The housing headlines in Canada right now are mostly about prices and sales volumes. And fair enough: those numbers are the ones that buyers and sellers feel directly. But there's a quieter, slower-moving problem underneath all of that, one that will reshape the housing market years from now. The construction pipeline is falling apart. And the people watching it most closely are not worried about 2026. They're worried about 2028.

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What the Numbers Actually Show

Canada's national housing starts rose 6% in 2025, to roughly 259,000 units, which sounds encouraging. But the composition of that figure tells a different story. Nearly all of the growth came from purpose-built rental apartments, which hit record highs in Calgary, Edmonton, Ottawa, Halifax, and Montreal. The ownership side of the market was heading in the opposite direction. Condominium presales collapsed. Unsold inventory climbed. And projects that couldn't hit the 70% pre-sale threshold required for construction financing were quietly shelved or converted to rentals.

Toronto hit its lowest per-capita housing starts among Canada's seven largest cities. In the first ten months of 2025, only 714 new condos were sold in the city, down 86% from 2023 levels. Only 2,540 condo units broke ground in Toronto through September, the lowest number recorded since the Ontario Condominium Act came into force in 1998. Vancouver's condo starts fell 13.4% in the first half of 2025 alone. In BC broadly, the BCREA reported just over 4,500 residential units sold across the province in February 2026, down nearly 10% year-over-year, with average prices falling 2.9%.

The reason this matters so much is timing. A condo project takes three to five years from groundbreaking to completion. Buildings that were supposed to deliver units in 2027 and 2028 needed to start construction in 2024 and 2025. They didn't. The supply that the country was counting on to ease its housing shortage simply isn't coming.

ConstructConnect forecasts a 5% year-over-year decline in residential starts nationally in 2026, including an 11.6% drop in single-family construction. That would mark the fifth consecutive year of decline. CMHC's Spring 2026 Housing Supply Report projects starts continuing to fall through 2026, 2027, and 2028. The rental market may absorb some of this in the near term, as completions from earlier builds flow through. But once that wave passes, the shortage bites.

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The Policy Response Is Real, But Modest

The federal government has not been idle. Prime Minister Carney's Build Canada Homes agency launched in September 2025, capitalized with $13 billion and tasked with building affordable housing at scale using factory-built and modular construction methods. The agency introduced its Build Canada Homes Act in February 2026 to establish it as a full Crown corporation. Early projects include partnerships in Ottawa (up to 3,000 units), BC (1,100 shovel-ready homes in partnership with BC Housing), and six direct-build sites across the country in Dartmouth, Longueuil, Ottawa, Toronto, Winnipeg, and Edmonton.

But the Parliamentary Budget Officer was direct about the limits: Build Canada Homes is on track to add approximately 26,000 units over five years, a 2.1% increase over baseline projections, addressing roughly 3.7% of the projected 690,000-unit shortfall by 2035. The ambition is real. The math is modest.

Ontario and the federal government made a more immediate move on March 25, announcing a temporary expansion of the HST rebate on new homes to all buyers, not just first-timers. For qualifying new homes up to $1 million, the full 13% HST would be waived, for a maximum rebate of $130,000. Homes priced up to $1.5 million still qualify for that same maximum. The window is tight: purchase agreements must be signed between April 1, 2026 and March 31, 2027. The province covers its 8% share, Ottawa covers the 5% federal portion, subject to federal legislation passing. Ontario estimates the measure could trigger 8,000 additional housing starts, support 21,000 jobs, and add $2.7 billion to real provincial GDP.

The eligibility rules carry important nuances. The rebate applies to primary residences and residential rental properties. For primary residence purchases, construction must begin by December 31, 2028 and be substantially completed by December 31, 2031. The rebate does not apply to resale homes, period. Buyers should read the purchase agreement carefully and confirm the builder is prepared to assign the rebate properly.

The problem, as Nathan Saliagas of Toronto fintech Loanova noted in a March 2026 MaRS piece, is that over three million homes are still needed to restore affordability, and no one seriously believes that gap is going to be closed. What concerns the more cautious observers now is what lies past the immediate softness: a construction pipeline that has gone quiet, a completion wave that will arrive in the next few years and then thin out sharply, and demand that will eventually recover into a market that hasn't been building enough.

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What This Means Beyond Ontario

It's worth being clear about the geography of this story. The Ontario HST rebate is an Ontario measure, and the construction crisis has been sharpest in Toronto and Vancouver. But the downstream implications reach further.

For BC, the dynamics are similar if less acute. Condo presales weakened across the province, rising permitting and approval costs are adding tens of thousands of dollars to new build prices, and the BCREA's February data showed activity falling well below year-ago levels. The provincial government has introduced some demand-side and development charge measures, but the underlying economics of building ownership housing in BC's higher-cost markets remain strained. Build Canada Homes' early partnership with BC Housing targets supportive and transitional housing, not the broader market.

The Prairies and Atlantic Canada are telling a different story. Calgary and Edmonton hit near-record housing starts in 2025. Rental construction dominated in Halifax and Ottawa. These are markets where land costs are lower, affordability is less stretched, and the pipeline has been running hotter. Their risk profile looks different in 2028.

For the Okanagan, the picture sits somewhere in its own category. The valley hasn't gone through the speculative condo-presale cycle that hit Toronto and Vancouver so hard, so it doesn't carry that specific exposure. But the broader provincial slowdown in new construction matters to anyone thinking about housing supply and long-term pricing in the region. As we discussed in our analysis of TD's revised 2026 forecast, BC faces below-trend economic growth and softer housing conditions through this year, with a fragile recovery expected to build through 2027. The construction pipeline thinning over the next two years won't make that recovery easier.

There is a version of 2028 that looks much better than the one the cautious observers are sketching: trade tensions ease, interest rates remain manageable, the HST rebate unlocks a genuine wave of new starts in Ontario, and Build Canada Homes starts delivering at scale. That version is possible. But right now, the people with the best view of the ground are flagging something different. The crisis Canada narrowly avoided in the last few years may be delayed, not resolved.

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For buyers in the Okanagan who are weighing timing and market conditions, understanding the national backdrop matters more than it might seem. The team at Coldwell Banker Horizon Realty works closely with local market data and keeps a clear eye on the broader forces shaping what happens here. If you're trying to make sense of it all, that's a good conversation to have.