Canada is experiencing a systemic shift in its residential construction landscape as developers abandon condominiums in favor of purpose-built rentals. A recent report from Desjardins indicates that condo starts have plummeted to their lowest levels since the 2009 global financial crisis.
Condo starts dip below 50,000 for the first time since 2009
The Canadian housing market is witnessing a dramatic reallocation of resources. According to the Desjardins report, condo starts have fallen below the 50,000-unit mark, while rental housing starts have surged to approximately 130,000 over the last four quarters. This shift is most evident in the ownership share of new starts, which the report says has crashed from 70% to roughly 45% in the period leading up to the second quarter of 2026.
This trend is part of a broader correction in a market that has long relied on investor presales to fund construction. With higher interest rates eroding affordability and making financing more expensive for both developers and buyers, the traditional condo model has become untenable for many. While the increase in purpose-built rentals addresses a deficit that has persisted since the 1990s, it comes at the cost of the ownership pipeline.
The 11,424 cancelled units shaking the GTHA pipeline
The volatility of the ownership market is most starkly illustrated in the Greater Toronto Hamilton Area (GTHA). Between 2024 and the first quarter of 2026, 11,424 condo units were cancelled. To put this in perspective, the Desjardins report notes that only seven condo units were cancelled in the entire ten-year period preceding 2024.
This collapse in the GTHA pipeline suggests that developers are no longer willing to gamble on the hope of investor appetite. Instead, they are pivoting projects to rental models to secure viability. This shift is further complicated by the high cost of development; for example, RESCON reports that taxes and government-imposed charges now account for roughly 36% of the purchase price of a new home in Ontario.
Minto Communities and the pivot to rental at Grand Park Village
The transition from ownership to rental is happening in real-time across major urban centers. A primary example is Minto Communities, which filed a major revision for its Grand Park Village project near the Mimico GO station. The project, a five-building mixed-use community, has been pivoted from a condo development to a rental one.
Such pivots are becoming the standard operating procedure for projects struggling to hit presale targets. In North York, the Solotex Group faced similar headwinds with its 147-unit townhouse project, Vic Towns, where 65 units remained unsold despite available HST rebates. As developers in Montreal, Toronto, and Vancouver see starts fall well below 2019 levels,the industry is effectively trading the "ownership ladder" for immediate rental stability.
Will the 30,000-unit ownership slump trigger a price spike?
The long-term risk of this pivot is a severe shortage of entry-level ownership housing. The Desjardins report warns that Canada is already facing a 30,000-unit slump in housing starts intended for ownership. because large-scale developments take years to complete, the full impact of today's decline in starts may not be felt in the actual supply until the latter half of the decade.
This raises a critical question: what happens when demand recovers? If prospective owner-occupiers return to the market while the pipeline of new condos remains depleted , the resulting scarcity could trigger a renewed surge in prices. Furthermore, it remains unclear how many developers will be able to sustain the rental model if government-backed incentives shift or if the rental market itself reaches a saturation point in specific urban corridors.
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