The housing industry knows this story all too well: prices are soaring and demand (until recently) has been relentless yet projects are stalling. The blame often falls on high land values or developer greed, but the real culprit is clear to anyone in the sector—it’s the staggering cost of delivering new homes.

The numbers are sobering. The Canada Mortgage and Housing Corporation (CMHC) says that we need to build 5.8 million new homes by 2030 to restore affordability to 2004 levels. If successful, that would mean that a newly built 1,000-square-foot, two-bedroom condo in downtown Vancouver would sell for $620,000 instead of the $1.5-million that it currently does. 

But here’s the reality: even if land were free and developers waived their profits, that condo would still cost more than $1-million to build. In Toronto, it’s a similar story, with hard costs alone pushing the price beyond $800,000.

By the numbers

Here’s how the numbers break down for that $1.5-million Vancouver condo:

• $294,000 (20 per cent) is for land acquisition
• $490,000 (32 per cent) is for hard costs (i.e. labour, building materials)
• $102,000 (7 per cent) is for soft costs (i.e. architectural designs, legal fees)
• $92,000 (6 per cent) is for marketing and realtor commissions
• $77,000 (5 per cent) is for finance charges and loan interest
• $267,000 (18 per cent) is for government taxes and fees
• $178,000 (12 per cent) is the gross profit margin required by banks to provide financing

(Numbers rounded for clarity)

Climbing costs lead to stalled projects

This isn’t news to anyone in the industry. What’s alarming is how quickly these costs are climbing, forcing projects to stall or fail altogether. In Vancouver and Surrey, B.C. alone, 58,000 homes are paused because the cost of delivering them exceeds what buyers can pay.

So, if the affordability crisis is really a cost-of-delivery crisis, what can be done? While macroeconomic factors like interest rates and global material costs are beyond our control, governments hold significant levers to reduce costs and unlock stalled projects.

Three areas of reform stand out:  

1. Reduce financing costs for housing projects

• Allow development cost charges (DCCs) and municipal levies to be paid at the end of a project, rather than upfront. This would reduce financing costs and free up critical capital.
• Exempt DCCs from GST/PST/HST and land transfer tax calculations—double taxation only inflates prices unnecessarily.
• Expand municipal surety bond programs to replace capital-intensive letters of credit, unlocking billions in tied-up equity.

2. Provide stability for developers 

• End the constant churn of new regulations. Introduce in-stream protections so projects already in process aren’t derailed by sudden policy changes or fee hikes.
• Expand the pre-sale period in British Columbia—currently, developers have only 12 months to meet pre-sale requirements for projects to move ahead, resulting in many projects not launching, or failing to meet requirements. This holds housing projects back that would otherwise be able to move forward 
• Establish a nationwide policy moratorium to provide the sector with a stable planning environment for the next five to 10 years.

3. Implement fairer ways to fund infrastructure and amenities

• Create a municipal services corporation for water and wastewater services so that regional districts can borrow and amortize infrastructure costs over time instead of relying solely on development cost charges.

While these changes require government leadership, the industry has a role to play. Developers need to speak with a unified voice, push for sensible reforms, and share the data that demonstrates the urgent need for change. Transparent conversations about what it actually takes to bring homes to market will help shift public perception and rebuild trust in the sector.

CMHC’s affordability target isn’t impossible—but it demands bold action. The time for incremental adjustments is over. If we want affordability to return to Canadian housing markets, we need governments and industry to tackle the true crisis: the soaring cost of delivering homes.

Canada’s once unstoppable population growth is finally tapping the brakes, and the ripple effects are beginning to surface—most notably in the country’s rental markets.

In a significant shift that could reshape the dynamics of Canada’s real estate landscape, the country has recorded the highest exodus of non-permanent residents (NPRs) since the Canada Mortgage and Housing Corporation (CMHC) began tracking this data in 2021. This exodus coincides with a marked softening of rental rates across various Canadian markets, hinting at a direct relationship between the two trends.

While the federal government recently committed to reducing population growth, available data suggests this decline may have already been underway before any official announcements. A recent report published on Valery.ca outlined how population growth could be predicted by rental inflation months in advance. 

Canada’s once unstoppable population growth is finally tapping the brakes, and the ripple effects are beginning to surface—most notably in the country’s rental markets. This plan includes the first-ever comprehensive strategy to manage not only permanent residents but also temporary ones.

