How did we get right here, the place condominium costs have dropped?

Nation-wide, condominium costs spiked by over 29% between January 2021 and April 2022, in line with the Canadian Real Estate Association (CREA). Because the peak in spring 2022, condominium costs have fallen 12%. The decline within the Larger Toronto Space (GTA) has been much more pronounced, with CREA reporting condominium costs down 19%. 

A Toronto condominium purchaser who purchased in spring 2022, on the peak benchmark value of $730,500, could have put down as little as 5%, or $36,525 for a downpayment. The present benchmark condominium value of $593,000 (as of April 2025) implies that preliminary deposit plus greater than one other $100,000 of worth has been worn out. Even when the customer nonetheless wished to shut on the acquisition, their chosen lender would possibly not wish to finance it.

What choices do you’ve got for those who’re unable to shut in your pre-construction condominium? Let’s have a look at completely different situations.

What occurs for those who promote your condominium at a loss

To find out potential financing, lenders usually use a property’s appraised worth at closing—not when the customer indicators the acquisition settlement, even when they get a pre-approved mortgage. And when costs drop, consumers could discover they can not borrow as a lot of the acquisition value as they’d anticipated. 

Some actual property builders work with banks to offer financing based mostly on the acquisition value moderately than the appraised worth. This will likely permit a purchaser to borrow more cash, however it doesn’t change the very fact they might be shopping for an asset that’s “underwater,” with extra debt than worth.

A purchaser in Canada might attempt to discover different sources of financing like financial savings, borrowing in opposition to actual property they already personal, or borrowing from household or associates. Non-public lenders could lend greater than a financial institution, albeit at larger rates of interest and with extra charges and restrictions. Or a purchaser might attempt to promote the unit earlier than closing on it. That is known as an project sale. Nonetheless, the customer’s deposit on the property could also be lower than the property’s value decline, and so they might even should pay the assignee to take over their contract and shut on the condominium as a substitute. Observe that project gross sales might have approval from the developer or be topic to extra charges. So, promoting earlier than closing will not be potential or sensible. 

For those who can’t promote the condominium—even at a loss—and you may’t get a mortgage, what different choices do you’ve got?