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businessMar 3, 202650:08pending

The Toronto Condo Ponzi Scheme

About this episode

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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The Toronto Condo Ponzi Scheme

The Canadian Real Estate Investor

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