Immigration targets in focus

As part of the new framework, the government aims to gradually reduce permanent resident targets from 500,000 in 2024 to 395,000 in 2025. The numbers will further decline to 380,000 in 2026 and 365,000 in 2027. This deliberate scaling back is expected to curb the intense demand for housing, especially rental units, which has surged in recent years due to high levels of immigration.

Temporary residents, including international students, foreign workers, and other NPR are also significant contributors to housing demand. While precise targets for temporary residents have not been disclosed, the government’s inclusion of this group in its planning signals a more controlled approach to overall population growth. Temporary residents often cluster in urban centres like Toronto, Vancouver, and Montréal, where they compete with locals for limited rental housing. Consequently, their departure is having a profound cooling effect on these overheated rental markets.

The link between population and rent inflation

The Bank of Canada has long highlighted the relationship between population growth and rent inflation. A booming population naturally amplifies housing demand, leading to rising rents, particularly in urban centres. However, recent data paints a different picture. As we enter 2025, several sources, including The Habistat and Rentals.ca, report a noticeable deceleration in rent inflation.

According to these reports, rental inflation is beginning to stabilize due to two key factors: slower population growth and increased rental supply. This shift marks a notable departure from previous years when double-digit rent hikes were common in major cities. CMHC’s Q4 report highlights this trend, with Toronto experiencing the lowest rent growth among major regions in 2024, at 2.7 per cent, down significantly from 8.8 per cent in 2023.


Interestingly, not all experts agree on the extent of this trend. Ben Myers of Bullpen Research, for example, has observed differing patterns in specific unit sizes, given the majority of new condominium supply is smaller. The prevalence of smaller units skews the average and median data down, but illustrates that units on a per-square-foot basis are not falling as sharply as the headline data might suggest: 

Source: Ben Myers, Bullpen Research

NPR departures and cooling rental markets

Once hailed as the eternal bull case for Canadian real estate, population growth seems to be grinding to a halt. In a surprising policy flip mentioned above, the liberal government took a populist approach after years of defending its position that its population growth strategy was sustainable. 

One of the most striking elements of this narrative is the synchronicity between the departure of NPRs and the cooling of Canada’s rental markets. NPRs, who typically contribute significantly to demand for rental housing, are leaving in record numbers, reducing upward pressure on rents. This shift has provided much-needed relief for tenants, but it also raises critical questions about the future of Canada’s housing market.

For example, a significant drop in NPR numbers could lead to prolonged stagnation in rental demand, especially in urban centres that have historically relied on this demographic to absorb new rental supply. Compounding this, some of these markets are experiencing record supply. This could also challenge landlords who are already grappling with high borrowing costs and reduced cash flow, forcing some to sell or convert their properties to owner-occupied units.

What lies ahead for Canada’s housing market

As Canada navigates a new era of housing and immigration policy, finding a balance between managing population growth and sustaining economic vitality will be critical. The ongoing decline in this demographic could have ripple effects beyond the housing market, potentially slowing growth in key sectors like retail, hospitality, and education. Canada’s GDP grew substantially from record population growth in the last few years while sacrificing per capita GDP. Now, we can see the opposite impact occurring as population growth slows in the absence of economic growth—GDP could fall, putting Canada clearly in a recession in 2025.  

At the same time, this transition offers an opportunity to reassess Canada’s housing priorities. By incentivizing the development of affordable housing, supporting renters, and expanding homeownership opportunities, policymakers can address the challenges posed by a slower-growing population. Proactive adjustments to housing policy, paired with a measured approach to immigration, could mitigate affordability issues while fostering sustainable development. The unfortunate part about all of this is that it sounds great in theory, but the reality is that it’s a painful process to get to. 

Much like a construction project, you have to demolish a derelict building before you can create a new one on a new foundation. The demolition process is necessary, but not pretty. 

That’s the phase of the process we’re in now. We’re not rebuilding yet. We’re just realizing that what we built before wasn’t working – and we’re doing something about it. The decisions made today will shape the future of Canada’s real estate market for years to come.

Canada’s real estate market is poised for a strong comeback in 2025, with activity expected to pick up as early as March, according to online brokerage Zoocasa. 

Lauren Haw, broker of record and industry relations officer at Zoocasa, highlights several key factors in a recent report, including stabilizing interest rates, the return of sidelined buyers and a potential boost in inventory.

“Next year, Canadians can anticipate a lively spring market kicking off as early as March,” Haw explains. “With interest rates stabilizing and strong pent-up demand among buyers, we’re likely to see a return to a more traditional spring surge in real estate activity.”

