The housing industry knows this story all too well: prices are soaring and demand (until recently) has been relentless yet projects are stalling. The blame often falls on high land values or developer greed, but the real culprit is clear to anyone in the sector—it’s the staggering cost of delivering new homes.
The numbers are sobering. The Canada Mortgage and Housing Corporation (CMHC) says that we need to build 5.8 million new homes by 2030 to restore affordability to 2004 levels. If successful, that would mean that a newly built 1,000-square-foot, two-bedroom condo in downtown Vancouver would sell for $620,000 instead of the $1.5-million that it currently does.
But here’s the reality: even if land were free and developers waived their profits, that condo would still cost more than $1-million to build. In Toronto, it’s a similar story, with hard costs alone pushing the price beyond $800,000.
By the numbers
Here’s how the numbers break down for that $1.5-million Vancouver condo:
- $294,000 (20 per cent) is for land acquisition
- $490,000 (32 per cent) is for hard costs (i.e. labour, building materials)
- $102,000 (7 per cent) is for soft costs (i.e. architectural designs, legal fees)
- $92,000 (6 per cent) is for marketing and realtor commissions
- $77,000 (5 per cent) is for finance charges and loan interest
- $267,000 (18 per cent) is for government taxes and fees
- $178,000 (12 per cent) is the gross profit margin required by banks to provide financing
(Numbers rounded for clarity)
Climbing costs lead to stalled projects
This isn’t news to anyone in the industry. What’s alarming is how quickly these costs are climbing, forcing projects to stall or fail altogether. In Vancouver and Surrey, B.C. alone, 58,000 homes are paused because the cost of delivering them exceeds what buyers can pay.
So, if the affordability crisis is really a cost-of-delivery crisis, what can be done? While macroeconomic factors like interest rates and global material costs are beyond our control, governments hold significant levers to reduce costs and unlock stalled projects.
Three areas of reform stand out:
- Reduce financing costs for housing projects
- Allow development cost charges (DCCs) and municipal levies to be paid at the end of a project, rather than upfront. This would reduce financing costs and free up critical capital.
- Exempt DCCs from GST/PST/HST and land transfer tax calculations—double taxation only inflates prices unnecessarily.
- Expand municipal surety bond programs to replace capital-intensive letters of credit, unlocking billions in tied-up equity.
- Provide stability for developers
- End the constant churn of new regulations. Introduce in-stream protections so projects already in process aren’t derailed by sudden policy changes or fee hikes.
- Expand the pre-sale period in British Columbia—currently, developers have only 12 months to meet pre-sale requirements for projects to move ahead, resulting in many projects not launching, or failing to meet requirements. This holds housing projects back that would otherwise be able to move forward
- Establish a nationwide policy moratorium to provide the sector with a stable planning environment for the next five to 10 years.
- Implement fairer ways to fund infrastructure and amenities
- Create a municipal services corporation for water and wastewater services so that regional districts can borrow and amortize infrastructure costs over time instead of relying solely on development cost charges.
While these changes require government leadership, the industry has a role to play. Developers need to speak with a unified voice, push for sensible reforms, and share the data that demonstrates the urgent need for change. Transparent conversations about what it actually takes to bring homes to market will help shift public perception and rebuild trust in the sector.
CMHC’s affordability target isn’t impossible—but it demands bold action. The time for incremental adjustments is over. If we want affordability to return to Canadian housing markets, we need governments and industry to tackle the true crisis: the soaring cost of delivering homes.

Brad Jones is Chief Development Officer at Wesgroup Properties, a real estate development company based in Vancouver, B.C.
Interesting article. A big part of the housing problem is overbuilding. Housing over the decades has increased in size and accessorization – need to scale back and reduce costs. As to “hard costs” need to look at better sourcing and efficiencies. Soft costs seem astronomical – $102,000 (7%) per unit? That would translate to say $10 million for a 100 unit complex. Marketing – needs improvement It’s ironic that government worries about housing supply/costs yet costs upped by taxes and fees. Are there other sources of revenue? As to profits what’s realistic?
Well said Brad!
Good points overall. If the cost of land is the largest component (aside from building costs), then, perhaps a new form of land co-ownership should be considered. Consider that, in my area, a typical townhouse on a 19×96 ft lot may come in, new, at $850,000. A 1-acre lot, subdivides into approximately 14 lots, allowing for corners, ends, possibly a municipal corridor between the yards for emergency access, etc. So, that 1 acre lot, which may have sold for $1m is now worth 14x $300k (numbers will depend on area as land cost varies considerably). If the lot is developed for the same number of homes BUT retains single lot status for tax purposes, with each resident/home paying their share of the tax bill, still retaining full enjoyment of their lot and the ability to sell the home and the enjoyment of the lot, as if the lot was a typical freehold, the home should be priced lower as cost component of their lot would be lower and the value of the home, as freehold tend to be more desirable than a similar condo, would be lower than a freehold and less than a condo as it is not a condo, which would have those associated costs (registration, condo fees, etc.). The builder, and developer would be selling the unit on a freely enjoyable, unbound by condominium restrictions lot and the owner would have that unfettered enjoyment and right to transfer ownership, which would include proportional use of their portion of the entire area (lot). The caveat is the Municipality would still have their DC fees and charges based on the DC fees for a townhouse but would receive lower tax inputs. Seeing that EVERY Municipality in Ontario is in debt, don’t expect anything more than the usual leg-humping rhetoric though.
Great article, well thought out with some rather interesting suggestions. I do not know if all are reasonable, it would be great to hear a few different points of view, though I think it is almost a foregone conclusion that costs of all sorts are getting out of control.
I was surprised to not hear more on governmental project approval time frames.
I guess the one question that I would like to know is, why is 2004 the target for affordability? What is it about 2004 prices that make them the “ideal” pricing for homes, given all the economics involved.
It’s clearly a crisis of both. Well-presented perspective with important take-aways – thanks Brad. Can’t personally vouch for the numbers.
If we end up with more supply of building materials in Canada with Trump’s tariffs, let’s take an oversupply of material in Canada as an opportunity to solve our housing crisis. As you have aptly pointed out, the real issues are bureaucracy, development charges, and the high cost of building materials. Keep preaching this message and solutions!