Canada’s Condo Collapse Could Lead to Smarter Urban Growth

Liza J. Lee | WBN News Vancouver | October 10, 2025 Editor: Karalee Greer Subscription to WBN and being a Contributor is Free.

Canada’s two hottest real estate markets—Toronto and Vancouver—have hit a historic low. With thousands of unsold condos and construction grinding to a halt, the industry is facing a reckoning. Yet for small business owners and urban innovators, this downturn may unlock new opportunities for smarter and more inclusive development.

📌 At A Glance

🏗️ Over 2,500 new condos sit unsold in Metro Vancouver
📉 Toronto housing sales dropped 90% in 2025
🚧 Construction starts fell 58%, with over 10,000 jobs lost in Toronto
💸 Developers are returning deposits and shelving projects in Canada
🧠 Experts warn of a self-reinforcing cycle of vanishing demand

🔍 What Is It?

This is a full-blown market correction in Canada’s condo sector. In Vancouver, unsold inventory has doubled within a year, driven by unaffordable build costs and mismatched unit sizes. In Toronto, investor-driven pre-construction sales have collapsed, echoing the 1990s crash—but with deeper structural vulnerabilities.

Instead, purpose-built rentals—housing developments designed specifically for long-term rental rather than resale—are gaining traction as a stabilizing force in Canada’s volatile housing market. Backed by financing from the Canada Mortgage and Housing Corporation (CMHC), these projects offer developers access to low-cost loans and flexible terms, especially when units meet affordability and accessibility criteria.

CMHC’s Rental Construction Financing initiative has become a key tool in shifting away from speculative condo builds toward sustainable, community-oriented housing. For small developers and nonprofit organizations, this opens the door to building secure rental stock that serves seniors, low-income families, and essential workers—while reducing reliance on volatile investor demand.

💡 Why It Benefits Users or Small Biz

For solopreneurs and small developers, this reset creates space for innovation. With fewer mega-projects dominating the skyline, there’s room for community-led housing, adaptive reuse, and purpose-built rentals. Lower land competition and evolving policy frameworks could lead to more affordable, human-scale development—and smarter partnerships with local governments.

Starting in 2026, Vancouver will launch an ambitious rezoning initiative to increase urban density through the creation of 17 new “villages”—compact, mixed-use hubs designed to support walkable living, local business, and transit-oriented development. Strategically distributed across the city, each village will be anchored by affordable housing, public amenities, and green infrastructure. The plan marks a shift away from single-family zoning toward multi-unit dwellings and mid-rise buildings, enabling more inclusive growth while addressing the city’s housing shortage. For small developers and community organizations, this is a chance to help shape vibrant, human-scaled neighborhoods with lasting economic and social impact.

🛡️ Trust, Safety, and Regulation

CMHC is closely monitoring the downturn, noting that stricter lending rules and pre-sale thresholds may help soften the blow. Municipalities are under pressure to revise zoning, reduce tax burdens, and streamline approval timelines to stabilize the market and protect jobs.

🌍 Broader Impact

This collapse is more than a real estate story—it’s a signal to rethink urban growth. The investor-first model is faltering, and cities must pivot toward livability, affordability, and resilience. For tech-savvy professionals and civic-minded entrepreneurs, this is a rare moment to shape the future of housing from the ground up.

🧩 Signature

Liza J. Lee – Contributor, WBN News | Follow Me on X

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Editor: Karalee Greer Subscription to WBN and being a Contributor is Free.

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