CMHC’s Chief Economist Warns a Housing Slowdown Could Set Up the Next Shortage: What It Means for Ontario Buyers

What Laberge said

On Sunday, Canadian Mortgage Trends reported on a warning from the chief economist of Canada Mortgage and Housing Corporation: the current slowdown could lay the groundwork for the next shortage.

Speaking at Mortgage Professionals Canada’s 2026 National Mortgage Conference in Calgary, Mathieu Laberge said construction is slowing faster than the underlying need for housing. “If we react to a softer market by stopping too much construction,” he told attendees, “we may be protecting ourselves from today’s risks, but we’re also creating tomorrow’s shortages.” He said housing affordability has improved in every major Canadian market since 2023, pointing to added supply as an important reason.

His timing argument is the heart of it. Large condo and rental developments can take six to eight years to deliver, he noted, while demand can come back much more quickly as confidence returns and households that postponed buying or moving re-enter the market. His line was memorable: “We should not close the fire station because it’s raining.”

The same warning, in CMHC’s own report

The remarks echo CMHC’s Housing Supply Report, summarized in its 10 September news release. CMHC estimated that housing starts need to rise to between 417,000 and 469,000 a year to restore affordability to pre-pandemic levels by 2036, and said new construction is slowing faster than demand. Its deputy chief economist, Aled ab Iorwerth, put the risk this way: Canada underbuilds during a softer market and finds itself further short of housing when demand strengthens again.

The release also flagged a structural point that matters for buyers. In most large markets other than Calgary and Edmonton, new supply is dominated by rentals, while ownership-oriented starts have weakened considerably. For Toronto, CMHC said the supply gap is increasingly concentrated in the ownership market, which still needs at least 50% more annual starts over the next decade. We covered the report in our earlier piece on the 4.69 million home estimate.

The wrong size of home, in the wrong place

Laberge also argued that the problem is not only how much gets built but what. “What’s small is unaffordable and what’s large is unavailable,” he said. In expensive downtown markets, he explained, developers have concentrated on smaller units because land costs make larger ones hard to justify, while families outside city centres are looking for affordable two- and three-bedroom homes near transit and employment, often without the premium finishes that add to cost.

He pointed to scale as an obstacle, noting Canada has just six residential construction businesses with more than 500 employees, which leaves many builders without the size to invest in automation or factory production. He raised factory-built housing, mass timber and standardized components as ways to build more efficiently.

Why financing is part of the conversation

The part of the speech most relevant to a broker was about money. Laberge said a home made in a factory has a very different cash flow from one built on site: materials are paid for earlier, draw requirements differ and the risk profile changes. “If financing understands only the old process, it can block the new one,” he said, and he encouraged mortgage professionals to share what they see in their local markets.

Anyone planning a build or a major addition meets a small version of this. Construction financing pays out in stages as work is inspected, and a lender holds back a portion until completion. How that works on a real project is set out on our Blueprint Build Plan page.

What this means for an Ontario buyer

Laberge was speaking about national supply and policy, not forecasting the price of any home. But three points translate for anyone with a decision in front of them.

• A soft market is not a permanent one. If a purchase works at today’s terms, it does not have to wait for a better moment that may not come. If it only works with a lower price or cheaper borrowing, it does not yet work.
• Think about the end of the term, not just the start. A five-year mortgage taken now will be renewed in a different market. A buffer in your budget and a plan for the renewal matter more than the entry point. Our renewal page explains what changes at that point.
• Know what you qualify for before you look. Supply and demand shift, but the qualifying rules are the same either way. A pre-qualification shows your position, and the buying guide lays out the steps.