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Affordability, availability, downpayments, and OSFI stress test remain primary roadblock

TORONTO , Feb. 11, 2025 /CNW/ -- First-time homebuyers throughout the country are facing some of the most challenging obstacles to home ownership in decades, due to the convergence of factors that have deepened Canada's housing crisis, driven down home-ownership rates, and locked a growing number of would-be buyers into the rental market, according to a report released today by RE/MAXCanada.

RE/MAX Canada'sNation of Renters Report examines how price appreciation, rapid population growth, and a limited supply of affordable housing stock have propelled rental markets in six major Canadian cities in recent years. The erosion in affordability–exacerbated by the Office of the Superintendent of Financial Institutions (OSFI) stress test, downpayment requirements, municipal/provincial taxes and closing costs–along with a lack of affordable housing stock, and an obvious disconnect between homebuilders, buyers and municipalities, has brought the country to a breaking point.

"Affordability remains, by far, the greatest barrier to home ownership from coast to coast," says RE/MAX Canada President Christopher Alexander. "With the average price of a home in most Canadian markets more than doubling between 2006 and 2021, first-time buyers are falling through the cracks. Rental rates that remain above historic levels, the high cost of living, and wages that have not kept pace with price growth pose a serious challenge to buyers hoping to amass a downpayment. It's near impossible for some buyers, even with steady, well-paying jobs. The dream of home ownership is eroding further and faster than their ability to save."

Adding insult to injury, the fallout from the U.S. Tariff announcement last month has served to somewhat destabilize the Canadian economy, explains Alexander. Although a 30-day reprieve has since been negotiated, the move has created economic uncertainty in most markets, particularly in Ontario and Quebec, given their close trade ties with the U.S. If the tariffs come to fruition, economists believe the country could enter a recession.

The Supply Shortage

Housing supply shortages have also been responsible for rising prices. Construction of affordable housing stock has seriously lagged over the past two decades, according to the Social Housing Supply Mix Strategy 4A Report by Toronto Metropolitan University, City Building, University of Toronto, and School of Cities. The country was able to build 45,000 federally assisted affordable units in 1971, but it took almost 25 years to build the same number of properties between 1995 to 2019.

Builders and developers are eager to get shovels in the ground, but projects need to be financially viable to proceed. Constraints include high land costs and development fees, zoning restrictions, lengthy approval processes and other red tape. Beyond that, there is a disconnect between what is being built and buyers' needs, with smaller units overwhelming the market when more spacious "missing middle" product is desperately needed to support urban family living. Municipal, provincial and federal governments must move quickly to revise their housing plans, which have long focused on greater density to ensure that the new housing mix matches the needs of residents. Policy shifts and zoning reforms will be necessary to support density and intensification goals.

Hefty Development Charges

Development costs and municipal charges also need to be addressed in major urban centres including Toronto, where they have risen to their highest level on record, to $189,325 per low-rise unit in 2022, up 21 per cent over 2020 levels, according to the Canada Home Builders Association Municipal Benchmarking Study, prepared by Altus Group in October of 2022.Hamilton, with the second-highest municipal charge per unit of $61,431, was up a substantial 49 per cent over 2020 levels, followed by Vancouver at $61,414, which increased 29 per cent. Ottawa rose 11 per cent to $46,320, while Calgary jumped 15 per cent during the same period, climbing to $42,800. Halifax had much lower municipal charges per unit, at $9,629, but that was still up 41 per cent from 2020, when it was just $6,823.

Unprecedented Population Growth

With the nation's chronic housing crisis, the issue of supply and demand as well as rising housing values are unlikely to improve. In fact, population growth has both underscored and exacerbated the undersupply of housing in Canada's major cities. Looking forward, serious housing gaps exist in relation to projected population growth. While Canada has eased immigration levels, the significant shortfall in housing is expected to persist.

Over the 15-year period between 2006 and 2021, Statistics Canada reported in its Annual Demographic Estimates that the country's population climbed by 17.4 per cent, adding another 5,668,671 residents. The Calgary CMA reported the greatest growth in population during the same period, rising by 36.8 per cent (414,693), followed by Vancouver at 26.5 per cent (581,381), Ontario'sOttawa-Gatineau region at 26 per cent (244,058), Toronto at 21.3 per cent (1,136,564), Halifax at 18.2 per cent (74,369) and Hamilton at 13.6 per cent (98,138).

