The headline sounds like bad news for real estate. Condo starts have dropped to their lowest level since 1996. Toronto's homebuilding activity fell to its lowest point since 1996, driven mainly by a 60% drop in condominium starts.
But for investors who understand how housing supply and demand interact over time, this collapse in new construction is one of the most bullish long-term signals available for Markham real estate. Michael John Lau, top real estate agent in Markham Ontario and CPA/CMA, explains the counterintuitive investment logic.
What Actually Happened to Condo Construction
The scale of the condo construction collapse is genuinely historic. Toronto's homebuilding activity fell to its lowest point since 1996, adjusted for population growth, on a 60% drop in condominium starts. Condominium apartment sales between 2022 and 2025 declined by 75% in the greater Toronto area, with inventories more than doubling and prices falling.
The cause is a straightforward feasibility problem. A pullback in investor demand during the first half of 2025 reduced project feasibility, leading to cancellations, delays, and a sharp drop in construction. Weak pre-construction sales led to the cancellation and pausing of projects that failed to meet the necessary 70% pre-sale threshold for financing. When investors stopped buying pre-construction condos at prices that made new projects viable, developers could not achieve the pre-sales required to secure construction financing, and projects simply did not proceed.
CMHC's data confirms the ongoing nature of the decline. Condominium apartments, especially in the GTA, will see the largest decline in starts due to very low pre-construction sales, which point to further declines. Ontario housing starts are projected to approach a two-decade low in 2026.
Why This Is Bullish — The Supply Cliff Logic
Here is the investment logic that sophisticated investors understand. Housing that is not started today cannot be completed in three to four years. The condos that would have been built in 2024, 2025, and 2026, but were cancelled or never launched, will not exist in 2028, 2029, and 2030. This creates a "supply cliff." A period several years out when very little new condo supply enters the market.
Today's Construction Determines Tomorrow's Inventory
Projects beginning construction today determine much of the housing inventory that will become available several years from now. A slowdown in today's development pipeline may therefore become a supply concern later. Even when the resale market currently appears balanced or favourable to buyers.
The current condo market weakness, high inventory, soft prices, buyer's market conditions, is the result of the 2021-2022 construction wave completing now. Once that wave is absorbed as sales momentum improves, the market transitions to the supply cliff created by the 2024-2026 construction collapse. At that point, demand continues to grow through population increase, household formation, and the eventual recovery of immigration, but meets dramatically reduced new supply. The predictable result is upward price pressure.
Neeraj Moolchandani on The Supply Cliff and Markham Condo Investment Strategy
Neeraj Moolchandani, REALTOR® at Kaizen Real Estate, works alongside Markham clients navigating exactly the situation this article describes. His specialty is translating complex market dynamics into a clear plan of action, whether that involves timing, negotiation strategy, or protecting long-term family wealth.
When Neeraj advises clients on the supply cliff and markham condo investment strategy, the conversation always starts with what matters most to the family, not what the market is doing this week. That is the difference between transactional advice and the kind of counsel Markham clients return to for a decade.
The Markham-Specific Investment Thesis
For Markham specifically, the supply cliff logic is particularly compelling because of the demand drivers unique to this city.
York University Markham Campus
Continuing to grow student and faculty population, generating sustained rental demand for adjacent condos.
Microsoft, AMD, Technology Expansion
Data centre investment and technology sector growth add high-income employment supporting rental and ownership demand.
IndyCar Destination Identity
Five-year commitment reinforces Downtown Markham as a destination district, supporting rental and ownership premium.
CanNorth College Third Campus
Additional post-secondary institution layers more student, faculty, and staff housing demand across the community.
These demand drivers grow while new condo supply in Markham (Gallery Towers, UnionCity, Pangea) represents the tail end of the pre-2024 construction pipeline. Once these projects complete and are absorbed, the supply of new Markham condos drops sharply, precisely as the demand drivers mature.
The Discipline That Separates Investors
This is the discipline that separates sophisticated real estate investors from reactive ones. The reactive investor sees soft condo prices and stays away. The sophisticated investor sees soft condo prices caused by a temporary supply wave, recognizes the historic construction collapse that will create a future supply shortage, and positions accordingly.
While a softer correction is expected compared to the 1990s due to stricter lending standards, the fundamental supply-demand dynamic is clear. The historic collapse in condo construction is creating the conditions for a future supply shortage that will support prices for investors positioned to hold through the transition.
Build Your Markham Long-Horizon Investment Thesis
Historic supply collapse. Growing demand drivers. Buyer-favourable entry pricing. The alignment is unusual. Book a private consultation with the Kaizen Real Estate Team.
Executing the Long-Horizon Thesis
The investor who buys a Markham condo during the current buyer's market, when prices are soft, inventory is high, and the HST rebate (up to $130,000 on eligible new construction signed before March 31, 2027) reduces the effective purchase price, is positioning ahead of the supply cliff. When the 2021-2022 supply wave is absorbed and the 2024-2026 construction collapse creates the supply shortage of 2028-2030, the investor who entered during the current weakness is holding an asset in a tightening market.
Michael John Lau, top real estate agent in Markham Ontario and CPA/CMA, helps investors understand the supply-demand dynamics and the long-horizon thesis that make Markham's current condo market a strategic entry point for patient capital.