Urbanation just released its Q3-2025 condominium market survey results for the Greater Toronto and Hamilton Area. Last quarter, a total of 319 new condominium apartments were sold across the entire region. This is the lowest quarterly total since Q3-1990 and is 92% below the latest 10-year average for Q3 periods. It also places us on track for the worst sales year in about three and a half decades. But this isn't news to anyone in the industry. And I'll remind you all that, in my view, now is the time for contrarianism, not conformity.

Here's something I found interesting in the data, though, and it ties into the above quote tweet. The average prices for unsold condominiums in Q3 were as follows:

• $1,315 psf for unsold pre-construction suites (i.e. projects in the pre-sale period)

• $1,199 psf for unsold developer-owned suites (i.e. remaining inventory in built projects)

• $867 psf for resales in recently completed buildings

Why do you think there's this gradient? The answer is that these are condominiums of different vintages and, therefore, of different cost structures. Developers generally price projects on a cost-plus basis — meaning if development charges go up (see above tweet), then developers have no choice but to raise home prices to cover their costs. And if the market isn't there at these new higher prices, well then too bad for developers. We don't get to build. The floor is the floor.

In economic terms, what is happening right now is that the marginal cost of producing new condominium homes exceeds the marginal benefit to home buyers (i.e. costs are greater than what the market is willing to pay for new condominium homes). And for this to change, one or both of the following adjustments will need to occur. The cost of building will need to come down and/or the price buyers are willing to pay for new homes will need to go up. Until then, Urbanation will continue to publish gnarly market updates.

But while the market works to find a new equilibrium, I do think it's disingenuous to try and detach the cost of building new homes from end-user prices (which is what the above quote tweet seems to do). Increasing the marginal cost of a good forces prices to rise. In turn, the quantity demanded falls because fewer people can afford it. And if the demand curve also shifts to the left, which is what happened starting in 2022, then the quantity demanded can even approach zero (see second chart).

Pretending we can heavily tax housing and not pay the price doesn’t help anyone looking for more affordable options.

When I was in Miami at the end of last year for the Elevate real estate conference, I was given the impression that every new development project has a luxury brand associated with it and that buyers from all over the world still have an insatiable demand for the city. The Toronto developers in the room had no choice but to commiserate amongst each other and make up excuses for why abundant sunshine and low taxes couldn't possibly be that nice.

But things seem to be changing quickly in Miami. I am seeing reports that the condominium market continues to soften and that unsold inventory is starting to accumulate. This seems to be happening for a bunch of reasons: lots of supply, relatively high interest rates, higher insurance costs (due to climate things), more stringent reserve funding requirements (following the tragic collapse of the Surfside tower), and perhaps even the hostile environment that the US is now creating for foreigners.

I don't have clear data for the pre-construction side of the market (like I do for Toronto), but typically you need a strong resale market to support new development. And that's because pre-construction pricing tends to be higher than resale pricing. If the latter is softening, then the value proposition for something new is weakened. On top of all this, there's right now a risk premium on US assets. The country is being viewed as less safe.

So it's easy to be bearish.

If any of you have any direct insights on the South Florida market, please leave a comment below.

Cover photo by Tomas Lundahl on Unsplash

Over the weekend, we spoke about how the "GTA condo market is in a state of economic lockdown." What this generally means is that the math isn't making sense to build new condominiums. And so the market is necessarily pausing.

We spoke about what this will likely mean for supply in the coming years, but I think it's also interesting to talk about this in the context of something else: unfunded inclusionary zoning.

As a reminder, inclusionary zoning is, in its most basic form, a requirement to build a certain amount of affordable housing as part of new housing developments. And what I mean by "unfunded" is that there are no subsidies or other incentives being provided to the project.

This means that the cost of providing this housing -- and there is an additional cost -- needs to be shouldered by the project, which ultimately means the market-rate units need to pay for it.

Which is why if you look at most policy studies, you'll often find recognition that, because of this economic reality, IZ tends to work better in areas where home prices/rents are higher. And again, that's because the market-rate homes need to shoulder the cost.

We have questioned, many times, on this blog, whether this is the right approach to delivering affordable housing, but I think this question becomes even more critical in our current market environment.

If the entire market is, for the most part, in a state of economic lockdown, should we really be layering on additional costs and making it broadly more difficult to build any sort of new housing? It seems counterintuitive.

For more on this topic, check out this recent Sightline article by Dan Bertolet.

