Toronto's condo market is experiencing its worst year on record, with sales hitting historic lows and new construction starts essentially frozen across most of the city. This collapse has exposed a fundamental weakness in how we finance new housing: the pre-construction sales model that places all the risk on individual buyers while prioritizing investor-grade units over livable homes. In many global cities like New York, Berlin, and Tokyo, selling condos after construction is complete is more common than it is here, shifting the risk from buyers to developers and lenders who are better equipped to handle it. Maybe it's time Toronto rethinks it’s approach.
2025 is shaping up to be the worst year for new home sales in GTA history, with only 3,007 units sold from January to July, fewer than even the 1990s recession. New condo construction has virtually stopped, with CMHC reporting zero starts in North, East, and Central Toronto in Q2 2025, and just 116 units in West Toronto. The pre-construction sales model that has dominated Toronto's market for decades requires developers to sell 70-80% of units before breaking ground to secure financing. This system has created a market flooded with small, investor-focused units that don't meet the needs of people who actually want to live in them. Meanwhile, many pre-con buyers from years ago are now facing financial stress, with some developers going bankrupt and leaving buyers in limbo. The entire development pipeline has stalled because investors have stopped buying.
This isn't just about a slow market. It reveals how fragile Toronto's housing supply really is. When the entire supply chain depends on individual buyers and investors fronting money years in advance, any market slowdown brings new construction to a complete halt. This means we're facing a potential supply shortage by late 2027 when today's lack of new projects catches up with us. More fundamentally, the current model puts all the financial risk on regular people who are least equipped to handle it, rather than on professional developers and institutional lenders with the resources and expertise to manage market fluctuations. We end up with housing designed for speculation rather than livability. Tiny units like the 267 sq ft studio at Goode Condos are asking $477,000, which is in the price range of a decent one-bedroom resale or a suburban townhouse. When buyers are funding projects instead of buying homes, developers optimize for whoever will buy early (investors), not for people who need places to actually live.
Look, I've worked in the pre-con industry and there's value in pre-construction sales. But when virtually our entire ownership housing supply depends on this one financing model, we've created a system that's both fragile and misaligned with actual housing needs. Other major cities prove there are alternatives: in places like Berlin and Tokyo, developers build first and sell after, which means the people with actual expertise and resources carry the risk, not regular buyers hoping to get into the market. We're watching this play out in real time. Developers are going bankrupt, projects are being cancelled or delayed, and the few buildings that are finishing now face a unique challenge: they have 10-20% of their units still unsold even after construction is complete. This means developers are now showing finished units to buyers. You can walk through them, see the actual finishes, and experience the space in person, something that's not usually possible with traditional pre-construction. The market has already shifted in practice; maybe it's time our financing model caught up. This doesn't mean banning pre-con entirely, but we need more flexibility in how developments get funded. Government-backed construction loans, public-private partnerships, staggered sales models: there are options that don't require regular buyers to shoulder all the risk just to create housing supply. Toronto has limited space and practically unlimited demand. I've seen walk-in closets bigger than some of these units. Let's stop building these investor-grade boxes and start building homes people actually want to live in, financed by people who can actually handle the risk.
