As of August 2026, buyers should target discounted finished inventory from builders and budget cash for the appraisal gap. Pre construction owners facing a closing should either close and live in the unit, close and rent while carrying the shortfall, or price an assignment well below resale. Walking away is the costliest option.
I am Moe Asgarian, a Toronto real estate broker, and a large part of my team's work sits in the GTA condo market, so I see every one of these situations in the same week. The market is really two different problems that keep getting treated as one. Thousands of pre construction contracts signed at peak prices are now closing well below appraised value, which is a genuine crisis for those buyers. The condo as a form of housing is something else entirely, and it is still the most realistic way into ownership in this city.
Why Pre-Construction Buyers Are Stuck at Closing
Most of the people in trouble bought a pre construction unit two to four years ago, with delivery scheduled for 2026, 2027 or 2028, and a large number of units reach delivery and closing by the end of 2028. Many of those buyers were investors who expected the value to be higher by handover.
Instead, in a lot of projects the current value of the unit sits well below the number written in the contract. Someone may have signed at $800,000 and now finds the bank valuing it far lower. The bank lends against today's value, not the price agreed years ago, so the buyer has to bring significant additional cash on top of the deposit already paid. Interest rates are also higher than when those contracts were signed, so even a buyer who qualifies can face a monthly payment that was never in the original calculation.
The Three Options a Pre-Construction Buyer Has
The first option is to close and live in the unit. For someone who bought it to live in and can afford the closing, that is usually the simplest and best outcome.
The second is to close and rent it out, and this is where it often breaks down. In many of these projects the rent does not cover the mortgage, the maintenance fees, the property tax and the rest. The owner can end up paying hundreds or even thousands of dollars a month out of pocket. That is not an investment with positive cash flow. It is a monthly loss with a hope attached that the price recovers, and nobody can tell you whether that takes five years, ten years or longer. Keep in mind that peak pre construction prices were often higher than resale prices for comparable units, so the buyer paid a premium from day one.
The third is an assignment sale, transferring the contract to someone else before closing. In practice that is close to impossible as of August 2026. A new buyer has too many alternatives: buy on resale, or buy a finished unit held by the builder with incentives and tax rebates attached. To compete, the assignor usually has to offer a steep discount, lose the deposit and sometimes put in more money to get the deal done.
Walking Away Costs More Than Your Deposit
The hardest situation belongs to buyers who simply cannot close. This needs saying plainly: backing out of the contract does not only mean losing your deposit. A pre construction agreement is a binding legal contract. The builder may resell the unit at a lower price and then come after you for the shortfall, for damages and for other costs. Anyone in that position should be speaking with a lawyer who works on these cases.
Why the Monthly Numbers Look Calmer Than the Reality
A good part of this pressure never appears in the official statistics. The monthly market reports focus on transactions recorded on MLS: sales counts, listing counts and average prices. A legal dispute between a pre construction buyer and a builder does not show up there. Units that go back to the builder and get sold off MLS may not appear either. Some builders sell several units in bulk at a discount to a large investor or a fund, and those deals happen behind the scenes with no clear trace in public data.
So the market can look steadier on paper than the pressure some buyers are actually living through. When you read a monthly report, remember what it does not count.
Where Buyers Can Find Value in Toronto Condos
Alongside the crisis, some buyers get an opening. Certain builders are holding finished, unsold inventory and their main goal is to clear it. In some projects that means discounts, financial incentives, better payment terms or a unit ready for immediate possession. For a buyer who genuinely intends to live there, has the capital and does the homework, this can be a reasonable moment.
That is not a statement that every project is a good buy. The building, the floor plan, the maintenance fees, the builder's track record, the condo corporation's financial position, the location and the final price all have to be checked one by one.
Why Toronto Still Needs Condos
The criticisms are fair as far as they go. Units were built too small. Some floor plans do not work for real life. Pre construction prices in the peak years were not rational, and too many projects were designed for investors rather than for families and end users. But you cannot judge an entire category of housing by its worst examples, and a condo is still housing in a city that needs housing.
Start with price. Freehold homes in Toronto generally start at a level that is out of reach for a large share of buyers, while the condo market covers a far wider range, from small older units to multi million dollar penthouses. For many first time buyers a condo is the only realistic route into ownership inside the city. Yes, a condo has monthly fees, but a freehold house has a roof, a furnace, a yard, snow clearing and a long list of unplanned costs of its own.
Then location. Much of Toronto's condo stock sits in central positions near the subway, employment centres, universities and city amenities, and some of the older buildings occupy the best sites of all because they were built when central land was still available. For someone who works downtown, or who does not want to spend hours a day in traffic, living near a subway station changes the quality of the week.
Condos also carry the rental market. Over the past few decades a large share of Toronto's new rental supply arrived through condo units: the builder built, an investor bought, the unit went out for rent. Without that, rental supply here would be much thinner and rents would likely be higher than they already are. Condos give downsizers somewhere to go as well. When an older couple sells a three or four bedroom house and moves into a well sized two or three bedroom condo, that family home comes back onto the market for a younger family. Without suitable condos, many of those owners never sell at all, and the supply of family homes shrinks.
Finally, land. Offer most people a house and a condo at the same price and nearly everyone takes the house. But Toronto does not have unlimited land, and a growing city cannot be housed in freehold alone. The more we avoid building condos, the tighter housing gets in the years ahead. So the problem is not the condo. The problem is irrational pricing, poor design, buying without proper review and treating housing purely as a profit play.
If you are weighing a condo purchase, a closing you are not sure you can complete, or a sale, fill out the form at the bottom of this page or book a free consultation with our team. Stay well and take care.
Frequently asked questions
What happens if I cannot close on my pre construction condo?
A pre construction agreement is a binding legal contract. Walking away usually means losing your deposit, and the builder may also resell the unit at a lower price and pursue you for the shortfall, for damages and for other costs. Before making any decision, speak with a lawyer who specializes in pre construction closings rather than relying on friends or forums.
Can I still sell my pre construction contract through an assignment?
It is possible but very difficult as of August 2026. A new buyer has plenty of alternatives, including resale units and finished builder inventory that comes with incentives and rebates. To compete, most assignors have to offer a steep discount, which often means losing the deposit and sometimes putting in additional money to complete the transfer.
Is buying a condo in Toronto still a good idea?
For an end user with stable finances, often yes. Condos cover a much wider price range than freehold homes, sit closer to transit and employment, and for many first time buyers they are the only realistic route into ownership inside the city. The unit matters more than the amenities: check the floor plan, light, building quality, maintenance fees, the condo corporation's finances and the location.