For Lendworth Financial, this shift matters. As banks tighten risk and developers pause projects, equity-based private lending is becoming an increasingly important tool for both borrowers and investors navigating a changing real estate cycle.
CMHC: Condo Construction Is the Weakest Link in Housing
CMHC’s annual housing outlook identifies condominium development as the most vulnerable segment of Canada’s housing system. Builders are pulling back as higher construction costs, elevated financing expenses, slower population growth, and softer buyer demand make new projects harder to justify.
Under CMHC’s baseline forecast, national housing starts are expected to decline steadily through 2028:
2025: 259,000 units
2026: 247,000 units
2027: 223,000 units
2028: 216,000 units
The steepest declines are projected in apartment construction — widely used as a proxy for condo development.
Weaker Demand Is Reshaping Buyer Behaviour
Housing demand is expected to remain below historical averages, with resale activity staying muted and price growth modest after declines in 2025.
CMHC forecasts average resale prices rising gradually from $698,000 in 2026 to $727,000 by 2028 — a slow recovery shaped by affordability constraints and ongoing global uncertainty.
At Lendworth, we’re already seeing the effects: more buyers delaying purchases, more developers reassessing timelines, and more homeowners turning to private lending solutions to bridge uncertainty rather than sell into a soft market.
Economic Uncertainty Is Limiting Condo Absorption
The construction slowdown is reinforced by a weaker economic outlook:
Real GDP growth: just 0.7% in 2026
Employment growth: slowing sharply to 0.3%, down from 1.5% in 2025
Even as interest rates stabilize, CMHC notes that fewer households will be in a position to absorb new condo supply — especially in high-priced urban centres.
This environment is making traditional lenders more cautious, while creating opportunity for private lenders like Lendworth to structure equity-based solutions where banks hesitate.
Toronto and Vancouver Face the Sharpest Pullback
The slowdown is expected to be most pronounced in Toronto and Vancouver, where condos have historically driven new housing supply.
Toronto
Apartment starts forecast to fall from 37,000+ units in 2023
Down to 16,000–19,000 units by 2026
Rental vacancy rates expected to rise to ~3.5%, easing rent growth
While higher vacancy helps tenants, it compresses margins for developers and investors — often forcing refinancings, extensions, or alternative capital solutions.
Vancouver
Apartment starts expected to drop from ~27,600 units in 2023
To 17,000–21,000 units by 2026
Elevated construction costs and weaker demand continue to challenge project feasibility.
Why This Matters for Lendworth Borrowers and Investors
CMHC does not forecast a sharp housing correction. Instead, it warns of a fragile balance — where today’s construction slowdown could limit future supply if demand rebounds faster than new projects can restart.
This is exactly the type of market where Lendworth’s private lending model becomes critical:
Homeowners use equity to manage renewals, bridge sales, or stabilize cash flow
Developers rely on flexible capital to complete or reposition projects
Investors benefit from disciplined underwriting and low loan-to-value lending during market resets
At Lendworth, we focus on capital preservation, clear exit strategies, and conservative valuations — especially during periods when banks pull back and uncertainty rises.
The Bottom Line
Canada’s condo market isn’t collapsing — it’s resetting. With construction expected to slow through 2028, the next housing cycle will be shaped by patience, liquidity, and access to flexible capital.
For borrowers and investors alike, this environment rewards strong equity, disciplined lending, and experienced private lenders.
If your bank is hesitating — or your project needs certainty in an uncertain market — Lendworth is built for moments like this.