Toronto Housing Starts Expected to Hit 30-Year Low, According to CMHC
The Canadian construction landscape is undergoing significant shifts, as reported by the Canada Mortgage and Housing Corp. (CMHC). A recent study indicates that Toronto is on track for its lowest annual housing starts in over three decades, underpinned by a 60% decline in condominium developments. This trend is mirrored in Vancouver, where construction activity has also decelerated in the first half of 2025 compared to the previous year. The stagnation in these key metropolitan markets signals not just localized issues, but broader implications for housing supply across Canada.
Despite stagnation in condominium projects, the report highlights a surge in purpose-built rental starts, largely fueled by government incentives. However, the growth in rental construction is insufficient to offset the downturn in ownership housing. Tania Bourassa-Ochoa, CMHC’s deputy chief economist, emphasized that the slowdown poses risks to future housing supply and affordability, crucial factors that directly affect workforce retention in urban areas.
One salient point in the report is the pressing need to adapt Canada’s housing policies. Bourassa-Ochoa asserts that systemic changes are essential to foster a development environment characterized by cost and time certainty. Developers face mounting challenges due to high development charges and protracted approval processes. These hurdles not only hinder project viability but also contribute to rising construction costs, thereby exacerbating the affordability crisis.
On a per capita basis, Toronto’s homebuilding activity has reached its lowest level since 1996, driven by a significant dip in investor demand. This has led to project cancellations and delays as developers struggle to meet the necessary financing thresholds. CMHC notes that the condominium market volume plummeted by 75% in the Greater Toronto Area from 2022 to 2025, with significant inventory build-up and falling prices. The deteriorating affordability of newly constructed condominiums indicates a pressing need for prices to align with local incomes to maintain housing accessibility.
In contrast, regions outside Toronto and Vancouver are witnessing construction growth. Calgary, for instance, has experienced a record pace in housing starts, bolstered by favorable zoning, financing programs, and strong population growth. Rental construction has surged, supported by municipal initiatives that facilitate increased housing density, including multiple office-to-residential conversion projects.
In conclusion, while some regions exhibit resilience, the overarching trends in Canada’s construction sector necessitate immediate attention to align supply with demand. The CMHC report underscores the urgency for effective policy changes to ensure housing remains accessible, thereby paving the way for a sustainable real estate market in the years to come.
📋 Article Summary
- Toronto is experiencing its lowest housing starts in 30 years, largely due to a significant drop in condominium construction, with overall Canadian housing starts remaining flat in key metropolitan areas.
- There is a marked increase in rental construction driven by government support, but this is offset by a decline in condo starts in major cities like Toronto, Vancouver, and Montreal.
- High development charges and lengthy approval processes are hindering construction, with the Canada Mortgage and Housing Corporation (CMHC) calling for systemic changes to alleviate these barriers.
- Despite the slowdown, rental markets in cities like Calgary and Halifax are thriving, indicating a regional disparity in housing trends and construction activity across Canada.
🏗️ Impact for Construction Professionals
The recent announcement from the Canada Mortgage and Housing Corporation (CMHC) highlights significant trends in the housing market that construction professionals should actively respond to. Given the projected drop in housing starts, especially in condominiums, construction companies must adapt their strategies to remain competitive.
Opportunities and Challenges: With rising rental starts driven by government incentives, firms should pivot towards “purpose-built” rentals. This shift can counterbalance the slowdown in ownership-focused projects. However, challenges such as high development charges and lengthy approval processes need to be addressed.
Actionable Insights: Companies should invest in streamlining their project approval workflows to mitigate delays, perhaps leveraging technology for better compliance tracking. Additionally, forming partnerships with municipalities could aid in navigating development charges.
Strategic Planning: Develop long-term plans that diversify project portfolios to include more multifamily and rental projects. Implementing flexible sourcing strategies can help manage rising costs in a fluctuating market.
By adopting these strategies, construction professionals can better navigate the evolving landscape and position their businesses for sustainable growth.
#Toronto #housing #starts #track #lowest #level #years #CMHC
