Toronto, ON, If you’ve been wondering why there are fewer cranes in the sky this year, you’re not imagining it. Toronto is on track to build the fewest new homes in almost 30 years. Condo projects that once sold out in weeks are now being put on hold, and even some single-family builds are slowing down.
At the same time, developers are shifting gears toward building more rental apartments even as that side of the market is cooling slightly too.
Condo construction is way down. According to CMHC, condo starts in Toronto dropped by more than 60% in the first half of 2025 compared to last year.
Rental projects are holding up better. Purpose-built rental construction is only slightly down year-over-year, and in some neighbourhoods it’s actually growing, thanks to federal and provincial incentive programs.
Overall housing starts are at a low point. Across Ontario, new housing starts are down roughly 25% compared to 2024, and Toronto’s share of that slowdown is the biggest.
A mix of economics, red tape, and market psychology is behind the slowdown.
1. Financing is tough right now. Condo projects rely on pre-sales, buyers who commit before construction begins. When fewer people are buying, developers can’t get the financing they need, so they delay or cancel projects.
2. Costs keep climbing. Land is expensive, labour is hard to find, and building materials still cost more than they did a few years ago. Add to that hefty municipal development fees, and profits can disappear quickly.
3. Interest rates are scaring buyers. Higher mortgage rates mean buyers either qualify for less or hold off completely, which makes it riskier for developers to start new projects.
4. Approvals take too long. Developers say that slow municipal approval timelines and zoning rules can delay projects for months, sometimes years, which only adds to costs.
Not everything is slowing down. Rental projects are holding their ground, and for good reason:
Government support: Ottawa and Queen’s Park are offering low-cost loans, tax breaks, and other programs to encourage rental construction.
Steady demand: Immigration is at record levels, and many newcomers rent first. With homeownership out of reach for many, rentals feel like a safer bet for builders.
No presale risk: Rental projects don’t depend on hundreds of buyers committing before shovels go in the ground. That makes them easier to finance when the condo market is sluggish.
If fewer homes are built for ownership, prices will likely stay high because demand keeps outpacing supply. Renting will continue to be the reality for a lot of people, not necessarily by choice.
Developers and housing advocates are calling for:
Lower development fees
Faster approvals
More incentives for mixed housing (townhomes, multiplexes, laneway houses)
Creative public-private partnerships to bring affordable homes online faster
Without changes, experts warn that Ontario’s target of 1.5 million new homes by 2031 could be missed by a wide margin - keeping both buyers and renters under pressure.