Canadian real estate developers are sitting on a record pile of unsold new homes. CMHC data shows completed and unsold new homes hit a record in December, a rare sight in a country where most units are sold pre-construction. Even more surprising is that half of these vacant new homes are in Toronto and Vancouver, where prices have been sticky despite tepid demand. That may change fast, as the inventory joins a laundry list of mounting downward pressures.
Canadian Real Estate Developers See Unsold Inventory Hit A Record High
Completed and unsold homes in Canadian metro regions (CMAs).
Source: CMHC; Better Dwelling.
Developers are sitting on an unprecedented number of completed and unsold homes. Inventory climbed 3.3% to 18,998 new homes in December, up 35.5% from last year. That’s enough to set a new record, with unsold and completed inventory surpassing the previous record of 18,091 units in January 1991.
Completed and unsold inventory is an unusual find in Canada. The vast majority of developments are sold in pre-construction, meaning they’re already sold before the building is completed. Most condo projects need ~70% of inventory sold to even start construction. Developers don’t build and hold much inventory, which requires risking their own capital. December inventory was 52.1% above the 35-year average of units, suggesting a paradigm shift. Half that shift (49.7%) are units in Toronto and Vancouver, two markets notorious for slim inventory.
Toronto Real Estate Developers See Inventory of Unsold Homes Surge
Completed and unsold homes in the Toronto CMA.
Source: CMHC; Better Dwelling.
Just over 1 in 5 (20.9%) of those completed and unsold homes are in Greater Toronto. Inventory climbed 4.5% to 3,975 homes in December, up 56.8% from last year. It’s the most since April 2016, and only matches 3 other periods seen in history—the early 1990s bubble crash, and the oil slump that kicked off in mid-2014.
That kind of unsold inventory is remarkable. Investors scooped roughly 3 in 4 Greater Toronto pre-construction homes. Completed and unsold inventory in December was 35.2% higher than the 35-year average. This suggests Toronto end users struggled to absorb just over 1 in 4 units. It’s an ominous sign for support at current prices, especially when one considers sales are now the worst on record.
Vancouver Real Estate Developers Have A Near-Record of Unsold New Homes Sitting Vacant
Completed and unsold homes in the Vancouver CMA.
Source: CMHC; Better Dwelling.
Greater Vancouver real estate is notorious for inventory scarcity, but not anymore. Completed and unsold inventory jumped 2.2% to 5,458 new homes in December, up 35.8% from last year. That volume is just 4 homes shy of the record reached in December 1995, and more than double (+116.5%) above the 35-year average.
Greater Vancouver real estate prices have demonstrated more resilience than Toronto. However, the region has less than half the population, but has more completed and unsold homes. In fact, over 1 in 4 (28.7%) completed and unsold homes sitting empty in Canada are now located in the region. It’s a volume so large for the region, it’s nearly equal to half the inventory on the local board’s MLS.
What Vacancy Tax? Most Regions Exempt, But Pressure Still Builds
New home prices have been sticky, resisting declines despite weak demand, but the clock is ticking. Vacancy taxes are designed to increase supply by offsetting artificially low carrying costs, lowering the profitability of speculating on empty homes. Governments have quietly carved out exemptions for this case, but the length of these exemptions varies. Both the Federal and Vancouver exemptions are effectively indefinite, as long as the units are listed for sale—even if listed at inflated prices to ensure they aren’t purchased. Meanwhile, Toronto’s exemption only lasts two years—and for many completed projects, those two years are coming fast.
Even if exempted, further downward pressures are building from record-low sales, rising inventory, and record construction already in the pipeline. At the same time, it’s not clear what can provide upward pressure to offset these issues on the horizon.
We’re all looking forward to the bill the government is about to stick us with the bail them out.
We don’t bail out developers, we apparently “make bad investments.”
At least that’s what the gov calls it when they give loans to their friends, forgive them shortly afterwards, then argue it’s a privacy issue you’ll never be able to see.
The govt doesnt need one. These are all chmc now, so banks dont care of they forclose on them.
Whats worse is the just terrible ‘regulation’ of lenders continues to rack up huge unfunded taxpayer liabilities in the name of supply.
Supply and price are barely connected in canadas housing market, and certainly not the main driver of housing cost since 2014.
Carney should know thia, but he continues to lie about the liberal created housing bubble.
