Is a new form of market manipulation quietly emerging in Canada’s new construction condo market?
One of the biggest risks facing the new-construction condo market in Southern Ontario right now is that many projects completing today were sold several years ago at peak prices, and they are not worth what buyers paid.
Imagine buying a pre-construction condo for $650K that’s only worth $550K today. Until recently, banks largely looked the other way, choosing to value these units at the original price to help buyers close.
But what happens when the gap becomes unmanageable?
What happens when that $650K condo is now worth $400K?
Someone reached out to me last week about exactly this situation involving a new condo development in the Kitchener area.
Resale condos in an earlier phase of this same development, units just under 600 sq ft, have recently sold for around $370K (roughly $650 per square foot).
Yet in early November, five units in the newly completed phase sold for over $1,000 per square foot, prices more typical of downtown Toronto.
Why would anyone pay such a massive premium when there are comparable units nearby selling for nearly 40% less?
Once we look closer, things get interesting:
- In all five sales, the seller was the builder.
- In every case, the buyer worked with the builder’s own agent — no independent buyer representation.
- And since August, despite many cheaper listings in the neighbourhood, these five units are the only recorded sales.
So what might be happening?
While we can’t say with certainty, the most likely explanation is that these units were purchased by a person or company connected to the builder. By recording sales at inflated prices, they create comparable sales data that appraisers are required to consider. If an appraiser values a buyer’s unit at the real market value ($650 psf), the builder can point to five sales in the same building at $1,000 psf, making it easier for the bank to appraise higher and helping their pre-con buyers close without defaulting.
And here’s the key detail most people don’t realize:
These transactions are pending sales. They haven’t closed. They can remain on MLS as “sold” even if the buyer never actually takes possession.
In financial markets, placing sham trades to manipulate prices is illegal and aggressively prosecuted.
But in real estate?
It’s the Wild West, and similar tactics have already been used by institutional buyers of single family homes in the US.
If builders can manipulate comparable sales to influence appraisals, the consequences extend far beyond a single project. It hides the true state of the market, props up unrealistic prices, and leaves everyday buyers carrying the risk.
If we want transparency and stability in housing, we need real oversight and policymakers who treat manipulation in the housing market with the same seriousness as manipulation in financial markets.
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn
November 28, 2025
Market |