Canada is still building a significant number of homes—but the type of housing being built is changing.
Recent housing-start data highlighted by BMO Capital Markets shows a widening divide between properties intended for homeowners and properties built specifically for renters. According to BMO’s analysis, approximately 58.2% of the 64,600 homes started between January and April 2026 were intended for the rental market. It marks an unusual shift in a country where new construction has historically included a larger share of ownership housing and condominiums.
BMO senior economist Robert Kavcic described the divergence between ownership and rental construction as the most notable development in Canadian homebuilding. Across major metropolitan areas, combined starts for condominiums and other ownership housing have fallen to levels normally associated with major economic downturns, while purpose-built rental construction remains close to record highs.
Some headlines have characterized this as Canada becoming a “nation of rentals.” That phrase is attention-grabbing, but the underlying situation is more complicated.
Canada is not eliminating homeownership. Instead, current construction economics, weak pre-construction sales, affordability challenges and government incentives are pushing more development toward rental housing.
For GTA buyers, sellers and investors, the important question is:
What happens when Canada continues adding homes—but fewer of those homes are available for individual buyers to own?
What Is Happening With Canadian Housing Construction?
Canada’s overall construction level remains relatively healthy, even though monthly housing starts have recently softened.
The seasonally adjusted annual rate of housing starts was approximately 239,000 units in June 2026, according to data referenced by BMO and Better Dwelling. Housing starts had declined for a third consecutive month, but the 12-month average remained near 256,000 units. Approximately 375,000 homes were also under construction, meaning Canada still has a substantial development pipeline.
The headline number, however, does not reveal what those units will become.
A housing start could represent:
- A detached home built for sale;
- A townhouse development;
- A condominium unit;
- A purpose-built rental apartment;
- A non-profit or affordable rental unit;
- Or another form of multi-residential housing.
The recent shift is not simply that Canada is building fewer homes. It is that a growing proportion of new construction is intended to remain rental housing rather than being sold to individual homeowners.
What Is a Purpose-Built Rental?
A purpose-built rental is a residential property designed and constructed specifically to be rented over the long term.
Unlike an investor-owned condominium, where individual units may be purchased and rented by separate owners, a purpose-built rental building is generally owned and operated by one company, institution or organization.
Purpose-built rentals may offer:
- Professional building management;
- Consistent rental operations;
- Longer-term rental supply;
- Amenities designed for tenants;
- Less risk that an individual owner will sell the tenant’s unit;
- And, in some cases, a wider range of unit types.
Increasing this supply can be beneficial for renters, especially in markets with low vacancy rates.
However, building more rentals does not automatically solve the challenges facing households that want to become homeowners.
Why Are Developers Building More Rentals?
1. Pre-Construction Sales Have Slowed
Many condominium and freehold projects depend on advance sales before construction begins.
Pre-sales help developers:
- Demonstrate buyer demand;
- Obtain construction financing;
- Reduce project risk;
- And confirm that expected revenue will support development costs.
When buyers hesitate because of affordability, market uncertainty or financing concerns, projects may fail to reach the sales thresholds needed to proceed.
BMO connects the weakness in ownership construction directly to the decline in new-home pre-sales. Projects intended for sale are often delayed or cancelled when developers cannot secure enough purchasers before breaking ground.
2. Ownership Housing Has Become Difficult to Finance
New ownership developments face high costs for:
- Land;
- Construction labour;
- Materials;
- Development charges;
- Financing;
- Insurance;
- Municipal approvals;
- And marketing.
At the same time, buyers remain sensitive to price and monthly mortgage payments.
If the final price needed to make a project financially viable is higher than buyers are willing or able to pay, the developer may postpone the project or reconsider the planned use.
3. Rental Projects May Receive Different Incentives
Various government programs and policy changes have encouraged the creation of purpose-built rental housing through measures such as financing support, tax treatment and development incentives.
These policies are intended to address rental shortages and improve long-term supply.
From a developer’s perspective, rental projects may become more feasible when they receive favourable financing or when weak condo sales make ownership projects too uncertain.
4. Past Rental Shortages Encouraged Construction
Canada experienced years of tight rental conditions and rapidly rising rents in many major cities.
Developers and institutional investors responded by adding more purpose-built rental projects. Because large developments can take years to plan and complete, many units now under construction were approved when rental demand appeared especially strong.
BMO has previously noted that rental construction was already outperforming ownership and condominium construction, while warning that some rental segments could eventually become more heavily supplied.
Does More Rental Construction Mean Canada Has Enough Housing?
Not necessarily.
A high total number of housing starts can coexist with shortages in particular segments.
