The Canada Mortgage and Housing Corporation (CMHC) has lowered its projections for new residential construction. At the same time, Toronto is seeing a dip in its population, and developers in British Columbia are taking legal action against buyers who default on presales.
The Trump Tariff Effect on CMHC’s 241,400 Unit Forecast
The Canada Mortgage and Housing Corporation (CMHC) has revised its expectations for new construction, predicting that annual housing starts will drop by 7% this year to 241,400 units. According to the report, the uncertainty surrounding President Donald Trump's latest tariff measures has created significant doubt regarding future construction activity. This economic volatility is compounded by rising costs for construction materials and a growing surplus of unsold condominium units across the country.
The CMHC's outlook suggests a multi-year period of contraction for the Canadian building sector. Following this year's dip, the organization expects a further 7.5% decline in 2027, before a projected 5% rise brings the figure to 211,900 units in 2028. This forecast highlights a precarious period where the combination of trade policy uncertainty and material inflation is stalling the momentum of new developments.
Toronto’s Population Decline and the Affordability Wall
Toronto is experiencing a significant demographic shift as its population begins to shrink after a period of rapid growth. this sudden downturn follows a year where the city added nearly the most people, a surge that contributed heavily to the ongoing housing affordability crisis. As living costs escalate,the city is seeing a reversal in the migration patterns that previously fueled its expansion .
The relationship between population density and housing availability remains a critical tension point for urban planners and residents alike. While high growth previously drove demand, the current shrinkage suggests that the cost of entry into the Toronto market may have reached a breaking point for many residents. This shift could fundamentally alter the city's economic trajectory if the trend of residents leaving for more affordable regions continues to accelerate.
B.C. Developers Turn to Litigation Against Presale Defaults
In British Columbia, the traditional stability of the real estate market is being challenged by a wave of legal battles between developers and consumers. Developers in the province have begun filing dozens of lawsuits against buyers who fail to close on their sales after signing presale contracts. This aggressive legal stance comes as the market faces pressure from changing economic conditions and buyer hesitation.
The move toward litigation highlights the growing friction in the pre-construction sector, despite the market's historical strengths. As interest rates and material costs fluctuate, buyers find themselves in positions where they can no longer fulfill their financial obligations.. For developers, these lawsuits are a mechanism to protect their capital, but they also signal a period of heightened instability for those looking to enter the B.C. property market.
The missing data on B.C. lawsuits and Trump's tariff impact
Several critical questions remain regarding the long-term stability of the Canadian housing sector despite the factors identified in the CMHC report . It is currently unclear how long the impact of President Donald Trump's tariff policies will persist or if they will trigger a wider trade war affecting Canadian construction. Additionally, the report says nothing about which specific regions in British Columbia are seeing the highest concentration of developer-led lawsuits.
Furthermore, the source does not provide a detailed breakdown of whether the surplus of unsold condos is concentrated in major metropolitan hubs or spread across suburban markets. Without knowing the exact geographic distribution of these unsold units, it is difficult to determine if the supply glut is a localized issue or a systemic national problem. The report also leaves open the question of whether the population decline in Toronto is a permanent shift or a temporary correction.
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