What Causes Pre- Construction Condo Delays?


9 minute read

February 27, 2023

Thanks to the readers for suggesting blog topics before the long weekend!

As you saw in Tuesday’s blog post, I took one such suggestion to heart.

And now, a second one, as a reader provided a request that I think has merit.

Here’s the comment:

Ah, Densha!

Thank you for taking us back to that place that we all thought we had left for good: pre-construction.

It’s my least favourite topic and that’s because it used to be my most favourite topic.  And because I’m a cynic, you can correctly assume that my “most-favourite” topics were ones that infuriated me to no end.

I started blogging (ranting?) about the pre-construction condo industry just as soon as this blog was launched back in 2007.

Somewhere along the line, I grew tired of it.  Not only because I said the same things over and over, but because the more I ranted about the perils of pre-construction, the more slimy real estate agents rushed to gain VIP access to “launch parties” so they could chase 4% commissions.

Pre-construction “experts.”


Like the crypto-expert who keeps popping up on your Instagram feed in that photo of him standing in front of his three Lamborghinis…

Some people just never got it, and never will.

There’s a comment on one of my YouTube videos from 10+ years ago where I’m ranting about the $800 per square foot price of pre-construction condos in one particular development, and the comment says, “This didn’t age well.  Prices are $1,200 now.”

That missed the point.

The point was that resale condos were $650/sqft at the time, so a buyer in that development was paying a massive premium just to take on a slew of risks that don’t apply to resale.

As I said, some people will just never get it.

I rarely write about pre-construction these days, but if somebody has a question or a point, I’m always happy to chime in.

Blog reader Densha asked about pre-construction condo delays and it’s a good topic.  Sadly, it’s a good topic because these condos are always delayed and the “horror stories” are extremely common.

So what are the reasons for these delays?

In my mind, there are five major ones, and as you’ll read shortly, they all somewhat tie into one-another…

1) Deliberately misleading target completion dates.

I was down on Front Street this week with clients who sold in 2019 and are now back looking to purchase again.  We passed by the St. Lawrence Market and they marveled at how the north market is almost finished.

Almost finished?

How long did that take?

It was 2009, if you can believe it, that the international architectural competition was launched to find a design for the north market.  David Miller was the mayor and came up with the idea.  That is how long ago this was!

Here we are, fourteen years later, and the Market is almost finished.

Torontonians have grown so accustomed to delays that we simply expect it.

So why in the world are pre-construction condo buyers caught off guard when the nonsense timeline they were purchased by the builder doesn’t come to fruition?

When you walk into a sales centre in February of 2023 and the advertising reads, “Move after New Year’s, 2025!” you have to know that’s bullshit, right?

It kind of reminds me of this:

Yeah, I know I’ve done this bit here on TRB many, many times.

But as a 10-year-old, I really, truly believed the advertising and thought I was getting twelve CD’s for a cent.

Condominiums don’t get planned, sold, built, and turned over within two years.

And yet every developer out there promises a timeline that’s absolutely impossible, unless you live in North Korea where you can build a new hospital in four months.

Many pre-construction buyers express displeasure with the “delays” simply because they don’t have the experience, knowledge, or downright cynicism and distrust of developers to know that the target completion dates presented during pre-sales is always far earlier than anything approaching reality.

I told this story before a few months ago: A new agent in our office asked aloud, “What percentage of condo projects end up delayed?”  Almost in unison, three of us shouted, “All of them.”

The “fine print” in developer agreements is nothing short of fantastic.  They don’t need to adhere to the target completion date, nor are those “estimated maintenance fees” anything but a pie-in-the-sky number.  Oh, really, the monthly fees in this project are only going to be $0.50/sqft?  Go on…

So if you’re a buyer and you’re feeling snake-bitten by a “delay” in your project, ask yourself if you had a realistic expectation to begin with…

2) Approvals.

Years and years ago, I was trying to explain pre-construction condo sales to a group of Manhattan bankers who had come in for the day to investigate the Toronto market while looking for the next “big short.”

I remember ranting, uninterrupted for a solid five or six minutes, before I said something that made one of the guys reach out, grab my hand, and say, “Hang on……..can you say that again?”

“Projects don’t need to be approved before a developer starts advertising and selling,” I said.

