A Market in Pause: Land Transactions Hit Record Lows
Let’s start with the big picture. Land transactions in Toronto have taken a nosedive. In 2021 and 2022, developers snapped up $18 billion and $16 billion of land, respectively. By 2023, that number plummeted to $6.4 billion; as of 2024, we’re sitting at under $1 billion year-to-date.
Why the steep decline? Developers are effectively hitting the “pause” button. The pipelines are frozen, and pre-construction sales are down 90% from the 10-year average. Steve explained it perfectly in our conversation: “When products ( new homes) aren’t selling, developers stop buying land. It’s as simple as that.”
Land Prices Are Down—Is Now the Time to Buy?
Here’s where things get interesting. While the market slowdown has created challenges, it has also created opportunities. Land values have dropped significantly—from $300 per buildable square foot in mid-2022 to $100–$150 today. Steve described it as a once-in-a-decade opportunity: “Land has never been relatively cheaper in Toronto. If you’re looking to buy, now might be the time.”
That said, the market isn’t without its challenges. Sellers are still clinging to pre-pandemic valuations, hoping for a recovery that hasn’t arrived yet. This stalemate has slowed down transactions further, but for buyers with capital, according to Steve, “it could be a golden moment.”
Pre-Construction: A Market on Ice:
Pre-construction condos have always been a hot commodity in the Toronto real estate landscape, but they’re at a dead standstill. Rising costs and a narrowing gap between resale and pre-construction prices have left investors hesitant to invest.
Historically, pre-construction condos commanded a significant premium over resale condos, with a 20% spread. Today, that premium has accelerated beyond reason, with resale condos trading at 1000- 1200 price per square foot and new construction trading at $1600- $1800 price per square foot. As Steve noted, “Until resale condo prices rise and dramatically narrow that gap, we’re not going to see pre-construction take off.”
Resale Market: The First Signs of a Rebound:
Despite the challenges in land and pre-construction (new home) sales, the resale market is showing some signs of life. Detached and semi-detached home prices remain strong, and activity and buyer sentiments are improving! Just last week, a property on the city’s east side received 18 offers and sold well above asking—a clear sign that confidence is beginning to return. As the market starts to rebound, look for the low-rise resale market to lead the charge. Once it starts to absorb inventory, pre-construction and development typically follow.
Advice for Buyers: Be Bold:
If there’s one takeaway from my conversation with Steve, it’s this: bold moves in moments of uncertainty often pay off. For buyers, the current market offers rare opportunities, whether negotiating on unsold pre-construction inventory or taking advantage of low land prices for developers. Warren Buffett’s timeless advice is, “Be greedy when others are fearful.” Yes, there is a lot of fear and uncertainty in the market, but that’s often when the best opportunities arise.
Policy Challenges & the Role of Government:
Of course, the discussion about Toronto real estate will only be complete by touching on government policy. Recent government incentives, like development charge (DC) waivers for rental projects, haven’t done enough to spark meaningful change.
As Steve put it, “Developers need margins to take risks. If the numbers don’t work, no one’s building.” The solution? Public-private partnerships, like the recent redevelopment of 610 Bay Street, offer a blueprint for how the city and province can partner with the private sector. However, this is just the start and broader systemic changes are needed to address the city’s housing challenges meaningfully.
What’s Next for Toronto Real Estate?
So, where do we go from here? Steve and I agree that we’re nearing the bottom of this market cycle. While the short-term picture may be uncertain, the long-term outlook for Toronto Real estate looks bright.
Over the next three to five years, we expect land values to recover, resale prices to climb, and pre-construction activity to increase again.
Final Thoughts:
Toronto’s real estate market is resilient. Yes, we’re in a moment of contraction and uncertainty, but we have survived the worst downturn.
Whether you’re a first-time buyer, a seasoned investor, or someone trying to make sense of everything, staying informed is your greatest asset. If you’re considering a move or want to discuss your options, my team at Fox Marin Associates is here to help.
Contact Fox Marin, Toronto’s downtown luxury real estate brokerage, today to learn more about the advantages of hiring a quality team!
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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.
