The Condo Crash is Spreading

Toronto and Vancouver’s condo industries collapsed spectacularly in 2025. Projects were cancelled, and buyers of pre-construction units were left with homes worth far less than what they paid for them. Pre-construction sales all but dried up, and some early-stage developments were converted to purpose-built rentals. This coming year, the dysfunction will bleed past Toronto and Vancouver and become a problem that affects all major urban centres. This housing collapse will extend beyond high-rise condos: pre-construction sales of all forms of ownership housing are now declining. Eventually, this will translate into fewer housing starts and sales across the country.

Related: The Condo Crash

To understand where we’re headed, we first have to understand how we got here. In the last few years, home prices rose at different rates across the country. Due to several factors—including the steady decline in global interest rates—prices more than doubled over the past two decades in southern Ontario and B.C.’s Lower Mainland, relative to income. In other areas, such as Edmonton and St. John’s, incomes kept pace with prices until the start of the pandemic.

Speculators identified where prices would hike due to shortages and bought up units, sending prices soaring higher. Municipal governments then jacked up taxes on new home construction to capture some of that profit for themselves. (The city of Toronto increased development charges on new homes by over 5,000 per cent in the last 25 years.) Developers passed along costs—with interest and other fees—to homebuyers and renters. 

These price shocks had cascading effects on how Canadians lived: young families moved out of larger centres to more affordable towns; others took advantage of remote-work arrangements and fled to other provinces. Meanwhile, condo sizes rapidly contracted to keep overall prices at levels people could afford—the kind of shrinkflation more commonly associated with cereal boxes. Still, their prices rose. (Even the shoeboxes.)

Prices didn’t drop again until March of 2022—particularly in more expensive markets, like the Greater Toronto Area—thanks to rapidly climbing interest rates. That helped, but other costs, such as development charges, remain sky-high. As a result, building new homes is not economically viable. In the first six months of 2025, new apartment condo sales were down 89 per cent in the Greater Toronto Area and Greater Golden Horseshoe, relative to six-month averages from 2021 to 2024. And though the pain first hit the condo market, it has since spread to single-detached homes and townhouses, with new sales down by as much as 70 per cent. 

This contagion is infecting the rest of the country. Smaller markets aren’t immune to the dynamics of prices falling faster than costs—and they too have their share of middle-class families struggling to qualify for mortgages. Compared to 2024, new condo sales were down 57 per cent in Calgary and 29 per cent in Montreal in the first nine months of 2025. Townhome and single-family home sales also dropped in Vancouver and Calgary.

Related: Why Is Vancouver So Insanely Expensive?

Calgary will likely be the next market to fall apart. In the first nine months of 2025, only 756 newly constructed and pre-constructed condos were sold. By contrast, more than 1,600 units sold yearly between January and September in each of the last four years. Newly built and pre-construction townhome sales are also down compared to the previous four years, though their decline has been less steep. Economic uncertainty, high construction costs and the inability of young families to qualify for mortgages are driving the slowdown. Canada’s six biggest metros have historically been responsible for nearly 60 per cent of all new home sales and starts. As go these markets, so goes the country. 

There are two ways out of this mess. The first is simply waiting for prices to start going up again, until they outpace costs and allow builders to resume building. This will lead to increased construction, but it comes at the expense of affordability. The second solution is through policy reforms to lower the cost of homebuilding, making it economically viable without price hikes. All levels of government should choose the second option, but a lacklustre set of housing reforms in the recent federal budget suggests they won’t. They could lower building costs through tax reductions and regulatory reforms, making the math work for new construction. I believe they will fail to do so—and set the scene for Canada’s next housing bubble.

Mike Moffatt is an economist and founding director of the Missing Middle Initiative.

This story appears in the January/February 2026 issue of Maclean’s. You can buy the issue here, subscribe to the magazine here or send a gift subscription here.