What Happened

A report released in the first half of 2025 by the University of Ottawa's Missing Middle Initiative reveals that housing starts in much of Southern Ontario have earned failing grades. The study highlights a 40 per cent drop in housing starts relative to the four-year average, signaling a severe contraction in new construction activity. Pre-construction condo sales have plunged 89 per cent, while sales for other home types are down 70 per cent, dragging down future construction activity. The decline in housing starts this year is projected to result in a loss of approximately 24,000 person-years of work, with the Toronto census metropolitan area alone accounting for 10,200 person-years of lost employment. The report warns that without urgent action from all levels of government, Ontario's housing shortage will worsen before it gets better. While Brantford exceeded its target by 126 per cent, it remains an exception within widespread weakness, having had no condo sales and significantly fewer ground-oriented sales. Meanwhile, Toronto, Mississauga, and Brampton are down 67 per cent, 71 per cent, and 92 per cent respectively from the provincial housing targets set in 2022. The report concludes that the collapse in pre-construction sales indicates the housing situation will deteriorate further.

Why It Matters

The steep decline in both housing starts and pre-sales in Southern Ontario points to a critical breakdown in the housing supply chain. When pre-construction sales collapse, future construction activity is directly impacted, leading to significant job losses in the building sector. The report emphasizes that this situation should alarm policymakers across all three orders of government, as the current trajectory is insufficient to address the housing shortage. The disparity between targets and actual performance in major cities like Toronto, Mississauga, and Brampton highlights the difficulty of meeting provincial goals. The report suggests that various building targets aimed at addressing the supply crisis are likely unattainable under current conditions. The collapse in pre-construction sales is a clear indication that the housing situation will get worse before it gets better, affecting affordability and market stability.

Local Vancouver / Burnaby Context

While the primary data focuses on Southern Ontario, the broader Canadian housing market faces similar pressures. Canada needs 3.5 million extra homes by 2030 to restore affordability, but is currently on pace to build only half that amount. In British Columbia, experts note that multi-family residential projects are frequently subject to real estate receiverships due to inflation and interest rates. Metro Vancouver's condo market is showing signs of strain, with projects stalling and sales declining. Industry experts attribute this to four major forces, including soaring prices and economic pressures. The situation in Southern Ontario mirrors concerns in Greater Vancouver regarding the feasibility of meeting housing targets and the impact of high costs on development. BC Housing Targets provide a framework for local governments, but the gap between targets and reality is evident across the province. The collapse in pre-construction sales in Ontario serves as a warning for other markets, including Vancouver, where similar economic factors are at play.

Market Impact

The collapse in pre-construction sales and the drop in housing starts in Southern Ontario suggest a significant reduction in future housing supply. This could lead to increased prices for existing homes as demand outstrips new supply. The loss of 24,000 person-years of work indicates a substantial impact on the construction industry and related sectors. In Vancouver, the strain on the condo market and the risk of receiverships for multi-family projects highlight the vulnerability of the development sector to economic pressures. Buyers may face reduced options and higher prices, while investors may encounter challenges in project completion and profitability. The broader market sentiment is likely to be negative, with caution prevailing among developers and buyers alike.

Builder / Developer Perspective

The significant drop in housing starts and pre-sales in Southern Ontario poses severe challenges for builders and developers. The loss of 24,000 person-years of work indicates a substantial reduction in construction activity, impacting profitability and project viability. The collapse in pre-construction sales suggests that developers are struggling to secure financing and buyer interest, leading to stalled projects. The disparity between targets and actual performance in cities like Toronto and Brampton highlights the difficulty of meeting provincial goals under current economic conditions. Developers in Vancouver and other parts of BC face similar risks, with multi-family projects often subject to receiverships due to high costs and interest rates. The report's warning that the housing situation will worsen before it gets better underscores the need for urgent policy intervention to support the development sector.

BurnabyHouse Insight

The data from Southern Ontario serves as a stark warning for the broader Canadian housing market, including Vancouver. The collapse in pre-construction sales and the drop in housing starts indicate a severe contraction in new supply, which could lead to increased prices for existing homes. The loss of 24,000 person-years of work highlights the economic impact of the housing crisis. In Vancouver, the strain on the condo market and the risk of receiverships for multi-family projects suggest that developers are facing significant challenges. The gap between housing targets and actual performance in major cities underscores the difficulty of meeting provincial goals. The report's conclusion that the housing situation will worsen before it gets better suggests that urgent policy intervention is needed to support the development sector and restore market stability. Investors and buyers should remain cautious and monitor the situation closely.