO noted the average new condo price of $1,344 per square foot in Q4 2025 was 78%, or $587, above the average resale price of $757. This gap has "ballooned" out from just 31%, or $144, a decade ago.
The recently introduced HST rebate of up to 13% on new condos, or about $175 per square foot, won't normalize the gap but will at least help builders work down the oversupply, added BMO.