Full Breakdown
Major Shakeup in Canadian Housing Starts: A Shift in Market Dynamics
10/23/2025, 12:34:45 AM
Changing Landscape of Housing Starts
In a notable shift for the Canadian housing market, Calgary has emerged as the leader in housing starts for the first eight months of 2025, surpassing Toronto, which has long held the title of the hottest housing market in Canada. According to data from the Canada Mortgage and Housing Corporation (CMHC), Calgary recorded 18,632 housing starts, followed closely by Vancouver with 18,405 and Montreal with 16,721. Toronto, once the dominant player, has seen a dramatic decline, with only 16,451 starts, marking a staggering 47% drop from the previous year.
Factors Behind the Decline
The downturn in Toronto's housing market can be attributed to several factors, including high prices that have diminished affordability and a significant drop in demand for new condominiums. Multi-unit starts in Toronto have decreased to 87% of total unit starts, reflecting a broader trend of reduced interest in the multi-family sector. In contrast, cities like Montreal and Ottawa-Gatineau have experienced substantial increases in multi-unit starts, with Montreal seeing a 49% rise.
Government and Economic Responses
In response to the housing crisis, the Canadian federal government has initiated the ‘Build Canada Homes’ program, aimed at increasing housing supply by making more public lands available for development. Additionally, provincial and municipal governments are implementing reforms to reduce regulatory burdens on homebuilders, such as Ontario's Bill 17, which standardizes building codes and delays development charges until occupancy.
Despite these efforts, economic headwinds, including trade tensions with the U.S. and a softening labor market, continue to challenge the housing sector. CIBC Deputy Chief Economist Benjamin Tal has characterized the current economic situation as a "per-capita recession," particularly affecting Ontario and British Columbia. He advocates for immediate rate cuts to stimulate the housing market, which he describes as "frozen."
Criticism and Opposition
Critics argue that the government's initiatives may not be sufficient to address the underlying issues plaguing the housing market. Tal emphasizes the need for a broader fiscal policy to ignite demand and stimulate supply, suggesting that the existing GST/HST relief should be expanded beyond first-time buyers to enhance affordability for all. Civic Action's report highlights that stalled housing projects in the Greater Toronto Area (GTHA) significantly outnumber active ones, indicating a systemic failure to translate approvals into actual construction.
Verbatim Quotes
- “For every 12 housing projects that are approved, only one is with a shovel actually in the ground.” — Leslie Woo, CEO of Civic Action
What's Next?
As the housing market continues to navigate these challenges, the upcoming months will be critical. Analysts are closely watching the Bank of Canada's policy decisions, particularly regarding interest rates, which could have significant implications for housing affordability and market activity. The combination of lower rates, federal spending, and potential stabilization in U.S. trade policy may provide a much-needed boost to the Canadian housing market in 2026 and beyond.
