If you bought a pre-construction condo during the market hype of 2017 or 2018, you probably remember the pitch: “You’ll never need to close, you can reassign before occupancy and walk away with a profit.”
Many investors believed it. Some paid over $1,400 per square foot for units they thought they’d never own. But after years of construction delays, financing hurdles, and rising rates, those same projects are now completing and the market looks very different. These closings are not just transactions, but they are a test of liquidity, timing, and endurance. The arithmetic that once justified record presale values no longer hold.
For investors preparing to take possession in 2025 or 2026, the challenge now is less about buying and more about surviving the closing and holding phase of the investment cycle. An area where our long operational experience becomes essential at Buttonwood Property Management.
The Market Reality Behind 2025 Closings
The average selling price of condominium apartments in the Greater Toronto Area stood at $685,961 in Q2 2025, reflecting a 5.9 percent year-over-year decline, according to Toronto Regional Real Estate Board (TRREB). Simultaneously, data shows that only 502 new condo units transacted in Q2 2025, the smallest quarterly volume in decades and a clear signal of diminished pre-construction activity. CMHC’s 2025 analysis notes a condominium downturn characterized by rising inventories, tighter lending, and investor financial strain as valuations reset.
Financing costs continue to weigh on liquidity. RBC describes the pre-construction sector in a deep freeze, with sales “plummeting” to crisis-era levels as carrying costs and risk reassessments deter buyers. At the same time, the pipeline is delivering, as urbanation projects around 31,400 condo completions in 2025, before a step-down in 2026 as earlier starts clear.
The practical takeaway for investors approaching title transfer in 2025-2026: conditions are orderly but return profiles are thinner, with slower resale velocity, cautious underwriting, and a larger flow of newly completed units shaping pricing and timelines.
Appraisal Gaps and Financing Shortfalls
At many 2025 project closings, appraisals are no longer keeping pace with the prices written into contracts years ago. Reports from major lenders and mortgage brokerages show valuation shortfalls ranging from 10 to 30 percent. For some owners, this extends well beyond a mere paperwork issue, but represents a true financial crisis.
The funding equation has shifted: deals that once cleared smoothly now require additional equity injections to meet lender ratios. Appraisers describe a steady rise in files where the contract price exceeds the certified value by wide margins, creating last-minute negotiations over financing and risk coverage.
When a lender values the unit lower than the contract price, the buyer must cover the difference in cash to meet loan-to-value requirements. For a $700,000 condo, that can mean tens or even hundreds of thousands of dollars at closing. Those unable to bridge the gap risk losing their deposits entirely, while others have had to write sizable cheques just to complete the deal.
Assignment activity has thinned to levels rarely seen outside crisis periods. Market data indicate resale listings for unclosed units have dropped to a fraction of their prior volume, a reflection of tighter credit and reduced investor liquidity. Recent surveys confirm that new-condo transactions remain near record lows even as completions accelerate, leaving more buyers exposed to appraisal gaps they did not anticipate.
We’ve seen buyers who once expected to profit on assignment now struggling simply to break even, and in some cases, walking away after years of payments. This is the new reality of the pre-construction condo investment cycle: the returns are slower, and the risks are real.
Rental Demand and Market Resilience
Toronto’s rental market continues to hold firm, even as affordability tightens. CMHC data still show low vacancy levels across both new and older buildings, a signal that supply has not caught up with population growth. Rents have levelled off after several years of sharp increases, but demand has not disappeared, it has simply become more selective.
Tenants are looking for value, and units priced within realistic market bands continue to move quickly. These over-asking listings often linger, as owners set unrealistic prices based on their high carrying costs rather than true market value. From our experience managing a broad GTA portfolio, our occupancy at Buttonwood has remained stable when pricing reflects true absorption levels and tenant quality is verified before signing.
This discipline, more than headline rent growth, is what keeps our revenue steady through shifting cycles.
High Carrying Costs and What They Mean for New Built Condos
For buyers closing in 2025, the math looks different than it did a few years ago. Interest rates, insurance premiums, and condo-fee budgets have all climbed, reshaping what used to be straightforward return models. The Bank of Canada’s rate reductions have offered some relief, yet borrowing costs remain high enough to compress margins.
