New Home Starts: The Boom to Bust Arc
Toronto CMA housing starts climbed steadily from 2015, peaked at roughly 55,500 units in 2021 driven by investor led condo presales and surging immigration demand, then collapsed. By 2025, CMHC data shows starts near a 30 year per capita low. Construction fell off a cliff exactly when the long term demand case remains strongest.
Per Capita Supply: It is Worse Than It Looks
Raw starts do not tell the full story. The Toronto CMA population surged at the same time construction collapsed, adding 268,911 new residents in a single year between 2023 and 2024. The per capita rate dropped 62% from peak to 2025, compared to a 57% drop in raw units. The two forces compounded each other.
The Rental Market: Softening Is Not Oversupply
Toronto's rental vacancy rate hit 3.0% in 2025, the highest since before the pandemic. But this is not structural oversupply. It is a demand shock from three simultaneous forces hitting a market whose underlying purpose built stock grew only 13% over 35 years.
The headline 3.0% vacancy masks major fractures. Location, asset type, and vintage are everything right now.
Why is the rental market softening?
Three simultaneous forces created a demand shock, not a supply surplus:
Is this a real oversupply?
No. The purpose built rental stock grew only 13% over 35 years, from 304,091 units in 1990 to 343,539 in 2025. For a metro of 7 million people, that is structurally thin. The softness is cyclical, driven by a demand collapse, not a supply abundance.
What parameters actually matter
Condo vacancy vs. purpose built vacancy. The 1.3% vs 3.0% gap tells you where real tightness lives. Core, older rental assets remain structurally sound.
Turnover rent vs. in place rent. In 2024, the gap between vacant and occupied two bedroom units reached 44% in Toronto, the highest among major Canadian cities. This gap is compressing now, signalling the correction may overshoot before recovering.
Completions pipeline vs. new starts. Starts collapsed 57% but completions from earlier starts keep arriving. When that pipeline runs dry around 2026 to 2027 with nothing behind it, vacancy will reverse sharply.
Immigration policy trajectory. Population declined slightly in 2025 for the first time on record. Politically, sustained population contraction is unlikely. When immigration normalizes, the demand shock unwinds and the structural supply deficit reasserts.
The opportunity
This is a window where rental assets and resale properties are pricing in uncertainty that will not persist. Core Toronto rentals and well located condos remain tight. New build suburban rentals are the pain point. For buyers weighing timing, the supply picture 24 to 36 months out argues strongly for the long side case.