"If you factor in the accelerated growth that occurred between 2021 and 2024, when further double-digit increases were recorded in Vancouver (+12.2%), Calgary (+15.5%), Ottawa (+8.7%), Toronto (+9.8%), Hamilton (+5.2%) and Halifax (+10%), the strain on the Canadian housing market is palpable, and the pressure is not expected to ease. Statistics Canada's medium growth (M1) projections predict the population could reach close to 52.5 million by 2050," says Alexander.

The Buy or Rent Debate

Those hoping to enter the housing market for the first time have been caught in the middle, unable to afford to buy, as they continue to rent at rates that are on par with mortgage carrying cost in many cities.

According to Ratehub.ca, the cost of carrying a $600,000 unit in the Greater Toronto Area would be approximately $2,665 monthly, based on a 10-per-cent downpayment of $60,000 with a five-year fixed rate of 4.1 per cent and a 30-year amortization period–only slightly higher than the average cost to rent a one-bedroom apartment in Toronto.

Demand for rental units accelerated between 2022 and 2024, amid housing supply challenges and as purchase prices surged. The result was tight rental market conditions, upward pressure on rental rates, and even fewer options for those seeking housing. Although the January 2025 Rentals.ca-Urbanation Rent Report found that residential rental prices and vacancy rates have moderated somewhat, with the average price of a residential rental falling to a 17-month low of $2,109 in December 2024, rates have remained relatively frothy in most major Canadian markets. Vancouver claimed the title of the country's most expensive rental market, sitting at $2,512 for a one-bedroom unit, followed by Toronto at $2,360, Halifax at $2,030, Ottawa at $2,012, Hamilton at $1,723, and Calgary at $1,606. 

Problematic Policy

"In additional to amassing a downpayment, qualifications for potential buyers include being able to carry costs at rates two per cent higher than those posted," says Alexander. "Rolled out in 2018, the OSFI stress test hampered home-buying activity in virtually all markets across the country. A once-in-a-lifetime event–the pandemic–supercharged the nation's housing markets in late 2020 when the Bank of Canada dropped the overnight rate to 0.25% to withstand the economic impact on the county. With the conditions that necessitated intervention no longer at play, the need for government to police prospective homebuyers is a duplication when banks and lending institutions already have mechanisms in place to do just that. The OSFI stress test has outlived its usefulness and is unnecessarily inhibiting capable, entry-levels purchasers."

Canada was once more vested in home ownership. In 2006, for instance, Canada Mortgage and Housing Corporation relaxed mortgage rules for homebuyers. It raised insured amortization periods from 25 to 40 years over a 10-month period and introduced zero downpayment mortgages and interest-only mortgages (for the first 10 years of the mortgage). The Canadian housing market soared in response, reporting its best year on record in 2007. By July of 2008, the amortization period was shortened from 40 years to 35 years and the requirement for a five-per-cent minimum downpayment was established.

"While the Great Recession shook housing to its core in the United States, the Canadian housing market weathered the storm in spite of less-stringent mortgage rules," says Alexander. "Delinquency rates for mortgages rose to seven per cent in 2009 in the U.S., while mortgage arrears in Canada hovered at just 0.42 per cent. In seeking to shore up potential risks to the housing and financial sectors to avoid a U.S.-style fallout, we saw an over-tightening of the qualification process that persists well beyond the conditions that prompted it."

CMHC began rolling back home-ownership incentives in 2012. It established the stress test in 2018. Toronto homebuyers are the only buyers in the country subject to a double land transfer tax at both the provincial and municipal level. Halifax implemented its own version of a buyer's tax, while Hamilton is mulling the decision to launch its own land transfer tax. As the associated costs of home ownership climb, Calgary continues to experience strong migration, thanks in large part to its affordable housing and it's 'no land transfer tax' policy at both the municipal and provincial level.

Creating Opportunity for First-Time Homebuyers

"It's time to revisit the potential to relax policy to allow buyers to enter the market and build equity," says Alexander. The 2023 cycle of the Statistics Canada Survey of Financial Security (SFS), released in late October of 2024, demonstrates why today's youth believe home ownership is key to future wealth. The highest income earners in the youngest age group—under 35—who owned their principal residence had a median net worth of $457,100 last year, while renters in the same group had a median net worth of $44,000. Families where the highest income earner was under 35 years of age experienced the largest percentage increase in their real median net worth from 2019 to 2023, up 179 per cent during this period to $159,100.

