Historically, pre-sales were priced at a discount that reflects project risk. The risk which developers shift onto the consumer. When you buy off-plan in Toronto today, you assume the risks of project delays, financing risk upon project completion, and price risk (if the market drops and you end up paying more than your neighbour for an identical unit). In return, you pay a lower price.

In the past decade of astronomical price growth, this was turned on its head. Buyers paid a premium because they were confident the price risk would work in their favour. Unsurprisingly, now that buyers are recognizing the risks they take on with pre-sales, they are pushing back.

Developers Want Relief—But From Whom?

Faced with slowing sales and rising costs, developers are lobbying governments for support. BILD argues that high development charges, GST/HST, and municipal fees are choking supply and threatening the region’s housing pipeline. They want intervention.

But the call for subsidies is politically awkward. Resale buyers, many of whom are selling for less than expected, receive no such aid. In April 2024, nearly half of condo resales fell within the $400,000–$600,000 range, indicating that affordability has returned, albeit with some losses for sellers. If individual homeowners must bear the market risk of lower prices when they sell their homes, why should developers be exempt?

Risk Should Be Priced, Not Passed Along

Toronto’s apartment market is not broken. It’s going through a painful adjustment to a more normal and balanced market.

The resale segment is functioning as markets should when buyers regain bargaining power.

One of the largest costs in building condos is land. Many developers overpaid during the boom years, assuming prices would keep rising. They now face thinner margins and fewer exits. While cost reductions are welcome, the presale model itself is under scrutiny. Buyers no longer want to pay a premium price while absorbing the risk of a project not yet built, especially in a softening market.

The danger is not to the market itself, but to developers who bet on never-ending appreciation. They now find themselves caught between cost pressures, cautious consumers, and the hard reality of market risk.

Resale apartments may have cooled, but they remain liquid and price-transparent. The same cannot be said of presales. The notion that government intervention will revive demand for high-priced, high-risk units is wishful at best.