This resurgence comes after an uneventful 2024 spring market, where sales remained subdued despite an increase in listings. Zoocasa predicts that heightened buyer activity will also encourage more sellers to list their properties

Mortgage renewals may prompt downsizing

Zoocasa projects a wave of mortgage renewals in 2025 will contribute to the influx in listings. Haw suggests a “wave” of renewals is likely to push some homeowners to downsize. 

According to CMHC, approximately 1.2 million mortgages will come up for renewal next year, with many homeowners transitioning from historically low rates secured in 2020-2021 to rates above 3 per cent. 

This influx of listings would help feed buyer demand, particularly in major markets like Toronto and Vancouver, where conditions have recently shifted in favour of buyers.

Buyer competition expected to increase

As interest rates stabilize, Zoocasa anticipates a renewed sense of urgency among buyers, particularly in the first half of 2025 With rates now hovering around 3.75 per cent and potentially dropping further, buyers may act quickly to secure properties before prices increase.

“First-time buyers and end-users will drive next year’s sales,” says Haw, who predicts the potential return of “FOMO” to the housing market. 

Investor challenges persist

The condo market will likely remain challenging for investors in 2025, according to Zoocasa’s analysis. High borrowing costs and lagging profitability have already prompted a rise in listings, and this trend is expected to continue.

“Investors will continue to have a lot of supply as multi-residential mortgage renewal rates push many condos and multiplexes underwater,” says Haw. “At the same time, the challenges of making land investments financially viable continue to discourage new development.”

Recent data reflects these struggles. In Q3 2024, new condo sales in the GTA and Hamilton Area dropped 81% year-over-year, marking the lowest quarterly total since Q1 1995, according to Urbanation. Meanwhile, ownership costs for condos have risen by nearly 60% since 2020, while rental income growth has lagged significantly behind.

The Canada Mortgage and Housing Corporation (CMHC) mortgage loan insurance program is a government-backed initiative that allows homebuyers to purchase properties with less than a 20 per cent down payment. 

Initially designed to help Canadians without significant savings enter the housing market, CMHC insurance has since become the single greatest catalyst of real estate demand in the federal government’s arsenal. 

Perhaps unsurprisingly then, as this dying government seeks any avenue to revive its political fortunes in advance of next year’s election, CMHC has recently announced that it is increasing its coverage on homes from $1-million to $1.5-million to permit for “greater affordability.”  However, our collective fiscal interests demand the opposite: CMHC insurance should be gradually phased out.

“Over the past 40 years, its effect on the market has been disastrous; incomes have become seriously misaligned from today’s house prices.” 

The dynamics of Canadian housing boil down to basic Economics 101: supply and demand. The more demand there is for homes, the more the price goes up but, critically and somewhat un-intuitively in this case, the demand in question is borne of monetary availability and not people. 

During the pandemic, the government increased the monetary supply by 25 per cent in a single year. That was what fuelled runaway housing prices; with more money in hand, even with roughly the same number of people, more houses were purchased than ever before. When quantitative tightening took place in the years following the pandemic, demand fell.

CMHC insurance functions as a form of monetary stimulus, artificially inflating housing demand.  Over the past 40 years, its effect on the market has been disastrous; incomes have become seriously misaligned from today’s house prices. 

The result is clear; young people cannot afford homes and the dream of home ownership is a reality now restricted to those 75 years and older. Meanwhile, those who are fortunate enough to afford CMHC-insured mortgages often face crushing debt burdens that deprive them and their young families of savings, life experiences and the superior quality of life that Canadians have enjoyed in the past.

Canadian housing prices are past a pivotal point and it is time we addressed the source of the contagion in a head-on, direct manner. Reducing CMHC insurance availability will impact the buying abilities of Canadians but, if we are honest with one another, we are at a point where the average person cannot afford homes even with that assistance. 

The average home price in Toronto is more than $1.1-million. To afford a property in that price range, a person requires $263,300 in gross income and, within such a pricing matrix, CMHC has seen its role reversed from the great enabler of home ownership to the source of pain for most Canadians whose housing markets CMHC infused-pricing pushes ever higher with every passing year.

“We need to gradually phase out CMHC insurance and, in the process, lessen the monetary demand for housing.”

It’s time to confront this issue directly. We need to gradually phase out CMHC insurance and, in the process, lessen the monetary demand for housing. Over time, this correction would restore the long-term balance between incomes and house prices, making homeownership attainable again for the average Canadian.

