CMHC Report Affirms Our Concerns: Toronto Is Facing a Crisis
In recent developments, the construction landscape in Toronto has reached a troubling nadir, as highlighted by the Canada Mortgage and Housing Corporation’s (CMHC) fall housing supply report. Homebuilding activity in the city has plummeted, with a staggering 44% decline recorded in the first half of 2025 compared to the same period in 2024. This downturn marks the lowest level of construction on a population-adjusted basis since 1996, indicating a looming crisis in housing availability just shy of a 30-year low.
The precipitous decline is predominantly attributed to a 60% reduction in condominium starts, driven by waning investor demand and a market increasingly characterized by project cancellations and delays. CMHC has pointed out that the requirement for 70% pre-construction sales has hindered developers’ ability to secure financing for new projects, particularly affecting urban condominiums where investor activity has historically been robust. The shift in market dynamics has left many developers unable to bring new projects to fruition.
Compounding the issue, Urbanation, a Toronto-based analytics firm, reported a record-high unsold inventory of 24,045 units across all development stages in the Greater Toronto Area (GTA) during the second quarter of 2025. This inventory surge coincided with a staggering 69% year-over-year decline in sales — a further indication that the market is straining under unprecedented pressures. With only three presale projects launched in the same quarter and four others canceled, the retreat from condominium development appears pronounced, raising questions about future market viability.
While CMHC noted a slight 8% dip in rental starts, these figures appear better positioned than their condominium counterparts, largely bolstered by CMHC’s financing tools and recent decreases in land prices. Notably, several condominium projects have transitioned to rentals since 2024, which could mitigate some pressure on the rental market moving forward.
The current trajectory suggests that Toronto’s new construction market is unlikely to rebound in the short term. CMHC has projected that annual housing starts through 2027 will significantly lag behind levels necessary to restore affordability to pre-pandemic standards by 2035. This stagnation poses broader implications, including potential economic slowdowns, increased incidences of homelessness, and reduced tax revenues.
Conversely, national housing starts in Canada remained robust overall, nearing all-time highs, primarily due to strong activity in markets like Calgary, Edmonton, Montreal, and Ottawa. Nonetheless, the stark contrast between these regions and Toronto underscores an urgent need for a strategic reevaluation of housing development policies to address the challenges facing one of Canada’s most critical real estate markets. As the construction industry navigates this complex landscape, the implications for future housing supply and affordability cannot be understated.
📋 Article Summary
- Homebuilding in Toronto is at a historic low, with a 44% drop in building activity in the first half of 2025 compared to 2024, marking the lowest population-adjusted starts since 1996.
- Condominium starts fell by 60% due to reduced investor demand and high pre-construction sales requirements, with a significant number of projects being cancelled.
- Unsold inventory in the Greater Toronto Area reached a record high, with a 69% year-over-year decline in sales, indicating a stagnating market.
- Although rental starts are improving, the overall slowdown in construction is expected to pressure affordability and economic activity further.
🏗️ Impact for Construction Professionals
The recent CMHC report highlights a critical downturn in Toronto’s housing market, particularly in condominium construction, presenting both challenges and opportunities for construction professionals.
Practical Business Implications: With a 44% drop in building activity, business owners should brace for lower demand, impacting project timelines and revenue.
Opportunities: There’s potential in shifting focus towards rental projects due to a higher viability shown by CMHC financing tools and reduced land prices. Companies should explore transitioning cancelled condo projects into rental units.
Challenges: Cancellations and stalled developments require careful cash flow and resource management. Keep a close eye on unsold inventory to reassess project viability.
Actionable Insights: Diversify your project portfolio by incorporating more rental constructions, and align resources to capitalize on the shifts in demand. Foster strong relationships with financing sources to navigate tough conditions efficiently.
Strategic Planning: Consider exploring markets like Calgary and Edmonton, which show growth, to balance risks in Toronto. This approach aids in long-term sustainability while adapting day-to-day operations to a more flexible and responsive model in a challenging market.
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