The downtown Toronto condo market has shifted so much that some 2021 pre-construction units are now worth less than their original sale price. Many Toronto pre-con condos are completing at values below their original sale price, forcing buyers to cover the difference out of pocket.
According to Urbanation, new condo sales in the Greater Toronto Hamilton Area fell 60% in 2025 to just 1,599 units, the lowest annual total since 1991 and a 95% drop from 2021. New launches collapsed, construction starts hit a multi-decade low of 3,272 units, and 28 active projects representing 7,243 units were cancelled outright.
Here are the buildings where original buyers are accepting six-figure losses to get out.
How a 2021 Contract Became a 2026 Problem
In 2021, GTA developers sold 32,919 new condo apartments, regularly pricing downtown projects at $1,400 to $1,600 per buildable square foot on the assumption that low interest rates and rising rents would carry forever.
Rising interest rates completely changed the market. By mid-2023, the Bank of Canada had increased the overnight rate from 0.25% to 5.0%, pushing carrying costs even higher. By February 2026, TRREB data showed average GTA condo prices had dropped from roughly $800,000 in February 2022 to just over $625,000. Some condo segments and municipalities are down closer to 30%.
The timing is becoming a major problem for investors. Buildings sold during the pandemic-era buying rush are now registering at lower market values in 2025 and 2026.
The Appraisal Gap
Banks typically finance up to 80% of a condo’s appraised value, which can become a problem when market prices fall below the original contract amount.
Here’s what that looks like with a real downtown example. A 500-square-foot unit contracted in 2021 for $700,000, with a 20% deposit of $140,000 already paid:
The buyer doesn’t get to renegotiate the purchase price with the builder. They either find another $160,000 in liquid cash, source it through high-interest private financing, or default and lose the deposit.
CMCH says this is not an isolated issue. Its 2025 condo market risks report shows some Toronto pre-construction buyers who closed in 2024 faced losses of up to 6%.
What Buyers Are Actually Losing on Assignments
As financing gaps grow, some pre-construction buyers are attempting to sell their contracts before closing through assignment sales.
In 2026, that almost always means selling at a loss. The table below tracks active distressed assignment listings across downtown Toronto and the wider GTA, with implied capital losses calculated relative to the original purchase price.
When the Builder Says No: The Vaughan Default Case
Assignments only work if the developer allows them. Most pre-construction contracts in Ontario contain clauses requiring written consent, and that consent is routinely refused when the builder still has unsold inventory to move.
A CBC News investigation in February 2026 followed Vitor Almeida, a Vaughan-based carpenter who signed a pre-con contract in 2020 for roughly $675,000, with a $135,000 deposit. When the unit registered, the bank appraisal came in at $590,000. He couldn’t bridge the gap, asked the builder to let him assign, and was refused. The builder terminated the agreement, kept the deposit, and reserved the right to resell the unit and sue him for the difference plus carrying costs and legal fees.
Why Tiny Units Are Sitting
The other piece of the story is what was actually built. To maximize density and per-square-foot revenue during the low-rate era, developers heavily favoured micro-units.
An extreme example is CentreCourt’s 252 Church Street, where 293-square-foot studios launched at $542,000 — $1,849 per square foot. The building is now trading at about $949 per square foot on the resale market, while Urbanation reports the GTA average for newly completed condos is $856 per square foot in Q4 2025.
End users are not showing strong interest in these units, and investors are struggling to make them cash flow at today’s interest rates.
Statistics Canada reported the largest quarterly drop in non-permanent residents since records began in 1971, with 176,479 fewer non-permanent residents in Q3 2025 alone, and Ontario posted its first annual population decline on record.
Developer Distress Is Now Part of the Story
While buyers are already feeling the impact, financial stress among builders is beginning to surface across the market.
The One (1 Bloor West)
The 85-storey supertall at Yonge and Bloor has been under receivership since October 2023. Tridel was appointed in early 2025 to take over construction and sales.
In November 2025, Justice Peter Osborne approved a court application to disclaim 314 of the 329 existing presale contracts, effectively cancelling the original buyers’ agreements so the units can be repositioned and resold at higher prices.
Ellie Condos (5220 Yonge St.)
A nearly-completed 31-storey project in North York was placed under receivership in November 2025 after developer G Group defaulted on $185M in Romspen financing.
The residential side was almost done, with the cost-to-complete report estimating just over $4.3M in remaining costs, but lien encumbrances meant no new lender would step in without a receiver.
What This Means for the Rest of 2026
For original pre-construction buyers closing this year, the options are now quite limited.
- Close with private secondary financing. Expensive, but it preserves the contract.
- Negotiate with the builder. Some are accepting price adjustments, capped levies, or extended closing windows to avoid litigation.
- Attempt an assignment. Possible if the developer consents, but expect to absorb the loss yourself.
- Default. Forfeit the deposit and accept exposure to a builder lawsuit for any net resale shortfall.
For prospective buyers in the resale and assignment market, there is currently a large amount of available inventory. A record 33% of new condo sales in 2025 occurred in completed projects rather than pre-construction projects. Buyers want de-risked, finished inventory, and completed units are where the real negotiating room lies.
What we are seeing today may not align with the market’s longer-term direction. With condo starts down 88% over three years and total units under construction at a 10-year low of 50,479, Urbanation projects new condo completions in the GTHA will drop 25% in 2026, fall again in 2027, and approach near zero by 2029.
For now, though, pre-con condos in Toronto that sold in 2021 are closing in 2026 at appraisals that no longer support the contract.
Looking at the resale and assignment market for opportunities? Browse active Toronto condo listings on Zoocasa to compare price-per-square-foot across completed buildings.
