How did we get here?
The current glut of unsold newly-built condos did not happen overnight. To understand how we got here (and what to do about it), we must explore the period leading up to now. Vancouver was in a real estate boom, with land prices increasing yearly. The area was (and still is) in high demand, thanks to economic opportunities, plus scenic surroundings and mild weather.
This led to a rush to build condos, and people bought them – both end users and investors. But there are limited locations where condos may be built, due to zoning laws. As a result, condos tended to be tall towers concentrated in certain neighbourhoods. Units were small, with one-bedroom condos often falling below 500 sq. ft. (46.45 m²). This was for a few reasons: one, the units would be cheaper because they occupied less square footage; two, developers could fit more units into a building; three, these units appealed to investors, who often bought units during the pre-sale phase with the intention of either reselling them later or renting them out.
Pre-sales were, and are, crucial for condo buildings to reach construction. Pre-sale buyers put down deposits, and developers need to pre-sell around 60% of the units in a proposed building to qualify for financing and proceed to building.
These condo units were expensive, though. That’s because land is expensive in Vancouver, which increases the price of units. Then there’s the matter of materials, labour and other costs involved in construction. And finally, there are taxes and fees on new developments. Development cost charges (DCCs) form a major part of the price of new condos. According to Anne McMullin, CEO of the Urban Development Institute at an interview with the Georgia Straight in 2018, DCCs and other taxes and fees can total up to 30% to 40% of the price of a unit. During the boom years, these were annoying but not showstopping. Buyers were ample in number and willing to pay more.
And despite a brief economic slump early during the COVID-19 pandemic, buyers went into a bit of a frenzy as the 2020s wore on. The Bank of Canada cutting interest rates to near-record lows and the rise of work-from-home policies led to another mini boom in real estate. Buyers snapped up both resales and pre-sales.
This last surge led to the strata projects currently coming onto the market. Why did it take around five years? McMullin says it can take five to seven years for a project to reach completion after all the approvals and changes required by the City of Vancouver. “There are 25 steps that you have to go through in the City of Vancouver to get approval,” she says.
But the economic situation changed drastically in the last five years. Tariff battles with the United States led to anxiety and hesitancy among buyers. Wages have not kept up with asking prices for new homes. And the units on offer, as mentioned earlier, tend to be small and suited to investors or foreign buyers, the latter of which aren’t present anymore due to changes in immigration policies. This has all led to a slump in home prices. Those who bought pre-sale units with the intention to sell them later now find themselves holding properties worth less than they anticipated when they put down a deposit.
And developers hoping to make up for the cost of building condos are finding potential buyers aren’t able to pay for the units being offered. The market has stagnated, hence the glut of available units. Everything appears to be in a holding pattern. Potential buyers hope that prices either fall further, or they’re turning their attention to new townhomes and single-family homes, plus older resale units, which tend to be larger and with more appealing layouts.
Our own data at REW backs this up. Engagement on new homes developments has dropped over the past few months, as the chart below shows.
But that’s not the entire story. It’s true that new condos are not doing as well as previously. However, we’ve seen buyers make moves when it comes to new townhomes and single-family homes. These property types offer larger, more family-friendly layouts that buyers find are worth the increased price. They also tend to be located in suburban locales, which are cheaper to build in and appeal to families.
Do developers lower prices and attempt to recoup some losses?
So, what strategies can developers use to move their newly-built condos? Some have found success offering sales and promotions. For instance, one developer offered a one-day sale that cut prices by 25% and another offered to buy back units. Other developers have touted everything from funds to upgrade interior finishes to free beer in an effort to entice buyers. Still, while these efforts have generated publicity, and in some cases compelled a few buyers into making purchases, overall the market remains flooded with unsold newly-built condos.
Developers remain hesitant to permanently lower prices to sell off units. Instead, they may be waiting for economic conditions to improve to recoup their losses. But this approach has its downsides. Developers owe payments to their financiers and creditors, and some are facing mountains of unpaid debt.
This has led to a rise in court-ordered sales. But so far, foreclosures remain relatively rare. A few more may be on the horizon, perhaps for individual buildings or developments. Rather than totally collapsing, many developers are instead pulling back construction on new developments after completing sales of existing inventory. This, as we’ll explore later, could have profound effects on the future of housing.
Do we wait and hope buyers and demand come back?
Since waiting seems to be the preferred strategy of most developers, Homeseekers and the industry as a whole, there are a few possibilities for the future.
