Homebuyers Getting Off the Sidelines, and 2 Canadian Cities Saw Biggest Spike in Construction Costs in the World

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Buyers, on Your Marks…  

Canadian homebuyers are limbering up for what could be a marathon spring season. After a year of sluggish sales and gradually declining prices — and with high hopes of lower interest rates — new data from Wahi and Angus Reid shows Canadians are ready to leave the sidelines  and enter the homebuying race. According to the survey, 1 in 5 are looking to buy in 2024, including nearly a quarter of 18- to 34-year-olds. While nearly half are still waiting to see where prices and rates land in 2024, 45% have already cut back on spending in preparation for the big purchase.

Whimper of a Year Ends With a Bang  

Canadian homebuying activity hit a two-decade low in 2023, but December brought some holiday magic to the market. According to Canadian Mortgage Trends, sales activity in Canada’s major cities unexpectedly jolted back to life in December, fueled by a slight dip in borrowing costs. In Toronto, for example, December sales shot up 11.5% compared to December 2022, despite falling 12% throughout the year. Calgary saw a similar surge of 14% in a year that witnessed an overall decline of 8%, while Vancouver saw a modest gain of 3.2% in a year that featured a total decline of over 10%.

Two Canadian Cities Top Global List for Biggest Building Cost Spike

Few corners of the planet were immune from inflation in recent years but rising construction costs have hit a couple of Canadian cities harder than most. According to a global ranking of building costs by Australia-based Compare the Market, Toronto saw the second biggest jump since the pandemic behind only Prague, while Calgary landed 5th place. According to the report, construction costs ballooned by 40.5% in Hogtown and 28.5% in Stampede City between 2020 and 2023. The report suggests most cities struggled with rising costs, but the Canadian towns were hit particularly hard by high borrowing costs and labour shortages.         

Toronto Braces for Steepest Property Tax Hike in History  

After years of mounting financial challenges Toronto’s chickens are coming home to roost in a coop that’ll cost a little extra. This week City Hall proposed balancing its beleaguered books with the largest residential property tax hike since amalgamation in 1998, totalling 10.5%. That’s roughly $375 extra per year for the average household. The city says the funds are necessary to plug a $1.8 billion hole in its budget, which has been leaking since the pandemic drove up costs and drove down revenues. Residents are invited to weigh in before the budget goes up for a vote on February 24.

Even if Rates Drop, Mortgage Costs will Likely Rise  

As mortgage holders look to the Bank of Canada for some relief, the Bank is shooting back a warning that their costs are probably up regardless. In a recent analysis, the BoC found that even if rates fall, mortgage payments will continue to climb in the coming years. That’s because the rapid rate hikes beginning in March 2022 aren’t going to be reversed any time soon, even if there is a slight peel back. The Bank also notes that higher rates hit households hard in the short term but reduces debt in the long run. You can thank them later. 

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