In the spring of 2022, Nizar Tajdin, a 41-year-old Montrealer, signed a deal he thought would set him up financially for years to come. On the advice of a realtor he’d met through a friend, Tajdin made a 10 per cent deposit on an $855,000 pre-construction condo. It was a 468-square-foot, one-bedroom unit in Toronto’s Forest Hill neighbourhood, a wealthy enclave not far from downtown. The project was scheduled for completion in 2024. But Tajdin didn’t intend to move into the condo, or even to close on the deal.

Instead, he planned to flip it before it was completed. Tajdin’s realtor—an agent named Rahim Hirji, who advertised himself as a specialist in “platinum pre-construction condos”—had devised the plan. It was called an assignment sale: the legal transfer of a purchase agreement to another buyer before closing, at a higher price than the seller originally paid. In essence, it means flipping a condo that doesn’t yet exist. Assignment sales had become a common hustle in the booming Toronto condo market. Tajdin says Hirji told him that he could make back double his deposit; he even offered to find a buyer in exchange for a fee.

Still, Tajdin was nervous. If he couldn’t sell in time, he’d have to close on the property himself, and he knew he’d never be approved for such a steep mortgage. If he couldn’t close, he’d forfeit his entire deposit. But the friend who’d introduced him to Hirji had inked several similar deals, making money each time. In the exuberant Toronto condo market, it seemed impossible not to. And Tajdin still had two years before the unit was finished. So he took the plunge, using his entire life savings of about $60,000 and borrowing the rest from his family. Then he waited for Hirji to find a new buyer.

The same month Tajdin signed his deal, Toronto condos reached an average price of $808,000, after years of surging demand that had helped turn the city into one of the least affordable real estate markets on Earth. Unfortunately for Tajdin, it was also the moment the bubble began to deflate. That month, the Bank of Canada raised interest rates in an effort to slow down borrowing and cool overheated inflation. Investors immediately retreated and, over the next year, condo sales plunged in Toronto by 43 per cent.

Soon after Tajdin made his deposit, Hirji stopped responding to his calls. Tajdin tried enlisting other realtors to find a new buyer, but they had no luck. Even if they had, the prospect of making a profit had vanished. By the first quarter of 2024, average condo values in the city had dropped by nearly $100,000 to $696,000. As his closing date neared, Tajdin panicked; his only hope was that the market would unexpectedly rebound. But in February of 2024, the worst-case scenario became a reality. Tajdin’s closing date arrived, and he couldn’t seal the deal. He didn’t even bother trying to secure a mortgage; after multiple discussions with banks, it had become obvious that it was futile.

The developer, CentreCourt, kept his deposit. Then it went a step further, suing Tajdin for $860,000 in damages, interest and legal fees for breach of contract. It sold the unit to another buyer for $420,000, less than half of Tajdin’s agreed-upon purchase price only two years earlier. Tajdin, in turn, filed his own lawsuit against Hirji, seeking indemnity from liability with CentreCourt and damages equal to his deposit. (I reached out repeatedly to Hirji for comment, but he did not respond.)

With years of legal battles ahead, and a small fortune already spent on lawyers’ fees, Tajdin might now be forced to declare bankruptcy. “If I do, it will become nearly impossible to get financing for anything,” he says. “I won’t be able to have a credit card or even make online reservations at a restaurant. It’s like losing the next seven years of my life.”

Tajdin is one of thousands of Canadians who have been caught in the fallout of the country’s collapsing condo market. Many are middle-class buyers who fell victim to the relentless real estate hype machine. They were told that big-city condos were a surefire place to park their money—and they were the biggest losers when the floor dropped out of the market. Since peaking in 2022, condo values in Toronto have plunged by 16.5 per cent and in Vancouver by nine per cent. Those averages mask the much larger losses experienced by would-be investors like Tajdin. Now, many buyers are on the hook for mortgages they can’t secure. Others own condos they can no longer sell, sinking deeper into the red every month as their carrying costs exceed what they can charge in rent. And a growing number are finding themselves on the wrong end of legal action as developers seek to recoup losses by taking legal action against buyers who back out of presale agreements.

Those developers, meanwhile, are unable to sell enough pre-construction units to finance new buildings. Many are entering receivership, postponing new construction and exacerbating an already painful housing shortage. Some are sitting on thousands of completed but seemingly unsellable units, built first and foremost as financial assets rather than functional housing.

The implosion has been most acute in Toronto and Vancouver where, over the past two decades, the condo boom reshaped skylines and transformed the very idea of housing. It was in these cities that condos evolved into something both more and less than homes: the ultimate financial asset, favoured first by rich investors and later by middle-class Canadians who plowed increasingly enormous amounts of personal wealth into them.

Real estate, especially in Canada’s most expensive cities, has for decades been considered a sure bet. For a long time, it was: since the 1990s, Canadian housing prices have gone steadily up, with only the briefest interruptions, even as naysayers and market pessimists came and went. Buyers became more deeply leveraged, and debt loads grew, but so did windfall profits and eye-popping flips.

And so for years, more and more investors piled in, building their nest eggs in the sky. When the market nosedived, it was those same investors who shouldered the worst of the collapse, exposing the fundamental flaws in our housing system: rampant speculation, the pursuit of short-term profit over long-term sustainability, and a laissez-faire attitude from policymakers who allowed everything to spiral out of control.

Condos have transformed Canadian cities—and yet, just a couple of generations ago, they didn’t exist. The first Canadian condo building was a townhouse complex built in 1967 in Edmonton. That same year, Ontario passed the Condominium Act, allowing developers to sell units as separate properties, instead of operating entire buildings as rentals.

The concept caught on slowly, stymied by a nation of homeowners more comfortable with detached houses. Banks looked at condos as a risky experiment in property ownership, and consumers were wary about only owning the space within their walls. But in 1975, Ontario introduced rent controls. That kickstarted a long period of decline for purpose-built rentals—and laid the groundwork for the........

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