TORONTO (Reuters) -The Canadian dollar edged lower against its U.S. counterpart on Thursday, pulling back from an earlier 10-day high, as oil prices dipped and ahead of domestic employment data that could guide expectations for Bank of Canada interest rate cuts.
The loonie was trading 0.1% lower at 1.3753 per U.S. dollar, or 72.71 U.S. cents, after touching its strongest intraday level since July 28 at 1.3719.
A new report from Urbanation and Rentals.ca shows the Ontario real estate market to be declining, with most of the Greater Toronto and Hamilton Area seeing drops in average rents in July.
The report found Toronto’s rental market to still be in decline. One-bedroom rentals in Toronto are up 0.1 per cent from last month but down 6.4 per cent from last year.
Two-bedrooms are down half a percentage point from last month and down 8.8 per cent from the same time last year.
Overall, average rent in Toronto dropped to $2,593.
Calgary’s luxury resale real estate market may be returning to a balance between buyers and sellers after years of strong demand, but one segment of the high-end market still running hot is a new type of home that offer downsizers a lock-and-leave lifestyle.
Downsizers “don’t want to give” up luxury, says Mary-Ann Mears, managing broker and real estate agent with Sotheby’s International Realty Canada in Calgary.
Canada’s social and affordable rental housing stock is aging, and many units require repairs, as rent prices continue to increase, according to new data from the Canada Mortgage and Housing Corporation (CMHC).
The findings, based on survey responses and administrative records, offer insight into the condition, rent, and vacancy of nearly 593,000 subsidized housing units across all provinces and territories from 2019 to 2024.
The findings largely focus on housing in major urban centres. Toronto alone accounts for nearly 30 per cent of the surveyed units, while Vancouver, Ottawa and Montreal collectively make up another 17 per cent.
Nonfarm payroll growth was slower than expected in July and the unemployment rate ticked higher, raising potential trouble signs for the U.S. labor market as President Donald Trump ramps up tariffs.
Job growth totaled a seasonally adjusted 73,000 for the month, above the June total of 14,000 but below even the meager Dow Jones estimate for a gain of 100,000, the Bureau of Labor Statistics reported Friday. June and May totals were revised sharply lower, down by a combined 258,000 from previously announced levels.
At the same time, the unemployment rate rose to 4.2%, in line with the forecast.
The June total came down from the previously stated 147,000, while the May count fell to just 19,000, revised down by 125,000.
For the second time this year, the Canadian Real Estate Association has downgraded its forecast for home sales in 2025, even as it says a turnaround could be looming following increased activity in June.
The association reported that the number of homes changing hands across the country in June rose 3.5 per cent compared with a year ago. Canadian home sales last month also increased 2.8 per cent compared with May on a seasonally adjusted basis.
In its outlook released Tuesday, CREA said it now expects a total of 469,503 residential properties to be sold this year, a three per cent decline from 2024. In April, the association forecast the number of home sales for 2025 to remain essentially unchanged from last year, which itself marked a steep cut from its January forecast of an 8.6 per cent year-over-year increase.
In 2025, Ontario’s pre-construction market is pivoting away from speculative condo development toward purpose-built rentals and townhomes. Lower investor activity, rising construction costs, and financing constraints are reshaping how developers build—and buyers purchase. This shift reflects both immediate market realities and long-term housing demand trends.
Decline in Pre‑Construction Condo Demand
CMHC and industry reports confirm that pre-construction condominium interest has weakened significantly in 2025 due to weak resale and rental markets. Developers are scaling back condo projects and focusing on alternative models.
Increase in Purpose‑Built Rental (PBR) Projects
Toronto saw a surge in rental completions early in 2025—2,136 PBR units in Q1, though only 731 new starts to date in the GTHA—a 60% drop from the previous year. This signals cautious optimism for delivering existing units while deferring new builds.
Condo-to-Rental Conversions and Cancellations
Nearly 1,900 planned pre-construction condo units were canceled, and another 1,400 units are being converted into rentals, particularly in Toronto. Developers cite financing barriers and weak demand for ownership as key reasons.