At the same time, operating expenses keep edging up, like utilities, property taxes, and building maintenance that rarely move in reverse. The result is a slimmer yield environment, with the return on investment in the GTA sitting around 2 to 3 percent for prime properties, a level that rewards careful budgeting over speculation.
Drawing a record of only six evictions for non-payment across thousands of leases, we continue to maintain strong occupancy rates and stable cash flow for our clients through disciplined cost control and proactive leasing strategies.
It’s not an environment for quick gains, but for steady stewardship that prioritizes occupancy, cash flow, and long-term asset health.
What Defines a Prime Property?
Not all condos perform the same, and in a market this competitive, the details matter more than ever. When evaluating or holding a unit, we encourage investors to focus on fundamentals that drive both rental demand and long-term appreciation:
- Location: Proximity to transit, grocery stores, and employment hubs.
- Owner-occupancy ratio: Buildings with more owners than renters often maintain better upkeep and community standards.
- Square footage and layout: Practical floor plans outperform ultra-small units in resale and rental value.
- School district: Good catchment areas remain a quiet but powerful driver of demand.
- Amenities and fees: Gyms, connectivity, and well-managed maintenance programs add value, but high condo fees can erode returns.
- Build quality and reputation: Developers with consistent delivery records and durable materials tend to command more stable resale prices.
Over time, these elements separate prime condos, the kind that return 2–3% steadily, from speculative ones that promise more but deliver less.
When Selling Stalls: Turning Strategy into Action
For many investors, the hardest part of closing isn’t the paperwork, but it’s what comes after. Units that once seemed easy to resell can sit on the market for months without serious offers. Each passing week adds stress: mortgage payments, maintenance fees, and property taxes accrue while the property remains idle.
This is where management decisions start to matter. Our team at Buttonwood works directly with owners to reframe these holdings as income-generating assets rather than dormant listings. Our process connects investors with an active network of qualified tenants and buyers, supported by marketing systems designed to draw attention from engaged agents. Our interests with investors are very much aligned; we only get paid when you get paid.
If selling momentum doesn’t materialize, the company pivots swiftly to secure reliable tenants instead of letting months of revenue slip away. That agility, backed by more than fourteen years of operational consistency, keeps our owners positioned to recover.
Builder Defaults and New Inventory Pressures
Behind the scenes, some developers are quietly absorbing units that purchasers could not close. Financing hurdles and shifting appraisals have created a secondary wave of inventory now returning to builders’ hands. In many cases, these units are being held for future release or added to rental stock, subtly reshaping local supply dynamics.
The effect is uneven as seen in select projects, temporary oversupply has softened resale sentiment and introduced modest pricing pressure, while other pockets of the market remain resilient due to location or scarcity. CMHC and Urbanation both note that although near-term availability has increased, fewer new projects are breaking ground, which signals that builders themselves are bracing for balance to return later in the cycle.
For individual investors, the message is simple: the next advantage will belong to those who can hold through the adjustment.
Long-Term Perspective for Preconstruction Investors
No one has a crystal ball, but after managing thousands of transactions, we can see clear patterns forming. Toronto’s condo market hasn’t hit bottom yet, especially for investors closing on older preconstruction contracts. Prices may adjust further in the short term, but that correction is setting the stage for the next upcycle.
Few new projects are launching, and it takes years to deliver a newly built condo. The pipeline is effectively dry, which means the current surge of completions will eventually give way to tighter supply and renewed price growth once demand absorbs existing inventory.
Our view is simple: hold where you can, rent intelligently, and plan for recovery within the next 12 to 18 months. Real estate wealth isn’t built in bull markets, it’s preserved through patience and professional management when things slow down.
Managing the Hold Phase: From PDI to Leasing
The road to closing a pre-construction investment has rarely been this complex. Financing gaps, slower resale activity, and rising ownership costs have tested even experienced investors.
Through every phase, from PDI inspection to leasing and long-term asset care, at Buttonwood Property Management, we offer steady, hands-on support rooted in years of operational experience and a proven record of tenant reliability.
We safeguard each property so that our clients can stay focused on what endures: long-term growth and lasting value.