"The disparity in net worth between young homeowners and renters is striking, and reinforces our belief that governments at all levels should be working toward increasing home ownership levels," says Alexander.

Greater incentives for first-time homebuyers are expected in coming months as small condominium units designed for investors come to market in Toronto. The rapid rise in condominium inventory levels has caused an exodus of investors who are unable to cover their costs and are facing a negative cash- flow situation.

"There is an opportunity for first-time homebuyers to absorb these listings," says Alexander. "While they are small and designed for two people, they may very well be the most affordable entry point to Toronto's housing market in recent years. The move to buy one of these units provides a stepping stone for first-time buyers, by giving them the means to enter the market at an affordable price point. The decision to move can be made in future years when equity gains can pad their progression to a larger condominium or freehold property."

All stakeholders need to come to the table to prioritize creative solutions for Canada's housing market now—not years from now. "We need policies and incentives that support home ownership as a feasible reality for Canadians, not a distant or improbable dream," explains Alexander.  "The housing crisis is already a chronic issue. The longer it takes to respond, the greater chance for home ownership to slide further out of reach. Each percentage point contraction in the national home-ownership rate represents thousands of Canadians locked out of the housing market. The financial, social and societal costs of the status quo will be steep, impacting everything from Gross Domestic Product (GDP) and birth rates to Canadians' financial security and prospects for the future."

Market-by-Market Overview

Greater Vancouver

Affordability has played a serious role in the decline of home ownership in Canada's most expensive housing market. Home-ownership levels sat at 62.1 per cent in Greater Vancouver in 2021, down from 65.1 per cent reported by StatCan Census Data in 2006, while the average price for residential properties more than doubled.

A finite supply of homes—ranging from detached, attached, and more affordable strata condominium properties—on a limited stretch of land has proven challenging for first-time buyers looking to achieve home ownership in Vancouver. Accumulating a downpayment remains a significant obstacle, with expensive rentals preventing savvy would-be homebuyers from building their savings. Additional costs implemented by the municipality and the province add another 10 per cent to already high closing costs. The decline in first-time buyers has thrown a wrench into the city's fine-tuned housing market, which relies on entry-level buyers to support the move-up segment.

Affordable rentals are few and far between, and those renters fortunate to live in these units are unwilling and unable in some cases to move, presenting a conundrum to the market. Much of the housing stock available in the city and suburbs consists of either detached homes or condominiums. The attached home is the missing middle here. Demand for these types of homes is strong, yet the category represented just 20 per cent of the overall market in 2024. Not surprisingly, the attached home was the only housing type that reported an increase in sales in 2024, rising almost 11 per cent year over year, according to Greater Vancouver Realtors.

Intensification continues to be the municipal focus, but high-density housing is not necessarily the answer for young families. The micro-condominiums currently in development may be well-situated, but at 400 sq. ft., they often fall short of the needs of today's homebuyer. Some first-time buyers are looking at older condominium housing stock built in the 1990s for empty nesters and retirees in suburban areas. These large units, ranging from 1,000 sq. ft. to 1,500 sq. ft., are attracting a growing audience, especially given that many downsizers are staying put, unwilling or unable to pay the transactional fees now associated with a move.

Townhome projects that would be underway in the suburbs are being temporarily halted until there is some clarity surrounding the tariff dispute from the U.S., with many builders and developers uneasy about the prospect of a potential 25-per-cent increase in building costs.

Over the 15-year period between 2006 and 2021, population levels have climbed but nothing prepared major Canadian centres for the population surge that occurred during the pandemic. The Vancouver CMA is now home to more than 3.1 million people, despite the loss of close to 50,000 between 2021 and 2024 due to interprovincial migration. Ultra-low interest rates accelerated home-buying activity during the pandemic, but as rates edged up, many buyers struggled. Still, Vancouver has one of the lowest mortgage delinquency rates in the country, according to Canada Mortgage and Housing Corporation-Equifax data, hovering at 0.14 per cent in Q3 of 2024.

For buyers taking the plunge as interest rates decline, condominiums outside of the city tend to represent the best bang for their buck, offering space and value as opposed to the micro condos in the city core. Purchasers willing to go farther afield can find a townhome in Langley at an affordable price point but will likely require a car to move around. And while the outflow to B.C. has slowed, there is always the option of moving to Alberta where housing is more affordable, and taxation is minimal.

