Why CMHC Says Canada's Affordability Gains Are at Risk: The Ownership Supply Crunch and What It Means for GTA & Cottage Country Buyers
Category: Market Reports
Canada’s recent affordability improvements are real. But the window may not stay open.
The CMHC Fall 2026 Housing Supply Report, released September 10, warns that Canada may underbuild during a softer market and face a deeper shortage when demand strengthens again.
The headline is significant:
- Canada needs approximately 417,000 to 469,000 housing starts every year to restore pre-pandemic affordability by 2036.
- The current business-as-usual pace is approximately 231,000 starts annually.
- That leaves a projected annual gap of approximately 187,000 to 238,000 homes.
This is not a forecast of an immediate price surge. It is a warning about future scarcity.
For you as a buyer, today’s improved leverage may not last forever. For sellers, tightening future supply supports well-priced existing homes. For investors and cottage-country buyers, it reinforces the value of properties that cannot simply be built to order.
What CMHC’s report actually says
The report points to several pressures working at the same time:
- New construction is slowing.
- Presales are weak.
- Construction costs remain high.
- Unsold condominium inventories are weighing on new projects.
- Ownership-oriented construction is weakening.
- Rental construction is rising and represents a growing share of new supply.
That last point is important. New rental housing can improve conditions for tenants. But rental construction does not replace ownership housing for households trying to buy.
Across many major markets, supply is increasingly being directed toward rentals while new ownership projects are delayed, reduced or cancelled. If demand strengthens before ownership construction recovers, buyers may face fewer choices and renewed competition.
That is the ownership supply crunch.
Toronto’s condo pipeline has weakened sharply
Toronto illustrates the issue clearly.
During the first half of 2026, only 156 condominium units started construction in the City of Toronto. That compares with approximately 7,000 condo units annually over the previous decade.
CMHC estimates that Toronto requires approximately 62,000 to 68,000 annual housing starts to restore 2019 affordability. The business-as-usual pace is approximately 42,000 starts.
That leaves an annual gap of approximately 20,000 to 26,000 homes.
CMHC says Toronto needs to increase annual housing starts by at least 50% over the next decade to restore pre-pandemic affordability. Rental construction is driving much of the new supply, while ownership housing remains exceptionally weak.
This does not mean every Toronto property will rise immediately. It does mean that a shortage of new ownership homes could become more important if household demand improves.
The GTA is still a good market, but conditions require precision
The August 2026 TRREB market data showed a market with improved affordability and meaningful buyer choice, but also fewer new listings:
- Average selling price: $993,410, down 2.7% year over year
- Home sales: 5,057, down 2.1%
- New listings: 12,075, down 14.1%
- MLS® HPI Composite benchmark: down 4.5% year over year
This remains a good market. Buyers have more negotiating room than they had during the strongest pandemic-era conditions. Sellers can still secure strong results when a property is accurately priced, properly prepared and professionally marketed.
The challenge is avoiding broad assumptions.
A city-wide average cannot tell you whether a specific Brampton townhouse, Mississauga condo, Caledon property or Toronto detached home is correctly priced. Local supply, property condition, financing and buyer demand all matter.
Fixed vs. variable: plan around your payment, not a prediction
The Bank of Canada held its policy rate at 2.25% on September 2, 2026. It was the seventh consecutive hold. The next scheduled decision is October 28, 2026.
You should not make a purchase decision based on an assumed rate cut or increase.
Instead:
- Compare fixed and variable options with a qualified mortgage professional.
- Confirm how much payment flexibility you have.
- Stress-test your budget against higher borrowing costs.
- Secure a pre-approval and ask about a rate hold.
- Keep enough liquidity for repairs, closing costs and unexpected expenses.
Your goal is not to predict the Bank of Canada perfectly. Your goal is to ensure the property remains financially comfortable under realistic scenarios.
What the ownership supply crunch means for cottage country
Cottage-country properties are different from urban condominiums. Waterfront land, shoreline settings, established access routes and private recreational properties cannot always be recreated quickly.
When new ownership supply shrinks, existing inventory becomes more important.
In July 2026:
- Muskoka waterfront properties recorded a median price of approximately $1,415,000.
- Parry Sound waterfront properties recorded a median price of approximately $825,000.
