Ontario’s residential construction sector is not just slowing — it is collapsing under the weight of a policy, cost, and confidence crisis that has been decades in the making.
RESCON’s latest pre-budget submission to the province lays it bare, noting that a literal perfect storm of factors has come together to create an environment where building homes that builders can manage to build — and purchasers can afford — is illusory.
Stifling taxation, rising material costs, unpredictable market forces, labour costs, interest rates, cumbersome planning approvals processes, and overly restrictive regulatory policies are to blame. The numbers are not just troubling — they are catastrophic.
Ontario’s cost-to-income housing ratio has now surpassed 9:1, a level that makes affordability structurally impossible for most families.
Housing starts have all but evaporated, precisely when they are needed most.
In the Greater Toronto Hamilton Area (GTHA), single-family home sales are down 71%, while condo sales have collapsed by 90%. Across Ontario’s Census Metropolitan Areas, housing starts are down 29% year-over-year, and in Toronto alone the drop is a staggering 58%.
It isn’t just a housing crisis — it’s an economic one as well. Ontario could see a 1.5-to-2.5-% GDP reduction in 2026, directly tied to the residential construction collapse. The ripple effects would be catastrophic for our economy.
Fewer homes mean fewer jobs, fewer purchases, fewer spinoff industries, and less economic resilience across the province.
At RESCON’s recent annual general membership meeting, economist Mike Moffatt of the Missing Middle Initiative reinforced that this is not just a “downtown Toronto condo problem.”
It’s everywhere.
From Toronto to Kitchener-Waterloo to Calgary and Edmonton, demand is down across the board.
New home sales in Toronto have plunged from roughly 40,000 in 2021 to about 2,000 in 2025. In Kitchener-Waterloo-Cambridge, sales dropped from 2,000 to just 250 in the same period.
Data from the Building Industry and Land Development Association (BILD) confirmed that 2025 marked the worst year for GTA new home sales in 45 years of records.
At the AGM, we heard that the core problem is simple: prices have fallen, but costs haven’t. Meanwhile, market prices continue to soften; a death spiral for viability.
Builders can’t build, buyers can’t buy, and renters can’t find supply. Everyone loses.
Yet, for the first time in a while, there is at least a glimmer of hope — a co-ordinated political recognition that the system itself is broken.
In remarks at the AGM, Premier Doug Ford committed to working with homebuilders to get shovels in the ground faster. This is truly a welcome sign that the government recognizes the urgency of the moment.
To its credit, the province has made inroads, investing more than $220 billion for schools, hospitals, highways and housing-enabling projects. This is a foundation upon which real progress can be built.
Funding through the Municipal Housing Infrastructure Program and the Building Faster Fund is also helping communities move projects forward, as are measures such as removing the provincial portion of the HST on purpose-built rental housing, and offering rebates for first-time homebuyers, which could shave tens of thousands of dollars off the cost of a new dwelling.
The province needs to take its tax cuts a step further and eliminate the full HST on all new homes — not just for first-time buyers — alongside significant reductions in development charges.
Moves such as these could genuinely move the needle.
Municipal Affairs and Housing Minister Rob Flack acknowledged at the AGM that it still takes too long, and costs too much, to build homes in Ontario. He noted that governments must create the conditions for builders to succeed.
The crisis we face in the residential construction industry is systemic — which means it can be fixed.
We know what the solutions are. The problem has been mustering the political will to do something about it. I am hopeful we are on the cusp of that happening.
The upcoming provincial budget presents an opportunity to do something about it. We don’t need incremental tweaks. We need real structural reform. And it needs to come sooner rather than later.
