Ford’s Ontario Government Cuts 2027 Housing Forecast by 5,200 Homes as Deficit Climbs to $16.9 Billion

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Ontario’s housing ambitions are colliding with a worsening financial outlook as Premier Doug Ford’s government lowers its construction projections and prepares for a substantially larger provincial deficit.

The October 29, 2026, Fall Economic Statement reveals that Ontario now expects just 65,100 housing starts in 2027, a reduction of 5,200 from its previous forecast of 70,300. Meanwhile, the projected deficit for the 2026–27 fiscal year has climbed from $13.8 billion to $16.9 billion, putting additional pressure on the government’s economic agenda.

The revised figures raise questions about Ontario’s ability to address its housing shortage while managing weaker economic growth, trade uncertainty and rising public expenses. For families struggling with housing affordability, the implications extend well beyond provincial budget calculations.

Ontario’s 2027 Housing Forecast Drops by 5,200 Homes

Ontario’s latest economic update delivers another disappointing projection for residential construction. The provincial government now expects 65,100 housing starts in 2027, compared with the 70,300 anticipated in its March budget. That represents a reduction of approximately 7.4% in the forecast within seven months. The outlook for 2026 has also weakened slightly, from 64,800 projected starts to 64,700. By comparison, Ontario recorded approximately 65,400 housing starts in 2025. These numbers suggest that the province could experience another year of relatively stagnant construction activity before any meaningful recovery takes hold.

The distinction between housing starts and completed homes matters. A housing start occurs when construction reaches the foundation stage, meaning the property is not necessarily ready for occupancy. A condominium building started in 2027, for example, might not welcome residents until considerably later. The reduction therefore signals a weaker pipeline of future housing rather than the immediate disappearance of 5,200 completed properties. For prospective buyers, renters and construction workers, however, the underlying concern remains significant: fewer projects beginning construction today can translate into fewer housing options and less construction activity in subsequent years.

Construction Projections Are Weaker Through 2029

The downward revision does not stop in 2027. Ontario has also lowered its expected housing starts for 2028 from 76,800 to 71,700, while the 2029 projection has declined from 80,500 to 75,400. Together, the latest forecasts anticipate approximately 15,400 fewer housing starts across 2027, 2028 and 2029 than the government expected in March. This is a cumulative reduction in projected construction activity, not a confirmed number of cancelled homes. Nevertheless, it illustrates how expectations for Ontario’s housing sector have deteriorated across several consecutive years.

There is still some anticipated recovery in the government’s projections, but it is more gradual than previously expected. Housing starts are forecast to increase by only 400 units between 2026 and 2027 before accelerating to 71,700 in 2028. For construction companies, that means planning around a potentially prolonged period of weak demand rather than a quick rebound. Developers deciding whether to purchase land, secure financing or launch new subdivisions must weigh those expectations carefully. A slower construction pipeline can also affect contractors, electricians, plumbers and building-material suppliers whose livelihoods depend on projects moving forward. The numbers therefore have implications for employment and economic activity as well as housing supply.

The 1.5 Million Homes Promise Faces Growing Pressure

Ontario’s weakening construction outlook creates another challenge for one of Doug Ford’s most prominent housing commitments. The provincial government established a target of creating 1.5 million new homes between 2022 and the end of 2031, an ambition equivalent to an average of 150,000 homes annually over the decade. Actual progress has been considerably slower. Internal provincial figures reported by Global News showed Ontario achieved approximately 58% of its 150,000-home target for 2025, even after counting additional types of accommodation, including student housing, long-term care beds and retirement suites. The 2027 forecast of 65,100 conventional housing starts sits far below the original annual benchmark.

The political debate has become increasingly complicated as the government shifts its emphasis toward practical construction measures. During an October 5 legislative committee meeting, Housing Minister Rob Flack reiterated that he was not focused on the 1.5-million figure, arguing that the priority was improving the conditions needed to get homes built. He nevertheless acknowledged that the target remained a government commitment. That distinction matters because the province’s broader housing count includes categories beyond conventional residential starts, so the two measures are not directly interchangeable. Even allowing for those differences, the revised outlook reinforces concerns that Ontario’s housing ambitions have moved much further ahead than the industry’s current construction capacity.

