As Developers Retreat, Greater Toronto Faces a Looming Condominium Supply Crunch

By Demetri Kafkis, Urban Planner & Realtor | June 13, 2025

TORONTO — In April, the Greater Toronto Area’s real estate market showed troubling signs of strain. Home sales through the Toronto Regional Real Estate Board’s MLS system fell by 23.3 percent year-over-year, down to 5,601 transactions, while new listings rose by 8.1 percent, reaching 18,836 units. On paper, it’s a buyer’s market. But behind the numbers, the conditions for a future housing crisis are already taking shape.

The city’s developers are pulling back—sharply.

In a pattern now being felt across Canada’s largest province, new housing starts are slowing to levels not seen since the 2008 financial crisis. In March, Ontario housing starts plunged 32 percent to just 39,000 units, according to data from the Canada Mortgage and Housing Corporation. The reasons are multi-layered: higher interest rates, ballooning construction costs, and a deepening trade dispute that’s driven up the price of imported building materials. But more critically, developers are responding to a historic collapse in demand.

Sales Stall, Projects Pause

Only 533 new condominium units were sold in the entire GTA in the first quarter of 2025—a drop of 62 percent compared to the same period last year, and the slowest start to a year since 1995, according to market research firm Urbanation. Several large developers have postponed launches, citing unfavorable economic conditions, uncertainty over municipal approvals, and surging fees.

“As interest rates stay high and consumer confidence remains low, there’s just no incentive for developers to take the risk,” said Shaun Hildebrand, president of Urbanation. “We’re entering a phase of underbuilding that will create serious problems down the line.”

The sharp decline in activity today means a stark shortage in completions by 2026 and 2027—just as population growth, immigration, and natural demand may rebound.

Development Fees Soar, Making Construction Even Riskier

The economics of building new homes in Toronto have also grown punishing.

Development charges in the city have increased by an astonishing 6,000 percent over the past 25 years, according to figures compiled by Better Dwelling. These fees—paid by developers to help fund infrastructure like roads and sewers—have added tens of thousands of dollars to the cost of building each new unit, even before factoring in land, labor, and financing.

“Just the development charges on a mid-size condo project can easily run into the millions,” said one Toronto-based developer, who asked not to be named due to ongoing negotiations with the city.

“It’s not even just about profit anymore—it’s about basic viability.”

A Province in Decline

Ontario, once the engine of Canada’s housing growth, now finds itself in reverse gear. From downtown Toronto to suburban Mississauga, Hamilton, and beyond, projects that once would have sailed through pre-construction are being shelved. Industry insiders point to a broad loss of faith in the province’s real estate market.

While much of the slowdown is cyclical—tied to monetary policy and global economic instability—there’s also growing unease over the province’s regulatory environment. Delays in zoning approvals, rising property taxes, and political uncertainty around housing targets have eroded developer confidence.

Meanwhile, rising interest rates have priced out many would-be buyers. Despite record levels of immigration, demand has “collapsed,” according to several market watchers. Those who can afford to buy are often choosing to wait.

What This Means for Buyers in Today’s Market

For now, buyers hold more leverage than they’ve had in years. Across the GTA, builders and sellers are offering incentives not seen since the early 2010s—mortgage rate buydowns, free upgrades, assignment clause flexibility, and even cash-back deals.

But this moment may be fleeting.

Today’s oversupply is the result of decisions made 12 to 24 months ago—when developers remained optimistic. That pipeline is now drying up. If you’re a buyer, this is the rare window where prices are flat, incentives are generous, and negotiating power is real. By the time this market corrects and housing starts up again, inventory will lag demand.

Buyers who can look past today’s volatility and secure financing may be able to lock in long-term value before the next shortage strikes.

Trouble Ahead

Ironically, the current slowdown is setting the stage for another housing crunch—just a few years away. If new units are not built today, supply will fall short tomorrow. With immigration targets remaining historically high and more than 400,000 new residents expected to settle in Ontario annually, the pressure on the housing system will only mount.

“Buyers may feel like they have the upper hand now,” said Hildebrand. “But by 2026 or 2027, we could be right back to where we were in 2021—rising prices, intense competition, and not enough inventory.”

The province has pledged to build 1.5 million homes by 2031, but as things stand, that goal is slipping further out of reach.

The Takeaway

• Sales are down, but so are starts and future supply.

• New listings may feel abundant today, but developers are retreating quickly.

• Development charges, red tape, and trade pressures are pushing builders out of the market.

• Buyers today have power—but tomorrow’s market may punish those who wait.