Market slowdown worsens as new regulations, rising costs, and investor exodus take toll
Vancouver’s condo market is facing mounting pressure as the number of unsold, newly built units is expected to jump by 60% by the end of 2025, according to new projections from Rennie Intelligence.
By year’s end, more than 3,400 completed condos are expected to sit vacant across Metro Vancouver, up sharply from 2,179 units at the close of 2024, the region’s highest inventory levels in years.
"Right now, the market is out of gas," said Ryan Berlin, head economist and vice-president at Rennie Intelligence. "Nothing is working for developers. It’s not really working for buyers. So, we’re just kind of stagnating right now."
A major driver behind the slowdown is the disappearance of investors, a group that historically supported pre-construction condo sales and allowed developers to secure financing. Investors once made up half of Rennie’s buyers between 2020 and 2023. By 2024, that share fell to 25%, and this year, Berlin said, it has plummeted to just 7%.
With rising borrowing costs, lower rental returns, and tighter regulations, the math no longer adds up for many investors.
"The opportunity for reward diminished and the risks increased," Berlin noted, adding that policies like the federal anti-flipping tax and short-term rental restrictions have further cooled investment appetite.
Meanwhile, developers are grappling with rising construction costs, expensive municipal fees, and regulatory hurdles that made sense in past boom years but are now threatening project viability. Some developers are now lobbying Vancouver to ease its social housing requirements, particularly the mandate that 20% of new rental or strata towers around transit hubs be dedicated to affordable units.
"We haven’t seen it yet in Vancouver, but other municipalities have started dropping their requirement for affordable housing, from 20% to 10%," said Tony Hepworth, president of Pennyfarthing Development. "Talking to my colleagues... we can't see how these big towers can go ahead."
Commercial broker Ian Brackett echoed similar concerns, warning that the cost of building below-market rental units often exceeds their completed value, pushing up the prices of market-rate units and making projects financially unfeasible.
"Twenty per cent (20%) of nothing is zero," Brackett said.
City officials acknowledge the challenges.
"Staff are working with applicants to find solutions," said Matt Shillito, director of special projects for the City of Vancouver, adding that the city is prepared to apply flexibility on a case-by-case basis, though no formal policy changes are planned yet.
Read next: Canadians turning away from condo market amid Toronto crisis: report
The broader implications of the market downturn are also drawing attention. David Eger, vice-president of Western Canada for Altus Group Ltd., noted that developers may increasingly choose to sit out until land values adjust or market conditions improve. In some cases, redevelopment only becomes viable if land prices fall dramatically — an unlikely prospect without broader market shifts.
Meanwhile, some experts argue that the current softening presents an opportunity to push for more affordable housing. University of British Columbia professor Patrick Condon warned that without regulatory intervention, falling land prices could quickly be reversed in the next market upswing.
"We are inflating land value rather than capturing the new value for public purpose," he said.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
