Canada’s Housing Crisis Could Deepen as Forecasts Predict Fewer New Builds
Canada’s housing crisis is getting worse. New forecasts show the number of homes built each year will drop until 2027. Even with political promises to build more, housing starts will fall far below national targets. This could make homes less affordable, reduce supply, and put more pressure on communities across the country.
Housing Starts Falling Short of National Targets
The Canada Mortgage and Housing Corporation (CMHC) forecasts just 237,800 housing starts in 2025, down from 245,367 last year. That number is expected to drop further to 227,734 in 2026 and 220,016 in 2027.
Those figures fall far short of the 480,000 annual starts CMHC says are necessary over the next decade to restore affordability. They are also well below the 267,000 starts achieved in 2021 and 2022.
The slowdown is most severe in Ontario and British Columbia, with housing starts down 25% and 8% respectively—despite both provinces facing some of the country’s highest housing prices.
Barriers Slowing Construction
Analysts say multiple factors are holding back new home construction, including:
Advertisement
- Higher interest rates
- Rising labour and material costs
- Slower population growth
- Trade tensions with the U.S.
- Declines in pre-sales
- Limited land availability in urban centres
Long approval timelines—sometimes over a decade when new roads and infrastructure are needed—also contribute to the lag between identifying land and completing homes.
Economic and Social Costs of Inaction
The CMHC warns that slower construction limits housing supply and hurts the wider economy. New builds create jobs, increase spending on items like appliances and furniture, and bring in tax revenue for all levels of government.
Economist Mike Moffatt says governments “do not appear to be getting the message” and are not taking the steps needed to meet housing demand. He estimates the Greater Toronto Area could lose over $6 billion in tax revenue from reduced construction.
Political Promises vs. Reality
In the last federal election, all major parties promised to increase housing supply:
Advertisement
- Liberals: Build 500,000 homes a year for 10 years, create a Crown corporation called Build Canada Homes with $35 billion in financing, cut GST on homes under $1 million for first-time buyers, and cut municipal development charges in half for multi-unit builds.
- Conservatives: Link federal infrastructure funding to municipal housing targets, penalize cities that miss their goals, and remove GST on new homes up to $1.3 million for all buyers.
Despite these pledges, analysts like Paul Smetanin from the Canadian Centre for Economic Analysis say developers are holding back. Many are sitting on approved land until market conditions improve.
Outlook: A Widening Gap in Housing Supply
Without significant changes to policy, financing, and approval timelines, housing analysts warn that Canada’s supply gap will continue to widen. With affordability already stretched and homelessness on the rise, the country could face even greater social and economic pressures in the years ahead.
More…
- https://ca.news.yahoo.com/housing-crisis-may-worse-forecasts-080033222.html
- https://nationalpost.com/news/canada/housing-crisis-may-get-worse-new-forecasts-show
- https://www.overheretoronto.com/taste-of-the-danforth-cancelled-for-second-straight-year
Advertisement
