CMHC data show 6,106 condo starts in the Toronto region over the last six months, while Urbanation Inc. and Zonda show only 1,950 and 2,300 condo unit starts, respectively.Cole Burston/The Globe and Mail
Home building in the country’s biggest market has declined even more than federal government reports indicate.
Although Canada Mortgage and Housing Corp. data show condominium starts in the Toronto region are down significantly over the past year, statistics from industry groups paint a grimmer picture.
In the first six months of the year, CMHC data show that there were 6,106 condo starts in the Toronto region. In comparison, data from industry research groups Urbanation Inc. and Zonda show that there were 1,950 and 2,300 condo unit starts, respectively.
CMHC and the industry groups showed that starts declined between 58 per cent to 65 per cent over the first six months of 2024. But data from the industry groups show that the decline in new condo building began in the second half of 2023 whereas CMHC data show the slowdown started late last year.
Ottawa is quietly working on launching a new entity it hopes will be key to housing affordability
In the first six months of 2024, CMHC data show 14,839 condo starts in the Toronto region. In comparison, Urbanation and Zonda show that there were 5,357 and 6,550 starts, respectively.
The reason for the difference lies in how CMHC and industry groups count the beginning of construction. Canada’s housing agency measures the start of construction at a later stage, when all of the concrete has been poured for the whole of the footing around a structure. Digging the hole in the ground and pouring the concrete can take months to complete.
Meanwhile, Urbanation and Zonda count the beginning of construction when excavation is under way, which captures starts at an earlier phase.
That means government data have been lagging by months and not showing the severity of the housing slowdown.
In a year when construction activity is steady, the difference in methodology may be less important because all the starts would eventually be counted.
But Toronto’s new home construction has been dropping precipitously and CMHC’s data are capturing activity that began at an earlier date and is just now completing the foundation pouring phase.
Preconstruction home sales have almost disappeared over the last few years with many developers forced to cancel projects.Cole Burston/The Globe and Mail
By measuring an earlier point at the start of the construction process, Urbanation and Zonda numbers more quickly reflect the current depth of the market’s downturn.
“Given that housing starts data informs housing policy, having a more contemporaneous measurement of activity allows for quicker decision making,” said Urbanation president Shaun Hildebrand.
Pauline Lierman, Zonda’s vice-president of market research for Ontario and Eastern Canada, said CMHC’s method is not a good barometer for evaluating the length of time it takes to start and complete a building.
CMHC says its methodology provides actual confirmation that the project has moved beyond the planning and excavation stage.
“It is a firm indication that actual construction has begun,” said CMHC spokesperson David Harris. As well, CMHC said this approach also ensures that residential construction activity is counted the same way across the country.
Opinion: Why Ontario is the problem child in Canada’s housing crisis
CMHC measures starts across the country and not just the major cities. Its historical data goes back decades. Urbanation measures starts in Toronto, Hamilton and other regions in Ontario and Quebec. Zonda measures starts in Toronto, Hamilton, Ottawa and other major cities in southern Ontario, plus Montreal and Halifax.
The housing agency said differences in market conditions and other location-specific circumstances can lead to activity being stalled after a site is cleared for construction or after a hole is dug to prepare the foundation.
Although some projects are put on hold after the excavation has begun, Ms. Lierman argues this is a very small number relative to the overall size of the market. When a site is fully cancelled – such as what happened when one of Vandyke Properties’ condo projects was pushed into receivership in 2023 – Ms. Lierman said the start is removed from Zonda’s overall construction count.
Michael Waters, chief executive of Canadian home builder Minto Group, said the industry’s methodology provides a clearer picture of the current level of investment in housing. “You do get a better measure of activity and sentiment,” he said.
The past few years have been difficult for residential house and condo developers. Preconstruction home sales have mostly disappeared and many developers have had to postpone or cancel projects. Some developers have been unable to pay their bills and lenders have pushed their projects into receivership.
Editor’s note: A previous version of this story incorrectly stated that Urbanation measures condo starts in the Toronto and Hamilton region. The industry research group measures starts in Toronto, Hamilton and other regions in Ontario and Quebec.