{"id":41750,"date":"2025-09-25T01:37:09","date_gmt":"2025-09-25T01:37:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/41750\/"},"modified":"2025-09-25T01:37:09","modified_gmt":"2025-09-25T01:37:09","slug":"toronto-preconstruction-condo-market-downturn-will-reverse-housing-agency-says","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/41750\/","title":{"rendered":"Toronto preconstruction condo market downturn will reverse, housing agency says"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Although a record number of new condo units are hitting the market this year, Canada’s housing agency says the vast majority have been sold.Cole Burston\/The Globe and Mail<\/p>\n

Toronto\u2019s preconstruction condo market is not as dire as it was during the 1990s property crash because the economy is stronger and there will eventually be demand for homes, according to a new government report. <\/p>\n

Although preconstruction sales are at a 33-year low<\/a> and some buyers are defaulting on their purchases, Canada Mortgage and Housing Corp. said there are signs that buyers will return. <\/p>\n

Ottawa and housing advocates say Canada has a shortage of homes given the increase in population and changing demographics, which will eventually boost demand for all forms of housing<\/a>.<\/p>\n

\u201cToday\u2019s market is shaped by a structural shortage of housing, suggesting inventories will clear as the market recovers,\u201d CMHC said in a report released on Wednesday that compares current market conditions with those in the 1990s.<\/p>\n

Will the preconstruction condo market ever bounce back? Submit a question to our experts<\/a><\/p>\n

The report outlined several factors that point to a more stable market today, including stricter lending rules and the need for more housing.<\/p>\n

Today, developers are typically required to presell a minimum of 70 per cent of a building\u2019s units to qualify for construction financing. <\/p>\n

That means more of the building is sold before construction launches, unlike during the 1990s, when developers often erected condo towers without selling the majority of the units and then were left with many unsold units.<\/p>\n

Although a record number of new condo units are hitting the market this year, CMHC said the vast majority have been sold. <\/p>\n

CMHC chief economist Mathieu Laberge said that in the 1990s there were twice as many unsold units per capita compared with today. <\/p>\n

The report also credited the country\u2019s lending rules for creating a more resilient housing sector. Federal banking laws require borrowers to prove they can make their mortgage payments at an interest rate that is at least two percentage points higher than the market rate and loan contract. <\/p>\n

Opinion: Toronto area housing faces a wave of distressed sales<\/a><\/p>\n

While the stress test has helped banks, the report does not address the fact that many preconstruction buyers cannot get a large enough mortgage to close on properties they agreed to buy because their condos are now worth less than what they agreed to pay several years ago.<\/p>\n

That has led to buyers walking away from their deposits and developers suing buyers for breaching their purchase and sales contracts. It has also forced developers to take back the defaulted units. <\/p>\n

Regardless, CMHC said, speculative building was more prevalent in the 1990s and contributed to overbuilding during that period.<\/p>\n

\u201cWe do not assess Toronto\u2019s<\/a> market as being overbuilt as it was during the 1990s,\u201d the report said.<\/p>\n

Condos became more popular around the turn of the century, and demand and prices steadily increased from 2000 until early 2022, with a particular spike in activity after the 2007 global financial crisis.<\/p>\n

The Next Move: Toronto homebuyers take cold-blooded approach to the condo market<\/a><\/p>\n

CMHC said the recent surge was \u201clargely driven by limited supply,\u201d strong immigration<\/a> and low borrowing costs.<\/p>\n

\u201cWe were actually building in line with fundamentals,\u201d Mr. Laberge said.<\/p>\n

The report said today\u2019s slowdown reflects the impact of higher mortgage rates and expectations that immigration will not be as strong as in previous years because of changes in government policy.<\/p>\n

The CMHC report compared the slide in prices for the current slump and the 1990s. The average price of a resale condo across the Toronto region is down 28 per cent from peak prices in early 2022, the report said. That is the price drop over the past 13 quarters.<\/p>\n

When looking at the 13 quarters that followed peak prices in 1989, the average price of a resale condo was down 43 per cent, the report said. Prices continued to fall and were down as much as 57.7 per cent by the late 1990s before values started to increase again.<\/p>\n

Ask your questions about Canada’s preconstruction condo market<\/p>\n

\nOn Sept. 25 at 11 a.m. ET, real estate reporters Rachelle Younglai and Shane Dingman will be answering reader questions on the state of Canada\u2019s preconstruction markets, its effects on housing in general, and what it means for Canadians looking to buy or sell a home in the coming months. Submit your questions now.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Although a record number of new condo units are hitting the market this…\n","protected":false},"author":2,"featured_media":41751,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[276,261,277,251,249,278,138,275,248,268,269,264,250,247,219,84,273,267,259,289,252,253,266,262,263,256,279,220,257,284,111,285,139,287,282,286,69,280,283,254,271,272,135,270,281,260,145,274,265,258,255,288],"class_list":{"0":"post-41750","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-alberta","9":"tag-arts-news","10":"tag-bc","11":"tag-breaking-news","12":"tag-breaking-news-video","13":"tag-british-columbia","14":"tag-business","15":"tag-canada","16":"tag-canada-news","17":"tag-canada-sports","18":"tag-canada-sports-news","19":"tag-canada-trafficcanada-weather","20":"tag-canadian-breaking-news","21":"tag-canadian-news","22":"tag-economy","23":"tag-education","24":"tag-environment","25":"tag-federal-government","26":"tag-foreign-news","27":"tag-globe-and-mail","28":"tag-globe-and-mail-breaking-news","29":"tag-globe-and-mail-canada-news","30":"tag-government","31":"tag-life-news","32":"tag-lifestyle","33":"tag-local-news","34":"tag-manitoba","35":"tag-markets","36":"tag-national-news","37":"tag-new-brunswick","38":"tag-new-zealand","39":"tag-newfoundland-and-labrador","40":"tag-newzealand","41":"tag-northwest-territories","42":"tag-nova-scotia","43":"tag-nunavut","44":"tag-nz","45":"tag-ontario","46":"tag-pei","47":"tag-photos","48":"tag-political-news","49":"tag-political-opinion","50":"tag-politics","51":"tag-politics-news","52":"tag-quebec","53":"tag-sports-news","54":"tag-technology","55":"tag-travel","56":"tag-trudeau","57":"tag-us-news","58":"tag-world-news","59":"tag-yukon"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/41750","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=41750"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/41750\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/41751"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=41750"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=41750"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=41750"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}