Measuring the Freeze: The Numbers
According to TalkCondo, 2025 is one of the weakest years on record for new condo sales. The GTA typically averages between 25,000 and 30,000 new home sales per year. This year, sales are tracking in the very low thousands (2,500 sales or so), which represents roughly a 90 percent decline from the ten-year average.
Minimal new launches: Only a few genuine high-rise launches have taken place in 2025, two of which are at the ultra-luxury level. The rest of the market remains stagnant.
Segment differences: The low-rise sector continues to see limited success, particularly for end-user-oriented projects priced realistically. High-rise developments are still struggling, with investors remaining on the sidelines and financing conditions tight.
Cancellations: Cancellations have increased significantly, even among large and established builders. Unlike ten years ago, when cancellations implied financial trouble or poor builder execution, many developers today are halting projects to protect buyers and refund deposits. In Bhandari’s words, “It is better to refund ten percent of buyers today than hold them for seven years waiting for a project that cannot get built.”
Price Discovery in Real Time
Price adjustments are the defining feature of the 2025 market. Several concrete examples show how far developers have to move pricing to find demand.
- A project in Mississauga launched at around $890 per square foot while competitors were priced at $1,200 to $1,300. Sales were slow until the builder reduced prices to the $860 range, which immediately triggered sales of approximately 100 units.
- In Oakville, a completed project repriced its remaining developer inventory from $1,100 per square foot to roughly $675, including parking and locker. The remaining units sold out in one weekend.
- A downtown builder that originally launched at $1,600 per square foot is now selling inventory between $1,050 and $1,100, putting it close to resale values.
TalkCondo visually tracks each of these price moves. The data shows that meaningful price drops, rather than small incentive packages, actually drive absorption.
Why the New Construction Market Remains Frozen
Cost Structure: Even though construction material costs have eased slightly, municipal development charges and government fees remain incredibly high. On a million-dollar condo, as much as $300,000 can go toward taxes and levies, leaving limited room for builders to reduce pricing. Politicians talk a lot about making homes in Canada affordable; if they ever got serious about this topic, they could start by reducing home prices.
Financing Conditions: Buyers are still qualifying at posted rates with conservative amortizations. The absence of foreign investors and reduced access to credit have further constrained demand.
Resale Sentiment: Pre-construction confidence depends heavily on expectations for future resale prices. When resale values are flat or declining, investor demand disappears, especially amid rising carrying costs and declining rents. When resale begins to increase again, pre-construction activity typically follows. As Ralph Fox noted, “The resale market wags the dog.”
Labour, Supply, and the Coming Shortfall
The slowdown in sales is already impacting construction employment. Contractors and trades are downsizing or leaving the industry. Bhandari expressed concern that when the market eventually returns, labour shortages will drive construction costs higher and delay delivery timelines.
TalkCondo’s internal projections indicate a clear supply cliff ahead. After two years of strong completions, the pipeline begins to fall sharply from 2026 onward. By 2029, completions could fall to fewer than 3,000 units, compared to the 25,000 to 35,000 new homes the region requires each year.
Even if developers resumed construction immediately, it would take a decade for the construction pipeline to recover fully. Many industry insiders are factoring in the complete end of new homes in their long-term forecasts and projections.
Closing Pressures and Developer Response
Buyers who purchased between 2000 and 2022 are now closing at a much higher interest rates. Some are struggling with appraisals that no longer match original purchase prices, given the current downturn.
Developers and lenders are responding more proactively than in past cycles.
Examples include:
- Blanket appraisals: banks like RBC are appraising at original purchase prices, which can be hundreds of thousands of dollars below market value.
- Early outreach by builders to identify financing issues ahead of closing and working with buyers under duress.
- Many developers are offering take-back mortgage and direct financing to help distressed buyers complete purchases.
Many developers are also hosting educational sessions for buyers, recognizing that cooperation is often the best way to avoid defaults and preserve long-term confidence in the market.
The Role of VIP and Platinum Agents
Toronto’s pre-construction market has long operated under a tiered distribution model. Bhandari explained that this system was developed because developers outsourced much of their marketing to experienced agents who built databases of qualified buyers. In exchange for that marketing effort, those brokers received priority allocations prior to a project launch.
When some developers attempted to use open, first-come systems, they often reverted to the VIP model because it was more efficient. The rational being, it is easier to coordinate 500 units with 25 experienced agents than 500 inexperienced agents, each selling one at a time.
Specialized brokers also understand the contracts and risks unique to pre-construction, which helps reduce rescission and default rates. If demand returns to even seventy perfect to prior peaks, Bhandari expects the VIP structure to remain part of the business model.
Policy Factors That Could Influence Recovery
Several policy and credit levers could help accelerate recovery:
- Reduction or restructuring of municipal development chargers
- Adjustments to mortgage qualification rules and amortization timelines
- More explicit guidance on the foreign buyer policy
- Incentives to increase purpose-built rental construction
If these conditions remain unchanged and interest rates stay flat, recovery will depend largely on a rebound in resale sentiment. Once resale prices being to rise, pre-construction will eventually follow, but that could be upwards of 5 years or even longer.
Key Takeaways from 2025 Data
- Sales volume are at historic lows, down roughly ninety percent from the ten-year average.
- High-rise projects remain frozen, while low-rise pockets show very limited strength.
- Price reductions are now the primary tool for generating sales.
- Cancellations are becoming common and are often a rational business decision.
- Developer inventory is being repriced closer to resale values across multiple markets.
- Construction activity will decline further between 2026 and 2029, setting up a significant shortage are likely once the market turns.
- Developers and lenders are more flexible than before in helping buyer close.
The Bigger Picture
Toronto’s pre-construction market in 2025 is officially dead, but the slowdown is also creating the next phase of scarcity. With fewer launches, increasing cancellations, and reduced labour capacity, the pipeline for 2029 and beyond is thinning quickly.
When demand eventually returns, the city will face a shortage that could take years to correct. In that context, the current freeze is not the end of the cycle but a reset.
Fox Marin has earned its reputation as Toronto’s premier downtown luxury real estate team, backed by over *$580 million in sales, more than 1,000 successful transactions, and over 500+ glowing 5-star Google Reviews. Discover the advantage of working with a proven team with a track record for winning results.
(*Source: Jan. 1, 2018 – Sept 1, 2025, RE Stats Inc. & Exclusive)
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This article was written by Ralph Fox, Broker of Record and Managing Partner here at Fox Marin Associates. Ralph is a Torontonian native who recognized from an early age that the most successful people in life apply long-term thinking to their investments, relationships, and life goals. It’s this philosophy, along with his lifelong entrepreneurial drive and exceptional business instincts, that help to establish Ralph as a top agent in the real estate market in downtown Toronto.
