Canada Housing Market Lags Behind

Canada’s housing market is losing steam — not with a crash, but a painfully slow deflation.

Home sales inched up for the third straight month in June, but the modest gains have done little to reassure economists or real estate agents. Most say the rebound is largely due to sellers slashing prices rather than any meaningful recovery in demand, the Wall Street Journal reported.

“It’s like the air is slowly coming out of the balloon without it popping,” said Doug Porter, chief economist at BMO Capital Markets.

Developers and builders across the country are hitting pause. The nation’s housing agency, Canada Mortgage and Housing Corp., says at least 430,000 construction starts annually through 2035 are needed to restore affordability, but the reality is far below that level.

For many firms, the math no longer pencils out: new home prices can’t cover the combined burden of higher construction costs, borrowing rates and mounting municipal taxes and fees.

“Our industry is bleeding out, largely due to taxes, fees and levies on new housing,” said Wesgroup Properties CEO Beau Jarvis. “We are delivering housing at a cost that people cannot afford to purchase.”

The strain is particularly sharp in high-cost metros like Toronto and Vancouver, where after-tax income required to cover housing costs is now at its highest share since 1990. Inventory is growing, and new condo deliveries in both cities are struggling to find buyers.

Compounding the issue is the broader economic drag from President Trump’s trade and tariff pivots, which have weakened confidence and contributed to a likely GDP contraction the second quarter, according to Statistics Canada. New immigration limits rolled out this year have also cooled demand in major markets.

More affordable cities like Calgary and Montreal are holding up better, with benchmark home prices still under C$600,000 compared to over C$1 million in Vancouver and Toronto.

Still, the national outlook is dim. The national housing agency projects another 2 percent drop in average home prices through the end of 2025 and doesn’t anticipate a real recovery until 2026. Until then, sellers will need to stay patient. Developers may stay on the sidelines.

— Judah Duke