Like everyone living through the housing and cost of living crises in Ontario today, home builders have been struggling. Housing starts were down 16 per cent in Ontario in 2024, and in some municipalities, they were down over 35 per cent. 

In many cases, projects are being cancelled, going into receivership, or struggling to close once completed. Builders and developers aren’t selling the new homes they build and we’re far from our target of 1.5 million new homes by 2031. This spells dire consequences for the industry and for Ontarians who hope to buy their own home one day.

In the last decade, the rate of increase in housing prices has outpaced that of wages significantly. Homes have become unattainable for many Ontarians, not just in the Greater Toronto Area (GTA), but across the province. The demand for real estate has skyrocketed, and to combat this issue, industry and government have been focused on increasing the supply of housing in Ontario. 

Development charges have increased 327% since 2009 in the GTA—becoming the highest in North America

This doesn’t just mean building more homes but building homes that are suitable for the target demographics. For example, for young families or young people who are moving towards family formation and need more space, increasing the supply of housing means building attainable single-family homes, semi-detached or townhomes, and condos with two or three bedrooms.

This goal of building more homes, and doing so faster, has been met with several challenges. Government fees and taxes are exorbitant and have increased remarkably at the same time as the province has faced a housing crisis. 

Development charges alone have increased 327 per cent since 2009 in the GTA—becoming the highest in North America. This is reflected in municipalities across Ontario, where some municipalities have development charges that exceed $200,000 for a single-family home. Those are costs that consumers ultimately take on and that inflate the price of real estate. Furthermore, there are the delays in permitting and approvals that have increased significantly in recent years and a need for more infrastructure to support new housing.

Three risks when it comes to tariffs

On top of these issues, builders were already struggling with the economic environment— inflation making the costs of materials increase, interest rates rising, and increasing their financing costs. Now, the tariffs are going to make it all worse.

At the Ontario Home Builders’ Association (OHBA), we’re watching three particular risks when it comes to tariffs and their impact on the housing sector. First, there’s the risk of economic downturn, which we’re already seeing in the stock market and layoffs in affected industries. Then, the risk of construction material costs increasing, leading to higher home construction costs, and finally, the risk of currency depreciation.

Economic decline

Significant economic decline would lead investors to lose confidence in the housing sector. Housing starts would plummet as ongoing projects halt, completed projects struggle to close, and investors decide not to pursue new projects. At a time when the province is desperate for more housing, this would be devastating.

Rising construction costs

The risk of construction costs rising also poses a notable threat to the sector. Dozens of products used in home construction cross the border multiple times back and forth before they’re completed. 

These tariffs are disrupting a supply chain that is very much embedded into the economy of Canada and the United States. Canadian suppliers whose revenues rely on the American market may be forced to raise prices domestically to avoid shutting down. And counter-tariffs will make imports to Canada more expensive, exacerbating the problem altogether. If construction materials go up in price that means construction will too, which will further deter investors from going after new projects when many are already struggling to sell completed homes due to high costs.

Currency depreciation

Currency depreciation would only make matters worse, as it would make importing any products related to home construction more expensive. If the Canadian dollar drops 10 per cent, that means a 35 per cent premium with counter-tariffs of 25 per cent—an unsustainable cost for most companies.

Tariffs indirect impact on the housing market

The tariffs are also having indirect effects on the housing market. The province needs more infrastructure to support new housing across the province. 

This means everything from water and wastewater to transit. However, we’ve already heard from Ontario municipalities that they expect the cost of planned infrastructure to increase due to tariffs. If costs increase significantly, this will pose a challenge for municipalities seeking to deliver on the infrastructure necessary to support new homes, which will likely result in less infrastructure being developed and therefore fewer homes being built.

Reduce delays at the municipal level and reduce the cost of land

Our advocacy priorities focus on making housing more attainable but would also help alleviate the impact of tariffs on the home-building sector. For example, reducing delays at the municipal level, which can cost $2,400 to $5,000 per day per unit, would give builders added confidence in this market.

Likewise, reducing development charges and exploring ways to reduce the cost of land by making more available for development would have a significant impact on the cost of housing and further incentivize builders and developers during these trying times. 

While these changes would all be meaningful for affordability and housing supply in Ontario, results would take time while the impacts of the tariffs are immediate. Simply put, the tariffs are making a bad situation worse and putting Ontario’s housing sector at risk. 

“In the short term, however, we will all feel the burn—and the residential construction industry may feel it more than others.”

The timing could not be worse, but you might ask, “Is there any silver lining to this trade war?” The only one I can think of is that this will help build unity and resilience within Canada’s economy. 

Focusing on building and buying Canadian, removing interprovincial trade barriers, and striking deals with new trade partners to end our reliance on the United States will only benefit us in the long run. In the short term, however, we will all feel the burn—and the residential construction industry may feel it more than others.

Scott Andison

Scott Andison is the CEO of the Ontario Home Builders. Association