Housing Slump and its Ramifications:

A scan of Toronto’s skyline reveals just how dramatically the city’s housing market has changed after decades of rapid growth. Where cranes once dominated the horizon, now only a single crane stands, symbolizing an unprecedented slowdown in construction activity. This visible shift reflects deeper economic concerns, as industry leaders warn that if home sales do not return to more typical historical levels, as much as $20 billion could be removed from Ontario’s economy.

Recent research commissioned by the Building Industry and Land Development Association highlights the severity of the downturn. In December 2025, new home sales totaled just 240 units. This figure represents a 24 percent decline compared to 2024 and an alarming 82 percent drop from the ten-year average. Despite lower interest rates and reduced home prices—conditions that would normally stimulate buyer demand—economic uncertainty, particularly surrounding tariffs, has discouraged builders from launching new projects. As a result, construction activity has slowed dramatically.

The impact on workers has already begun and may worsen if conditions do not improve. Layoffs are occurring throughout the sector, and industry projections suggest that up to 100,000 jobs could be lost if sales and construction activity fail to rebound. Considering that the housing sector directly and indirectly employs approximately 225,000 people, such losses would represent a significant contraction with serious economic consequences.

Although all housing types are experiencing a slowdown, the condominium market in the Greater Toronto Area (GTA) has been hit especially hard. A recent report from Urbanation illustrates the scale of the decline. In 2025, new condominium sales totaled just 1,599 units—a 60 percent decrease from 2024 and a staggering 91 percent drop from the ten-year average. This sharp contraction underscores the challenges facing developers and investors alike.

Developers argue that reducing costs is the only viable path to recovery. The City of Toronto has already taken steps by deferring or eliminating development charges for purpose-built rental projects. Additionally, both federal and provincial governments have removed the Harmonized Sales Tax (HST) for first-time homebuyers purchasing homes under $1 million. However, industry leaders insist that further action is necessary. They are calling for broader reductions in development charges across all housing types and for the removal of provincial and federal sales taxes, such as the PST and GST, on new homes. Without substantial tax relief and policy adjustments, they warn that the housing market could face even more severe challenges.

Ironically, the current slowdown in construction may lead to an even greater problem in the near future: a critical shortage of housing supply. With very little new housing being built, researchers caution that the GTA could face a severe lack of available units. According to Urbanation, by 2029 there may be no new condominiums ready for sale in the region. This looming supply crisis suggests that today’s downturn could create significant housing pressures in the years ahead.

In summary, Toronto’s housing slowdown is not merely a temporary dip in sales but a significant economic shift with wide-reaching implications. From job losses and reduced economic output to the possibility of a future housing shortage, the consequences of the current downturn could shape Ontario’s housing market for years to come.