Though once borne of good intentions, CMHC is now hurting our markets, our youth and our collective future. We owe it to the next generation to chart a new course. The elimination of CMHC insurance must become a priority for the next federal government. It’s time to pull the trigger on reform and rebuild a housing market that serves Canadians.

Canadian housing starts jumped 8 per cent in October, due largely in part to increases in the multi-family sector and single-detached, according to the national housing agency.

Canada Mortgage Housing Corporation (CMHC) says the seasonally adjusted rate of housing starts in October was 240,761 units, up from 223,391 in September.

The multi-family sector was behind the gain, with urban starts up 7 per cent month-over-month to nearly 176,000 units, while single-detached urban starts increased 1 per cent, to 47,406 units.

GTA presales remain “exceedingly weak” 

“Even with October’s gain, the outlook for housing starts remains soft,” Rishi Sondhi, economist, TD Economics, writes. “This is largely due to the outsized weakness expected for Ontario, which will bring down the national figures. We’d note that over the last 12 months, starts have tumbled to levels last seen in 2020 in Ontario.”

Sondhi explains presales remain “exceedingly weak” in the Greater Toronto Area, with more of the same expected in 2025. “This is the key factor underpinning our forecast that starts will decline next year, even with homebuilding likely to hold up better in other parts of the country.”    

“Despite these results, we remain well below what is required to restore affordability in Canada’s urban centres,” Bob Dugan, CMHC 

The six-month trend in housing starts was flat in October at 243,522 units. 

“Actual year-to-date housing starts are similar to last year, but we continue to see higher activity in the Prairie provinces, Quebec and the Atlantic provinces, while Ontario and British Columbia have seen declines in all housing types,” explains Bob Dugan, CMHC chief economist, in a press release.

“The increases in the monthly SAAR in Toronto and Vancouver are a promising sign for Ontario and British Columbia, as they drove the national SAAR increase in October,” Dugan adds. “Despite these results, we remain well below what is required to restore affordability in Canada’s urban centres.” 

The 7.7 per cent month-over-month increase in home sales activity is a striking development, especially considering the more modest gains of 1.9 and 1.3 per cent in September and August, respectively.

This surge in activity presents a complex landscape with both opportunities and challenges for buyers, sellers and real estate professionals. While we’re seeing a significant increase in demand (measured by sales) we’ve also observed an equally large jump in supply (measured by new listings).

For sellers, this surge in activity is undoubtedly positive news. The increased demand could lead to quicker sales and price growth in the absence of supply. However, the opposite could be true, if a “pent-up supply” scenario is pending among CMHC’s recent reports that mortgage delinquencies will be rising in most cities across Canada.

Real estate professionals may also benefit from this uptick, with more transactions likely leading to increased commissions and business opportunities.

However, buyers face a more challenging landscape. While lower interest rates have improved affordability, the sudden increase in market activity could lead to increased competition and diminishing affordability. 

Against the backdrop of rising unemployment, the market may be quick to exhaust any potential gains from cheaper interest rates, 30-year amortizations and $1.5-million insured mortgages coming in December. This situation underscores the importance of being well-prepared and acting decisively in a more active market.

Supply and demand balance

This balanced growth in both supply and demand has caused the market to present in a somewhat unpredictable fashion. We have a sales-to-new-listings ratio rising rapidly, and months of inventory falling to levels not seen since summer 2023.

The interplay between supply and demand is crucial in understanding the market’s direction. Despite the 3.5 per cent month-over-month decline in new listings in October, the quarterly trend is up, and the number of active listings remains 11.4 per cent higher than last year. This increase in supply is a positive factor for buyers, offering more choices and potentially tempering price growth.

The tightening of the sales-to-new listings ratio to 58 per cent indicates a shift towards a more balanced market. This equilibrium could benefit both buyers and sellers, creating a more stable environment for transactions. However, with inventory levels at 3.7 months—the lowest in over a year and approaching seller’s market territory—we may see upward pressure on prices if this trend continues into the spring market.

Price trends and regional variations

The national average home price of $696,166 in October, up 6 per cent year-over-year, reflects a market that is gaining momentum but not overheating. The marginal 0.1 per cent month-over-month decrease in the MLS Home Price Index suggests stability, which can be reassuring for buyers and sellers. The market has been basically trading sideways and grinding down slightly since the big drop after rate hiking started.

Economic implications and future outlook

The real estate market’s performance is closely tied to broader economic factors. The series of interest rate cuts by the Bank of Canada, totalling 125 basis points, has played a significant role in stimulating market activity. 

