Homebuyers who took a chance by purchasing a home before it was constructed to secure a position in a costly market early on are now facing the repercussions as property values decline.
An increasing number of Canadians, particularly in condominium markets like Toronto, are realizing the harsh reality that developers and lenders are not ready to bear the financial loss when property values drop.
Vitor Almeida, a carpenter and former real estate agent, is experiencing this firsthand. Over five years ago, he committed to buying a pre-construction condo in Vaughan, Ont., for $675,000, putting down around 20 percent. However, the financing is not finalized until the unit nears completion and the transaction is ready to close.
Years later, an appraisal valued the condo at $590,000, making it impossible for Almeida to secure a mortgage to complete the purchase since the property was no longer worth the agreed-upon price.
“The market was thriving back in 2020, and we never anticipated this situation. If I had known this could happen, I wouldn’t have made the purchase,” Almeida remarked.
Buyers Must Cover the Gap
In late 2025, the average selling price of condos in the Greater Toronto Area had decreased by over five percent compared to the previous year.
Since the peak in 2022, apartment prices in Toronto have plummeted by approximately 25 percent.
If buyers like Almeida cannot bridge the gap between the appraised value and the initial price, their options are limited. The developer can retain their deposit and any fees paid, and the buyer may also face additional expenses.
“They have informed me that they will sell it for a lower amount and will pursue me for their losses,” Almeida mentioned.
The price of Toronto condos has dropped by 25 percent since reaching a peak in 2022, leaving many pre-construction buyers struggling to secure a mortgage to