The most equitable solution would be to intervene on mortgage principal, with the lendets developers taking a big loss.
I’ve been seeing a lot of inventory piling up in Toronto and Vancouver recently. It’s going to be interesting to see how this plays out for the market.
I remember when houses were more affordable… today’s economy is tough, but it’s not all doom and gloom! Let’s keep our heads up and support local businesses 💪🏽💼
Boomer or real estate agent?
must be an agent. i’m a boomer (sort of) and I couldn’t agree less…
Make sense. I keep reading sales are at record lows but building is at a record high, and it doesn’t make sense unless no one is buying it and the developer gets to sit on vacant homes indefinitely.
So that’s why they want the CMHC to back back foreign investors? They get to “invest” in new buildings, which is just vacant new homes?
“it’s not speculation if the government is helping!”
“It’s a supply problem”.
“It’s immigrants”
“It’s the government.”
It was always investors trying to gouge everyone.
Empty houses cost a lot to hold. Developers have to sell them eventually at any price and the prices are dropping possibly for the next few years. So far ,in Vancouver drops have not been significant but that is about to change. Down 1-2%/ month is looking more likely Nov and dec 2025 had significant drops in Vancouver and Toronto and that may carry through 2026. The spring market is probably going to be a dud in both Vancouver and Toronto. Come midsummer the panic sell might be on prices dropping fast and everyone looking for buyers who are not there.
Everyday the Canadian housing markets collapse is a great day for stinking rich renters who turn all their money into money making machines in the stock and money markets around the world. Stop making developers, builders and realtors rich and make yourselves unbelievable rich instead.
Buy later after the broke and desperate are forced to sell homes, condos, farms, townhouses at incredible discounts to get rid of them, All the cheapest and best deals are in the USA. Be Rich Invest Rent Vulch later after prices in Canada collapse country wide.
WE ALWAYS BUY AT THE BOTTOM OF DESPAIR TO GET THE ABSOLUTE LOWEST PRICES ON EVERYTHING WE BUY
There are about twice as many people in T.O. today versus the early 1990s. So, 18k homes for 2.5 million peeps vs 5+ million is a big difference.
It always bothers me that there never seems to be an accounting for population growth. Probably a big factor for “sticky” prices.
when it says “homes” does that mean detached homes, semi-detached, townhomes, condos?
This is good news, it will force the developers to either lower their prices, or turn a number off the units into rentals, which will increase rental inventory, and lower the relative rental market rates.
The reason for the continued high building rate is due to time it takes to get a development off the ground. Its a bit of the sunk cost fallacy. So if a developer or two takes a loss, so be it. That’s the risk of doing business. And the government should stay out of guaranteeing developer and rental agents business. Let the market decide who succeeds, and limit inventory consolidation to keep competition levels high.
So in 2023, carney and freeland introduce measures to increase supply, primarily the taxpayer funding bad developments through the chmc and bdc.
Since then we have the same narrative about supply, yet affordabolity os at least as bad?
So, freeland can be excused for not having any sort of fonance training or ontellect. Carney is a self proclaimef expert, yet has wasted huindreds of billions building housing no one wants?
Now we are in a long down cycle of gdp contraction (real gdp) since 2015. The clear intent of this housing inflation was to cover up widespread corruption and negligence.
So asking the same people to fix thos mess is dumb. Its the same issue with trump. Maybe if we had a different govt ,,,
My guess is that developers here in Vancouver are keeping their unsold properties listed, but at inflated, higher prices. That way the developer gets to avoid the Speculation and Vacancy Tax, hang onto the unit without being forced to sell it at a loss, and wait for prices to recover.
In the meantime, the developers are quietly pressuring government to take action to prevent prices from actually correcting…maybe a new surge in immigration, debt relief or other legislation to mitigate the loss developers will incur as a result of a price correction.
The person who gets hammered is the homebuyer…still struggling to afford a home. The BC Government needs to put a time limit on the S&V Tax (2 years, like Ontario) and force these units onto the market.
In the Vancouver area, I just bought a condo listed at $2.2 million (comp sales last year were at that level too) for $1.5 million.
The price drops are already here. You just have to ignore the realtors.
Also, baby boomers are starting to sell now. There will be a glut of homes on the market very soon. Not just tiny condos with no parking and no room for dressers in the bedrooms.
A house is worthless by our calculations
Too many costs every month to make ownership worth it