How presales helped Canada’s condo market boom, then collapse

As sales of preconstruction condominiums in the Toronto region continue to tally their worst performance in more than 30 years, with a record number of projects being cancelled for lack of demand, industry experts are asking what lessons can be learned to avoid a future bubble.

“Preconstruction is gambling. … This was a house of cards that was built to fold,” said Dave Fleming, broker with Bosley-Toronto Realty Group Inc., who has been writing on his Toronto Realty Blog for more than a decade about the financial risk inherent in preconstruction condos for everyday buyers. “If you took it apart and looked, it was unsustainable. But you couldn’t hear yourself talk because everyone else was ringing the bell on another sale.”