Plummeting number of new condos could signal end of Toronto's building boom

Toronto's skyline of cranes and ever-rising condos might be cooling off, as new housing start data suggests that developers have begun to pull away from the market.

The Canada Mortgage and Housing Corporation (CMHC) has released its housing starts data for September 2023, and figures highlight a substantial decline in the number of new condos being built in Toronto.

According to the latest figures, year-to-date housing starts in Toronto have fallen off a cliff since 2023, down 20 per cent from what was a notably high year for housing starts in Canada's most populous city.

Toronto's single-detached starts only saw a marginal hit of -4 per cent, dropping from 3,539 in the first nine months of 2023 to 3,389 in the period from January through September 2024.

SIngling out September figures, just over 400 single-detached housing starts were recorded in the city last month, dropping by roughly 150 homes from the same period during the previous year.

In contrast, condo starts in the region took a significant hit, plummeting from 36,441 starts during the first nine months of 2023 down to 28,559 during the same period in 2024.

Between condos and houses, Toronto is roughly 8,000 units behind where it was at the same time last year, a concerning indication that confidence in the market is waning among homebuilders.

Unlike the booming housing starts recorded in many provinces last month, Kevin Hughes, CMHC's Deputy Chief Economist, notes that "year-to-date starts in Ontario and British Columbia have decreased across all housing types."

"Despite the increase in housing starts in September, we remain well below what is required to restore affordability in Canada's urban centres," said Hughes.

So, what is the root cause of this decline in housing starts?

Well, according to the CMHC, high interest rates are to blame for the massive declines now being witnessed in Canadian housing starts. 

Government could provide low interest mortgages to low income households, could have rent controls, could open up government lands to ONLY geared to income housing development- but instead line the pockets of billionaire insiders and land flippers

— BC (@OvilleResident) October 11, 2024

A bulletin issued by the CMHC earlier this month estimated that higher interest rates have cut into new home construction starts in the country by roughly 30,000 units in 2023 alone, a trend that has evidently continued into 2024.