Despite expert projections of a potential rebound in Toronto’s real estate market, new data reveals that Ontario’s housing supply is shrinking, developers are hitting financial roadblocks, and buyers remain hesitant due to high costs and economic uncertainty.
While new home construction rose across most of Canada in 2024, Ontario saw a 16% decline in housing starts—one of only three provinces to experience a drop, alongside British Columbia (-9%) and Saskatchewan (-5%). This sharp decrease in new developments—nearly 15,000 fewer homes built compared to the year prior—highlights growing concerns over Ontario’s ability to meet housing demand and address affordability issues.
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New Construction on the Rise Across Canada—Except in Ontario
According to new data from the Canada Mortgage and Housing Corporation (CMHC), residential construction in major Canadian cities grew by 2% in 2024, with some provinces seeing significant increases in new housing starts:
🏡 Newfoundland and Labrador → +67% more home starts
🏡 Alberta → +32% more home starts
🏡 The Prairies → +25% more home starts
🚨 Ontario → -16% fewer home starts 🚨
This means that while Alberta saw construction begin on 11,400 more homes compared to 2023, Ontario lost nearly 15,000 new homes—a troubling statistic for a province already grappling with sky-high housing costs and a supply shortage.
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Why Is Ontario’s Housing Construction Stalling?
Several factors are preventing new developments from breaking ground in Ontario, according to housing industry experts:
📈 Skyrocketing Building Costs → High material, labor, and land prices make projects financially unviable.
🏛 Excessive Taxes & Development Charges → Developers face escalating taxes, municipal fees, and red tape, further driving up costs.
🚧 Permitting & Zoning Delays → Restrictive zoning laws and long approval timelines slow down new construction.
💸 Low Pre-Sales & High Consumer Prices → With homebuyers unable or unwilling to purchase at current prices, developers hesitate to launch new projects.
“Nothing pencils in Ontario: Skyrocketing taxes, high land prices, and red tape,” wrote housing expert Mike Moffatt, Founding Director of the Missing Middle Initiative, in a recent post on X.
Developers Pull Back as Home Sales Remain Weak
Premier Doug Ford’s administration has focused on boosting housing supply, implementing policies like The Cutting Red Tape to Build More Homes Act and providing additional municipal funding.
However, despite these efforts, consumer demand remains weak, particularly in the condo market, where sales have been sluggish for months. Without strong pre-sale numbers, developers have halted or abandoned projects, further contributing to the supply problem.
🏢 Toronto’s Condo Market Struggles:
✔ Record-high resale inventory → Many condo listings remain unsold.
✔ Pre-construction units not moving → Developers can’t secure enough buyers to justify new projects.
✔ Uncertainty around pricing & interest rates → Many buyers are waiting for lower prices or interest rate cuts before making a move.
Will Lowering Construction Costs Actually Make Homes Affordable?
While some experts believe that cutting construction costs and increasing supply could eventually help reduce housing prices, others argue that Toronto’s market has been historically overvalued and that prices may never drop to truly affordable levels.
“To make progress towards solving the housing crisis, we need to build more homes at prices that Canadians can afford, faster,” the CMHC stated in a recent release.
“This means ending restrictive zoning, speeding up permitting, and adding greater density, especially near transit and post-secondary institutions.”
However, the question remains: Even if more homes are built, will prices ever truly become affordable in a region where housing has always been expensive?
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Final Thoughts: Ontario’s Housing Market Faces an Uncertain Future
Ontario’s 16% drop in new housing starts signals a troubling trend for the province’s long-term housing supply and affordability goals. While government efforts aim to stimulate development, high costs, permitting delays, and weak consumer demand continue to hold the market back.
📌 Key Takeaways:
✔ Housing starts increased in most of Canada (+2%) but dropped in Ontario (-16%)
✔ Developers face rising taxes, land prices, and slow permitting processes
✔ Weak condo sales are causing new projects to be delayed or abandoned
✔ Experts call for zoning reform, faster approvals, and more density near transit hubs
The future of Ontario’s real estate market remains uncertain, and while some experts predict a recovery, others warn that unless systemic issues like taxation, zoning, and affordability are addressed, homeownership will remain out of reach for many Canadians.
🏡 Will Ontario’s housing market turn around in 2025, or will affordability continue to worsen? Stay tuned for further updates as government initiatives and market conditions evolve.
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