Pre-sales completing in 2025–2026 are reportedly appraising 10–30% below their original purchase price, and RBC has quietly removed its 'once approved, you stay approved' language. The pre-con assignment market is in genuine distress.

Last updated 2026-05-19. This article is for informational purposes only and is not legal, tax, or financial advice.

Toronto pre-construction's closing crisis: when the appraisal is 10–30% below the contract

One of the most under-reported but consequential stories of spring 2026 is what's happening at the closing table for Toronto-area pre-construction condos. Pre-sales that were signed in 2021–2022 at peak prices are now closing in 2025 and 2026 into a very different market, and according to a lender at a Big Five Bank quoted on Steve Saretsky's Substack, those units are typically appraising 10–30% below the original purchase price.

How the squeeze works

Imagine a buyer who signed a $850,000 pre-construction contract in spring 2022 for a downtown one-bedroom completing this spring. The unit appraises today at $650,000 — a $200,000 gap. The lender will finance the lower number, leaving the buyer to either bring an extra $200,000 in cash to closing, find a private second mortgage at high cost, or walk away and face being sued for damages by the developer.

RBC quietly changes its language

RBC, one of the largest pre-construction lenders in Canada, has reportedly updated its mortgage promise. The old language guaranteed that "once approved, you stay approved" until closing. The new language simply says, "At RBC, we offer mortgage approvals based on the closing date provided by the builder." The shift is subtle but the implication is large: the bank that built its pre-construction marketing around guaranteed approval has quietly removed the guarantee (YouTube — Why Canadian Pre-Construction Buyers Are Losing Everything, May 22, 2026).

Why this is happening now

Three forces are converging in 2025–2026:

Resale prices well below 2022 peaks. The April 2026 GTA average price of $1,051,969 is roughly 13% below 2022 highs, and condo prices specifically are down further.
The completion wave. Urbanation projects 21,850 GTHA condo completions in 2026, on top of nearly 30,000 in each of 2024 and 2025 — many of which were sold at 2021–2022 peak prices.
Stricter underwriting. Regulators have made clear that appraisal methods used in rising markets don't transfer to falling markets, and lenders have tightened qualification standards accordingly.

The legal reality of walking away

Recent Ontario court decisions have confirmed that walking away from a pre-construction contract is rarely a low-cost option. Builders can sue for the difference between the original purchase price and what they ultimately resell the unit for, plus carrying costs, plus legal fees. In a market down 13–25%, that gap can easily exceed the buyer's deposit, leaving them on the hook for additional six-figure sums.

What pre-construction buyers facing this should consider

Get a current appraisal early — well before final closing — so you know the exact size of the gap and can negotiate from a position of information.
Talk to the builder. In a market this distressed, many builders would rather negotiate a partial price adjustment or extended deposit structure than fight a foreclosure lawsuit they may only partially win.
Explore assignment carefully. In a falling market, assignment sales typically clear at a discount to the appraised value, not at the original contract price.
Consult a real estate lawyer familiar with pre-construction litigation before missing closing — once you're in default, your leverage shrinks dramatically.

What this means for the broader market

Stressed pre-construction closings tend to feed back into the resale market as forced sales, assignments at deep discounts, and lender-driven inventory. That's a meaningful component of the supply pressure still weighing on GTA condo prices. As this wave works through 2026 and into 2027, expect continued downward pressure on condo prices in the 416 specifically. Once the wave passes — and assuming the Q1 2026 launch freeze means few new units in the pipeline for 2028–2029 — the condo market may find a firmer floor than today's data suggests.