With the recent cancellation of a 475-unit condo project on Appleby Line, a correction in the condo market may already be happening.
What are some of the reasons behind this market correction?
The transformation of GTHA’s condo market from housing to an investment vehicle for “mom and pop” investors didn’t happen overnight. The roots lie in policy changes, economic shifts, and the emergence of “pre-construction” condos as an asset people invest in.
1. The 1990s housing crash.
The first wave of small-scale speculation occurred in the late 1980s. Driven by rapid price growth, with prices doubling in just four years, many individuals bought new units with the intent to “flip” them before completion. The housing market crashed in the early 1990s, when the Bank of Canada’s prime rate peaked at 14.06%.
Following the crash, banks introduced a 70% pre-sale rule. Lenders began requiring developers to sell 70% of the units in the building before financing construction. This was a simple way for the banks to determine if the condo project made sense. Assuming investors did their due diligence – tiny rooms, no parking – 70% of the units won’t sell.
A young couple, starting out in life, is not in a position to buy a pre-construction condo and wait two or three years for construction to be completed. An unintended consequence of the 70% pre-sale rule is that it forced developers to rely on investors, people who can wait.
2. Tall, not sprawl.
The 2005 Greenbelt Act and the 2006 Places to Grow Act restricted sprawling suburbs. Suddenly, developers were forced to build up instead of out. In 2007, for the first time in the history of Toronto, high-rise condo sales outsold houses. The investment thesis: land for housing was now scarce, and condo values would continue to increase.
3. The 2008 Financial Crisis
After the 2008 financial crisis, our stable banking system and low interest rates made the GTHA a global safe haven. Pre-construction condos shifted from a way to buy a home to a tradable financial asset. Investors, or perhaps speculators, began using “assignments” to sell the pre-construction contract to someone else before the building was finished, taking profits without taking out a mortgage.
In our capitalist society, housing is largely a free market. Developers sell what people buy. To keep prices low for investors, the median condo size dropped from approximately 950 sq. ft. (1990s) to 640 sq. ft. (after 2016).
Airbnb launched in 2008, providing another incentive for investors.
The Result
One result is called price detachment. Prices rise based on what investors expect to sell for later, rather than what people can actually afford to pay in rent or mortgages.
In October of 2024, Statistics Canada released a report stating:
“The data released today show that there is a higher proportion of investment properties among smaller units (under 600 square feet) than among larger, more family-friendly units (800 square feet and over). For instance, in 2022, in the Toronto CMA, close to two-thirds (64.5%) of the new condominium apartments built after 2016 that are under 600 square feet were investment properties, compared with 44.1% of those that are 800 square feet and over. Meanwhile, the proportion of smaller units among new builds increased over time, from 7.7% of those built in the 1990s to 38.4% of those built after 2016.”
https://www150.statcan.gc.ca/n1/daily-quotidien/241003/dq241003a-eng.htm
Current Status (2026)
Many independent condo speculators are now losing money, unable to sell the units for what they paid, and unable to rent them for enough to cover mortgage payments, condo fees, and property taxes. These investors have stopped buying pre-construction units, and developers are unable to reach the 70% threshold required by the banks to finance construction.
Driven by the investor market, GTHA developers built thousands of “shoebox” condos (under 500 sq. ft.). In 2026, these are the hardest to sell because people don’t want to live in them.
Crashes in the housing market are not good for anyone; many Canadians rely on the value of their homes for their retirement plan. As condo owners tire of losing money, month after month, and sell, we may well see a crash in condo prices. Market adjustments, driven by supply and demand, take time as thousands of individuals make decisions about what is best for them: hold on for dear life and wait for prices to recover, or cut their losses and run. Would a vacant home tax tip the scales and put more units onto the market?
What does this mean for Burlington?
City Hall decided to build Bateman and expand Skyway in anticipation of population growth. The school boards have a strict policy of not building until the kids are in the neighbourhood.
In a council meeting, Basit quoted Councillor Galbraith, who owns prime development land in Aldershot, “you know, chicken or the egg, do you wait for all of these residents to go up and for people to be living in them before you start to collect the money and then make investments in community ammenities or do you try and do it at the same time and in a smart way.”
You can listen to Hassan Basit (former Burlington CEO) here:
The advantage of waiting until the homes are built is that property tax dollars from those homes help pay for additional services. The current situation suggests that existing taxpayers will pay off the debt the city took on to expand services.
The good news is that traffic may not get worse for a few more years.
The building in orange, 2076 Old Lakeshore Rd. has been approved. The developer may have to pause the other towers.
Further bad news: due to the housing crisis, the city has approved numerous towers with thousands of units. Once approvals are in place, the developer may wait years before starting construction.
The question before the City Council on Monday, February 9th (2026), is whether eliminating development charges in Burlington will save the development industry. In a free market, to what extent are Burlington taxpayers responsible for the development industry?
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The approval of 2076 Old Lakeshore should never have happened. This is basically a hotel with 50 condominium Units. There are 82 parking spaces for a hotel with 154 rooms and 50 condominium units that supposedly will be rentals. So, either the renters get 1 parking spot which would mean 50 of these spots are already taken leaving 32 parking spaces for hotel guests. Perhaps the renters will have no parking spaces.
When asked what they plan to do if they do not have enough parking spaces for the hotel guests their answer was ” we will use private parking in the area to accommodate the overflow”. My question – where in the downtown core is there enough “private parking” to handle these cars?
All cars will be taken down to the parking garage by 2 elevators that can each hold 2 cars. Valet parking only. This could be a nightmare if the Valet is busy when you are trying to get into your rental unit.
Because this development is a hotel the developer does not have to meet the criteria of selling 75% of the units before getting financial funding. He can start building at any time.
The 50 units are registered as condominiums. Presently they will be rentals but at any time the developer can decide to sell them.
What did the City get in return? The developer has promised to give a small piece of land on Old Lakeshore Road that cannot be developed. This “gift” is supposedly wonderful because it extends the Waterfront Trail. Unfortunately this trail ends at Emma’s Back Porch. Smoke and Mirrors.
Did I forget to mention that this small piece of land belongs to Conservation Halton. The developer does not even own this land.
This is a disaster waiting to happen. Pretty soon no one will be coming to the downtown core to shop or eat in the restaurants. Traffic which is already bad will become a nightmare which will be exacerbated by the lane closures on Lakeshore Road to accommodate the outdoor patios.
Time for change at City Hall.
The greenbelt acts like a fence around the GTA, thus any land inside the greenbelt becomes significantly more expensive as it is a finite resource .Build on or outside the greenbelt and land becomes cheap again