The Greater Toronto Area’s (GTA) pre-construction market, especially condominiums, has seen better days. 2020 to mid 2023 were some of the best years for the real estate market. However, what was once a high-demand, fast-moving segment is now facing record-low sales, growing inventories, and declining investor interest.
Like any other cycle, this market will recover eventually, the road ahead is long and one full of unexpected surprises.
In this blog, we break down today’s market conditions in simple terms and point to triggers that could drive a turnaround.
What’s the current state of today’s pre-construction market in GTA?
We’ve all read or watched news about unsold condos and constructions that’s halted because enough units haven’t been sold.
When builders launch a project, construction only begins when 70% of the units are sold. That’s the minimum units sold required by a bank to sanction them a commercial loan.
According to Urbanation’s report, the market is still in a deep slump.
- Sales collapse: Only 502 new condo were sold in Q2-2025 across the Greater Toronto Hamilton Area (GTHA). This is:
- Down 10% from Q1-2025
- Down 69% from Q2-2024
- 91% below the 10-year average for this time of year
- Unsold inventory: There were 24,045 units available across all stages of development in Q2-2025, slightly down from last year’s record high, but still well above historic norms.
- Launch slowdown: Only three projects (891 units) launched in Q2-2025, as developers paused new presales.
- Cancellations: Four projects (719 units) were cancelled in Q2-2025, bringing the total since the start of 2024 to 21 cancelled projects representing 4,412 units. Nine of these are being converted to rental.
Inventory is Piling Up in GTA’s pre-construction market
Between April and June 2025, builders had 2,478 units sitting ready for sale. That’s double the number from a year ago and five times higher than two years ago.
These projects only sold 131 units during those months. At the current pace they’re selling, it’ll take 5 years to sell all units.
Average asking prices for these completed units were $1,212 per square foot (psf), which is down 6% year-over-year and 16% below the market peak two years ago.
One of the reasons why pre-construction projects remain unsold is the difference between per square foot price. Resale homes are available at $903 psf, while pre-construction homes are available at $1,187 psf. That’s a $284 psf difference, which doesn’t make sense when you have to wait for a minimum of a couple years to move in.
This Slowdown Is Different Than The Previous Ones
Unlike past slowdowns, this one is being shaped by several forces hitting the market at the same time.
Higher Interest Rates
The Bank of Canada’s rate hikes between 2021 to 2024 pushed mortgage costs and everyday needs prices sharply higher. Even though the rate is lower now, it has already disrupted the market as it discourages both end-user buyers and investors. It eats into their rental income.
Inventory Overhang
In 2025, completions are on track to hit 31,422 units, a record high for GTA. With so much supply hitting the market at once, buyers have more options and less urgency.
Financing Thresholds and Delays
CMHC research shows that lenders typically require 70% of units to be pre-sold before construction financing is approved. When sales fall below that level, projects stall and that’s exactly what’s happening now. In Q1-2025, 55% of units remained unsold, far from the industry-standard 70% pre-sale mark needed to proceed.
Investor Losses and Confidence Erosion
The gap between purchase prices and current pre-construction market value means many recent buyers face the prospect of closing on units worth significantly less than they paid. For some, this has led to failed closings or lawsuits with developers.
Lessons from Past Market Cycles
Something similar happened in the 1980s. Speculate buying drove up prices and developers jumped into construction without enough sales. This flooded the market with units and when the demand weakened, prices dropped right now.
Builders adopted the waiting strategy in the first half of the 2010s, but it wasn’t as big.
Between 2014 and 2015, 79% of projects waited until they had sold at least 70% of units before starting construction.
Unsold inventory was low. It was noted that when builders would rush for construction without enough sales, they were more likely to have a higher unsold inventory at completion.
What’s happening in 2025?
While 2025’s completion numbers are record-high, the construction pipeline is already contracting:
- Condos that started construction in Q2-2025 only have 1,276 units, down 57% year-over-year and 84% below Q2-2023.
- Units under construction have fallen to 64,623, down from a record 105,864 in Q2-2023, which is a 41,241-unit drop in just two years.
The market has an oversupply, which means we’ll see fewer new projects in the next few years.
If you’re a buyer, the resale market is a better choice for you currently. You can move into your new home within a few weeks instead of waiting for at least a couple years.
As an investor, assignment sales could still be a good investment, considering the unit is located in a well-established area, connected to the rest of the city with public transit, and has low maintenance rates.