Dear Valued Subscriber

In this issue we’ll cover:

1. What’s driving cost & supply-chain pressures

2. How these pressures show up in Ontario’s housing pipeline

3. What it means for housing supply, affordability and timing

4. Strategic actions for buyers, sellers & investors

5. RealEdge take-aways

What’s driving construction and supply-chain pressures

Materials & global supply chain disruption

• Building materials steel, concrete, lumber, insulation remain elevated. For example, the Canadian Construction Cost Trends report shows Ontario residential construction costs rising roughly 1-6% in 2025 despite earlier big jumps. normac.ca

• Builders report major supply-chain headaches: shipping delays, tariff uncertainty (especially U.S.-Canada trade tensions), and sourcing shifts (e.g., switching steel/brick suppliers). constructconnect.com

• The Canadian Home Builders' Association (CHBA) notes that “material shortages and shipping bottlenecks have added tens of thousands of dollars to the cost of building a home.” Canadian Home Builders' Association

Labour & regulatory cost escalation

• Skilled-trade shortages in Ontario and Canada are driving up wages, lengthening timelines and increasing risk for builders. Normac’s report highlights labour as one of the biggest upward cost drivers. normac.ca

• Regulatory and code changes (energy efficiency, accessibility, green-building) add cost and complexity. In Ontario many builders report that tighter standards are increasing design/build cost profiles. RIISE BUILDING+1

Project viability & developer response

• Because of higher input costs + weaker buyer margin, many developers are delaying, downsizing or cancelling projects especially in Ontario’s higher-cost regions. For example, the Canada Mortgage and Housing Corporation (CMHC) Fall 2025 Housing Supply Report states that in Toronto “construction activity is on track for its lowest level in 30 years.” Canada Mortgage and Housing Corporation

• Given tighter margins, fewer new starts and slower completions mean supply pipeline is weaker than headline numbers suggest.

How these pressures are showing up in Ontario & the GTA

Ontario developers cite longer build times and higher per-unit costs, which squeezes feasibility and limits the number of new units entering the market.

• In the GTA specifically, the CMHC report flags that housing starts are declining sharply in 2025 due to these cost/supply issues. Canada Mortgage and Housing Corporation

• Even though cost increases are moderating compared to peak pandemic levels, although less dramatic, the baseline cost remains higher than historical norms, meaning every new home is more expensive to deliver than several years ago. Altus Group

• Supply-chain and cost pressures mean that even when demand returns, the supply side may not respond immediately, creating a lag effect which could extend upward pressure on prices/rents.

What it means for housing supply, affordability and timing

Supply Slowdown

• Because cost and timeline pressures discourage some builds, fewer units are coming online than needed especially in fast-growth regions like the GTA where demand is strong.

• Fewer new units = tighter effective supply, at least temporarily. This may support prices or rents in well-located markets.

• On the flip side, in segments where builders are cautious (e.g., smaller projects, low-rise) supply may be particularly thin.

Affordability impact

• Higher construction cost → higher delivery cost → higher price required for the builder to justify the project. That cost may be passed onto buyers or renters.

• For first-time buyers or those in lower-income segments, this means fewer entry-level options or higher required budget.

• For rental markets, slower supply of new rental units due to cost/chain issues may keep vacancy low and rents elevated.

Timing & Market Cycles

• The lag between start → completion means cost/supply issues now will impact housing stock 1–3 years later. For example, projects delayed now might not deliver until 2027-28.

• For investment and development planning, this timing matters: the market may shift from “too many units incoming” to “delayed pipeline” which creates opportunity windows.

Strategic RealEdge Moves

For Buyers

• Focus on quality: Buying property in a market where supply is constrained (especially delivery of new homes is slow) may offer better long-term value.

• Evaluate new-build premiums carefully: The higher cost of delivering new homes may justify price premiums—but ensure you’re comfortable with the carry and resale implications.

• Location counts: Properties near infrastructure/transit may benefit more because supply is harder to add.

For Sellers

• If you own a property in a market where new supply is lagging, you may be in a stronger position than you realize—highlight that as a value proposition.

• If you’re selling a new-build or newer product, be aware that higher costs may result in higher comparable listings—price realistically and emphasize value.

For Investors

• Delivery constraints = opportunity: In markets where new rental or ownership stock is delayed, well-located existing properties may benefit from tighter competition.

• Underwrite carefully: Because cost pressures may reduce profit margins or delay timelines, assume conservative delivery schedules and financing terms.

• Consider development entry: If you’re in the business of developing or re-purposing properties, cost/supply pressures may raise barriers (which reduces competition) but also raise risk—project feasibility is critical.

RealEdge Bottom Line

Construction costs and supply-chain pressures are major structural headwinds for housing supply in Ontario and the GTA. This doesn’t mean “prices will skyrocket” tomorrow but it does mean that supply will likely remain tighter than many expect, at least in the near to medium term. For home-buyers, sellers and investors alike, understanding the supply side gives you a clearer lens on where value and risk lie.

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See you next week