Urbanation just released its Q3-2025 condominium market survey results for the Greater Toronto and Hamilton Area. Last quarter, a total of 319 new condominium apartments were sold across the entire region. This is the lowest quarterly total since Q3-1990 and is 92% below the latest 10-year average for Q3 periods. It also places us on track for the worst sales year in about three and a half decades. But this isn't news to anyone in the industry. And I'll remind you all that, in my view, now is the time for contrarianism, not conformity.

Here's something I found interesting in the data, though, and it ties into the above quote tweet. The average prices for unsold condominiums in Q3 were as follows:

• $1,315 psf for unsold pre-construction suites (i.e. projects in the pre-sale period)

• $1,199 psf for unsold developer-owned suites (i.e. remaining inventory in built projects)

• $867 psf for resales in recently completed buildings

Why do you think there's this gradient? The answer is that these are condominiums of different vintages and, therefore, of different cost structures. Developers generally price projects on a cost-plus basis — meaning if development charges go up (see above tweet), then developers have no choice but to raise home prices to cover their costs. And if the market isn't there at these new higher prices, well then too bad for developers. We don't get to build. The floor is the floor.

In economic terms, what is happening right now is that the marginal cost of producing new condominium homes exceeds the marginal benefit to home buyers (i.e. costs are greater than what the market is willing to pay for new condominium homes). And for this to change, one or both of the following adjustments will need to occur. The cost of building will need to come down and/or the price buyers are willing to pay for new homes will need to go up. Until then, Urbanation will continue to publish gnarly market updates.

But while the market works to find a new equilibrium, I do think it's disingenuous to try and detach the cost of building new homes from end-user prices (which is what the above quote tweet seems to do). Increasing the marginal cost of a good forces prices to rise. In turn, the quantity demanded falls because fewer people can afford it. And if the demand curve also shifts to the left, which is what happened starting in 2022, then the quantity demanded can even approach zero (see second chart).

Pretending we can heavily tax housing and not pay the price doesn’t help anyone looking for more affordable options.

When I was in Miami at the end of last year for the Elevate real estate conference, I was given the impression that every new development project has a luxury brand associated with it and that buyers from all over the world still have an insatiable demand for the city. The Toronto developers in the room had no choice but to commiserate amongst each other and make up excuses for why abundant sunshine and low taxes couldn't possibly be that nice.

But things seem to be changing quickly in Miami. I am seeing reports that the condominium market continues to soften and that unsold inventory is starting to accumulate. This seems to be happening for a bunch of reasons: lots of supply, relatively high interest rates, higher insurance costs (due to climate things), more stringent reserve funding requirements (following the tragic collapse of the Surfside tower), and perhaps even the hostile environment that the US is now creating for foreigners.

I don't have clear data for the pre-construction side of the market (like I do for Toronto), but typically you need a strong resale market to support new development. And that's because pre-construction pricing tends to be higher than resale pricing. If the latter is softening, then the value proposition for something new is weakened. On top of all this, there's right now a risk premium on US assets. The country is being viewed as less safe.

So it's easy to be bearish.

If any of you have any direct insights on the South Florida market, please leave a comment below.

Cover photo by Tomas Lundahl on Unsplash

Over the weekend, we spoke about how the "GTA condo market is in a state of economic lockdown." What this generally means is that the math isn't making sense to build new condominiums. And so the market is necessarily pausing.

We spoke about what this will likely mean for supply in the coming years, but I think it's also interesting to talk about this in the context of something else: unfunded inclusionary zoning.

As a reminder, inclusionary zoning is, in its most basic form, a requirement to build a certain amount of affordable housing as part of new housing developments. And what I mean by "unfunded" is that there are no subsidies or other incentives being provided to the project.

This means that the cost of providing this housing -- and there is an additional cost -- needs to be shouldered by the project, which ultimately means the market-rate units need to pay for it.

Which is why if you look at most policy studies, you'll often find recognition that, because of this economic reality, IZ tends to work better in areas where home prices/rents are higher. And again, that's because the market-rate homes need to shoulder the cost.

We have questioned, many times, on this blog, whether this is the right approach to delivering affordable housing, but I think this question becomes even more critical in our current market environment.

If the entire market is, for the most part, in a state of economic lockdown, should we really be layering on additional costs and making it broadly more difficult to build any sort of new housing? It seems counterintuitive.

For more on this topic, check out this recent Sightline article by Dan Bertolet.