The stress test had its moment during the pandemic but it's no longer necessary, preventing some buyers from making the foray into home ownership. Furthermore, taking the plunge is still a challenge for many as employment and wage growth have failed to keep pace with rising housing values, particularly in B.C. Those who are sitting on the sidelines generally look to rentals, with current prices slightly lower than the carrying costs of a condominium or townhome.

"To address the obstacles to home ownership, municipal, provincial and federal governments need to work together to increase accessibility, including the introduction of more practical first-time buyer programs, given the steep entry-point in the Vancouver market," says Tim Hill, RE/MAX All Points Realty. "Some ideas for consideration include a matched/vested program, whereby the government matches first-time buyers' costs for a stake or interest in their home. Other options include mortgage insurance for properties, even with five per cent down, and longer amortization periods of 30, 35 and 40 years – similar to those that stimulated strong home-buying activity between 2005 and 2008. Loan grants could also be offered to homeowners to build rental suites or coach houses to help bolster affordable rental inventory. These can all have a significant impact on the cost of carrying a property. But without this intervention, we are creating a nation of renters, who like generations before them, may remain locked into the rental housing model without much hope of ever owning a home."

Calgary

Affordability continues to be the hallmark of the Calgary real estate market, with the city leading major Canadian markets in terms of home ownership, despite a decline in levels in the 15-year period between 2006 and 2021. According to Statistics Canada Census Data, 70.5 per cent of Calgarians owned their home in 2021, down from 74.1 in 2006. 

While the average price of a home rose quickly between 2006 and 2014, the oil and gas downturn between 2014 and 2020 had a significant impact on housing values. As a result, values have risen just over 38 per cent over the 20-year period, from $357,142 to $492,642 according to the Calgary Real Estate Board (CREB).

In more recent years, however, the rebound from the oil and gas industry has catapulted housing values across the board. The province's 2022 "Alberta is calling" campaign was met with unprecedented success as migration from B.C. and Ontario into Calgary and Edmonton soared, tightening inventory levels and putting upward pressure on housing values. Calgary welcomed more than 41,000 interprovincial migrants between July 2022 and July 2024, with its population climbing to almost 1.8 million. By year-end 2024, the average price for a residential property in the city rose to $697,079, up 23.3 per cent from 2021 levels.

"While Calgary still has issues with supply, migration into the city has tapered, giving homebuyers some much-needed breathing room in terms of decision-making," says Richard Fleming, RE/MAX Real Estate (Mountain View). "The economy continues to expand, driven by oil and gas and a burgeoning tech sector. Lower interest rates are prompting some first-time buyers to take the home-ownership plunge, although the stress test continues to be prohibitive, preventing some buyers from qualifying. Canada Mortgage and Housing Corporation is encouraging home ownership by extending mortgage insurance to the $1.5 million price point and allowing for a 30-year amortization period, showing the market is headed in the right direction."

With rental costs comparable to owning in Calgary, home ownership is expected to grow in the coming years. Just over 41 per cent of homes sold in Calgary in 2024 moved under the $500,000 price point, according to CREB. The downpayment continues to be an impediment, but parents and grandparents are stepping up to the plate, helping with a cash outlay that allows their kids to comfortably carry the monthly mortgage payments. Taxes are a non-issue in Calgary, given the city and province have no land transfer taxes, and overall taxes are significantly lower than in other provinces.

While some growing pains may inevitably be felt in fast-growing Calgary in coming years, the city remains well-positioned. Despite a slip in home-ownership rates in line with the national trend, home ownership within Calgary remains largely within reach of aspiring purchasers.

Hamilton

Affordability remains the most challenging aspect of home ownership in Hamilton, with ownership rates in the city steadily declining over the census years, falling from a high of 71.6 per cent in 2006 to a low 68.6 in 2021, according to Statistics Canada Census Data. Hamilton-Burlington reported the highest increase in overall average price in the 15-year period, climbing more than 240 per cent from $253,887 in 2006 to $879,446 in 2021.

Solid population growth in that 15-year span has placed pressure on housing supply, including the most recent five-per-cent increase pushing the Hamilton CMA's population to just over 785,000 in 2021. Much of this growth has been spurred by Torontonians seeking access to more affordable home ownership, resulting in significant upward pressure on average price in recent years.