Growing Focus on Ground-Oriented Townhomes
Developers like Cranson Capital see opportunity in medium-density builds such as townhouses and low-rise PBRs, which require shorter timelines (2–3 years) and don’t require pre-sales, making them more viable in the current financing climate.
Financing Constraints and Investor Exit
The condo model is faltering as higher rates and investor retreat leave projects unable to meet pre-sale thresholds necessary for financing. Negative cash flow concerns are discouraging retail investors from participating in new launches.
Rental Market Softness
CMHC shows year-over-year rent declines in Ontario of 4 ± 6% across condo and PBR apartments, with rising vacancies up to 2.7% in Toronto. This places upward pressure on stabilization timelines for rental projects and limits rent growth assumptions.
Policy & Development Charge Dynamics
Municipal and provincial efforts—including reduced development charges for PBRs and the GST exemption on affordable rentals—are supporting some rental projects. However, ongoing rate hikes and policy uncertainty still undermine developer confidence.
Purpose‑Built Rentals as a Strategic Pivot
Developers are leaning into PBR projects that don’t depend on pre-sales. PBRs—especially townhome or mid‑rise models—are seen as practical alternatives to condo builds. These projects also benefit from government incentives and faster approvals in some jurisdictions.
Townhomes Fill the Gap for Family Buyers
As ownership demand shifts away from high-rise condos, townhome and mid-density ground-oriented housing provide an attractive alternative. These formats appeal to families and first-time buyers who seek affordability and space.
Institutional Investment Filling Gaps
Following investor exits, institutional capital and family offices are quietly snapping up distressed condos and supporting rental developments. These players are bridging gaps in markets left by retail investors.
Regional Variations Create New Niches
While central Toronto sees a glut of units, suburban and mid-sized cities—Mississauga, Hamilton, London—offer stronger rental stability and demand. Rental appeals vary by region, with Oakville showing strong rent growth. Smaller cities often require differentiated solutions.
Ontario’s pre‑construction sector in 2025 is undergoing structural realignment. With rising uncertainty in condo sales, developers are steering toward rental and townhome formats that align more closely with financing constraints and demographic needs. Though the rental market is softening slightly, PBRs remain viable thanks to government support and longer-term demand growth.
Buyers—particularly those seeking stable returns or family-oriented housing—will find opportunities in townhome and rental projects delivering between 2026 and 2028. Meanwhile, developers with flexible models and access to capital are best positioned for success in this evolving market.
Ontario’s pre-construction condo market in 2025 is experiencing its sharpest downturn since the 1990s. Sales have plunged 72% year-over-year, with April 2025 recording just 310 new home sales—an 89% drop from the 10-year average. Inventory has ballooned to 78 months of supply, the highest in modern history. Elevated interest rates, soaring construction costs, and weakened investor demand are triggering cancellations, delays, and long-term supply risks.
Historic Sales Collapse: Condo and single-family home sales dropped to levels not seen since 1995. Absorption rates have fallen to 27%, far below the historical average of 67%.
Record Inventory Levels: There are 23,918 unsold units in the GTHA, including completed, under-construction, and pre-construction properties—indicating deep market saturation.
Construction Starts at Multi-Decade Lows: Only 497 units broke ground in Q1 2025—the lowest total since 1996. This lack of new supply will trigger future shortages by 2027–2029.
By Indradip Ghosh and Mumal Rathore
BENGALURU (Reuters) -The Bank of Canada will hold its overnight interest rate steady at 2.75% on July 30 for the third consecutive meeting thanks to a recent rise in inflation and a fall in unemployment, according to a Reuters poll of economists that still found many expect at least two more cuts this year.
The Canadian central bank has cut rates by a total of 225 basis points since June 2024, but has been on hold since March as policymakers await news on where a confusing barrage of U.S. tariff threats will eventually settle.
Beyond Toronto, housing markets across Southern Ontario are experiencing some of the steepest price declines in the country, as economic uncertainty and trade tensions take a growing toll on buyer confidence.
Areas like Hamilton-Burlington, Niagara, and Kitchener-Waterloo are feeling the brunt of a market downturn driven by fears over tariffs. While the Greater Toronto Area has long been the focus, the softest conditions are now spreading outward into regions more vulnerable to external shocks.
