Canada’s housing narrative flipped from shortage to surplus faster than you can say “speculative bubble.” Desjardins economist Kari Norman notes that new housing starts fell sharply last month, while new homebuilding permits hit a record—demonstrating red tape isn’t the problem. Meanwhile, the number of newly completed but unsold homes is the highest in a generation. Norman asks a question policymakers refuse to ask: Will Canada be able to absorb the supply?
Canadian New Home Starts Fall, But Permits Show Red Tape Isn’t The Issue
Residential building permits surged to nearly 350,000 units in August, a new record high. The volume was already elevated heading into 2020, but the low-rate fueled real estate frenzy sent permits into the stratosphere.
Despite that, new housing starts are falling. The seasonally adjusted annual rate (SAAR) dropped to 245,800 units in August, down 16% from July. The gap between permits and starts has never been wider—undermining the claim that red tape is the main bottleneck.
This isn’t a supply problem. It’s a demand one.
Canadian Real Estate Developers Have Historically High Unsold Inventory
Norman contrasts the surge in permits with rising unabsorbed inventory—particularly in multi-family housing. Nearly 12,000 unsold units were reported in August, about 50% above the long-term average. It’s the largest glut of completed, unsold homes in at least 25 years, raising red flags about excess supply in a segment once thought untouchable.
A whole generation has never seen this much finished inventory sitting vacant without buyers. Even pricier single-family homes that remain unsold are still at relatively healthy levels.
This is a rare dynamic for Canadian real estate. Typically, most new homes are bought by investors during pre-construction, minimizing builder exposure. But that’s clearly broken—developers are now holding historic volumes of completed homes with no buyers in sight.
Canadian Real Estate Has Too Much Supply. Will Demand Return?
Rising inventory points to a clear mismatch between completions and demand at current prices. There’s a massive volume of housing in the pipeline—but Norman raises the real question: Can Canada absorb it?
Pre-construction demand is virtually dead. New home sales in major markets like Toronto have plunged to record lows. At the same time, existing homes have seen new listings surge to record highs, further flooding the market with supply.
Policymakers keep insisting that “building more” will fix housing, suggesting there’s a supply shortage. It’s accompanied by billions spent annually on stimulus to hasten supply. In reality, the data shows the contrary—there’s a surplus of homes at this price. Home prices remain deeply unaffordable for end-users, and speculators have run out of leverage for the casino tables.
Normally, oversupply leads to falling prices but input costs continue to rise. This is applying margin pressure for homebuilders, limiting their ability to cut prices. It’s a strange dynamic: demand has collapsed, yet construction costs won’t budge.
Ironically, the same state-backed building stimulus pitched as an affordability tool is propping up costs. Infrastructure spending is stabilizing input demand, blocking the normal deflation that follows a demand shock. It’s starting to look less like a housing plan and more like price floor reinforcement.
But of course, policymakers only act in the public’s best interests. Right?
Managed decline , poor policies, a flailing economy, job losses by tens of thousands, many newcomers returning home because it’s too expensive to live in Canada. Got the memo. Canada, is finished.
I came to Canada with my family in 1999 as self financed refugee from Europe. Went to school to learn French and English and after started working and saving. I just bought my house this year 26 years later. Small 650k house. I gave 250k and took 400k mortgage from bank. I’m making a little over 100k but had to add my wife and son to mortgage. Not sure any more if it was a smart move.
What is hard for me to understand is compared to Europe for example we have huge country with so many resources and are part of most developed countries in the world yet we struggle more then some tiny little EU countries that don’t have nearly as much as Canada has to offer. It’s mind boggling.
On top of that I probably won’t be able to afford to retire in Canada. I’m telling my kids after they get their degree to go to USA if they want to make money and afford a home.
My brother sold his property and n Canada and went back home and invested into business. He tries a few different businesses in Canada but it’s just so hard he gave up.
It’s harder and harder to achieve Canadian dream even for hard working people. I don’t know any more. It doesn’t look good.
Any politician who prop up home prices needs to be jailed.
