The collapse

News that 2,000 unsold and spanking new condos sit empty in Vancouver – where everyone says there’s a ‘housing crisis’ – made it onto the international scene this week. The story was picked up in the UK, for example, as an example of Canadian silliness.

Fears are, say analysts in YVR, the number could swell to a breathtaking 3,500 soon. And this week a new development planned for Burnaby was cancelled for lack of buyer interest.

Well, West Coast snowflakes, cry us a river. Your former mayor (now the fedfederal housing minister) will need his Big Boy pants to wade into the swamp of condo misery known as the GTA.

Look at this chart. The Hub tells us the current number of new and unclaimed condos in this one market (Hamilton was thrown in) now totals 23,918. That’s ten times the grief being felt in 604.

Source: The Hub, Urbanation, Park Home NKO

“The Toronto condo market is on the brink of a historic collapse,” says the site, hyperventilating. This total includes almost 11,000 in pre-con, another eleven thousand being built and two thousand finished and vacant. In addition, there’s the assignment market – where desperate investors who have not yet closed on their units are trying to unload, often taking a deep loss to do so.

Oh wait. And what about the resale market?

Yup. Another 15,000 condo units are currently available in the GTA and the suburban arc surrounding it.

So, what happened? How can there be so many less-expensive housing units on the market, with sales crashing, at the same time the federal and provincial governments are desperate to get more of them built?

Multiple reasons. Too many units are one-bedders, less than 600 square feet and unhappy places for kid-rearing. Rents are going down (off 6% in a year) so investors who bought units to lease out are staring at negative cash flow. Immigration levels have been slashed and Canada’s population might actually start to decline next year. Less rental demand. Condo costs are jumping – property taxes, insurance premiums and maintenance fees are all in a spiral. Parking is a bummer as most new developments offer few car spaces. And condo financing rates aren’t cheap. Investors need a big downpayment and are closing with mortgages in the mid-4% range.

Sales are a disaster.

In its latest monthly report the region’s builders counted just 385 deals – one-tenth the norm. That is down 68% from last year and sits 87% below the ten-year average. Of those sales, only 160 were condos, leaving a massive 17-month supply of inventory

Laments the industry:

“New home sales in the GTA have plummeted to catastrophic lows, and without urgent government action, we risk long-term damage not just to housing supply, but to the broader economy. If this were the auto sector, governments would be lining up with support. Let’s not forget: the housing and development industry in the GTA directly employs 285,000 people, results in $16.9 billion in wages, and creates $60.8 billion in economic activity. This is not a fringe issue – it’s a cornerstone of our economy.”

Swelling inventory and languishing sales are resulting in a cascade of project cancellations. Thousands of units have been yanked. Construction on average is down 80% from this time last year. The Ontario government’s plan to have 1.5 million new units constructed has gone up in smoke. When buyers stay home, builders cannot finance or get shovels in the dirt. Typically, 70% of a project must be pre-sold before a lender will pony up the money for development. Right now a builder is lucky to sell 10% or 15% of his planned units.

Despite this, prices are falling too slowly to entice buyers. The average selling price peaked at $710,000 three years ago, and is now just shy of $690,000. That’s only a 3% discount, but gaining momentum in certain areas. As mentioned, assignment sales are more dramatic – but the ‘bargains’ are relative to nose-bleed pre-con valuations of three and four years ago.

Some economists are calling for a total price reduction of 15%, maybe 20%, before a bottom is hit for condos. That moment is expected to come by the end of 2025.

But, of course, all this is speculation in a world where the US president is rogue, tariffs could crush us, the Canadian economy could slip into recession and key sectors – cars, lumber, steel – have been targeted for pain.

Lots to worry about. But it could also change fast. Lately the Toronto stock market has been hitting all-time record highs, which makes you wonder what institutional investors and savvy traders know that you don’t. After all, if we get a new trade deal with America, if interest rates decline a few times and if Drake doesn’t tour we might all feel lighter and hopeful again.

Are we truly on the verge of collapse? Or headed for opportunity? The industry keeps telling us a halt in construction now means a potentially wild price escalation in a few years when a shortage truly occurs.

Here we go. Back to the future.

About the picture: “We ran into this guy on a river trip on the island,” writes Ryan in BC (this is a species-neutral safe-space blog). “I’d never seen one like it before and fear it may be an invasive species. the world is changing, perhaps we can change the term ‘invasive species’ for ‘new nature’ , it might be a little less protectionist.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/05/21/the-collapse/