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Greek philosopher and pioneering polymath Aristotle once declared, “It is during our darkest moments that we must focus to see the light.”
Sadly, Ontario’s homebuilding industry now finds itself at that grim point. Housing starts in the city of Toronto are presently near a 30-year low and sales have ground to a halt. Weakness in the market is expected to continue through 2027, threatening economic activity.
Disturbingly, a comprehensive new report prepared by the Missing Middle Initiative (MMI) at the University of Ottawafor the Residential Construction Council of Ontario (RESCON), also revealed that most municipalities in the Greater Golden Horseshoe aren’t building enough homes.
The report examined 34 separate municipalities across nine metro areas in the Greater Toronto Area and Greater Golden Horseshoe and assessed the state of housing sales and construction over the first six months of 2025, compared to the first six months of the previous four years.
The result?
Two-thirds, or 22 of the municipalities received an F, another five received a D, and the other seven municipalities received a C or higher.
The assessment was based on data from Canada Mortgage and Housing Corporation and Altus Group.
Researchers found that, in the first six months of 2025, housing starts were down an average of 40 per cent in the municipalities. Condo apartment starts over the first six months were down 54 per cent relative to 2021-24 while starts for everything other than apartments were down 42 percent.
The reduction in housing starts in the municipalities over the first six months of the year, relative to 2021-24 averages, translates into 24,195 fewer person-years of employment. In Toronto, starts in the first six months of 2025 were down 58 percent and sales declined 91 per cent compared to the same period between 2021-24, causing employment to fall by 10,209 jobs. And it’s going to get much worse.
The findings are troubling. Our economy will be in dire straits if we do not act quickly to lower the tax burden so that builders can build homes people can afford. Presently, taxes, fees and levies account for 36 percent of the cost of new housing. For example, that means on a new home that costs $1 million, the tax burden accounts for $360,000 of the purchase price tag.
The federal government set a target of building 500,000 homes a year for the next decade and, earlier, the province set a goal of building 1.5 million homes between 2023 and 2031. Yet, housing starts trending in the wrong direction, with further declines expected in the years ahead.
MMI founder Mike Moffatt has noted that Canada risks losing 100,000 housing jobs over time due to the anticipated decline in starts. A loss of that magnitude would cause substantial economic damage.
The city of Toronto is already feeling the effects of the downturn. There was a substantial shortfall in Municipal Land Transfer Tax revenue during the first few months of 2025. If the rest of the year plays out as expected, the levies will fall $70 million short of original expectations.
To fix the problem, our political leaders must be on the same page. The tax burden must be reduced. Red tape and zoning rules that stymie construction must also be addressed. They’re choking supply.
The feds have committed to reducing the federal share of the GST on new housing up to $1 million for first-time buyers and offering a partial rebate for first-time buyers of homes up to $1.5 million. The Ontario government was supposed to follow through with a sales tax reduction for first-time buyers but didn’t. Both levels of government must also seriously consider extending the rebate to all new home buyers.
With the residential construction industry at the precipice, governments must take unified action and offer a ray of hope for the residential construction sector. The depressed state of the housing market should alarm policymakers of all political stripes across all orders of government.
The consequences of doing nothing could be devastating.
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 me***@****on.com.