For example, a city could add thousands of studio and one-bedroom rental apartments while still lacking:
- Entry-level ownership homes;
- Family-sized condominiums;
- Townhouses;
- Detached homes;
- Affordable units;
- Accessible housing;
- Or homes in locations close to employment and transit.
Housing supply is not interchangeable.
A rental studio does not necessarily meet the needs of a family trying to purchase a three-bedroom home. Similarly, an expensive new rental unit may not solve affordability for a lower-income household.
The number of units matters, but so do their size, location, tenure and price.
What Could This Mean for GTA Home Buyers?
1. New Ownership Supply May Remain Limited
When fewer condominium and freehold projects begin construction, fewer newly built ownership homes may reach the market in future years.
This does not necessarily create an immediate shortage because the GTA still has a large number of units under construction and existing resale inventory.
However, if the slowdown in ownership projects continues, buyers several years from now may face less choice in:
- New condominiums;
- New townhouses;
- Entry-level ownership housing;
- And family-sized new developments.
Real estate construction has a long timeline. A project that does not launch or begin construction today may represent missing supply three to five years later.
2. Resale Homes Could Become More Important
If builders produce fewer homes for individual ownership, future buyers may rely more heavily on the resale market.
This could support long-term demand for established:
- Condominiums;
- Townhouses;
- Semi-detached homes;
- Detached homes;
- And low-rise communities.
That does not mean every resale home will rise in value. Prices will still depend on mortgage rates, employment, population, household income and local inventory.
But reduced new ownership construction could eventually limit the number of alternatives available to buyers.
3. Buyers Should Not Assume Every New Project Will Proceed
A project launch does not necessarily guarantee that construction will start on schedule.
Before purchasing pre-construction, buyers should review:
- The builder’s track record;
- The project’s sales progress;
- Financing and cancellation clauses;
- The outside occupancy date;
- Deposit protection;
- Assignment provisions;
- Development status;
- And the risks of delay or cancellation.
A buyer should also avoid making long-term plans based entirely on an estimated occupancy date.
4. Renting Longer May Become More Common
High ownership costs may lead some households to rent longer while saving for a down payment or waiting for their finances to improve.
A larger supply of professionally managed rentals could give these households more choice.
However, postponing ownership also involves trade-offs, including:
- Delayed equity building;
- Continued exposure to rent changes;
- Less control over the property;
- And the possibility that ownership prices later move faster than savings.
Renting is not automatically a poor financial decision, and buying is not automatically the right one. The better choice depends on the household’s timeline, stability, savings and lifestyle.
What Could This Mean for First-Time Buyers?
First-time buyers may be the group most affected by a decline in ownership construction.
New condominiums and townhouses have historically served as entry points into the market. When fewer of these homes are launched, first-time buyers may have fewer opportunities to purchase newly built housing.
They may need to consider:
- Older resale condominiums;
- Smaller properties;
- Locations farther from the downtown core;
- Co-ownership or family assistance;
- A longer savings period;
- Or continuing to rent.
At the same time, a weak pre-construction market may create negotiation opportunities on existing inventory.
Builders with completed or nearly completed units may offer:
- Price adjustments;
- Deposit flexibility;
- Closing-cost incentives;
- Upgrades;
- Mortgage-related incentives;
- Or reduced assignment fees.
Every incentive should be evaluated carefully. A promotion is valuable only if the underlying property, price and contract make sense.
What Does This Mean for Pre-Construction Buyers?
The shift toward rentals highlights how much the pre-construction ownership market has changed.
During stronger markets, buyers often focused on obtaining access to popular projects before units sold out.
In a slower market, the questions are different:
- Is the project likely to reach sufficient sales?
- Is the contract price supported by current resale values?
- Could the appraisal be lower at closing?
- Can the buyer still qualify several years later?
- How much are the development and closing adjustments?
- Is assignment permitted?
- What happens if construction is delayed?
- Does the floor plan meet real end-user demand?
Pre-construction should not be purchased only because a builder advertises an incentive.
The buyer must evaluate the complete purchase price, closing costs, financing risk, project quality and long-term marketability.
What Could This Mean for GTA Sellers?
1. Existing Ownership Homes May Face Less Future Competition
If fewer new ownership developments proceed, established resale properties may eventually face less competition from newly built alternatives.
This could be particularly relevant to:
- Family-sized condominiums;
- Freehold townhouses;
- Semi-detached homes;
- Detached homes;
- Properties near established schools and transit;
- And homes in communities with limited available land.
However, the impact would likely develop gradually rather than immediately.
2. Current Pricing Still Depends on Today’s Market
The future possibility of reduced supply does not justify overpricing a home now.
Today’s buyers compare:
- Recent sales;
- Current listings;
- Mortgage payments;
- Property condition;
- Condo fees;
- Taxes;
- And alternative neighbourhoods.