Stagnant wage growth in the city, however, has made it increasingly difficult for local buyers to enter the housing market. Even a condominium priced at $425,000 can be a challenge for a single first-time buyer, given unrecoverable costs such as maintenance and taxes. Some would-be buyers can afford to make the leap into ownership but opt to rent to avoid common stressors associated with home ownership, including the recent volatility of borrowing costs, fluctuations in housing values, and the cost of maintenance, repairs and upkeep. Rentals have become an increasingly common option amongst younger generations, who may or may not use the opportunity to save for a later downpayment on a home.

Micro condos, which have been a significant component of the Hamilton market in recent years, have list their appeal as builders and developers come to realize that demand is limited for the product. Large condo units are selling and are in greater demand, but they are few and far between. Focus has shifted on construction that is more communal as a result, allowing for several generations to live in one larger unit.

Movement to urbanized areas with cache outside the city core has been a trend, including markets such as Ancaster, Dundas and Port Dalhousie. These areas typically offer a vibrant culture and sense of community. Flight to affordability has occurred simultaneously in the region, with migration occurring to markets further afield including Haldimand County and Beamsville, where housing values are more affordable.

The stress test, introduced in 2018, also proved a barrier to home ownership, despite softer housing values in 2018, 2019 and 2020. Pent-up demand was unleashed during the pandemic as interest rates fell to historic lows, creating one of the frothiest markets on record. Buyers moved off the sidelines and jumped into the market to take advantage of lower rates. Although the stress test likely proved beneficial during the pandemic, it has likely outlived its usefulness. 

"The recent .100 basis point decline in overnight rates in the fourth quarter sparked some interest in the Hamilton market, and another .75 to .100 basis point drop in coming months should move the needle toward a rebound in home ownership levels," says Conrad Zurini, RE/MAX Escarpment & Niagara. "While a good selection of product is available throughout Hamilton, Burlington and surrounding communities, housing policymakers need to look for new and innovative ways to make home ownership more accessible. Some of the items that bear review are the participation of private equity firms in downpayments and market value mortgages, tax deferrals for first-time buyers on the sale of a home, allowances for rental units or garden suites within single-family dwellings, and land lease opportunities."

Home ownership will remain top of mind, but the industry may have to step up its efforts to help younger buyers achieve their goals. Meanwhile, home-ownership levels in Hamilton remain slightly above the national average, thanks to its relative affordability compared to much of the neighbouring Greater Toronto Area.

Greater Toronto Area

While affordability has played a significant role in the decline of home-ownership rates over the past decade, an assortment of secondary issues has contributed to the downturn in the Greater Toronto Area (GTA). The OSFI stress test, combined with land transfer taxes (especially in the City of Toronto), availability of housing supply, and a population uptick have made the dream of home ownership more elusive to a growing number of first-time buyers. The average price of a residential property in the GTA more than doubled between 2006 and 2021, rising by 211 per cent to almost $1.1 million, according to Toronto Regional Real Estate Board's MarketWatch. During the same period, Statistics Canada Census Data reported home ownership levels in the Toronto Census Metropolitan Area (CMA) declined after peaking at 68.3 per cent in 2011, falling to 65.1 per cent in 2021.

Freehold detached, semi-detached, townhomes and row housing remain most sought after in the GTA, but they are also the most expensive options. Condominiums, as a result, now represent the first step to home ownership for many. More than one in three homes sold in the GTA is now a condominium apartment or townhouse. In 2024, the average price of a condominium apartment sat at $702,858, while the cost of a condominium townhouse hovered at $803,246, down 2.1 per cent and 3.1 per cent respectively from year-ago levels. Fewer freehold properties have been built in recent years, prompting buyers to scoop up smaller homes and semis. Many have since been renovated, given additions, or demolished and rebuilt as buyers revitalize older neighbourhoods throughout the city. This is anticipated to push lower rise prices higher and further out of reach for first-time buyers in the years ahead, particularly as low-rise homes comprise a smaller portion of total sales amid the city's intensification. Affordability remains a challenge for first-time buyers despite a slight dip in pricing year-over-year. The average price of a detached home in the GTA at year-end 2024 sat at $1,453,262, while a semi was priced at $1,102,568.

Housing supply is one of the most prevalent issues facing today's real estate consumers, with the housing crisis described as a "chronic" issue. Population growth and housing demand in the GTA continue to outpace new housing supply. Meanwhile, the city and its surrounding areas have grown at a steady clip. The population of the country's largest metropolitan area, the Toronto CMA, rose close to five per cent between 2016 and 2021 to just over 6.2 million. While the City of Toronto climbed 2.3 per cent, suburban markets including Brampton, Oakville, Milton, Caledon and King soared, recording double-digit growth during the same period. In July 2024, the population of the GTA surpassed 7.1 million. This comes at a time when the market is at a crossroad in terms of inventory levels, with thousands of units available for sale but very few designed for family living.