This would have never gotten anywhere near this bad if the government had taxed capital gains on homes. Homes are one of the worse forms of capital allocation for a society, barely a notch above consumption like gambling and booze. You now have all these old folks demanding welfare (healthcare, CPP, OAS, etc), who aren’t going to pay anything for those very expensive services, and want to burden the far fewer kids they *didn’t* have with the tax burden. I personally know many older folks who did simple jobs like a janitor or food aide with a fully paid off home (even after a divorce or two), whereas a young single engineer has no hope of buying his own property without saving up for a minimum of ten years -assuming we don’t have another artificial crack-up boom in prices.
They’re sitting empty because prices are outrageous.
I make $70,000 a year and can’t afford a mortgage on a $300,000 home.
Absolutely,
There is still a shortage of sfds it’s just now the banking and condo developer cabal want young people to absorb the excess of inventory that nobody wants, to help “save” the industry. What bull hockey.
My husband and I worked together for 5 years for a down payment for our first house. No vacations ,no car,no going out to dinners. We ate at home and brown bagged lunches. No one wants to do this now.
Young people and their avocado toast indeed. /s
gfy, both of yo. You’re not worth educating but congratulations on your properties
Yes Joe Whipple and those old folks went to war so you’re wimpy ass could live in this once great country
It’s idiots like you that destroy a country
Sounds to me you’re not a real canadian anyways Brett
Eric get back into you’re closet you piece of garbage
Older real canadians made the mistake of allowing in 3rd world garbage
They were to kind and now you woke gearboxes just complain
Grow a set goof
Bull*@#&! Check the price:income ratio from when you bought vs today — it’s easy to prove you wrong. My parents easily bought homes on a single income, & paid them off easily even at high interest rates because the purchase price was low — they could buy a family house (with land) for perhaps 3x my Dad’s annual income in the Vancouver area.
Now, a young fairly high earning couple, let’s say a combined $200,000/yr, cannot buy any home in the Vancouver area for $600k – not even a decent condo in Surrey.
The real problem is home prices running up far beyond any reality over the last 20 years, and no amount of scrimping and saving will get you into a **million dollar** starter home!!
The lack of taxing capital gains on homes is exactly how/why the asset-price bubble on housing formed; homes will sell for as much as the banks are willing to lend out to purchasers; and rental costs are meant to absorb the interest fees (see: Michael Hudson). The fact that in prior times a single ‘regular’ wage-earner could afford to buy a home is directly related to the lack of regulation and the centralization of credit in the banking sector who lend towards easy-buck, speculative, and non-productive ‘investment’ aka economic rent. It’s the financialization of the entire economy that has led to it’s enshittification and the immiseration of the majority working class, the huge chasm of income inequality. They don’t care how much the masses starve so long as they can keep eeking out interest payments to avoid catastrophic levels of default. Not taxing capital gains and allowing rent-seeking to run hog wild is private equity’s wet dream; and here we are. It’s not sustainable; and that’s why Hudson’s book about it was called “Killing the Host”. Laissez Faire Capitalism is an ultimately irrational, self-destructive death cult.
Tax on homes, are you serious? The government cannot spend money responsibility as it is and you want to give them more?
All those items you mentioned CPP, healthcare were already paid with tax dollars.
The conversation is clearly dominated by people who have no idea how economics works. Massive printing of money has two effects 1) inflation which hurts the poor and middle class and 2) asset inflation (stocks, housing, art etc). Combined with a poor immigration policy, this effectively raised the cost of housing. Also the government told people that interest rates would be low for long period of time. Oops
Buying a home was difficult back then as well as now, sure the home prices were less dollars but they were earning less dollars (like 20 dollars a week ) the elderly certainly contributed to cpp and paid their taxes back then too…I know a lot of engineers and other professionals that didn’t buy houses back then and rented instead, so it’s all about sacrifice and life choices…
I’m 41. My boomer parents worked low skilled jobs. Mom, part time grocery store clerk (benefits, vacation, union). My Dad a framer in construction. They bought in Grimsby ON, near Lake Ontario, a 5 bed 3 bath home with a 400′ deep lot. Last house on a dead end street. 2 cars in the driveway, a boat and a “fun” little sports car for leisure. It was paid off by the time they were 37. That wasn’t uncommon. We had no sacrifices. That house sold for 1.8 mil a few years ago. Doctors can’t even afford to live there. It’s not the same today as it was. In fact my mom made more per hour (not adjusted for inflation) than grocery store workers today make. Plus they have no benefits, pension etc. And if you say “it’s the Starbucks and Netflix”. You’re wrong there too. We had cable tv, a land line and Nokia cell phones in the early 90s. Went to Timmy’s regularly and the house was stocked with all of the advertised goodies. This experience wasn’t unique to my, it was nornal
It was 3 to 5 times the amount of your income. The same house is now 10 to 15 times the income. It’s not the same and even worse the younger generation have bigger debt and no hope of a job with a pension. I feel for the younger generation, it’s near impossible without help from parents. They should triple the property tax on anyone who owns more than 1 home in canada and disallow corporations from purchasing residential property in condos or houses.