A seller should price according to current local demand, not solely on a prediction that new ownership supply will be scarce in several years.
3. Family-Sized Homes May Remain Distinctive
Much of Canada’s current rental construction is concentrated in multi-unit buildings.
If fewer low-rise ownership homes are added, existing family-oriented homes could remain relatively scarce in established GTA communities.
Sellers should highlight features that new rental apartments may not provide, such as:
- Larger living areas;
- Private outdoor space;
- Multiple bedrooms;
- Parking;
- School access;
- Storage;
- And renovation potential.
What Could This Mean for Real Estate Investors?
At first glance, record rental construction might appear positive for investors because it confirms strong institutional interest in rental housing.
However, investors should also recognize the possibility of increased competition.
A privately owned rental condominium may compete with new purpose-built rental buildings offering:
- On-site management;
- Move-in promotions;
- New amenities;
- Flexible leasing programs;
- Multiple available units;
- And professional marketing.
BMO has noted that while ownership housing may remain scarce in some segments, rental supply could become more saturated in others.
Investors should therefore avoid assuming that every new condominium will generate strong rental growth.
They should evaluate:
- Local vacancy;
- Competing rental projects;
- Unit size and layout;
- Condo fees;
- Property taxes;
- Expected rent;
- Tenant demographics;
- Building quality;
- And long-term resale demand.
Could More Rental Supply Lower Rents?
More rental construction can create competition and give tenants more choice, particularly when many units are completed within the same period.
In parts of Southern Ontario, BMO has already observed softer apartment prices and pressure on rents amid increased condo and rental supply, while population growth has slowed.
However, the impact will vary by market and unit type.
Rents may remain stronger for:
- Family-sized units;
- Homes near major employment centres;
- Properties close to schools and transit;
- Well-managed buildings;
- And markets with limited new construction.
A high number of small rental apartments does not necessarily create excess supply of larger family homes.
Does This Mean Buying Is Better Than Renting?
Not automatically.
Buying may make sense for someone who:
- Has stable income;
- Has enough savings for the down payment and closing costs;
- Plans to remain in the home for several years;
- Can manage repairs and ownership expenses;
- And values long-term control and equity building.
Renting may make sense for someone who:
- Needs flexibility;
- May relocate;
- Is still building savings;
- Would be financially stretched by ownership;
- Or prefers not to assume maintenance and market risk.
The construction shift means future housing options may change. It does not create one correct decision for every Canadian household.
Is Canada Really Becoming a “Nation of Rentals”?
The phrase captures a genuine trend but should not be interpreted too literally.
Canada continues to have a large homeownership market, and millions of households still aim to purchase homes.
What has changed is the new-construction pipeline.
Developers are currently starting more rental units while ownership and condominium projects have pulled back sharply. That shift reflects:
- Weak pre-construction sales;
- Difficult ownership affordability;
- High development costs;
- Rental-project incentives;
- And investor preference for long-term rental assets.
Whether this becomes a permanent transformation depends on future home prices, mortgage rates, construction costs, policy changes and buyer demand.
If ownership sales recover, developers may again launch more homes for purchase. If affordability remains strained, rental construction may continue taking a larger share.
JDL Realty’s Perspective
The most important takeaway is not simply that Canada is building more rentals.
It is that the supply of homes being created may not match the long-term goals of households that want to own.
For GTA buyers, this makes property selection increasingly important.
A home with enduring end-user appeal may offer:
- A practical layout;
- Sufficient living space;
- Access to transit and employment;
- Good schools and community services;
- Reasonable carrying costs;
- And a property type that is difficult to replace.
For pre-construction buyers, the focus should shift from hype and early access toward project viability, contract risk, financing readiness and long-term value.
For investors, more rental supply means that location, unit quality and professional management will matter even more.
At JDL Realty, we help clients compare resale and pre-construction opportunities, examine neighbourhood supply and demand, and make decisions based on their finances and long-term goals—not only market headlines.
Final Thoughts
Canada’s housing-construction market is undergoing an important shift.
Although total housing starts remain relatively strong, purpose-built rentals now represent the majority of recently started units, while ownership and condominium construction has fallen significantly.
This could have several long-term effects:
- Renters may gain more professionally managed housing options;
- Developers may launch fewer ownership projects;
- Future buyers may rely more heavily on resale homes;
- Established ownership properties could become harder to replace;
- And private landlords may face more competition from purpose-built rentals.
The shift does not mean homeownership is disappearing. It means Canada is currently building a different mix of housing than it did in the past.
For buyers, sellers and investors, understanding that mix is essential. The number of new homes matters—but so does who they are being built for.
Source: Better Dwelling
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