Muskoka carried elevated inventory, creating more choice and more room for careful negotiation. Parry Sound showed stronger sales momentum, with July waterfront sales substantially higher than the same month a year earlier.
The right property still requires disciplined due diligence. Before you commit, investigate:
- Insurance availability and wildfire-related restrictions
- Shoreline conditions and water quality
- Year-round and seasonal access
- Private-road maintenance agreements
- Easements and rights of way
- Septic systems and permits
- Wells, water quality and flow
- Docks and shoreline structures
- Retaining walls and erosion
- Roof condition and drainage
- Seasonal maintenance requirements
- Winter access and heating systems
A waterfront property may be irreplaceable. That does not mean every waterfront property is a good purchase.
A practical plan for buyers
You do not need to wait for a market crash that may never arrive. You need a clear acquisition plan.
Start with:
- A mortgage pre-approval.
- A rate-hold discussion.
- A list of non-negotiable features.
- A realistic comparison between resale and new construction.
- A complete review of carrying costs.
- Professional inspection and legal review.
- A willingness to walk away from a property that does not meet your requirements.
For cottage buyers, add a separate rural due-diligence budget. Property taxes are only one part of ownership. You may also need to plan for private roads, septic servicing, well maintenance, heating fuel, dock work, snow clearing and insurance.
Use AP Bains’ property search to compare available homes across the GTA, Muskoka and Parry Sound based on your needs, lifestyle and intended use.
A practical plan for sellers
The future supply shortage does not justify overpricing your home today.
Buyers remain selective. They compare condition, location, operating costs and value. A well-positioned property can stand out, but an unrealistic price can extend your time on market and weaken your negotiating position.
To prepare:
- Price from current comparable sales and competing inventory.
- Complete the repairs that improve buyer confidence.
- Document renovations, permits and major improvements.
- For rural properties, organize septic, well, dock, shoreline and access records.
- Use professional photography and accurate property descriptions.
- Build a digital marketing plan that reaches local, national and international buyers.
- Review offers based on price, terms, financing strength and closing risk.
You can request a detailed home valuation before deciding whether to list.
What investors should monitor
Investors should underwrite conservatively.
Review vacancy assumptions, repairs, insurance, taxes, financing, maintenance and regulation. Do not rely on appreciation to make a property work.
The previously reported national arrears figure was 0.28% through July 2026, while regional equity resilience remains an important consideration. These figures do not remove the need for property-level analysis.
Ontario’s Bill 114 HST relief window runs from April 1, 2026, to March 31, 2027, with up to $130,000 available for eligible properties under the applicable rules. The program is designed for qualifying new homes and new residential rental properties. Confirm eligibility, timing and implementation details with a tax professional.
The September 21, 2026 Residential Tenancies Act changes should also be included in your operating plan if you own or intend to acquire a rental property.
Obtain professional tax and legal advice before relying on any rebate, rental strategy or ownership structure.
The risks are real, but they are not a reason to panic
Construction could recover. Demand could remain soft. Tariffs, employment and consumer confidence could affect the market.
Ontario lost 18,000 jobs in August 2026, according to Statistics Canada. That is an important reminder that housing demand is connected to the broader economy.
The constructive takeaway is balance.
The current real estate market remains a good market for prepared buyers and sellers. You may have more negotiating room today than during the strongest market conditions. At the same time, CMHC’s figures show why ownership supply deserves your attention over the longer term.
Do not wait for certainty. It may not arrive.
Instead, work with a local REALTOR® who can help you assess pricing, property condition, financing, future supply and resale potential. Whether you are buying a Toronto condo, upgrading in Peel, purchasing a rural home in Caledon or searching for a waterfront retreat in Muskoka or Parry Sound, the right strategy can help you move with confidence.
AP Bains REALTOR® is by your side through the search, valuation, negotiation and closing process.
Search for your next property
Request your home valuation
AP Bains | CENTURY 21 Green Realty Inc. Brokerage
416-817-8110
info@apbains.com
www.apbains.com
Source references: CMHC Fall 2026 Housing Supply Report, CMHC September 10, 2026 release, TRREB August 2026 Market Watch, Bank of Canada September 2, 2026 decision, Ontario Bill 114, and Statistics Canada Labour Force Survey, August 2026.