The whole table went quiet.

“This is the fucking Wild West,” the guy said.

One of the many issues I’ve had over the years with pre-construction condo sales is that the buyers aren’t really buying anything.  They’re simply making a bet.

A developer is looking to build a condominium to his specifications, within his timeline, with his projected profit margin, and on, and on, and on.

Some do, some don’t.

And along the way, there are all kinds of changes to the timeline, the condominium structure, and the project itself.

Some developers start sales when they have the exact project that they want, fully approved in every way from every regulatory body.

Others just shoot first and ask questions later.

3) Sales.

Another “across the table” conversation I had many years ago with a group of Manhattanites had to do with the concept of selling before a property is built.

Yes, seriously.  This is how long ago this was, and this is how foreign the concept was to a group of very astute, very savvy, very informed individuals who worked in the financial markets.

One of the guys said, “I was looking at an apartment on the Upper West Side that was almost done, and we walked through with an agent saying, ‘This is going to be a marble counter, and this ceiling will be coffered,’ but the apartment was done and built.  The building was finished.  It was just the final touches that we were negotiating, and it still made my fiance and I feel uneasy.”

Imagine his response when I told him that here, in Toronto, we sell nothing and the buyers of said nothing simply wait to see what happens.

It’s almost impossible to think of a day when a condominium in Toronto is built and then people buy the units.

But we’ve grown so accustomed to developers selling units in advance that the opposite idea is completely unreasonable.

Lost in this, however, is the fact that the project isn’t going to get built if the developer can’t sell enough units.  And since the developer provides iron-clad agreements to buyers, the developer can effectively wait as long as it takes to get those units sold!

Contrary to popular belief, not every condo sells out in 48 hours after the pre-pre-V-VVIP sale where buyers line up overnight while wearing purple wrist-bands.

Some projects are tougher to sell than others, whether it’s due to the location, price, project, or the lack of flash and pizzazz that often help to flog these magic beans.

Thanks to Urbanation, I have data for virtually every cancelled condo project in the last twenty years.

There are different columns for “total suites,” “total sales,” “percentage sold,” and finally, “months to 70% sold.”

Halo Residences on Yonge and The Clover, both by Cresford Developments, were only one month to 70% sold in 2016 and 2015 respectively.

But Union Lofts by Windmill Developments were a whopping 28 months to 70% sold in 2012.

All three projects were canceled and/or re-sold.

But there are many projects that take five, ten, fifteen, or twenty months to get to the 70% threshold that aren’t canceled.  It just means these projects will be delayed.

A project that only takes one month to 70% sold is far less likely to be delayed than a project that takes one year to 70% sold, but there’s still no guarantee that either is finished on time.

And as we saw in point #1, what is “on time” anyways?

In bull markets, it’s almost easy to get to the 70%-sold threshold, but there have been long periods of sluggish sales in the pre-construction industry and that’s likely going to be a larger cause of a delay than any of these points on our list today.

4) Financing.

This both is and isn’t related to point #3 above.  Let me explain…

As noted already, developers don’t build a condominium and then sell the units.  They pre-sell the promise of a unit to a buyer who puts down a deposit.

So who actually pays for the cost of construction?

Not the buyers!  And not the developers!

Financing condo construction can be very tricky and it’s why so many projects end up being delayed or canceled.

For background consider the following…

I talk occasionally about how I work on land consolidations for developers, and while the idea of buying up a block of old houses, rezoning them, and building a condo is a sexy topic, what’s very unsexy is how to get from A to B.

When it comes to financing, who pays for the purchase and how?

Let’s say we bought a whole city block of homes for $90 Million.  Is the developer paying for that?

Unlikely.  Very few developers, believe it or not, have that kind of money.

Will a bank finance this purchase?

Not in a million years!  Not a chance.

Why, you ask?

Well consider how land consolidations work, ie. you’re paying people more than fair market value for your homes.

A dozen houses worth $2 Million each might be purchased for $60 Million because, together, they could be rezoned and approved for a 50-storey tower, and suddenly that land is worth $200 Million.

But is a bank going to lend based on that $60 Million purchase price?


The houses are only worth $24 Million, right?  A dozen houses at $2 Million each?

No bank is going to lend on that $60 Million purchase price.

