In Toronto, a church slated for conversion into condos at the intersection of High Park Avenue and Annette Street has remained partially unfinished for several years. The construction of the 70-unit condo project commenced in 2019 but has been at a standstill since 2023. Phil Earnshaw, who put down a $280,000 deposit in 2018 for a two-bedroom unit, expressed concern over the lack of progress, noting the absence of any activity at the site.
Last year, the project went into receivership and was subsequently sold to another developer earlier this summer. This change in ownership means that purchasers like Earnshaw, who made deposits before construction began, will not receive the units they intended to buy and are now awaiting refunds. The situation with the stalled High Park development mirrors a trend seen across various condo projects in Toronto facing cancellations or receivership, with expectations for this trend to continue.
The Canada Mortgage and Housing Corporation (CMHC) recently released a report indicating a decline in condo construction in Toronto. Urbanation, a real estate consulting firm, has identified nine cancelled projects in the city so far this year, on track to match last year’s total of 11 cancelled projects comprising 2,581 units. The firm foresees this trend persisting in the coming quarters as many projects encounter challenges with sales.
Urbanation reported that the number of cancelled condo projects peaked in 2021 with 2,153 units cancelled and in 2017 with 1,809 units cancelled. According to Michael Niezgoda, Senior Manager of Market Research and Development at Urbanation, the reasons for project cancellations have shifted. While past peaks were mainly due to individual developers’ financial struggles, the current trend reflects broader market dynamics such as a lack of buyers and escalating costs.
The CMHC report highlights a significant drop in condo starts in Toronto in the first half of this year, contributing significantly to the overall decrease in housing starts, reaching levels not seen since 2009. Urbanation is monitoring 16 projects in Toronto that were launched over a year ago and have sold less than 40% of their units, signaling a potential increase in project cancellations.
Investors, who have historically been key buyers of pre-construction condo units, are now turning away from such investments due to diminishing profitability, according to the CMHC report. Buyers like Earnshaw, who once considered renting out their units, are now reconsidering their investment due to changing market conditions. Despite the challenges faced by the condo market, experts like real estate lawyer Bob Aaron anticipate a shift in the market dynamics in the future, emphasizing the cyclical nature of real estate trends.