By Richard Lyall
RESCON
The residential construction industry is at a precipice. The numbers paint a bleak picture and the forecasts are grim.
Housing sales, starts and completions – which have been on a progressively downward spiral since 2022 – have slumped. Projects have been shelved, workers are being let go and layoffs have begun.
The next few years could be even worse, with new home sales, starts and completions expected to come in around 30,000 annually in Ontario, according to the Canadian Centre for Economic Analysis. That will leave the province well short of the 1.5-million new home goal by 2031.
In the Greater Toronto and Hamilton Area, new home sales are now down 71 per cent for single-family dwellings, and condo sales have plummeted by 90 per cent.
The experts are forecasting that Ontario will likely see a reduction in GDP by as much as 1.5 to 2.5 per cent in 2026 directly related to the situation affecting the residential housing sector.
A report prepared for RESCON by the Missing Middle Initiative at the University of Ottawa indicates that, given current and anticipated conditions, new home starts and sales across 34 municipalities in the GTA and Greater Golden Horseshoe are going to get worse before getting better.
The analysis revealed that starts in the first nine months of 2025 were down substantially from the same period in the previous three years, while industry job losses continued to grow.
The findings are alarming but only confirm what we’ve been hearing from our builders. It is a particularly dark time for those who work in residential construction.
The analysis shows that housing starts were down 34 per cent in the municipalities over the first three quarters of 2025, relative to the January-to-September periods in 2021 to 2024. Condo apartment starts, meanwhile, were down 51 per cent in 2025 relative to the same earlier time periods.
The analysis estimates that the slowdown in housing over the first nine months of 2025 translated into 35,377 fewer person-years of employment, compared to the same period in the previous three years.
To turn the situation around, I suggest five actions be taken.
Tax burden
First, we must lower the tax burden on new housing. Taxes, fees and levies are too high and putting home ownership out of the reach of most working individuals and families.
Taxes account for 36 per cent of the purchase price of a home. We need to reduce that by eliminating the five-per-cent federal and eight-per-cent provincial sales tax on all new homes. The province and feds are doing it for first-time buyers of homes purchased up to $1 million, as well as reducing the taxes on a sliding scale for homes between $1 and $1.5 million. However, the initiative needs to be extended to all new-home buyers.
Development charges
Second, runaway development charges (DCs) must also be reduced. They have risen dramatically over the last two decades and are killing the market. In Toronto, the average condo faces $130,200 in DCs.
For a single-detached home in Toronto, development charges vary from about $125,000 in Pickering to about $180,600 in Toronto.
An Ontario Housing Supply Task Force recommended in a report four years ago that action be taken to stem exorbitant DCs, but the problem has not been addressed.
Approvals process
Third, steps must be taken to simplify, speed up and digitize the approvals process. It can take up to two years from the time a developer submits a building application to receiving approval.
No industry can work on a timeliness such as that.
Social housing and homelessness
Fourth, governments need to do a better job of co-ordinating their efforts around social housing and homelessness, perhaps through a Ministry of Growth Management. Both housing and infrastructure are critical to our future, so we need to be organized with firm targets.
Residential construction industry
Fifth, governments need to take steps to fix the ailing residential construction industry, as private builders account for 90 per cent of housing supply. The federal Build Canada Homes initiative is important, but it will not solve the problem. The government needs to work with the private sector.
Fixing the crisis won’t happen overnight. Homebuilding is a slow process. With very little building anticipated over the next few years, the dire situation will become even more problematic.
The longer we wait to put fixes in place, the tougher it will be. We must act now to chart a brighter future.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
