Homebuilding is booming in Canada … just not where it’s most needed

As published on LinkedIn

Key Takeaways:

• Non‑Ontario housing starts are near record highs
• Ontario is experiencing its worst homebuilding slump since the 1990s recession
• Condo oversupply is choking new projects
• Canada still lacks sufficient supply of affordable housing

A Boom Outside Ontario

Canada is in the middle of a homebuilding boom—but you wouldn’t know it in Ontario. As the graph below illustrates, non-Ontario housing starts set a record last year, and many economic forecasters expect starts to stay at levels not seen since the 1970s for the next two years.

Construction isn’t just strong—it’s widespread. Alberta had a banner 2025, Quebec starts hit their highest level on record (outside of pandemic reopening) in March, and B.C. housing construction remains above pre-pandemic levels (graph). This suggests Canada can build at scale—just not everywhere—and tax and regulatory policy changes designed to stimulate building have helped.

Ontario’s Deepening Slump

Ontario tells a different story, and it’s a troubling one. The province has been experiencing one of its worst homebuilding downturns since the 1950s. As illustrated in the graph below, housing starts have fallen in four consecutive years—the first time that’s happened since the severe 1990s recession that hit Ontario particularly hard.

Looking beyond the headline number doesn’t change the story. There have been deep declines in both single-family and multi-unit construction. And while provincial and federal incentives appear to have supported purpose-built rental building, Ontario’s recent pace on this front significantly lags that of other provinces after adjusting for population growth.

What’s Driving the Divide?

How can Canada’s largest province be in a homebuilding recession while the rest of the country booms? Economists at TD, RBC, Desjardins, and the Bank of Canada have all highlighted a particularly bloated inventory of condos in the Toronto area, which is depressing home purchases, sales, and new construction.

There are other factors are at play. The province is one of the most exposed to U.S. tariffs and related uncertainty, which has soured investor sentiment since late 2024. Over the last four years, homebuilding costs, including materials, labour, equipment, overhead and profits, have increased considerably more in Ontario than anywhere else in Canada (graph).

Why Affordability Still Might Not Improve

As strong as non-Ontario building has been, it’s unlikely to fix Canada’s housing affordability crisis. The CMHC’s 2025 housing supply report tells us that to bring enough new supply to market, provinces outside Ontario would somehow have to maintain recent monthly housing highs for the next 10 years. Ontario—home to the biggest provincial population and starts gap—would still fall well short (graph).

Building conditions could also get tougher in the months ahead, further holding back efforts to restore affordability. The condo market overhang won’t likely clear anytime soon. The Iran conflict has pushed borrowing and material costs higher, with risk of escalation. Population aging and competition for workers from major infrastructure projects will add to labour constraints.

Final Thoughts

Canada has shown it can build at scale—what remains to be seen is whether that can continue and expand to where it’s most needed.

While housing affordability is unlikely to improve quickly, that’s precisely why ambition still matters. Pursuing bold homebuilding targets remains valuable, even if they are not met, because they push governments and industry to innovate, collaborate, and remove barriers. The path forward isn’t just about outcomes, but about sustaining the momentum to try.