You should have actually taken a look at house prices vs salaries then and now before you submitted you comment.
Finally an article that portrays the truth. No amount of party rhetoric about improving a housing shortage will make up for a lack of purchasing power of the general population. Investors spending is not a cure but simply makes the problem worse. Prices for the basic necessities of life have not been protected from predatory investment strategies and now the result is about to manifest itself.
Bring on the Recession!
Ya can’t have a guy as incompetent and autocratic and narcissistic as Trudeau for your PM for 10 years without some serious bad economic fallout. I think a dead monkey wouda done a better job than Trudeau … at least it wouda “listened” to its advisors.
Bring it on!!
we were in such an incredibly over inflated bubble that houses have still not fallen to their true value.
remove corporations from real estate entirely and limit every person to owning a single property and watch as the value of homes drop precipitously.
housing is not an asset to be bought and traded.
I will never own a home in my entire life unless they reach reasonable values like they were when your car cost more than your house
More doomsaying rooted in nothing. Our in-flow of new citizens MASSIVELY outweighs the absorption rate of new dwelling units entering the market. If you look at Canada instead of only Vancouver and Toronto, it is abundantly clear that new homes are creating a price-stabilizing effect that is preventing locals from being pushed out of the market by interprovincial/intl. investors, without causing any depreciation of existing homes. This is what everyone, excluding large-scale equity firms buying up family homes, wanted to happen.
In the GTA, between develop fees and HST, housing costs are close $250,000 before the shovel hits the ground. Put just that amount into a mortgage calculator and you get some scary numbers, before adding the price of the box and land! Affordability is a huge issue, and none of the cost inputs are willing to cut their share. So, with investors out of the market, and most citizens locked out of the market, the market behavior is finally making sense!
It’s the narcissist’s fault. Trudeau decided to replace oil and gas extraction with house building. his father cost Canadians 90-120 billion dollars/yr. In lost economic activity with his idiotic nationalization of oil and gas. Not to mention the fact that both he and his idiot son (his words) racked up the vast majority of the federal public debt. Rene Levesque said 60 years ago that “Canada is over governed and ill governed. He wanted clearly defined rules between jurisdictions. The Trudeaus blurred them …
I hope international students won’t get blamed for this. /s
Everything is wrong, gentlemen. No one wants to point out that everything is going wrong. Starting with the fact that the average person can’t buy land…it’s held by investors or the government, and the price is vastly inflated. Then, even if you buy it, you need a building permit and utilities. Then it starts…materials are incredibly overpriced…wood, of which we have incredible abundance in Canada, costs more than iron, any screw costs as much as an airplane wing, and all this is explained by far-fetched reasons about supplies being disrupted by COVID…manufacturers simply love making excess profits. Next…any construction specialty…the prices are through the roof…just random…Where has anyone seen a construction worker earn more per hour than a doctor or engineer? Since when have agreements been worthless, since when can the price of labor and materials change several times during a contract? Bureaucracy, inflated prices, excessive profits at every stage… this is the main reason for unaffordability. And of course, there’s the eternal whining… young people can’t afford it. They can if they start saving for a down payment instead of wasting everything here and now, if they invest in education and the future instead of pleasures and expensive cars, if they work hard and complain less.
—Where has anyone seen a construction worker earn more per hour than a doctor or engineer?—
I did.
In USSR.
