The stalled redevelopment of Montreal’s Bridge-Bonaventure sector, a stretch of aging warehouses and industrial lots where consultations began nearly a decade ago, reflects Canada’s struggle to add housing as two federal studies present widely differing estimates of how much the country needs.
Similar delays can be seen in Toronto’s Port Lands revitalization and Vancouver’s False Creek Flats redevelopment. All three projects share comparable timelines, with rezoning, consultations, planning and approvals adding years to each initiative.
The Canada Mortgage and Housing Corp., or CMHC, put the number of new homes needed across Canada over the next decade at roughly 5 million while the Office of the Parliamentary Budget Officer, or PBO, estimates that 3.2 million new residences are required.
The divergence between CMHC and PBO is rooted in how each defines housing need. CMHC’s higher target is based on restoring affordability by building even more residences, meaning housing costs return to a reasonable share of household income similar to 2004 levels. CMHC’s approach centers on income-based housing costs, while PBO emphasizes market balance.
Adding complexity to the picture is that the residential vacancy rate climbed to 3% in 2025, nearly double the 1.6% recorded in 2023, according to the PBO. This increase could deter developers from proceeding with new projects, as falling rents and higher vacancies erode near-term returns.
The PBO noted in its report that historically higher vacancy rates did not halt construction in past decades because demand for certain housing types, such as single-family homes, remained strong.
Canada’s vacancy-rate spike could be grounds to invalidate both studies, according to one real estate analyst.
“There is oftentimes a disconnect between academics and people who actually work in the field,” said Steve Saretsky, founder of The Saretsky Group of Vancouver and a housing analyst and podcaster, in an email. “It is hard to argue we are undersupplied with rising vacancy rates and falling rents. The rental vacancy rate is at a 30-year high in Vancouver!”
Furthermore, Saretsky said, “Resale home prices are also declining at their steepest pace since the 1980s. CMHC’s targets are built on spreadsheets, not reality. With immigration slowing significantly there is no shortage of housing.”
Vacancy at equilibrium
The 3% vacancy benchmark is used by government to signal an equilibrium, or point of fairness, between tenants and landlords. However, it can mask sharp differences across property types.
“Certain types of properties have a higher vacancy rate than others,” said Renaud Brossard, vice president of communications at the Montreal Economic Institute, or MEI. “Single-family homes in large metropolitan areas remain extremely tight.”
He noted that developers still built during periods when vacancy rates were historically higher, even at about 6.5%, because demand for specific housing types persisted. “Families want backyards, and those homes are scarce,” Brossard said in an interview.
Brossard, unlike Saretsky, sees a need for more residential construction, noting that the PBO study referenced 700,000 Canadians living in suppressed households, that is, people living in less-than-ideal conditions such as families sharing apartments or living with roommates.
Immigration adds another layer of demand, despite the recent dip, Brossard said. “We’ve reduced the number of people coming in, but there’s still a lot more people in the country,” he said.
Brossard’s MEI has lobbied to rezone more farmland to allow for residential construction.
“Lots of it is sitting empty; for example, 40% to 50% of the agriculturally zoned land in Laval is not being used for farming,” Brossard said. “Technology has improved crop yields, and governments should allow more homes to be built on those agricultural lands without hurting production.”
He said a strong farm lobby and local opposition, known as NIMBYism — or “not in my back yard” — make change difficult.
“Everybody that is already living there gets heard in consultations,” he added, “but the voices not heard are the ones who would be living in the homes that get built.”
Brossard’s group also favours a zoning change to allow new buildings to have one staircase.
“In Europe, it’s rather common to have only one egress, one staircase,” Brossard said. “You adapt building to make sure it’s fire safe. It allows for configurations to make it more livable, three bedrooms, four bedrooms, even five bedrooms.”
As for the CMHC report, it suggests that the current apartment vacancy-rate hike is caused by historically high rental completions — over 80,000 units were added nationally in 2024 — combined with a slower population growth of 0.9% in 2025 versus 1.8% in 2023. The highest vacancy rates are found in pricier rental units, causing landlords to sometimes offer incentives such as one month of free rent in Toronto and Vancouver.
Regardless of the CMHC’s and the PBO’s estimates of how many new residences are needed, Canada’s housing starts total remains well below both numbers.
National starts averaged 283,734 units, seasonally adjusted, in June but fell to 232,765 units by October, a drop of nearly 18%. Housing starts in urban areas are up slightly over 2024 but remain about 40% short of CMHC’s recommended pace.
Housing starts have been held down by a variety of factors, ranging from costly development fees charged in many municipalities to construction costs that rose 3.3% year over year, according to Statistics Canada’s Building Construction Price Index for the third quarter.