‘Cratering sales’: Why only 25 new condos were sold in downtown Toronto last month

Ron Butler, principal broker at Butler Mortgage, examines Toronto’s collapsing condo market and its ripple effects across Canada’s housing sector. He explains why new condo construction has ground to a halt, how resale prices are undercutting new developments, and what this means for the building industry and the broader economy. Butler also grades government responses and discusses why development charges remain a critical barrier to reviving new home construction across Canada. You can listen to this episode on Amazon, Apple, and Spotify. Program Summary This is an automated summary. Please check against delivery. Canada’s condominium construction industry faces an unprecedented slowdown as market conditions create a perfect storm of challenges for developers and buyers alike. The convergence of pricing pressures, financing difficulties, and regulatory costs has brought new residential construction to a near standstill in major urban centers, particularly in Toronto. The pre-construction sales model that has long sustained the condominium industry is showing signs of fundamental breakdown. Developers typically require substantial pre-sales before breaking ground, but many projects are failing to meet these thresholds, forcing cancellations and deposit returns. This dynamic has created a cascading effect where projects that seemed viable just months ago are now being abandoned, leaving the development pipeline increasingly empty. A significant price gap has emerged between new construction and recently completed units in the resale market. New developments carry substantially higher per-square-foot costs compared to units that are only slightly older, creating a rational disincentive for buyers to commit to pre-construction purchases. This pricing disparity reflects both rising construction costs and a softening resale market, squeezing developers from both directions. The construction sector itself is preparing for a dramatic contraction. As current projects reach completion, the workforce and equipment that have defined Toronto’s skyline for years will have nowhere to go. The only exceptions appear to be institutional projects and purpose-built rental housing, which operate under different economic models and benefit from specific government support programs. Development charges imposed by municipal governments have emerged as a critical pain point. These fees add substantial costs to each unit, yet municipalities continue to maintain these charges even as new construction grinds to a halt, creating a revenue paradox where high fees yield no actual revenue due to lack of activity. Some policy responses are taking shape at the provincial level. Efforts to eliminate certain taxes on new construction represent attempts to stimulate activity, though questions remain about whether these measures address the fundamental economics driving the slowdown. Federal authorities face pressure to implement similar relief measures across all construction types. The situation extends beyond Toronto to other Ontario markets, where completed units face similar pricing challenges relative to surrounding properties. This suggests systemic issues rather than localized problems, with implications for housing supply across the province. The national picture shows varied regional dynamics. Western markets that previously showed strength are now experiencing corrections, with prices declining or stagnating. Quebec stands as an outlier, with prices reaching new peaks, though still remaining well below Ontario levels in absolute terms. The immediate future appears to point toward a construction drought in major urban centers. The completion of existing projects will not be followed by new starts under current conditions, potentially creating a multi-year gap in new supply. This raises questions about how housing needs will be met in growing cities and what long-term impacts this pause will have on urban development patterns. The situation represents a significant shift from the construction boom that characterized recent years, with implications for employment, housing supply, and urban planning extending well into the future.