Vancouver's Broken Ladder: Why We Can't Just Build Our Way Out of the Housing Crisis

For decades, the popular solution to Vancouver’s housing crisis was believed to be increasing housing supply. The logic is simple and compelling: we live in one of the world’s most desirable and geographically constrained cities. As a consequence, not enough homes exist for the people who want to live and work here. Building more housing supply has become a general consensus across the political spectrum, and for a period of time, that’s exactly what we did.

However, today, cranes that once made up the skyline stand idle, and newly completed condominiums glitter with a number of dark empty windows. The Canada Mortgage and Housing Corporation (CMHC) published data stating that project cancellations for condominium apartments in Vancouver had skyrocketed, increasing a staggering tenfold since 2022.

Despite a clear and desperate societal need for more housing, the economic engine designed to create it has seized. The core of the problem lies in a fundamental flaw in our strategy. Governments, unwilling or unable to fund and construct housing on the massive scale required, have almost entirely outsourced the job to the private sector. The private sector, however, doesn't build out of social obligation; it builds for profit. Right now, for a growing number of developers in Metro Vancouver, the opportunity to profit has vanished.

From Boom to Bust

In the years leading up to 2022, the market was booming. Homebuyers and investors had access to cheap money, fueling relentless demand with interest rates at historic lows. Developers, seeing an endless runway of profitability, rushed to the table. They paid premium prices for land, underwent complex and lengthy approval processes, and launched ambitious projects based on a simple assumption: the market would keep rising.

The Bank of Canada executed one of the most aggressive series of interest rate hikes in its history, desperately trying to battle runaway inflation. This had a significant impact on the housing market. Potential buyers saw their borrowing power disappear overnight. A mortgage that was manageable in 2021 became unthinkable by 2023. As of mid-2025, the market remains down. Sales volumes in Greater Vancouver are down nearly 24% year-over-year, and the average home price has fallen by almost 6%. Active listings have surged by almost 30%, pushing the region deep into a buyer's market. This domestic credit crunch was worsened by global economic uncertainty, with the lingering effects of trade tensions and supply chain disruptions.

Developers who broke ground in the boom are now trying to sell in the bust. For them, the consequences are catastrophic:

• Vanishing Profits: They are being forced to sell units for significantly less than their initial financial models projected, gutting their profit margins.

• Failed Closings: A significant number of pre-sale buyers are now finding that the bank's final appraisal value is lower than the price they committed to pay. Unable to secure the full mortgage, they are forced to walk away from their deposits, leaving developers with unsold inventory they thought was spoken for.

  
  

The remaining pool of potential buyers, seeing prices fall, is understandably hesitant. The fear of "catching a falling knife," where people buy a home only to see its value continue to decline, has kept them firmly on the sidelines.

The starkest illustration of this crisis is exemplified by Coromandel Properties. The company sought creditor protection in early 2023 with 16 stalled projects and over $700 million in debt. Their collapse was the first domino in a wave of insolvencies and court-ordered land sales that have sent fear through the industry.

The Developer's Dilemma

The crisis facing developers isn’t just about falling sale prices; it's a multi-front war against skyrocketing costs. The financial equation that underpins residential construction is broken. A 2024 analysis by Coriolis for Metro Vancouver laid out the math. It found that for many common forms of development, particularly rental and wood-frame condo projects, the profit margin was already "marginal" before the latest round of cost increases. Any project with a projected profit margin below 10% was deemed "not likely viable." Today, many developers would celebrate a 10% margin.

Furthermore, the price of essential materials used in the housing industry, like steel or concrete, remains high. A persistent shortage of skilled tradespeople means labour costs are also unaffordable. Municipal fees and charges add to the financial pressures. Development Cost Charges, Community Amenity Contributions, and other fees can add up to hundreds of thousands of dollars. These costs have pushed housing projects to become more unviable. As one industry expert from Polygon Homes noted, "I've been working... for 22 years and I've never seen a cost environment like we have today." The cost for developers to borrow the massive sums of capital needed for construction has become painfully expensive with higher interest rates, eating directly into any potential profit.

When you combine escalating costs with falling revenues, the math simply no longer works. The risk becomes too high, and the potential reward vanishes. This is the core reality that has led to tens of thousands of approved housing units across Metro Vancouver sitting in limbo.

A Call for Action

The left-wing answer has always been for the government to step in and build housing itself. But the more mainstream solution, and the one that dominated the recent election, is to find a new way to fix the broken incentive structure for the private sector. How do you convince builders to build when it’s no longer profitable?

One potential solution is to explore partnerships between public and private sectors. By sharing risks and rewards, we might create a more sustainable model for housing development. This could involve government subsidies or incentives for developers willing to take on projects that serve the public good.

Another approach is to streamline the approval process for new developments. By reducing bureaucratic hurdles, we can encourage more projects to move forward. This could help alleviate some of the supply issues we currently face.

Moreover, we need to rethink our approach to zoning and land use. Allowing for more diverse types of housing, such as multi-family units or co-housing, could increase the supply of affordable options.

As we navigate this complex landscape, it’s crucial to keep the conversation going. We must engage with various stakeholders, including developers, community members, and policymakers, to create a balanced approach to Vancouver's housing crisis.

In conclusion, the challenges we face in Vancouver's housing market are significant. However, with thoughtful discussion and innovative solutions, we can work towards a future where everyone has access to safe and affordable housing.

By understanding the dynamics at play, we can foster open discussions that go beyond typical headlines. The phrase “housing crisis” encapsulates the urgency of our situation. Together, we can seek solutions that benefit all residents of our vibrant city.