This monetary policy approach aims to support economic growth, but it also raises questions about long-term inflation and housing affordability. At this point, unemployment is a greater risk to the housing market than mortgage renewals, according to RBC’s recent analysis.

Looking ahead, CREA Senior Economist Shaun Cathcart suggests that the October numbers might be a preview of what to expect in 2025. With mortgage rates potentially reaching their expected lows next spring, we could see sustained market activity. However, this projection comes with caveats:

• Supply constraints: The availability of new listings will be crucial in maintaining market momentum. A lack of supply could lead to price increases and affordability issues.
• Economic uncertainty: Factors such as employment rates, inflation and overall economic growth will continue to influence the housing market.
• Regional disparities: The varying performances across different regions of Canada highlight the need for localized strategies and policies.

For buyers, the current market presents a mixed picture. While increased activity might mean more competition, the still-elevated supply levels and potential for further interest rate cuts offer opportunities. Buyers should be prepared to act quickly but also remain cautious about overpaying in a potentially heating market.

Sellers are in a favourable position, with increased demand and stable prices. However, they should be mindful of supply trends, especially ahead of a year with a record number of mortgages renewing at higher interest rates – there is a real potential for pent-up supply to hit the market, increasing competition swiftly.

A newly designated provincial flood zone in Quebec has sparked concerns and anger across the real estate industry.

The Quebec Professional Association of Real Estate Brokers (QPAREB) says the new zone affects 77,000 properties potentially impacting property values, complicating insurance coverage and destabilizing the market.

“We applaud the government for seeking to implement long-term solutions to counter the very real impacts of climate change,” says Nathalie Begin, president of QPAREB’s Brokerage Practices Committee. 

“However, it is crucial that mitigation and supportive measures be developed to support homeowners affected by the new mapping and to preserve property market stability. The government can continue to count on our complete cooperation in this regard.”

Frustration and anger among Quebecers 

Begin notes the expansion of the map is causing frustration. “A lot of people in the province are pissed off because we had a map before but they’ve added a lot more properties on the new map,” she explains

“Most of the people now in the flood zone it’s their only asset in life,” she said. “A lot of people have been living (in their homes) for a long time. For now, the problem is, because the map is already out, all the insurance companies, (and) the lenders will decide if they want to put some insurance or accept a mortgage on a house, they are looking at this map.

According to Begin, the lack of clarity from lenders and insurers has stalled some transactions. “We don’t have any news about what the lenders are going to do, what the insurers are going to do and we don’t have any programs by the government that’s going to help those people.”

In Sainte-Marthe-sur-le-Lac, Begin notes “almost all the properties are now in the flood zone. People over there are crying because they don’t know what they’re going to do.”

QPAREB’s recommendations

QPAREB has submitted a brief to the public consultation on modernizing the province’s regulatory framework for water environments and flood-prone areas. 

The brief indicates that the new flood zone now covers 55,000 more properties than previously.  

The association is recommending the government implement mitigation measures to relieve the already shaky real estate market and help Quebec homeowners affected by the regulatory framework.  

“This loss of property value will clearly have an impact on the tax revenues of municipalities, which are already facing serious financial difficulties. This is a major issue, since the estimated total value of properties in flood-prone areas under the new mapping is around $18.4 billion,” according to QPAREB.

 “Moreover, owners of homes in the zones newly identified as flood-prone could have serious difficulty should they wish to sell their property. The perception that a flood risk exists, even if this is considered a low-recurrence possibility, can be enough to dissuade potential buyers.”

Recommendations and measures proposed by QPAREB include:

• The Quebec government should establish financial assistance programs to support affected homeowners.
• Financial institutions and insurers should publicly disclose their policies regarding properties in flood-prone zones.
• The government should implement a “resilience certification” program, as suggested by Professor Michel Leclerc of the Institut national de la recherche scientifique, to recognize properties that have been retrofitted for flood protection.
• A public awareness campaign is needed to clearly communicate the impacts of the new regulations to affected residents.

National perspective on climate resiliency and property values

Pierre Leduc, spokesperson for the Canadian Real Estate Association (CREA), shared that CREA is gathering data to evaluate the impact of labelling properties in high-risk zones. “CREA fully recognizes that extreme weather events are happening around the country that are having a direct impact on housing and continues to support efforts to address climate resiliency of Canadian homes,” he wrote in an email statement.

Leduc says CREA collaborated with Natural Resources Canada on “A Homeowner’s Guide to Energy Efficiency,” which aims to inform buyers and sellers about energy-efficient upgrades to make homes more resilient.

