The Vancouver Life Real Estate Podcast New Homes Being Built Hits Lowest Level In 16 Years!
The Canadian housing market is experiencing one of its most dramatic shifts in recent history, as the gap between government promises and market realities continues to widen. While policymakers have focused on demand-side measures like home-flipping taxes, actual housing starts have declined significantly. Meanwhile, an unprecedented number of rental units are entering the market, leading to falling rental prices.
Despite political rhetoric about increasing housing supply, overall housing starts have dropped 19% since their peak in 2021, now sitting at 239,000. However, rental unit construction is surging—up 44% year-over-year—comprising nearly half of all new starts. A record-breaking 144,000 rental units are currently in development, which is already having a profound effect on the market.
Rental rates, which had been rising for 38 months straight, have now fallen for four consecutive months, with national averages dropping from a peak of $2,196 in January 2024 to $2,100 today. Shared accommodation listings have surged 42% year-over-year, with rates declining 7.6%, signaling a shifting dynamic in the rental market.
While rental construction is booming, single-family home (SFH) completions tell a different story. In January 2025, only 3,800 SFHs were completed—the lowest monthly total since 1997. This ongoing supply crunch suggests that SFH prices may hold firm, even as the condo market weakens.
Inflation in Canada remains relatively stable, sitting at 1.9% in January, marking six consecutive months at or below the Bank of Canada’s 2% target. However, the vast majority of inflation—1.3%—is being driven by shelter costs. Mortgage interest costs, a key driver of inflation, have been slowing, with the most recent increase at just 0.2%, the weakest since April 2022.
Employment Insurance (EI) claims are rising at an alarming rate. Nationally, claims increased 14% year-over-year, from 245,000 to over 280,000, while Ontario saw a 29% jump, from 76,000 to 98,000. These numbers suggest weakening economic conditions, which could drag down GDP growth in the months ahead.
On the mortgage front, December saw a staggering 90% year-over-year surge in mortgage originations, largely due to renewals. Many homeowners who locked in ultra-low rates five years ago are now facing a 35% payment shock, putting additional strain on household finances.
At the same time, housing inventory is surging. January saw an 11% month-over-month increase in new listings—the largest ever recorded. BC led the way with a staggering 29% increase. Pre-sale condo inventory in Greater Vancouver has nearly doubled from 7,000 to 12,000 units, pushing total available homes in the region above 25,000. This supply surge is making price increases unlikely in the near term.
February data indicates a shift in market momentum. After months of year-over-year sales growth, February saw a 12% annual decline in sales activity. Prices are also softening, with median home prices in Greater Vancouver dropping $20,000 to $900,000—a 10% decline from peak values.
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