Urbanation President Shaun Hildebrand shared the results of the analysis with CP24 on Tuesday.
He said construction costs, which are rising by about 20 per cent year-on-year, are now rising “much faster” than real estate, which could result in some projects “no longer being able to afford it”.
Rising labor costs amid historically low unemployment are also a factor, according to Hildebrand.
“This is exacerbated by supply chain issues caused by the pandemic and the war in Ukraine and contributes to very, very strong cost increases to the point that now the cost of building apartments is increasing by 20 percent year on year.  “and are rising much faster than prices,” he said.  “It’s not just the 5,000 units already on the market that could be canceled, but all the projects that should have started in the next period are no longer going to enter the market.  Thus, the offer is compressed not only today, but also years later, when these works are finally delivered “.
Real estate prices have already begun to fall amid an aggressive cycle of interest rate tightening by the Bank of Canada.
Hildebrand said Toronto has been in the middle of a “condo explosion” for some time, so overall supply will remain strong with around 87,000 units under construction and another 33,000 in the pre-construction phase.
However, he warned that there would be some “collateral damage” due to the fact that “costs are rising very fast at a time when prices are starting to fall”.
In that case, he said, buyers would have the right to have their deposits returned to them under Ontario law, but not necessarily by valuation.
“Unfortunately, years can pass between when this deposit will be paid and when they will actually get their money back and the intermediate prices could have escalated considerably and they usually can not get this estimate from this deposit, the which in some cases drives buyers off the market, “he said.  
Data from the Toronto County Real Estate Council had previously indicated that house prices have now fallen for three consecutive months.  However, the average price of a home in Toronto was still up 10 percent year on year in May.