What Collapsing New Condo Sales Tells Us About the GTA Housing Market

Wahi speaks with Ben Myers, president and founder of Bullpen Consulting, about the current state of the GTA housing market — and where it’s headed.

By Josh Sherman | 2 minute read

Ben Myers has more than 20 years of experience in the real estate industry.

As the president and founder of Bullpen Consulting, Ben Myers advises real estate developers and lenders on the viability of new housing projects. While he primarily focuses on the high-rise pre-construction market, that segment doesn’t exist in a vacuum. What’s happening in the new condo market has knock-on effects for the resale market — and vice versa. 

We recently sat down with Myers to learn about the interplay between the new and resale markets, what to expect looking forward, and more. 

Wahi: Some of the numbers coming from the GTA housing market are staggering. There were fewer than 500 new condo sales in the Greater Toronto and Hamilton Area in Q3, according to a report from Zonda Urban. That’s fewer than 500 sales in a region that’s home to seven million people. Before we look ahead, can you describe what’s been going with new condos for the past year or so to provide some context?

Ben Myers: Last year had less than 5,000 new condo sales. If we look back a few years, it was 35,000 during the peak of the market. So it’s been a significant dropoff and probably the worst since the mid-1990s and the recession — before my time in the housing market and before the time of many of the developers who are active in the marketplace.

It really was a — I’ve been saying — a toxic soup of things that happened with COVID, emergency-level low interest rates, product inflation due to COVID, [and] major increases in the taxes that are charged on new developments. Most people are not aware that on the average new condo, 30% of the cost goes to government fees and taxes. So $150,000 on a $500,000 condominium goes to various levels of the government. The city increased those at one point in time 46% in a single year — so pretty crazy growth. Then, on top of that, as prices continued to go up, investors continued to buy and saw that as them making money when technically they were not actually making money.

Now we’ve run into a period where investors are completely out of the new condominium market, so we’re seeing extremely low levels of sales. I think this is unfortunately going to be something that lingers for many years.

It’s going back 10 years, when investors started to buy condos solely for capital appreciation. They no longer worked as delivering cash flow on a monthly basis. It was only a matter of time before prices couldn’t continue to go up, and the gap between the price of a new condominium and the price of a resale started to get to 25%, 30%, 35%. When it was 10 to 15%, that made a lot of sense. A building’s going to take three-to-four years to complete, the markets going up 3%-7% annually, so they buy a unit and it’s worth more when they take occupancy.

But that is no longer the case because of the bubble-like growth we experienced in 2021 and early-2022, so it’s going to be a pretty long process before developers can get pricing down to a level that entices investors.

Wahi: Could the cratering new condo market end up benefiting the resale market? When investors do come back, will they opt for existing homes because of the lower price points? And could this renew the struggling resale condo market?

It’s always difficult to tell. The resale condo market tends to lead the new condo market. When investors start to jump back in the market, it’s because the resale market has shown some resilience. Really, the only recent example is the global financial crisis going back to 2009, when there were 900 sales in Q1 of 2009 as the world was experiencing the aftermath of syndicate mortgages and all that fun stuff. But in the second quarter of 2009, the resale market set a record for transactions. So it really came right out of the shoot. We were much better prepared for what was happening in the mortgage market — obviously we had more conservative underwriting from our lenders — and that led to a strong second half in 2009 of 10,000 sales.

But… the bubble that we had in that 2021 and early-2022 period in the new condo market was just obscene. Pricing was going up at 30 to 40% a year and, again, the gap between what a new condo was being priced at and an equivalent resale — so something that was recently completed — could exceed 40%.

Some of that was developers just saying, ‘Hey, I can sell it for what I want.’ But one of the biggest parts of the inflation was actually trade profits. The trades were seeing how fast prices were going up and how many sales were happening [and saying], ‘Now I can charge more for my services for the build-out of a new condominium.’ That will slowly start to go down as the number of cranes come down and buildings get completed.

So for the future of resale, it’s really almost running on a four or five year cycle. We had really strong sales in 2021 and early 2022. We won’t actually start to see those buildings — some of the stuff that happened at the peak of the market — completed until 2026. Sales were slow in the second half of 2022, bad in 2023, and terrible in 2024.

Fast forward to 2028, and we’ll have this massive undersupply of new housing units in the marketplace which will ultimately drive up rental rates and resale pricing. I imagine a lot of investors out there will try to time the market — you know, what’s the lowest point in the marketplace — and try to jump back in. Again, that’s anyone’s guess, but it’s certainly a cyclical market.

Wahi: Given the construction slowdown, once everything that’s under construction is completed, it’s going to be years before we see a new condo building in Downtown Toronto. Do you think people realize what this means for affordability and how much worse it could get?

People see the towers. They drive down the Gardiner and the DVP and they see the high-rise buildings and they just assume we are building a record number of units. But if you look at the GTA as a whole, or the Toronto CMA as a whole, we built more units in 2002 than we did in 2024 despite the fact that we built record condominiums [last year]. People weren’t driving in North Whitby and North Brampton and Milton [in 2002] and seeing the massive delivery of single-family and townhomes that were happening in those years. The average unit was probably 2,500 square feet, and now the average condominium is 680-700 square feet.

The problem with the politicians is they like to look at the market as units — just solely units — but when a unit can be 275 square feet or a unit could be an 8,000 square feet house on a 70-foot lot, it’s not exactly comparing apples to apples. We need to look at how much square footage is getting delivered and how many bedrooms are getting delivered.

We’ve continually undersupplied the market, we haven’t given the market exactly what it wants. Any survey that’s ever been done, people want to live in single-family homes or townhomes. We’re significantly underdelivering that type of housing, and it’s causing people to move farther out.

Wahi: How do you assess the impact of the federal government’s recent limitations on immigration on the housing market?

That’s the hardest one to wrap your head around. Obviously more immigration and more foreign students is good for demand that either pushes prices up or in a market like this keeps them a little bit more stable.

So many immigrants want to come to the GTA that we may decrease the number federally, for the entire country, but it still may not significantly decrease the number of people who come to the GTA. That’s why it’s difficult to assess the impact.

We also have what’s called latent demand. There are adults living with parents into their 30s, we have people in their 40s living with roommates. If rents are to come down, those people are going to start their own households and create their own demand, and so it’s always difficult to really get a sense of how reducing the amount of people coming into the country ultimately impacts prices and rents in any specific area.

Wahi: What percentage of pre-construction condo buyers are investors compared to end users who intend to live in the unit they purchase?

It really depends on where, but if I was to look at a building down here [downtown Toronto], it would probably be anywhere from 85% to 95% investors, maybe 5% end users. Is that good or bad? It really depends on your outlook.

If the investors didn’t exist, then those units wouldn’t be built or sold. It’s difficult to get an end user to commit to buying a unit in a 75-storey condominium building that started sales in 2025 and is not occupying until 2032. If it wasn’t for that investor who has the profit motivation, that unit would not exist.

What’s the ideal mix? I don’t know. I think what needs to change is the way buildings are financed. The lenders often require not only 75% of the building to sell but 75% of the revenue of the building, too, so that really changes the way that developers program their building. Because the small units sell to the investors first, they’ll do a lot more small units.

I don’t think it’s going to change even when the market does come back — whether the market comes back in 2027 or 2028. I think it’s still going to be a market dominated by investor-buyers, and if the government wants that to change then they’ll have to work with the lenders to get that to change. Or they’re going to have to provide some kind of incentives for end users to purchase new condominiums, which I find very unlikely.

This interview was edited and condensed for length and clarity.