A rising number of Canadian homebuyers, particularly in the condo sector like Toronto, are facing challenges as property values decline post-purchase agreements. Vitor Almeida, a carpenter and former real estate agent, encountered this firsthand when an appraisal valued his pre-construction condo in Vaughan at $590,000, lower than the agreed $675,000 price over five years ago. Consequently, he struggled to secure a mortgage to complete the purchase due to the reduced value.
Amid a more than five percent drop in average condo selling prices in the Greater Toronto Area by late 2025 compared to the previous year, apartment prices in Toronto have plummeted approximately 25 percent from their peak in 2022. Buyers like Almeida find themselves in a predicament, needing to bridge the gap between the appraised value and the initial purchase price, or risk losing their deposit and incurring additional costs.
Experts suggest limited options for buyers caught in a declining pre-construction market, with legal repercussions likely if the original contract terms are not met. Mortgage broker Ron Butler emphasized the challenges faced by buyers in such situations, predicting a peak in Toronto’s problematic market in 2026. Attempts to assign the property to another buyer come with complications, including requiring approval from the builder and potential fees.
Real estate lawyer Gathya Manoharan highlighted the difficulties buyers face in a market where property values are struggling to hold. She emphasized the risks associated with pre-construction purchases and cautioned against assuming property values will always rise. Meanwhile, academic Diana Mok from the University of Guelph noted the complexities in regulating such market risks, drawing parallels with stock market speculation.
In conclusion, navigating the uncertainties of pre-construction real estate investments requires a cautious approach and an understanding of the potential financial implications. Buyers are advised to avoid impulsively following market trends and consider the long-term implications of committing to fixed-price contracts in fluctuating markets.
