Photo : X / Sukhhwindder Dhaliwal

Toronto Faces Historic Housing Slowdown

Toronto is facing the most severe housing slowdown in three decades, with new data showing that construction of homes has dropped to levels not seen since the mid-1990s. The Canada Mortgage and Housing Corporation (CMHC) reported a 44 percent decrease in housing starts in the first half of 2025 compared to the same period in 2024. On a per capita basis, this marks the lowest level of housing construction in 30 years, signaling a serious crisis for the city’s housing market.

The decline is particularly pronounced in condominium construction, which has dropped by nearly 60 percent. Condos have traditionally been a major part of Toronto’s housing supply, especially for investors and first-time buyers. The sharp decrease has created a ripple effect across the housing sector, from developers and construction workers to buyers and renters who are now facing rising prices and limited options.

Decline in Condominiums and Investor Demand

The dramatic slowdown in Toronto’s housing starts is largely due to a decline in investor demand. Pre-construction condominiums, which were once popular among investors seeking rental income or resale profits, have seen a sharp drop in interest. Many projects that were previously planned or under construction have been delayed, scaled back, or canceled entirely. Developers cite difficulties in securing financing as pre-construction sales have fallen to record lows.

This hesitation among investors has created uncertainty in the market. Developers are now more cautious about launching new projects, especially in the condo sector. The reduced activity means fewer units are available for purchase or rent, which further exacerbates the city’s housing supply shortage.

Rising Costs and Financial Challenges

Toronto developers are also facing rising costs for construction materials and labor. Building a home or a condominium is now more expensive than in previous years, which makes some projects financially unfeasible. High interest rates have also increased the cost of financing, making it more challenging for developers to start new projects or continue existing ones.

These financial pressures mean that even if there is demand for housing, the number of new homes being built may continue to lag. Without intervention or support, Toronto’s housing shortage could worsen, putting further strain on buyers and renters alike.

Impact on Housing Prices and Affordability

The slowdown in construction has had a direct impact on housing prices. With fewer new homes being built, supply has not kept up with demand. This has led to a rise in home prices, making housing less affordable for many residents. Buyers are finding it increasingly difficult to find homes that fit their budgets, particularly first-time buyers and families.

Renters are also affected. The lack of new rental units means that competition for available apartments remains high. In many parts of the city, rental prices continue to climb, creating financial stress for residents who already struggle to keep up with living costs. The combination of limited supply and high prices has made housing affordability one of the city’s most pressing challenges.

Social and Economic Consequences

The housing slowdown is not just a market issue; it has real social and economic consequences. Families and individuals who cannot afford housing may face longer commutes or are forced to move to suburban or less desirable areas. This can affect quality of life and community stability.

There are also economic implications. The construction sector, which employs thousands of workers, experiences slower growth when projects are delayed or canceled. Related industries, including suppliers of building materials and home furnishings, are affected as well. Overall, the slowdown in housing activity can reduce economic activity and impact the city’s broader economy.

Government Measures and Response

The federal and provincial governments have taken steps to address the housing crisis, but experts warn that more may be needed. Initiatives include financial incentives for developers, such as subsidies or low-interest loans, to encourage the construction of new homes. Governments are also looking at regulatory reforms to streamline zoning approvals and reduce delays in project approvals.

Public housing projects have been expanded in an effort to provide affordable options for low-income residents. However, these initiatives may not be enough to meet the current demand. Experts stress that without a more comprehensive approach, including support for private developers and increased housing starts, Toronto may continue to struggle with shortages and rising prices.

Long-Term Implications for Toronto

Toronto’s housing slowdown serves as a warning for the future. If construction activity does not pick up, the city risks long-term challenges related to affordability, social inequality, and economic growth. Housing is a critical component of urban development, and delays in construction can affect many aspects of city life.

The current crisis also highlights the importance of planning for sustainable housing development. Toronto will need to balance new construction with infrastructure, public services, and community needs. Developers and policymakers will have to work together to ensure that future housing projects meet demand and provide safe, affordable, and accessible options for all residents.

Hope on the Horizon

Despite the challenges, there are reasons for cautious optimism. The government’s interventions and incentives could encourage developers to resume construction. Additionally, new technologies and construction methods may help reduce costs and accelerate building times.

Toronto’s housing market is resilient, and history shows that periods of slowdown can be followed by recovery if supply and demand are managed effectively. By addressing both the financial and regulatory barriers to construction, Toronto has the potential to overcome its current housing crisis and build a stronger, more balanced market in the coming years.

Toronto is facing its most serious housing slowdown in 30 years. Construction of new homes has dropped dramatically, especially in the condominium sector, leading to rising prices and reduced affordability. The slowdown has social, economic, and financial consequences for residents, investors, and the broader community.

Government support, financial incentives, and regulatory reforms are critical to addressing the crisis, but more comprehensive action may be needed. By focusing on increasing housing starts while ensuring affordability and accessibility, Toronto can work toward a more sustainable housing market that benefits all residents.

The city’s current challenges serve as both a warning and an opportunity. With careful planning, investment, and collaboration between developers, policymakers, and communities, Toronto can emerge from this slowdown stronger and better prepared to meet the housing needs of its growing population.