“Moreover, CREA is in the process of developing a ‘green’ designation for Realtors which will allow Realtors to better assist their clients (in recognizing) home improvements that make their homes resilient to extreme weather events and more energy efficient.”

In an email, Canada Mortgage and Housing Corporation said it “undertakes and supports research that deepens our understanding of challenges such as extreme weather events and adapting to climate-related risks in the future.”

In an email, Canada Mortgage and Housing Corporation (CMHC) stated it supports research on challenges such as extreme weather and climate adaptation.

 A CMHC study, conducted with the Intact Centre for Climate Adaptation and the University of Waterloo, explored the impacts of catastrophic flooding in Canadian cities including Grand Forks, Burlington, Toronto, Ottawa, and Gatineau. Findings showed that catastrophic flooding led to:

• An 8.2 per cent reduction in the final selling price of homes,
• A 19.8 per cent increase in time on market,
• A 44.3 per cent reduction in the number of houses listed for sale.

Challenges with real estate data on flooding 

Alan Tennant, CEO of the Calgary Real Estate Board, cited the lack of current, credible data as a major hurdle, and noted the flood that devastated Calgary in 2013. 

“We’ve had a huge desire to have maps of that nature and frankly crime statistics and traffic volumes. Those kinds of things are important bits of data that our members are thirsty for because their clients want them.,” Tennant explains. “But it’s getting that credible source that keeps them current and a lot of government agencies aren’t equipped to do that,”

Tennant said a common question is what impact the big flood has had on real estate in the city but there really isn’t any great data on that.

“Most of the time it’s sort of anecdotal,” he said.

The Canada Mortgage and Housing Corporation (CMHC) recently reported that Ottawa’s “population-adjusted construction is at its lowest level in nearly 10 years.” A City of Ottawa progress report shows that Ottawa is only at 22 per cent of its annual housing target at the end of August.  

The Ottawa Real Estate Board (OREB) reported a healthy increase in home sales for September, with 1,047 units — a rise of 11.4 per cent from the same time in 2023. However, sales remain below historical averages, coming in 17.4 per cent below the five-year average and 15.4 per cent below the 10-year average for September.

Year-to-date, home sales reached 10,485 units, representing a 6.4 per cent increase compared to September 2023.

Healthy fall outlook with chronic supply issue — ‘not building enough of the right homes to address the ‘missing middle’’

“As we navigate a shifting housing market, Ottawa’s fall outlook is healthy,” says OREB president Curtis Fillier. “Activity is robust with an uptick in sales and prices remaining steady. Meanwhile, both buyers and sellers are rethinking their purchasing power amid news about additional interest rate cuts on the horizon, longer amortizations and increased price caps for insured mortgages.”

Fillier goes on to explain that recent policy developments to stimulate demand have been encouraging, though the Ottawa market doesn’t typically experience issues with demand. Rather, “We have chronic supply issues,” he notes. “We’re not building enough homes in the city, and we’re not building enough of the right homes to address the ‘missing middle.’”  

Price trends

The overall MLS Home Price Index (HPI) composite benchmark price for September was $642,800, a slight increase of 0.2 per cent from September 2023.

Single-family homes saw a benchmark price of $729,000, up 0.5 per cent year-over-year, townhouses/row units experienced a 1.7 per cent decline with a benchmark price of $500,000 and apartments had a benchmark price of $414,200, down 1.3 per cent year-over-year.

Inventory and new listings

September’s new listings totalled 2,343 units, a 3.9 per cent increase from the year prior. This was 4.7 per cent above the five-year average and 11.6 per cent higher than the 10-year average.

Active listings rose to 3,529 units, marking a 16.9 per cent year-over-year increase and sitting 43.3 per cent above the five-year average. Months of inventory rose slightly to 3.4 months, up from 3.2 months in September 2023, indicating a slightly more balanced market.

Review the full report here.

There’s speculation that Canada’s housing market is headed in a direction that will land us in a foul-up similar to much of Europe, with housing prices so out of reach that many people will never be able to afford a home unless they inherit one.

In a country like ours, recognized globally for its opportunities, this harsh forecast comes as a shock. But experts aren’t denying that it’s a possibility.

The housing supply crisis’ magnitude

“It’s a valid question,” says Kevin Hughes, deputy chief economist with the Canada Mortgage and Housing Corporation (CMHC). “Housing affordability and the housing crisis have been in the news for several years now.”

