Except this isn't how it has worked - not by a long shot. Instead what's happened is that existing, and more affordable, rentals have seen that people are willing to pay much more in rent to condo owners trying to cover their mortgage with tenants. So they raise their prices too because they know they can get it. In addition, foreign investors have found real estate in Toronto to be very cheap by international standards. Cheap for them, not for the average Torontonian by any means. Developers see they can get a higher price (driven by many foreign investors) and so they all price accordingly. Higher condo price means higher tenant rent required to cover the mortgage.
Over the past decade, rents in the city, on average, have gone up more than three to five times the usual maximum of 3% per year. And a $200k condo 10 years ago now goes for over $350k from blueprints.
Business 101. Don't sell for cheaper than you need to. Why sell for $1000 when everyone else is selling for $1500? Instead, sell for $1450.
