Toronto Pre-construction Condo Market: Why Assignment Sales With Cash Incentivies Are Increasing

1.A New Trend Emerging in Toronto's Pre-Construction Condo Market

Recently, an interesting trend has been emerging in the Toronto real estate market. More pre-construction condo owners are attempting to transfer their purchase contracts to other buyers through assignment sales, and in some cases they are even offering cash incentives to make the deal happen.

An assignment sale refers to the transfer of a purchase contract for a property that has not yet been completed. Traditionally, when the housing market was rising, original buyers could sell their pre-construction contracts at a premium and make a profit. However, the situation in Toronto has recently reversed.

Some pre-construction buyers are now not only willing to walk away from their deposits but are also offering additional cash incentives just to transfer their contracts. This trend is largely tied to projects that were purchased during the extremely hot housing market of 2022.

2.The Growing Gap Between Contract Prices and Current Market Values

At that time, housing prices in Toronto and across the Greater Toronto Area (GTA) reached historically high levels. Many buyers rushed to secure pre-construction condos. Since then, however, market conditions have changed significantly. Interest rates have risen rapidly, increasing mortgage costs, while home price growth has slowed and in some areas even declined.

As a result, a significant gap has appeared between the original contract price and the current market value of many pre-construction units.

For example:

• A buyer signed a pre-construction condo contract in 2022 for $1,000,000

• Paid a $200,000 deposit

• The current market value of the unit may now be around $700,000

In this situation, a new buyer may only be willing to pay around $700,000. However, the developer still expects the original contract price of $1,000,000 at closing.

3.Cash Incentivies and New Stretegies Emerging in Assignment Sales

If we calculate the numbers:

Even including the $200,000 deposit, the effective price only reaches $900,000, leaving a $100,000 gap.

As a result, the original purchaser may have to pay the new buyer approximately $100,000 in cash to make the assignment deal possible.

According to some realtors working in the market, cash incentives of $50,000 to $100,000 are becoming relatively common in assignment transactions. In some extreme cases, offers of $400,000 to $500,000 have reportedly been seen, although these figures are difficult to verify.

Assignment deals are often conducted outside the traditional Multiple Listing Service (MLS) and instead appear in private real estate networks or social media groups, which makes the overall scale of these incentives difficult to track.

This phenomenon is not limited to condos. In some cases, similar situations have appeared with freehold townhouse assignments. For example, a townhouse originally purchased for approximately $1.245 million may be offered for assignment at around $950,000, with the seller also providing additional cash incentives to bridge the gap.

Another strategy emerging in the market is the builder leaseback program. In some developments, builders offer rental guarantees to attract buyers. For instance, a developer might guarantee $3,250 per month in rental income for two years, effectively acting as the tenant and subleasing the unit.

These incentives reflect broader changes in the market environment.

Recent data helps explain the trend. According to the Toronto Regional Real Estate Board (TRREB), the average home price in the GTA has recently fallen below $1 million again, marking the first time this has happened since 2021.

Meanwhile, data from the Building Industry and Land Development Association (BILD) shows that new home sales in the GTA reached a historic low in December 2025. The average price for a newly built condo currently sits around $1 million, while the average price for a new single-family home is about $1.4 million, down roughly 9% year over year.

4.What Options Do Pre-Construction Buyers Have Now?

Under these conditions, many pre-construction buyers are forced to consider several options:

1. Proceed with closing the purchase

2. Transfer the contract through an assignment sale

3. Fail to close and potentially face legal action from the developer

In many cases, assignment becomes the most realistic option for buyers who can no longer qualify for a mortgage or afford higher interest rates. Despite the challenging market conditions, some real estate professionals note that buyers still exist if the price is right. Certain investors even view these assignment opportunities as potential bargains.

Ultimately, the Toronto housing market is currently experiencing a phase where pre-construction contracts signed at the 2022 market peak are now reaching completion, revealing the gap between the original contract prices and current market values. Going forward, the trend in assignment listings will likely continue to evolve depending on interest rates, economic conditions, and housing demand. What is clear, however, is that the Toronto real estate market is witnessing new types of transactions and market dynamics that were rarely seen before.

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