To get an idea of the magnitude of the housing supply crisis, CMHC recently updated its Supply Gaps Estimate report in hopes of determining how many housing units beyond current trends would need to be built between now and 2030 to restore affordability. The number CMHC came up with is 3.5 million.

“That’s a lot,” Hughes stresses. “I’m not saying it’s a realistic goal. But it’s what we’re looking at.”

It would in fact be an unprecedented boost in construction, which would come at what many consider an unacceptable societal cost, majorly stressing the system and creating countless spin-off issues around infrastructure, traffic and the environment.  “We can’t look at housing in isolation of these other factors,” Hughes asserts.   

What’s realistic?

Reading between the lines, such an extreme level of supply may very well not be achievable, despite ongoing government initiatives at all levels, including the recent federal budget, which lays out a plan to unlock 3.87 million new homes by 2031. 

According to the CMHC report, Ontario and British Columbia continue to be Canada’s least affordable housing markets, with the lion’s share of the housing supply gap. As financial pressure mounts for Canadian households in large centres battling high prices and insufficient supply, “more people get priced out and move elsewhere,” notes Hughes.

Increased population density is another path forward for cities in this situation, he explains. 

“There are roughly 4,000 people per square kilometre in Montreal, and Toronto is about the same. That can go up to 7,000 and above in some centres in Europe. The starkest comparison is Paris, where there are 20,000 people per square kilometre.”

Yowza. No wonder France is experiencing a major lack of housing supply.

Similar trends around the globe

In cities worldwide with similar issues around population and housing shortages, experts have observed that there tend to be:

• greater numbers of compact housing units being built,
• more focus on public transit over cars in the downtown core,
• increased cohabitation and communal living,
• more people commuting greater distances,
• a significant percentage of young people living at home who’d normally have moved out and
• mortgages being held for longer periods, even well past retirement.

All of these things are happening to some extent in Toronto, Vancouver and Canada’s other large, busy cities.

“We’re already seeing density increasing,” Hughes affirms.

Many possible future paths — including those like Europe’s

The True-North-strong-and-free is shifting to a new normal. Take the example of commuting. “Before, no one would travel an hour to get to work. Now no one gives it a second thought,” Hughes points out. “What people think of as ‘normal’ changes. When we think we’ve reached the limit, we realize we haven’t.” 

He continues: “The future in Canada will likely be a mixture. We’ll see more supply, more density and more people moving elsewhere. The variables aren’t mutually exclusive. It’s never all or nothing. It could go many ways with many variables. Nothing is inevitable and none of this will happen overnight. There are many possible paths.”

So yes, it seems that watching our housing market become more like Europe’s may be among these. 

“I’ve heard that,” confirms Valerie Dooley, a sales rep with Forest Hill Real Estate in Toronto who’s lived in Europe. “Multigenerational living is common in countries like Italy,“ she adds. “I think we’re starting to move more in the same direction.”

Another outlook

Despite perceptions to the contrary, Re/Max Canada president Christopher Alexander states that homeownership rates throughout much of Europe remain high, “upwards of 70 per cent in places like Malta, Estonia, Hungary and more.” (At the time of the last census in 2021, Canada’s homeownership rate sat slightly beneath that, at 66.5 per cent — a 20-year low.) 

Alexander insists that Canada still has a lot of affordable markets. “Many people tend to make affordability comparisons to our most expensive and sought-after cities when it’s not realistic for first-time homebuyers to expect to buy their dream homes at their first purchase,” he points out.

The best advice he can give homeowners, he says, is to get into the market within their means and start building equity. “That’s a surefire way to be able to eventually afford the home you want in the city you want.”

And in case of any lingering doubt, Alexander asserts that real estate in Canada continues to be a good investment.

“Canada is aggressively trying to build more homes and create greater affordability. I’m confident that homeownership will be in reach for most people for years to come.”

The BC Real Estate Association (BCREA) and the Canadian Mortgage Brokers Association — British Columbia (CMBA-BC) are asking the B.C. Government to amend and refine recent changes to the Residential Tenancy Act (RTA).

Changes laid out in Bill 14, which amends the RTA and is intended to protect residential tenants from tenancies terminated in bad faith, came into effect on July 18, 2024.

