Workers at the construction site for a condo tower in Delta, B.C., on July 2. B.C. housing industry players said in a letter to Prime Minister Mark Carney that if nothing changes, housing supply could continue its slowdown.DARRYL DYCK/The Canadian Press
Good afternoon.
Homebuyers struggling to cope with Canada’s housing crisis are finding themselves in the position of being thirsty at sea.
Housing prices remain unattainably high for most buyers, and yet, worsening market conditions have also meant a glut of unsold condos on the market in Toronto and tanking condo construction in Vancouver.
High construction costs and land prices, municipal fees, and erratic U.S. tariff policies have dramatically slowed new construction projects.
At the end of June, sales in the Toronto area were crashing, while the inventory of condos continues to rise. A July 15 report from Urbanation, a Toronto company that tracks the condo market, said there were about 24,000 unsold units by the end of June, while sales dribbled. The Greater Toronto and Hamilton Area saw only 502 condo sales in the second quarter of 2025.
In British Columbia, Chris Gardner, chief executive officer of the 5,000-member Independent Contractors and Businesses Association, said companies are putting projects on hold because of uncertain costs and financing – devastating the province’s construction industry.
“We have not seen layoffs for builders like this in more than a decade,” said Gardner. “I think people in government don’t understand how serious this is and how rapidly things are unwinding.”
Last week, major builders in B.C. sent a letter to Prime Minister Mark Carney, Housing Minister Gregor Robertson and Premier David Eby calling on them to roll back restrictions on foreign investment in the housing sector.
Without that crucial pool of investment in the early, presale stage of condo construction, builders can’t get the financing required. Construction of new units will slow and the inventory will never meet the need, which means the prices of that kind of housing will go up once again, they argue.
“New condo development requires presales to meet financing thresholds, part of which relies on investor-focused buyers. Closer to occupancy, sales typically shift more toward owner-occupiers.”
“In the absence of foreign investors, fewer projects will meet presale financing thresholds, suppressing supply delivery, which serves no one in a housing crisis as projects will not start,” the letter says.
As housing prices spiked over the past decade, B.C., Ontario and other Canadian jurisdictions introduced taxes aimed at discouraging foreign investment in the country’s real estate. The federal government banned foreign housing investment in larger metropolitan areas in 2023 and has now extended that ban to 2027.
But Hani Lammam, executive vice-president at Vancouver building company Cressey Development Group, said residential construction in major cities in Canada can’t function without the ability to get capital from somewhere other than Canadian citizens, companies or pension funds.
People who are looking to buy are generally unwilling to tie up large sums of money for a long time before a project is completed, he said. “To rely on the end user is asking too much, to have to make a buy decision four or five years before.”
Lammam‘s company, which typically builds five to eight projects a year of rentals and condos, did not start any new projects last year.
The letter suggests alternatives to dropping foreign investment restrictions entirely.
For example, an Australian policy, implemented earlier this year, restricts foreign investment in established homes, but allows it for new builds and presales.
But Eby rebuffed the letter writers’ request, saying he doesn’t want to return to the old system that allowed rampant and uncontrolled foreign investment in Canadian housing.
He asserted that the aggressive tax was put in place for a reason. “Look, if you’re a foreign buyer, you want to buy, you want to benefit from our public services, from our police services, from our schools, from our hospitals. You don’t get to just buy a property here and pay your income tax somewhere else and not support those services,” Eby said.
Tom Davidoff, a professor in the University of British Columbia’s Sauder School of Business, has written an upcoming article on the impact of foreign buyers on housing for the Canadian Tax Journal. He applauded B.C.’s decision to tax, rather than ban, foreign investment.
But Davidoff said allowing foreign investors back to Canada on certain conditions, especially for presales, is beneficial for the housing industry and for Canadian residents. He added that it’s probably necessary for the wellbeing of the country’s economy.
“As long as they’re occupied, it’s great. If you want a half million units a year,” – a doubling of the current rate of construction that the Prime Minister has said is a goal – “you need all the financing you can get.”
This is the weekly British Columbia newsletter written by B.C. Editor Wendy Cox. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here.