Toronto’s distressed real estate market is undergoing a correction and stabilization phase, but a broader bottom could extend into 2027 or 2028, according to experts quoted in RENX’s November 12, 2026 report. Their discussion at an October 30 Urban Land Institute Toronto webinar offers GTA pre-construction buyers and investors a cautionary view of stalled projects, lender negotiations and emerging investment activity.
A potential bottom, not a firm recovery date
Andrew Kidd, senior vice-president at NorthWest Value Partners Inc., described the market as working through a correction and inventory adjustment. He said analysts were considering a potential broader bottom and stabilization extending through 2027 and 2028. That is an outlook, not a confirmed turning point.
Kidd attributed the downturn to rapid Bank of Canada interest rate increases beginning in 2022, alongside immigration cutbacks. At the webinar, he described inventory ranging from land without zoning to partially built projects, with some properties two or three years into receivership and still seeing limited transactions.
He also said some bids were below 50 per cent of asking prices, while banks remained unwilling to accept discounts. These comments concern distressed property negotiations; buyers should not treat them as a quoted discount available on an individual pre-construction condo.
Jonah Brown, a partner at Oakbank Capital Group, explained that land previously valued for condo development was not necessarily worth the same when assessed for rental development. As land values compressed, borrowers could struggle to refinance, replace debt or sell.
Receivership is not the first step
Tushara Weerasooriya, a restructuring and insolvency partner at McMillan, said lenders first consider accommodations such as extensions, waivers and forbearance agreements. Receivership has become the most popular option for stalled condo projects when initial negotiations fail, she said, rather than the starting point.
Noah Goldstein, a partner and managing director at AlixPartners, explained that a court-appointed receiver works for the court, with powers established by the receivership order. The receiver assesses how to stabilize the property and maximize value for creditors.
There are signs of transactions moving, but they do not establish a market-wide recovery. Colliers executive vice-president Jeremiah Shamess said lenders were increasingly looking to dispose of debt. He also pointed to bulk discounted condo purchases by High Art Capital and Jesta Group as helping developers clear their capital stacks without distress measures.
General guidance for pre-construction buyers
For buyers and investors, the practical takeaway is to focus on the specific project rather than rely on a market-bottom forecast. Consider the following due-diligence steps:
- Review project status: Ask about zoning, construction progress and any disclosed lender negotiations or court proceedings.
- Read the agreement carefully: Seek independent legal advice about deposit provisions, timing obligations and the implications of any disclosed project distress.
- Assess suitability: Consider the location, layout and design against your intended use, rather than treating a discount as sufficient justification.
- Revisit your budget: Review deposit timing and your own financial flexibility before making a commitment.
The report describes a difficult adjustment with some capital returning—not a settled recovery. For GTA pre-construction buyers, a measured approach means distinguishing expert forecasts from confirmed project information and seeking advice before committing.
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