So the developer often looks to the sellers for a 50% vendor take-back mortgage, then finds a partner to cove the other half.  So of the $60 Million purchase price in the example above, maybe the developer has $15 Million in cash into the project.

Once the land is rezoned and the project is approved, the bank will refinance, and the developer can pay off the vendor take back mortgages and whoever else lent money.

But that can often be two years away.

Now, consider that these issues with financing, in our example where a developer is rezoning existing real estate, take place before there’s any approval, let alone sales.

So imagine what happens once a project is approved, sales are underway, and there’s a host of lenders involved?

Every project is different and involves different lenders.  And every lender is different as well.

Banks, credit unions, pension funds, private equity groups, real estate investment trusts, or even extremely wealthy individuals or families.

Every development is financed differently, with different requirements, sales thresholds, and objectives that need to be met within prescribed timelines.

Very few developers are financing their own projects so they’re at the mercy of those who actually put up the money.  So if sales targets aren’t met or if there are other things that the financial backers want, then construction is delayed as a result.

A developer might tell buyers, “We want to get this project started.  We’re eager to get a shovel in the ground,” and that developer could be completely sincere with his comments.  But whoever is putting up the money is going to have a large say in when construction starts, and often how quickly construction moves along.

5) Economic viability.

I’m going to be the bearer of bad news here, at least for a large percentage of the city who have ideas about development.

Here goes:

Developers aren’t not-for-profit, NGO’s, or entities to serve the public.

They are businesses.

They undertake “adventures in the nature of trade.”

They build condominiums to make money.

I’m always amazed by the graffiti on Development Notice boards that read, “Build public housing!!!” as though the developer who put up the notice should be tasked with a public sector responsibility.

Every time an article is written about a canceled condominium, people post comments saying, “They should be going ahead with this!  Totally unfair!”

Why would a developer take on a project if it’s going to lose money?

Some will argue that there’s risk in many projects, in many industries, and nobody should be guaranteed anything.

I would be inclined to agree.

But I’m not a pre-construction buyer signing on the dotted line of a contract that allows a developer to cancel a project with no repercussions.

It’s the buyers who allow this simply by purchasing the units.

If the buyers said, “No way,” then the industry would change.

It’s like a sports team that is terrible every single year, but they sell-out every game.  Why would management and ownership change anything?  Why spend more money or rock the boat in any way?  If the fans stop coming to the games because of poor play, then there’s an incentive for the team to implement change.

I believe in consumer protection to some degree and there is an argument to be made that developers shouldn’t be able to cancel projects.  But if that were the case then they would look for protections elsewhere, perhaps charging higher prices at the onset, and that doesn’t help with affordability.

Developers all have these “economic viability” clauses in their iron-clad Agreements which allows them to delay projects or often cancel them.

A developer who isn’t sure if a project will be profitable is not going to break ground, and this is surely going to cause a delay.

New legislation has been enacted to limit the number of times that a developer can push back the economic viability date and outlines compensation for buyers, but this isn’t going to result in major changes.

Developers won’t build if they don’t make money.  If a project isn’t economically viable, it will be canceled, or it will be re-worked (repackaged and re-sold…) so that it’s profitable.

So those are my top five reasons, and as I said, they all sort of bleed into one another, as you can see.

If you have experienced a delay with your project, we’d love to hear from you!




Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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  1. TLM

    at 9:15 am

    This is an interesting topic, and there was an opportunity to educate readers here, but the way this is presented is pretty misleading. A few key notes that really change the tone of this info:

    1. Developers don’t “promise” unrealistic dates. The governmental authority that regulates developers, Tarion, has a very strict way of requiring developers to set dates. They are never allowed to move a date forward/sooner, so their first tentative occupancy date is required to be the earliest possible date that they could ever theoretically deliver. It is stated everywhere to be a “FIRST TENTATIVE” date and the Tarion Addendum makes it very clear that it can be extended all the way to an “outside date” which is listed on the first page of the addendum, and is usually 5-7 years after the “first tentative” date. If a purchaser thinks they’re moving in on the first tentative date, they’re not making even a minimal effort to read what they’re signing or ask any questions. If you don’t like this system, you would need Tarion to let developers set a realistic date and move it forward or backward as required – but right now, the government doesn’t let them do that.

