Condo Crash

For years, low interest rates fuelled a big-city condo-flipping frenzy. Profits got bigger and condos got smaller. Now the bubble has popped and left behind thousands of unsellable, unlivable units.

- By Ali Amad

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.