Canada’s residential land market has suffered a dramatic collapse over the past two and a half years, with undeveloped land prices down 40 to 50 percent from their peaks, according to Aaron Ulinder, Partner and Executive Vice President at Lennard Commercial Realty in Vancouver.
“Land has been hit the hardest, so undeveloped land, and we’ve seen lots of foreclosures pushing values down by 40 or 50 percent off the all-time highs,” Ulinder says. “Major residential developers won’t bid on land unless the pricing is rock bottom.”
Immigration Policy Shock
Ulinder attributes this steep decline primarily to the federal government’s reversal of immigration policy, rather than to interest rates or construction costs. “Canada’s got this push against immigration right now, specifically geared towards international students,” he explains.
The shift has been abrupt. Under previous federal policies, immigration numbers surged, driving demand for housing. Now, with new restrictions in place, the flow has slowed sharply. “If you take out hundreds of thousands of inbound immigrants into a country that’s only got 40 million, it has a material impact,” Ulinder says.
Developers who bought land based on earlier, higher demand projections are facing immediate losses. “Imagine you’re a landowner who bought based on previous valuations, took on debt, and now your loan is coming due or you want to sell, but no developer wants it because the economics don’t pencil out,” Ulinder says.
Development Economics N,o Longer Work
Even as demand has dropped, other costs have not. “We’re seeing prices still quite high for labor and construction materials, and unless the land is almost at zero, a lot of these developers can’t make it work,” Ulinder explains.
As a result, landowners who need to sell cannot find buyers willing to pay enough to cover existing debts. This has led to a wave of foreclosures, further driving down values and reinforcing the market’s downward spiral.
Ulinder points to a core vulnerability in Canada’s real estate market: its heavy reliance on immigration-driven demand. When government policy can rapidly add or remove hundreds of thousands of potential residents, asset values tied to long-term housing demand become highly volatile and challenging for developers to protect against.
Distressed Asset Buyers Step In
The collapse has created opportunities for well-capitalized investors. Ulinder says most recent transactions have involved “distressed assets through foreclosures. Those who have the capital are the ones who are active in this market right now.”
This has created a secondary market in which investors buy foreclosed land at steep discounts, potentially betting on future policy reversals or long-term market recovery. For current landowners, however, losses are immediate and substantial.
Wider Market Downturn
The land crisis is part of a broader decline across Canadian real estate. “The market has been on a downward trajectory across all sectors for the past two and a half years,” Ulinder says, citing global economic uncertainty, geopolitical instability, and tariffs as additional pressures.
Multifamily properties have also seen declines, though less severe than land. “Multifamily transaction volume is probably down by 50% from the average numbers, and pricing is off by 25 to 35%,” Ulinder notes. Unlike land, many multifamily owners are opting to hold rather than sell at reduced prices. “Those buildings are still cash flowing. Yes, pricing has come down, but many investors simply won’t sell. They’ll ride the cash flow.”
This difference is crucial: land generates no income, so owners are more exposed when debt comes due, and values have dropped. Income-producing properties give owners the option to wait out the downturn.
What Comes Next
The outlook for Canada’s land market will largely depend on factors beyond traditional real estate fundamentals. Future immigration policy, political decisions, and government housing strategies will determine whether demand returns to levels that can support new development.
For now, Ulinder says, the market is stuck. “Developers won’t bid unless land reaches near-zero pricing, and landowners face an increasingly difficult choice between accepting catastrophic losses or risking foreclosure.” The fate of Canada’s land market now hinges on policy decisions that could restore or further erode the economics of residential development.