Around this time, the Canadian Federal Government introduced the first concrete details for its Build Canada Homes program. These include promises to use Government land to build homes. While this may have a small impact on the markets included in the first round of the program, BC isn’t on the initial list.
There have been calls from the real estate industry to end the BC foreign buyers ban and raise immigration caps. The hope is they will buy empty units and pre-sales to spur construction. However, the Federal Government has indicated that immigration caps won’t change and BC’s provincial authorities haven’t indicated reconsidering the foreign buyer’s ban before its 2027 deadline.
The next option would be improved economic conditions spurring buyers into action. However, the US Trump administration has so far pushed ahead with its tariffs. Prime Minister Mark Carney has been negotiating trade deals with the US government, but the economic mood remains low. Most analysts predict the economy will be sluggish for at least the next year. With this weighing on the minds of Homeseekers, the appetite to buy a new condo likely won’t come back soon – and the problem of small units and unappealing layouts remains.
What role are taxes and land use policies playing?
Another avenue to explore to spur both condo sales and new construction is cutting taxes. The Urban Development Institute states that “One of the chief reasons for the slowdown in the market in the housing sector (including for-profit, non-profit and government builders) is the cost of delivery crisis. The slowdown is not because there is an oversupply of housing… [rather] the sector cannot provide homes at the price and rent most households can afford due to increasing fees/taxes at all levels of Government.”
While the City of Vancouver recently voted not to increase property taxes, these aren’t the taxes concerning new condos. Rather, DCCs – as mentioned above – led to the high price of condos and the increasing costs of construction, say developers. In December 2025, Vancouver approved a temporary reduction of 20% to development fees. This initiative was in direct response to the wave of stalled new homes projects in the city, say city staff and council.
Mike Moffat, Founding Director of the Missing Middle Initiative and co-host of the Missing Middle Podcast, writes: ”Governments often say they want more homes, but their tax policies say otherwise. From the GST and PST on new homes to development, the tax burden on new housing is crushing.” According to Moffat, these taxes are not only a large part of why condos are expensive, but they also stifle new construction.
As mentioned above, zoning plays a role in the form condos take, and applying for rezonings has been noted as something that leads to higher costs and longer timelines. Vancouver has recently rezoned portions of the Broadway and Cambie corridors to allow low, mid- and high-rise developments without the need for spot rezonings. Proponents say this will help accelerate construction – though much of the city remains single-family homes by land area. Burnaby also introduced legislation that removed density calculations altogether, and instead defines zones based on height in hope this will speed up development.
What about the future of condos in general?
You may be wondering, if all this is true, why are there so many new condos coming on to the market and construction cranes all around? Moffat writes that, “On the surface, Canada’s housing starts still look relatively healthy… But housing starts are a lagging indicator. They capture projects that were financed, approved, and pre-sold under the hotter market conditions of 2021 and 2022.”
He goes on to explain that new home sales are down. As we have been discussing, this is true. Real estate advisor and analyst Manraj Dosanjh, Personal Real Estate Corporation at Dexter Realty, notes, “‘Buy condos, because we’re not making any more of them.’ It’s a line I often find myself repeating, especially these days. Walking through Metro Vancouver, you can see it happening in real time: projects that once would have broken ground as condos are instead being built as rentals. On paper, it looks like progress. But for the average Canadian hoping to one day own, it means fewer opportunities to step onto the property ladder.” This is a prime time for people looking to buy new condos because inventory is high, but it points to a worrying future.
Without selling their current units and completing more pre-sales, developers cannot finance new condo projects. High land costs and taxes have raised prices, and these get passed to buyers. Supply will likely tighten significantly; as Dosanjh states: “This downturn isn’t permanent. Sooner or later, policies shift, confidence returns and people come back to the market. By then, though, we’ll be staring at a serious supply gap. The homes not being built today are the completions missing tomorrow. Industry data shows that by 2027 or 2028, the number of new homes hitting the market will fall sharply.”
And as we discussed earlier, new townhome and single-family home projects tend to be doing well on REW. These developments are more expensive than condos, however. Buyers seem willing to pay for them; we may see the market shift in response to this demand. Still, condos remain a backbone of the BC property market that cannot be entirely replaced, due to both matters of space and economics. In fact, many townhome projects involve a condo tower component, without which the development would not be viable.
Without addressing the confluence of factors that got us to this point, we are set to see an extremely constrained supply of new homes in the future. The current glut of condos on the market won’t last forever. But it’s not the end of the story. It’s the beginning of a much more troubling chapter, unless we take action.