Toronto’s Struggling Condo Market Is a Major Part of the Problem

The Greater Toronto Area’s condominium slowdown is contributing to Ontario’s disappointing housing projections. The Canada Mortgage and Housing Corporation has identified extremely weak pre-construction condominium sales as a major obstacle to new development. Its September 2026 housing supply analysis found that only 156 condominium units began construction in the City of Toronto during the first half of 2026, compared with an annual average of approximately 7,000 units over the previous decade. While those periods are not directly comparable, the figures illustrate the extraordinary weakness in new condominium development. High construction costs, unsold inventory and reduced investor demand have made launching projects considerably more difficult.

The financing system helps explain why fewer condominium sales translate into fewer construction starts. Bank of Canada research published in February 2026 noted that lenders have traditionally required developers to presell around 70% of a project’s units before approving construction financing. When buyers hesitate, developers may struggle to reach that threshold. A proposed tower can remain on the drawing board even after substantial planning work has been completed. Purpose-built rental housing has helped support construction activity, but it cannot fully compensate for declining condominium development. This creates a difficult contradiction: buyers may benefit from weaker condominium prices today, while the disappearance of new projects threatens the availability of ownership housing later in the decade.

Lower Home Prices Are Providing Relief, but the Outlook Is Complicated

Ontario’s housing slowdown is producing a mixed picture for consumers. The fall economic update projects that average home resale prices will decline 2.4% in 2026, replacing the government’s earlier expectation of a 0.8% increase. Prices are subsequently forecast to rise 1.4% in 2027, followed by increases of 4.2% in 2028 and 4.6% in 2029. Resale activity is also expected to decline 0.7% in 2026 before growing 7.8% in 2027. These projections suggest that the government expects buyers to gradually return, even as construction activity remains substantially below the levels originally anticipated.

For households hoping to purchase their first property, declining prices can create opportunities that were unavailable during Ontario’s hottest housing-market years. However, affordability involves much more than the purchase price. Mortgage payments, household income, property taxes and financing eligibility still influence whether a family can buy. Lower prices can also discourage developers from launching expensive projects if anticipated sales revenue no longer covers construction costs. Consequently, a weaker housing market does not automatically resolve the province’s long-term supply problems. The challenge is achieving housing prices that people can afford while maintaining sufficient incentives for builders to create new properties.

Ontario Is Betting on Tax Relief to Revive Housing Construction

Despite reducing its housing forecasts, the Ford government is continuing with financial incentives intended to encourage new construction. A major component is temporary Harmonized Sales Tax relief that can provide eligible buyers of new or substantially renovated homes with savings of up to $130,000. The program can effectively eliminate the full 13% HST on qualifying new homes valued at $1 million or less, with the maximum relief maintained for eligible homes valued between $1 million and $1.5 million. The temporary enhanced program generally applies to purchases from builders between April 1, 2026, and March 31, 2027. The fall statement also accounts for an additional $293 million to support the Ontario New Home Affordability Payment.

The government is also working with Ottawa and municipalities to reduce development costs. A federal-provincial partnership includes $8.8 billion over 10 years for housing-enabling infrastructure, while Ontario’s Development Charge Reduction Program prioritizes municipalities that reduce development charges by at least 30%. These measures are intended to make construction financially viable by lowering the expenses associated with roads, water systems and other services. However, their success ultimately depends on whether developers can obtain financing and attract enough buyers. Tax relief can improve affordability for qualifying purchases, but it cannot independently overcome weak demand, expensive construction materials or uncertainty about future property values.

Ontario’s Deficit Climbs to $16.9 Billion Despite Higher Revenue

The housing downgrade arrives alongside a substantial deterioration in Ontario’s provincial finances. Finance Minister Peter Bethlenfalvy’s March 2026 budget projected a deficit of $13.8 billion for the 2026–27 fiscal year. The October economic update increases that estimate to $16.9 billion, representing approximately $3.1 billion in additional red ink, or a deterioration of more than 22%. The province recorded an actual deficit of $13 billion in 2025–26, making the latest projection considerably larger than the previous year’s final result. Although the government continues to describe its financial approach as responsible and cautious, the revised figures demonstrate how quickly Ontario’s fiscal expectations have changed.