    2. Approvals, Sales and Financing – these are all called “early termination conditions”. The fourth common type of ETC is “Purchaser’s Financial Viability”, where the developer can cancel the agreement if they determine within a certain time period that the Purchaser doesn’t have the financial strength to complete the transaction. For all of these conditions, the developer is only allowed to use very strict wording that Tarion provides, and the conditions only last until a set time (usually the first tentative date). Again, purchasers complaining about this haven’t done any work to read their documents, because the conditions are very clearly set out in the Tarion Addendum and the other notice documents – the developer is required to call attention to them and be explicit about the deadline dates for satisfaction. If purchasers don’t like that their agreement could be cancelled if the developer doesn’t sell 80% of units in the project by 2 years from now, fine – they should walk away. But it’s annoying for people to complain that developers are somehow taking advantage of them when the conditions are clearly set out in government mandated, standardized forms for every project.

    3. Economic viability – years ago, developers were allowed to make their agreements conditional on economic viability. However, they haven’t been able to do so for many years, as this type of condition was prohibited by Tarion (I believe in 2012 but would need to check). Some people will argue that the “financing” condition is a type of economic viability condition, because if the project is going to lose money, the bank won’t finance it – that’s kind of true, but also kind of not true because the developer is required to make bona fide efforts to obtain financing, they can’t just assume they won’t get it because they’re losing money. In any event, the way that “economic viability” is presented here is just false, there is no such condition and it shouldn’t be a separate paragraph from financing.

    The bottom line is that pre-construction condos are definitely risk-driven investments, and they don’t make sense for every purchaser or perhaps even most purchasers. People need to actually understand what they’re signing and read the documents. But it doesn’t do anyone favours to pretend like evil developers are tricking innocent buyers – the industry is highly regulated and developers are almost always following the requirements that are set for them by Tarion and clearly disclosing these risks. People just don’t care.

    1. Nobody

      at 2:13 pm

      Are you yourself an owner/senior employee of a developer or simply a lawyer for a developer?

      You also didn’t read the article closely because David always, here and in other comments over the years, blames the buyers for entering agreements that they don’t read or understand. David hates the game, not the players/developers.

      1. TLM

        at 4:26 pm

        Why would it matter what I do for work? The comments I included above are objective information about how the pre-construction industry is regulated in Ontario. Anyone can google a copy of the Tarion Addendum and confirm that it says the things I’ve claimed. I love reading this blog and really appreciate all of the time David puts into it, especially the real estate market war stories and MLS musings, but I felt like someone should comment the points in this particular piece that were clearly not correct.

        I did read the article closely, and I think it’s suggesting that developers are taking advantage of people. Sure, David notes that buyers are partly to blame by buying things they don’t understand, but the premise is that developers are being deceptive.

        It’s inaccurate to say that projects are “always delayed” and that developers “deliberately mislead” purchasers about target dates, when in fact all of these agreements have very clear mechanisms for setting occupancy dates, and they are required by law, not left up to developers. In fact, most developers hate these requirements. I think there’s a big difference between having a non-fixed closing date everyone agrees to that can be extended in accordance with the terms of the agreement vs. “delaying” closing, which suggests that something went wrong or the new date was somehow unexpected. Similarly, things like “a developer can cancel a project with no repercussions” or “developers all have economic viability clauses in their iron-clad agreements” are plainly false and actually the opposite of the legal requirements for pre-cons in Ontario.

        People can hate the way that the industry works, lobby for change, etc. – but it’s irresponsible to suggest that it works in the way outlined above. Part of the reason that the condo development industry has issues is that people don’t understand the laws that exist to protect them, and an uneducated buyer reading this would think that a developer could get away with all kinds of things that are actually prohibited.

        1. Nobody

          at 10:05 am

          I said that because you aren’t writing like a normal person making those points. You cite Tarion regulations like somebody who has them memorized and deals with the contracts daily.

          Plus developers do write absolutely one sided contracts of adhesion that are fundamentally unfair. Even the most customer focused ones do. There are decent reasons for this thanks to dealing with unsophisticated buyers who tend to be litigious and less than willing to close.

          I am on the developers’ side politically, have actually built townhouse projects under TARION, and am friends with people behind several massive condo developers. Hell I am trying to help one of those massive developers get some sites! Still think industry practices are shitty and that buying precon is stupid.

