The Chill in Toronto’s Pre-Construction Condo Market: What You Should Know
Toronto’s pre-construction condo market has entered a deep freeze, with demand dropping to levels not seen since the global financial crisis. According to a special housing report by RBC, the once red-hot segment of the market is now facing serious headwinds—impacting buyers, developers, and the future of new housing supply.
What’s Causing the Freeze?
Several factors are contributing to the downturn in pre-construction condo activity:
Investor appetite is evaporating. The high returns that once justified speculative purchases are no longer guaranteed. Cooling rental demand and more realistic expectations on capital appreciation have made pre-construction projects less attractive.
Abundant existing inventory is undercutting new projects. Many resale condos are available at lower prices than developers can offer. That makes new developments a harder sell, especially when buyers can move immediately into resale listings.
High development and construction costs. Ongoing increases in materials, labor, and regulatory requirements push the cost base up. This means developers need to charge more, pricing many buyers out.
A Buyer’s Market—For Now
Because inventory of both resale and under-construction units is high, the balance of power is tilting toward buyers. RBC highlights how this creates a self-reinforcing cycle: more supply gives buyers leverage to negotiate harder, which slows new project sales, deterring developers from launching new phases
For many buyers, this is a rare chance to compare options and take time to decide without pressure. But that window may not last forever; the market could evolve again once inventory tightens and demand returns.
Recovery Won’t Be Instant
RBC’s analysis suggests that the road back will be gradual:
Pre-construction demand likely won’t rebound until inventory declines—some modeling shows we may need to see a 25% drop in current overhang before developers gain confidence.
New project starts are falling, which means fewer future units will enter the market. Over time, this could help restore balance.
Resales and existing inventory will continue to dominate decisions in the near term, especially given lower risk and faster delivery compared to new projects.
What This Means for You
Buyers: If you’re considering a condo—especially in pre-construction—this may be one of the few times when the conditions favor your advantage. Use this moment to do your research, compare resale and new builds, and negotiate on terms.
Developers & Investors: Be cautious. Launching new projects in this environment carries higher risk. Strong project pricing, phased launches, and cost discipline will be essential.
Market watchers & policymakers: The pre-construction pause underscores Canada’s broader housing challenges. Supply constraints, affordability, and construction costs remain structural issues that policy alone may struggle to resolve.
Final Thoughts
RBC’s report paints a clear picture: Toronto’s pre-construction condo market is frozen, and recovering it won’t be quick or simple. The forces of cost, competition, and buyer sentiment are creating a landscape where resale options win over speculative new builds. But for those who act wisely, there is opportunity.
If you’re thinking about buying, investing, or building in the condo space, now is the time to work with a team that understands both sides of the market and can help you navigate these complexities.
Source: RBC: “Navigating Toronto’s frozen pre-construction condo market” rbc.com