For years, there has been an obvious disconnect between builders and homebuyers. While municipalities are laser-focused on high-density projects offering more units with less square footage, homebuyers are looking for the opposite – larger properties that offer more square footage. Yet, Statistics Canada reported the median size of non-investment condominiums built between 2016 and 2020 in Toronto sat at approximately 680 sq. ft., while those targeting investors averaged about 615 sq. ft.

Development costs instituted by the city have also contributed to the decline in home ownership levels. Between 2020 and 2022 alone, development charges rose 21 per cent in the City of Toronto, rising to $189,325 per unit for low-rise construction in 2022—the highest in the country, according to the Canadian Home Builders Association and Altus Group Economic Consulting. This has contributed to a decline in housing starts in Ontario, currently down 13,952 year-over-year (2024 vs. 2023). The need for a revised city plan—which has so far failed to address or keep pace with future needs—given that outdated policies and zoning bylaws, climbing costs and fees faced by builders and developers and a slow approval process are ongoing barriers to new construction, and to some extent, repurposing or renovation of existing product. Without remedy or greater incentive, new projects will fail to move forward.

The climate for condominiums has changed substantially in recent years, given the decline in pre-construction starts and an uptick in failed transactions. Assignments in the market have soared as a result, with builders abandoning condominium construction and shifting toward purpose-built rentals. The math simply does not work for developers, given the current cost of construction, especially when factoring in development costs, material costs, labour shortages and wage increases, Overall inventory levels have climbed in the Toronto Regional Real Estate Board as a result, with an estimated 7,400 active condominium and apartment listings available for sale at the end of 2024 and an estimated 30,000 new units expected to be released by developers in 2025.

"While it won't fill the gap in housing needs, the timing may be opportune for first-time buyers to take the first step in home ownership," says Tim Syrianos, RE/MAX Ultimate. "Recently introduced Canada Mortgage and Housing Corporation initiatives–extended mortgage insurance to $1.5 million and increased 30-year amortization periods–have been implemented to entice more first-time buyers into the market. Buyers will still need to contend with the stress test and land transfer taxes, but these market conditions are short-term and unlikely to occur in the future with interest rates on their way down."

Although these recent moves on a national level will ease entry for many homebuyers in the short-term, in the longer-term, it may take years to successfully remedy pervasive challenges in Toronto's housing sector. Supply, demand, affordability, development issues, red tape and other barriers are likely to be key factors impacting home ownership rates as effective solutions remain hotly debated but slow to fruition.

Ottawa

Affordability has played a sizeable role in the decline in home ownership levels, despite strong population growth that has pushed Ottawa's population up over the one-million mark. Average price of a residential property in Ottawa has climbed more than 150 per cent between 2006 and 2021, according to the Ottawa Real Estate Board. While values appreciated, Ottawa-Gatineau home ownership levels for the same period show a gradual contraction from a peak of 68.2 per cent in 2011 to 65.4 per cent in 2021, according to StatCan Census Data.

Demand for homes priced between $400,000 and $600,000 remains strong, but supply has been limited in recent years. The chronic shortage of entry-level freehold product at affordable price points has impacted young buyers in the government and tech sectors. Condominiums, while affordable, typically end up costing more when condominium association fees are factored into the equation. The stress test, which proved somewhat beneficial during the pandemic years, is now preventing many first-time buyers from getting into the market, leaving many to question if adjustments are needed to ensure its relevance.

Some buyers fresh out of college now prefer to rent rather than own, giving them the freedom to move. Rent controls have also given tenants greater stability in buildings older than November 2019 where annual rate hikes are limited.  The rental market has seen an uptick as a result, as young would-be purchasers put their home ownership aspirations on hold. Although rental rates have softened somewhat in recent months, they are still more expensive than historical levels, making it harder for aspiring buyers to save for a downpayment.

"Urbanization has led to upward pressure on housing values, with homes in the central area of the city experiencing strong homebuying activity," says Jason Pilon, RE/MAX Hallmark Pilon Group Realty." The increase has fueled suburban sprawl, although zoning regulations, development costs and bureaucracy are impacting new housing starts. By providing greater incentives to builders, especially those focused on entry-levels housing, municipalities can help offset high construction and labour costs. Removing the so-called red tape from the process by expediting approvals for affordable housing at a municipal level and providing construction subsidies on entry-level product at a provincial level or federal level would go a long way in toward meeting pent-up demand.

