The construction site of new residential houses at the intersection of Maple and Fifth Streets in Collingwood, Ontario, on March 24, 2025.EDUARDO LIMA/The Globe and Mail
Ontario’s homebuilders have slashed purchases of new land for future residential developments in another sign that new home construction is slowing fast, according to new data.
Altus Group data shows that in 2024 more than $3.35-billion was spent on 296 deals for residential land development in the greater Toronto area, down 15 per cent from the 349 deals in 2023 with the dollar volume falling 18 per cent from that year’s $4.13-billion in sales. There is an even steeper drop when measured from the recent peak of 2021, which saw 549 deals (46 per cent higher than 2024) for $8.41-billion (60 per cent higher than 2024).
“The overall capital market investment activity is down, but particular land because of what’s happening with housing sector and especially with the low sales volume that we’re having for the past 18 to 24 months,” said Ray Wong, Vice President of Data Solutions for Altus Group who noted that the Toronto region – once the engine of the province’s new home-building activity – has seen the sharpest drops.
So far in 2025, the market is even worse with only 47 sales in the first quarter for $398-million. That’s lower than any quarter from the last five years, the closest being the second quarter of 2020 (82 sales for $662-million) during period of contraction amid the lockdown crisis of the COVD-19 pandemic response.
High-rise sites are seeing the fastest drop in price according to Mr. Wong: across the GTA there were 239 high-density sites sold in 2022 for $4.7-billion, but 2024 saw just 152 sites (36 per cent fewer) sell for 72 per cent less cash at $1.392-billion.
“The high density market is stopped,” said Mike Czestochowski, Vice Chairman of the Land Services Group for commercial real estate brokerage CBRE Ltd. He attributes a large part of the drop to the disappearance of expensive downtown Toronto land sales: “It didn’t take many $100-million deals to pump up the market. You take that out and that’s a significant difference to our market.”
There are already worrying signs that builders are pulling back on construction for sites they currently own: Zonda Urban reported that in the first quarter of 2025 sites representing 4,442 condo apartments had begun the starting excavation stage, that is 80 per cent lower than the 22,253 apartments that began excavation in the fourth quarter of 2022.
According to Mr. Wong some of the transactions he recorded as residential land deals are for industrial, commercial and retail properties: The difference is that where a few years ago much of this land would be valued at a significant premium because of its residential conversion potential, today those sites are being sold as if they are only worth a small multiple of the business income they currently generate.
There is one category that’s growing: distressed land sales, which relate to land from a bankruptcy, insolvency or power of sale process.
In all of 2022 and 2023 the GTA saw 23 distressed sales worth $237-million; in 2024 there were 29 distressed sales for $597-million.
“During the [2008] financial crisis was the last time we saw distressed sales like this,” said Mr. Wong, who says it’s also possible the numbers are understated, especially if you consider the number of deals that have sold at seemingly large discounts.
“The banks were patient and they’ve run out of patience,” said Mr. Czestochowski said, who said his group normally brokers one or two distressed sales in a year, but last year worked on a dozen. “This year we’re sitting with 16 to 18 distressed land listings.” He has notice a trend where the transaction are getting larger in value. “A couple years ago when this started, it was smaller property smaller owners who got caught up. Now it’s mid-sized developers.”
The biggest challenge for builders trying to plan ahead is the lack of certainty about what’s going to happen in a North American economy being whipsawed by a global trade war, according to Mr. Wong.
The one area that seems immune to these pressures is the luxury condo market.
“We’re as insulated as you can be. The value of our buyer’s homes haven’t been materially impaired by any of the gyrations in the market and they’ve accumulated enough wealth that they don’t view them as piggy banks for retirement,” said Jordan Morassutti, co-founder of luxury builder North Drive. Over the weekend the company launched sales for a new 62-unit condo at 2 Post Road – in Toronto’s prestigious Bridle Path neighbourhood – where there hasn’t been any new condos built in more than 20 years. Based on the traffic and the interest, he expects to see close to 50 per cent of the units sold by the end of the week, a velocity of sales that’s almost unheard of in the last 18 months.
Much of that comes down to the buyers according to Mr. Czestochowski. “These are empty nesters and they want a lifestyle, they don’t care about tariffs or their job in logistics,” he said.
Even with that recent success in its pocket, North Drive is still taking a cautious approach to its own land pipeline and doesn’t have anything firm lined up for its next luxury build.
“We are reviewing a couple of investment opportunities currently, two potential projects we could act on,” Mr. Morussutti said. “We’re taking a disciplined approach while being cognizant of where we are in the market.”
Editor’s note: (May 15, 2025): A previous version of this article incorrectly stated that 2 Post Road will be a 160-unit condo. The development will have 62 units. This version has been updated.