Interestingly, the larger deficit is not simply the result of falling government revenue. Ontario now expects to collect approximately $232.6 billion during 2026–27, about $2 billion more than forecast in March. However, total projected expenses have increased by roughly $4.4 billion to $247.3 billion, while the government’s fiscal reserve has also grown. Housing weakness is creating additional pressure in specific revenue categories. The latest update lowered its land transfer tax revenue projection by $497 million compared with its first-quarter financial update, primarily because of weaker-than-expected housing activity. That connection illustrates how a struggling property market can affect provincial finances even when other sources of tax revenue are performing better.

A Larger Contingency Fund Is Adding to Ontario’s Financial Pressure

A significant portion of Ontario’s worsening fiscal outlook reflects the government’s decision to prepare for unexpected economic challenges. The fall statement adds approximately $3.8 billion to the provincial Contingency Fund, bringing its available balance to $4.9 billion for 2026–27. The government says this additional funding provides flexibility to protect essential public services, respond to trade-related disruptions and manage potential compensation pressures. Separately, Ontario has increased its fiscal planning reserve from $1.5 billion to $2.2 billion. These are distinct financial provisions, and the additional contingency funding should not automatically be interpreted as money already spent on completed programs.

The distinction matters when evaluating the projected $16.9-billion deficit. Money set aside for uncertain circumstances can increase planned expenses even before the government determines exactly how much will ultimately be required. Some allocations are already identifiable, including the $293 million associated with the new-home affordability payment and another $100 million for emergency firefighting requirements. Other funds provide flexibility in case economic conditions deteriorate. For taxpayers, the question is whether these financial buffers will protect services and support employment without creating unnecessary long-term borrowing. The eventual deficit will depend partly on economic conditions, program spending and how much of the allocated contingency funding is actually used before the fiscal year ends.

U.S. Tariffs and Slower Economic Growth Are Complicating Ontario’s Plans

Ontario’s revised budget reflects an increasingly difficult economic environment for a province heavily exposed to manufacturing and cross-border trade. The government has reduced its 2026 real economic growth forecast from 1% to just 0.5%, while its 2027 projection has declined from 1.7% to 1.5%. Officials identify U.S. tariffs, international conflicts, energy-price pressures and uncertainty surrounding business investment as significant risks. These challenges extend beyond factories and export businesses. When employers become cautious about hiring or expanding operations, households may delay major purchases, including homes. Builders, in turn, can become reluctant to launch projects without clear evidence that demand will support future sales.

The government’s own economic scenarios demonstrate how much uncertainty remains. Under an alternative scenario involving the removal of most tariffs and countermeasures, Ontario’s economy could grow 2.2% in 2027. A slower-growth scenario involving a U.S. withdrawal from the Canada–United States–Mexico Agreement and continuing trade restrictions projects growth of only 0.5% that year. Neither scenario is a prediction that those trade-policy outcomes will occur. Rather, they illustrate the potential range of economic conditions facing the province. For Ontario’s housing industry, stronger employment and consumer confidence could help stimulate construction, while prolonged uncertainty could keep both prospective buyers and developers cautious.

Balanced Budget Pushed to 2029–30 as Debt Costs Continue Rising

The Ford government’s revised financial outlook now delays its anticipated return to a balanced budget until the 2029–30 fiscal year. Ontario had previously projected a $6.1-billion deficit in 2027–28, but that forecast has more than doubled to $12.7 billion. The province had also expected a modest $600-million surplus in 2028–29; it now anticipates a $6.7-billion deficit instead. Under the extended outlook, the government expects a small $200-million surplus in 2029–30. These changes represent another postponement of the province’s fiscal recovery, raising questions about whether economic conditions and government revenues will improve quickly enough to support the latest timetable.

Debt servicing is another growing consideration. Ontario expects to spend approximately $17.4 billion on interest and other debt-servicing charges in 2026–27. Its net debt-to-GDP ratio is projected at 37.4%, below the government’s 40% target, but the province is still carrying substantial borrowing obligations. The combination of larger deficits, weak housing construction and uncertain economic growth leaves limited room for further disappointment. Ultimately, the most important measure of progress will be whether Ontario can translate its housing incentives into additional construction while bringing expenses and revenues onto a more sustainable path. For residents, the stakes involve more than balanced budgets: they include housing availability, employment opportunities and the province’s ability to maintain essential services.

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