The Toronto Condo Ponzi Scheme

The Bank of Canada and Better Dwelling argue Toronto’s condo boom was driven by investor speculation and presale funding, creating Ponzi‑like dynamics where ongoing new-buyer inflows were needed to sustain prices and projects; when demand and returns fell, many projects stalled, inventory surged, and systemic risk materialized.

3 major bullet points:

• Presale-dependent financing + high investor leverage (small deposits, assignment flipping) made the development model reliant on continuous new buyers rather than end-user demand.
• Rising interest rates, easing population growth, and oversupply collapsed expected short-term returns, leaving many investors with negative‑cash‑flow units and unsold inventory.
• Consequences: record unsold/returned units, halted starts and cancellations, developer stress : a market correction that resembles Ponzi finance dynamics but lacks outright fraud.

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