Political uncertainty has clouded Ottawa's housing outlook to some extent this year, with the outcome of the Liberal leadership race and potential for an upcoming election creating some concern amongst public service employees. Pent-up demand continues to exist throughout the city, although fixed mortgage rates would need to fall further to force Ottawa buyers off the fence and into the market.  At present, Ottawa-Gatineau home-ownership levels remain in line with the national average.

Halifax Regional Municipality

While home ownership levels in the Halifax Regional Municipality steadily declined between 2006 and 2021—falling from 64 per cent in 2006 to 58.6 per cent in 2021 according to StatCan Census Data—the uptick in interprovincial migration and immigration during the pandemic may have reversed the course of home ownership in the city, but that remains unknown until the release of the 2026 Census. Statistics Canada, meanwhile, reported that close to 57,000 new residents called Halifax "home" between July 2020 and July 2024, bringing the city's population to 530,000.

Growth, while positive, has brought challenges. Affordability has been an on-going issue in the city, culminating with a 60-per-cent increase in housing values between 2016 and 2021, bringing average price to $460,149. Strong interprovincial migration and immigration have further bolstered price appreciation during the pandemic, but home-buying activity was curtailed when the Bank of Canada started to hike interest rates.

First-time buyers have been most impacted by higher housing values and stringent lending policies, yet they remain the crucial domino needed to propel move-up buyers and downsizers. Many entry-level buyers can afford monthly mortgage payments, which are now comparable to rental rates, but the downpayment remains the largest roadblock to home ownership. The average price of a residential property in Halifax currently hovers at $575,000.

Other factors have contributed to declining home-ownership levels over the past one and a half decades. Many developers continue to focus their energies on multi-unit rental accommodations rather than condominiums, given the negligible price differential between semi-detached or row housing and condominium units. Developers have been dealing with higher input costs from construction materials to labour costs, all of which are passed down to the consumer. The time is right for the municipality to revisit development costs on new construction, reduce red tape and fast-track approvals; Halifax has historically been slow to turnaround permit approvals in comparison to other municipalities across the country. The Halifax Partnership Dashboard shows housing starts (on a 12-month moving average) fell to 311 in December of 2024, down 149 units from year-ago levels.

"Continued changes to the land use bylaws should focus on increasing density and allowances should be extended to first-time homebuyers in terms of in-law suites and rental unit," says Ryan Hartlen, RE/MAX Nova. "Some builders are already including secondary suites in detached homes to allow buyers to offset mortgage costs. Additional costs at a municipal level, including a 1.5 per cent transfer tax are an impediment to home ownership for first-time buyers. Some housing and policy analysts have suggested a municipal or provincial deferral or exemption under a certain price point would help younger buyers enter the housing market."

At the federal level, the stress test certainly served its purpose during the pandemic but, given current market conditions, it may be prudent to relax rules that don't require buyers to qualify at rates of eight or nine per cent. Longer amortization periods—to 35 or 40 years—should be on the table once again for first-time buyers as well, given that rental costs never end.

The Halifax market continues to be supported by a strong economic base, anchored by higher education, public service offices and travel and tourism. The city has also done a good job in attracting new business, including head offices and new hotel construction. Wages are pushing upward, with a good assortment of positions available from entry levels to C-suite. Inventory levels remain tight in the city, with seller's market conditions prevailing. Pent-up demand exists, with sidelined buyers anxious to jump into the market. Although the outlook for the city remains bright, the home ownership rate in Halifax remains seven per cent below the national average. The Provincial Housing Needs Assessment Report, commissioned by the Nova Scotia governments, notes that affordability, income constraints, and challenges in saving a downpayment make the leap from renting to home ownership key factors that have impeded growth in home ownership to date. High provincial tax rates have also been an on-going contributor. The implementation of economic and policy levers would serve to ease the path to home ownership for a greater number of younger buyers, particularly in light of an anticipated supply shortfall in housing expected through to 2032.

About the RE/MAX Network

As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC and RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.

RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children's Miracle Network Hospitals^® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.

Forward looking statements

This report includes "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company's business, the Company's ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company's ability to attract and retain quality franchisees, (6) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company's ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company's ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

SOURCE RE/MAX Canada