In 2020, when Toronto’s condo market felt more like a casino where everyone was winning than real estate, Vitor Almeida signed his pre-construction contract. He made a 20% down payment on a $675,000 Vaughan apartment, which at the time seemed almost too simple. The math just stopped working when the appraisal came back at $590,000 five years later.
Even though the story is well-known by now, the people who are living it still find it to be extremely painful. Buyers like Almeida are trapped between a contract they can’t break and a bank that won’t assist them in fulfilling it because lenders won’t finance a mortgage on a property worth less than its agreed price. His statement, “If I did know that this could have happened, I wouldn’t have bought the condo,” likely captures the sentiment of thousands of investors in the city at the moment.
Why is explained by the numbers. The Greater Toronto Area’s condo prices have decreased by about 25% since their peak in 2022, returning to levels seen during the pandemic. That decline isn’t abstract to someone who purchased in 2021 or 2022, when bidding wars were commonplace and FOMO influenced choices more than spreadsheets. It’s the difference between what they owe and what the bank will lend, which they are now required to close with money they might not have.
This downturn differs from Toronto’s previous condo bust, which occurred in the early 1990s, not because of its size but rather because of its shape. The obvious culprits at the time were loose lending and unchecked speculation, but the market eventually stabilized once rates dropped and credit tightened. This time, lending standards are still stringent and interest rates have already begun to decline. However, land transfer taxes, development fees, and construction costs have increased to the point where builders are unable to offer units at prices that correspond to what buyers can truly afford. It is arguably more difficult to correct because it is a structural mismatch rather than merely a cyclical one.
Assignment flipping is another darker undercurrent that permeates this crash. Pre-construction contracts were handled like stock options by buyers for years, who intended to sell their stake prior to closing rather than ever occupy the unit. That strategy fell apart virtually overnight when the market turned. In response to being left with unsold inventory, developers have sued defaulting buyers for the difference between the initial contract price and whatever they ultimately sold the unit for, sometimes resulting in losses of hundreds of thousands of dollars in addition to legal fees.
Assignment sales, the purported escape hatch, require developer approval, which is rarely granted, and practically no newly constructed property has maintained its value, according to real estate attorneys. It’s difficult to ignore how quickly an investment that was advertised as almost risk-free became a financial and legal trap for regular buyers, many of whom were teachers, carpenters, and first-time investors rather than seasoned speculators.
It’s still unclear if 2026 will be the lowest point or just a stop along the way. This year alone, about 28,000 units are anticipated to be finished, which could further increase the discrepancy between contract prices and market reality. As of right now, those caught in the middle are left to wait, negotiate, and sometimes even get ready for court.