  2. Marina

    at 9:25 am

    I honestly would not want anything to do with pre-construction, and I can’t imagine why anyone would. I mean, ten years ago people were practically minting money, but now the price premium is insane, given how much can go wrong.

  3. Ethan

    at 11:11 am

    I think we should clarify that most, if not all, of David’s comments are referring to pre-construction from an investors perspective.

    If you’re an end user, love the location, and want the ‘pick of the lot’ with the ability to choose from a variety of floor plans, floors, exposures, finishes, etc, AND you don’t like the idea of a renovation, I can’t think of a better option.

    Yes, many pre-construction developments have been cancelled and resold over the past 10-20 years. How many of these were by reputable builders like Tridel, Pinnacle, Concert, etc? There are ways to mitigate your risk with pre-construction, and buying into an upstart developer’s project might not be the way to go.

    1. Nobody

      at 2:10 pm

      I know a number of people who were end users who bought pre-con for downsizing purposes. Just an absolute utter disaster because of how delays can be announced very close to a claimed delivery date.

      It impacts how and when youvsell your house and then also managing an interim rental since it’s almost impossible to do a direct move from an owned house to a new build condo goven the various cash needs and timing challenges. Even in a rental you can run into problems by giving notice and then not actually having a condo to move to and by being stuck in a place that’s not ideal. 6 months somewhere is easier than 18 months. Especially with less than a year of planned transition you can end up having to move multiple times because extending your 6 month lease is impossible because owner needs to move back, etc.

      Only good reason to buy pre con is if you can’t afford to buy today but are very likely to be able to buy in 36++ months.

  4. Ace Goodheart

    at 12:30 pm

    “It’s like a sports team that is terrible every single year, but they sell-out every game. Why would management and ownership change anything? Why spend more money or rock the boat in any way? If the fans stop coming to the games because of poor play, then there’s an incentive for the team to implement change.”

    TML? (Go to a Tampa Bay play off game in Florida, where the stadium is half empty, beer costs $2.00 a cup and the best seats can be had for less than $100.00).

    1. Nobody

      at 2:01 pm

      It can be cheaper to fly to florida and get a hotel for the night to watch a hockey game than to buy tickets for a family to see the Leafs at home!

    2. Crofty

      at 2:44 pm

      “It’s like a sports team that is terrible every single year…”

      As Branch Rickey reportedly said to Ralph Kiner during a contract dispute, “We finished last with you, we can finish last without you.”

  5. Nobody

    at 2:30 pm

    The rules around financing building were actually a good response to the failures in the industry in the 80s thanks to the real estate bust Toronto had.

    By having developers pre-sell units they prove out real market demand before they can waste real money digging holes and erecting structures. It reduces risk to the financial system from defaults (a big issue in the 90s). It also embodies the ideas of the lean startup movement to go to market very early to test demand. Don’t spend hundreds of millions of dollars on a new game/product/building without getting any customers to use it and spend real money on it! That’s how you get failed products like New Coke.

    Manhattan approach of borrowing a billion dollars for 5 years before any customer revenue is incredibly risky in terms of economic timing, taste of the developer, marketing ability of the developer, etc. Plus you end up with much higer financing costs and thus less building per end user dollar.

    We’re seeing some units not close because of financing now. If we had entire buildings coming to market today with 0 units sold and current mortgages it would be an epic disaster not only for the developers but also for the people financing them and probably the financial system. We saw this in the 80s and the big banks were in real danger.

    Also it’s just better for the city and neighborhood for a project to get stopped before anything happens. Makes it much easier for the site to transfer to a new developer/project and avoids blighted sites like Bay Adelaide for the 90s and early 2000s. Toronto had a 6 storey stump of an elevator core on one of the best sites in the country and it took until today for the site to be fully developed after that disaster!!

  6. johnny mandrake

    at 8:11 pm

    How much average time the preconstruction condos are delayed. Is it like 6 months or a year. I have a friend who brought in jac condos by graywood to be handed over in jan 24. So far, so good and yet no news on any delay. Its very important that the completion and handover date should be tentaively given for plus minus couple of months for financing etc.can anyone tell, whats the average delay in months by the builder. Thanks

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