I am a young professional who married another young professional and we cannot afford anything. This is not a life choice but it is just incredibly difficult to afford anything decent without parental help (which we don’t have). We don’t eat out we bag our lunches, we do have cars because we work out of town yet it is so difficult to buy anything these days. Please look up Home prices vs. disposable income. It is not sensical to argue that home prices were less dollars but they were earning less dollars. If we were just 10 years early, we could have afforded three garage house (we don’t live in toronto nor vancouver), now we can only afford semi-detached.
Yes Joe Whipple and those old folks went to war so you’re wimpy ass could live in this once great country
It’s idiots like you that destroy a country
Sounds to me you’re not a real canadian anyways Brett
There’s ample demand, what there isn’t is affordability. Lots of people want their own homes, but the majority are classified as “impossibly unaffordable,” and the Federal Minister of Housing said he wants to stabilize pricing, NOT bring back affordability. Nobody making the average 65K per year can afford a 1-2 million dollar apartment or house, it is simply out of reach. Canada’s economy has been woefully mismanaged for decades, with the wealth gap and debt increasing massively to totally dysfunctional levels. Canada did not invest in R&D or infrastructure and almost all growth came from an epic real estate bubble which is now popping, and immigration—which Canada’s infrastructure was not equipped to absorb. Our leaders FAFO and voters let them do it. People were warning of the property bubble for at least a decade, if you are losing your shirt, don’t say you were not warned. Meanwhile, with the cost of living so high, there is no way to get ahead for young people, graduates, entrepreneurs—almost anyone who isn’t rich. People will have to move to other cities or even countries to do that. Those are the consequences of irresponsible voters and politicians.
By definition demand needs to be qualified (aka it needs to be able to purchase the actual units). There’s plenty of “demand” for Lamborghinis by your definition, people just can’t afford them. If Lamborghini only made more it would be cheaper!
Never in history has supply ever brought down the cost of homes. It’s the recession that knocks the s**t out of the market and forces lower prices.
Soooo I wonder how all of this is going to square with Carney’s new big shiny “BUILD CANADA HOUSING” plan or whatever. Another give away to private developers and asset-inflating bankers ofc. But this could spell some serious trouble for him politically.
Yes exactly. The public bureaucracies’ best interests…
Joel Whipple has his his head stuck in his butt and that shitty view will never change, as an immigrant child I learned the language went through school and got a trade and started a business , I did OK because hard work was the accepted thing to do , 2 children went to university and are engineers and both own homes because of work ethic , it can be done and don’t complain . I am glad Joel is not my neighbor there are plenty of jerks to go around
You are confusing the concept of “anyone” can do it with “everyone” can do it. That’s just not mathematically possible with the current pay vs housing prices. We can’t have a country of 30 million engineers. “people should get a better job then” But the truth of the matter is that someone has to stock shelves, clean toilets, package food, etc., and they deserve secure and stable housing for their families too.
That being said I think it’s more the lack of pay than housing prices. Turns out that back in the 50s, CEOs were making about 20x their average workers’ pay, but now they make 210x. I wouldn’t mind paying $2 million for a home if I was making 10x more like they are
Emily , Humbled by your reply , was I lucky and in the right place at the right time? and did that opportunity evaporate and is no longer available , wage disparity is the root cause , and yes I have nothing but respect for the cashiers and store clerks , and all the others that are trapped , where do we go from here?
If a question of affordability not availability. I’m a renter, but my rent has more than doubled in 10 years while my income certainly hasn’t.
Most young people are having difficulty finding jobs, let alone saving for a mortgage for a “box in the sky” condo. The unemployment rate for under 30s is 16%.
Maybe it’s time to get housing prices back in line with reality and stop blaming the customer for not being rich enough.
1997 was the last balanced budget under Paul Martin , spending money you don’t have has never made sense , mistake number 2 is the continued and accelerated rate of spending , our national per capita debt is insane , hoping that future revenue increases will somehow pay this is equally insane , Mark Twain was right “politicians and diapers should be changed often and for the same reason” 6 years as an MP will get you a pension for life , so what caliber of talent and ability has that attracted? Trudeau2 was fired as a teacher for an affair with a minor that was settled with a large amount of cash and a nondisclosure agreement and yet he was elected. we are doomed….