PRESIDENT’S MESSAGE IS RESIDENTIAL CONSTRUCTION IN TORONTO STILL SLOWING DOWN? I used to love making market predictions. It was easy, until it wasn’t. Imagine you are a tenured code writer tasked with creating a predictive algorithm that will forecast construction markets for a client’s strategic plan. Just kidding! You and I both know that AI creates predictive algorithms in seconds and that code writers and the platforms they create are nearly extinct. We also know that AI is potentially flawed and should not always be taken at face value. It is, however, the place to start. To get this conversation started, let’s ask AI for Toronto’s construction market forecast. According to ChatGPT, Toronto’s construction forecast shows a stark contrast between a severe downturn in high-rise condo building and robust activity in public civil infrastructure, data centres and institutional projects. Feels like old news. In fact, most of what we read and hear these days about the near-term forecast for the GTA construction market is getting old, whether we use an AI powered predictive tool or just old-fashioned market research and instinct. My ChatGPT request was intentionally crude. I chose simple because inputting more data isn’t always a good thing when there are so many moving parts. Keeping it simple will suffice. To put a residential construction forecast in perspective, we should first talk about residential real estate. According to my AI tool of choice, 2026 will be a “stabilization” year for the Toronto real estate market. Average GTA home prices will be just over $1M ($1.0-1.03M) and edge down slightly throughout the year with condo and detached home prices declining from three per cent to 4.5 per cent. Not great news. Average prices have already fallen more than 24 per cent since the peak in early 2022. That would be great news if you were a real estate purchaser, except for the fact that prices and affordability are still miles apart. There is a pent-up demand, of course, but the affordability gap is a game changer. We also know the HR condo market won’t recover any time soon with high borrowing costs and weak pre-construction sales making builder financing thresholds impossible to achieve. Purpose-built rentals and low-rise developments may fare a little better, but the backlog of unsold HR condo inventory and weak investor demand stands in the way of a meaningful recovery. The bottom line is that there is no sunshine in the 2026- 2027 forecast and that, barring a miracle, it will get worse before it gets better. Ironically, the residential construction forecast in Vancouver was almost identical until Prime Minister Carney announced a $1.6-billion initiative for the government to purchase roughly 2,200 unsold condos and convert them into affordable, rent-to- own housing. Vancouver incidentally had about 4,300 newly completed condos on the market at the time. Both Carney and B.C. Premier David Eby claim the $1.6 billion is not a developer bail-out, but the truth is that it is a bail-out, and a much needed one at that. I get the economics. Governments buy deeply discounted existing inventory, and consumers seeking affordable housing are theoretically the primary beneficiaries. It is, however, still a bail-out and just the kind of catalyst we would need in the GTA to kick start a residential market recovery. 6 Quarter 2 2026 BUILDERSDIGEST
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