Toronto condo market in crisis mode

Toronto’s condo market is experiencing a crisis, with the market for pre-construction condos coming to a near-halt. The city, which has been a hub of construction activity in North America, has seen a significant decline in sales and prices. This decline is attributed to a combination of factors, including a rise in interest rates and a decline in population growth.

According to the report, the number of pre-construction units sold in the Greater Toronto Area in December 2025 was just 87, the lowest single-month total in 45 years. Developer activity has also slowed, with only 10 new condo projects launched in 2025, compared to the dozens typical in a healthy market.

The real estate market in Toronto has been driven by demand from investors, who have been buying pre-construction condos as a kind of futures bet on the market. The remaining new home inventory has hit a record high, equivalent to over two years of sales.

The crisis in the condo market is not just a real estate issue, but also a failure of economic forecasting. The field of economics has been criticized for its inability to predict extreme events, such as the collapse of major financial institutions during the Great Financial Crisis (GFC).

Traditional economic models, which rely on normal distributions and the assumption of efficient markets, have been shown to be inadequate in predicting tail events and market anomalies. The GFC was a wake-up call for economists, highlighting the need for new approaches that account for uncertainty and complexity.

Frank Fabozzi and Sergio Focardi, in their book Adaptive Finance, argue that the need for models that can predict tail events and market anomalies has become increasingly apparent. They suggest that the deterministic models of the past are giving way to new approaches that account for uncertainty.

The condo market crisis in Toronto is a reminder that economists need to consider new insights and approaches. Instead of relying on traditional models that have been shown to be inadequate, economists need to develop new models that can account for uncertainty and complexity.

The field of economics is slowly moving towards a new paradigm, one that recognizes the importance of uncertainty and complexity. This new paradigm is characterized by a shift away from deterministic models and towards more detailed and adaptive approaches.

The condo market crisis in Toronto is having a significant impact on the community. Many investors who bought pre-construction condos are now facing significant losses.