How did we get here, where condo prices have dropped?
Nation-wide, condo prices spiked by over 29% between January 2021 and April 2022, according to the Canadian Real Estate Association (CREA). Since the peak in spring 2022, condo prices have fallen 12%. The decline in the Greater Toronto Area (GTA) has been even more pronounced, with CREA reporting condo prices down 19%.
A Toronto condo buyer who bought in spring 2022, at the peak benchmark price of $730,500, may have put down as little as 5%, or $36,525 for a downpayment. The current benchmark condo price of $593,000 (as of April 2025) implies that initial deposit plus more than another $100,000 of value has been wiped out. Even if the buyer still wanted to close on the purchase, their chosen lender might no longer want to finance it.
What options do you have if you’re unable to close on your pre-construction condo? Let’s look at different scenarios.
What happens if you sell your condo at a loss
To determine potential financing, lenders typically use a property’s appraised value at closing—not when the buyer signs the purchase agreement, even if they get a pre-approved mortgage. And when prices drop, buyers may find they cannot borrow as much of the purchase price as they had expected.
Some real estate developers work with banks to provide financing based on the purchase price rather than the appraised value. This may allow a purchaser to borrow more money, but it does not change the fact they may be buying an asset that is “underwater,” with more debt than value.
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A buyer in Canada could try to find other sources of financing like savings, borrowing against real estate they already own, or borrowing from family or friends. Private lenders may lend more than a bank, albeit at higher interest rates and with more fees and restrictions. Or a buyer could try to sell the unit before closing on it. This is called an assignment sale. However, the buyer’s deposit on the property may be less than the property’s price decline, and they could even have to pay the assignee to take over their contract and close on the condo instead. Note that assignment sales may need approval from the developer or be subject to additional fees. So, selling before closing may not be possible or practical.
If you can’t sell the condo—even at a loss—and you can’t get a mortgage, what other options do you have?
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