Inadequate consultation; changes could worsen instead of alleviate tenant & housing issues

Trevor Hargreaves, senior vice president of government relations, marketing & communications, BCREA, explains: “We appreciate the efforts to protect tenants from bad-faith evictions and the need to provide more rental supply but are concerned the policy changes appear to have been crafted without adequate consultation with related sectors in terms of the multitude of related issues they will cause. These changes are inadvertently making it more difficult for all buyers, but especially first-time buyers, many of whom are currently tenants, to enter the housing market.”

Rebecca Casey, president, CMBA-BC, agrees: “We appreciate the B.C. Ministry of Housing’s commitment to addressing housing challenges and protecting tenants’ rights. However, while we await accommodations or changes to the Act, we are concerned that these amendments will worsen these issues rather than alleviate them, potentially compromising the stability and affordability for current and prospective tenants and home purchasers.”

Both organizations published open letters outlining concerns about unintended consequences and the high likelihood that the changes will negatively impact homebuyers, rental-property owners and tenants in the province. The letters note points of confusion that will create difficulties when the rules are used in transactions.

BCREA’s concerns

These are the main concerns BCREA noted in its letter to government:

1. The new requirement of providing four months’ notice – instead of the previous two months’ notice – for evictions due to personal or caretaker use is posing a major hurdle. While this is a problem for all buyers, it’s particularly problematic for high-ratio buyers, including first-time buyers, who generally need mortgage default insurance to secure their financing.

2. The new legislation makes no distinction between a buyer of a tenanted unit who just wants to move into their new home and a landlord who might be using a bad-faith eviction as a tool to raise rents beyond the allowable limit.

3. Combining a four-month eviction notice with a 30-day dispute notice produces an effective five-month period in which a buyer can’t take possession of their new home. This is impractical for buyers moving from one home to another and is too long a period to wait between completions.

4. Without default mortgage insurance, lenders require a minimum down payment of 20 per cent for rental properties. First-time buyers typically do not have the financial capacity for such a significant down payment. Furthermore, a default-insured mortgage holder must receive vacant possession to qualify for a default-insured mortgage and cannot close on a purchase where the former tenant has not vacated the home.

5. A home must be owner-occupied to be eligible for homeowner insurance and also for mortgage insurance from Canada’s largest providers of mortgage insurance, including Canada Mortgage and Housing Corporation (CMHC).

6. Using a new web portal, landlords will be required to provide personal and confidential details about the persons moving into the home, which will then be shared with the tenant. This new requirement is raising serious implications for the privacy and security of owners.

CMBA-BC’s added concerns

CMBA-BC added input around the mortgage approvals timeline, increased financing risks and legal and liability concerns.

1. The four-month notice period creates a misalignment with the typical 90 to 120-day rate hold period for mortgage approvals. Buyers, especially those with less than 20 per cent down payment, may face significant challenges in coordinating the vacancy of the property with their mortgage approval timeline, potentially leading to funding denials or increased costs for buyers. These changes will impact first-time homebuyers the most as these are the most typical buyers of previous rental properties.

2. Buyers may be forced to remove financing conditions from their offers without a guaranteed mortgage approval due to the extended notice period. This leaves them vulnerable to interest rate fluctuations and other factors that could impact their ability to qualify for the mortgage, heightening their financial risk.

3. The new timeline could increase the risk of purchase contract cancellations, as buyers may struggle to secure financing within the extended period. This could lead to legal disputes or lawsuits, adding stress and financial risk for all parties involved.

Recommendations for government

Due to these and other concerns, the organizations recommend the following to the provincial government:

1. Adjust the notice rules for conventional mortgage buyers to allow for vacant possession within no longer than a three-month time period.

2. Allow high ratio insured buyers (including first-time buyers) who will be occupying the property to continue to have a two-month notice period because of the financial hardship caused by a longer delay in them taking possession of their property, and the likelihood of them running afoul of financing restrictions.

3. Require that the privacy of new buyers be protected. Use existing, publicly accessible systems as the source of information on new buyers to be reported by landlords to former tenants. Contracts of Purchase and Sale are confidential documents and should not be shared with tenants. A standard Statutory Declaration form should be developed to carry out any necessary disclosures.

4. Eliminate the reporting requirement for buyers who intend to occupy their own units. The buyer’s intent could be documented by use of a Statutory Declaration or as part of the Property Transfer Tax return process. An early sale of the unit could be tracked through the Land Titles or B.C. Assessment systems.

BCREA also reiterated its past call for the B.C. Government to create a permanent housing roundtable comprised of housing policy experts and other representatives from organizations across the housing sector in B.C. The association said that this type of group would be able to provide early advice to government in the creation of new or updated housing policy, such as changes to the RTA.