Skip to main content
Canada’s most-awarded newsroom for a reason
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
Canada’s most-awarded newsroom for a reason
$1.99
per week
for 24 weeks
// //

Workers are seen at a condo development in the west end of Toronto last month. CMHC estimates that roughly 25 per cent of condominiums in the Greater Toronto Area are sold but sitting vacant.

Kevin Van Paassen/The Globe and Mail

If Canada is on the cusp of a soft landing in housing someone forgot to tell condo builders.

Housing starts shot up 14 per cent to a seasonally adjusted annual rate of 244,900 in April, Canada Mortgage and Housing Corp. reported Tuesday. That compares to 214,800 starts in March.

And virtually all of the increase was due to construction of multi-unit homes in urban centres – read: condos.

Story continues below advertisement

Multiple urban starts soared 27.4 per cent to 158,500 – the second highest monthly reading on record..

By contrast, builders started work on just 67,700 single-family homes in April

"Wow," Scotia Capital economist Derek Holt said in a report to clients. "This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing Canadian condo craze."

The active condo market reflects the high volume of "presales" since last year, CMHC said. Deputy chief economist Mathieu Laberge added that the increase in condo starts is "in line with job gains over the last year."

But there are worrying signs of a bubble emerging in key markets, such as downtown Toronto. Canada now has the highest stock of unsold newly built condos since the early 1990s, Mr. Holt pointed out.

Mr. Holt, citing a recent CMHC survey of condo owners, said nearly a quarter of condos in the Greater Toronto area are rented out and not occupied by their owners.

Condo developers in Eastern cities such as Toronto, Montreal and Ottawa, appear to be rushing to sell and build units before interest rates start to climb, and the market crashes.

Story continues below advertisement

"There's little question now that Canada's residential construction sector is heated, with the big-city condo market boasting the highest temperature," said Bank of Montreal economist Robert Kavcic.

Finance Minister Jim Flaherty warned recently that developers appear to be willing to build new units until sales dry up, which could lead to a crash. And the last buyers in could get burned, he warned in a meeting with the Globe and Mail's editorial board last month.

"I do worry about the last person buying a condo in Toronto, and people getting caught," Mr. Flaherty said. He characterized the pace of condo construction as "remarkable."

Bank of Canada Governor Mark Carney, along with many economist have expressed similar concerns about possible overheating in Canada's housing market and the high debt levels Canadians are taking on. Canada largely escaped the global real estate slump from 2007 to 2011.

"We're monitoring the situation," CMHC's chief risk officer Pierre Serre said in a later conference call.

With a file from Tara Perkins

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies