Toronto Homeowners Get a Tax Hike, and Inflation in Canada Slows

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.

New Home Construction Had a Slow Start to 2024 

Instead of searching for a ladder, Canada appears to be reaching for a shovel as it digs itself deeper into its housing shortage. According to CMHC, new home construction dropped 10% last month compared to December, putting the country on pace to build less than 225,000 new homes in 2024, down from an annualized pace of about 249,000 last month. The latest report, however, emphasizes that most of the declines were in more sparsely populated areas, and that regions with over 10,000 residents experienced a 13% jump in home construction compared to last January, including a 49% increase in Toronto.

Toronto Property Tax Hike of “Only” 9.5% Becomes Official  

Mayor Olivia Chow and City Council have successfully made the biggest property tax hike in Toronto’s history seem palatable. That’s because, after shocking residents with a proposal for a 10.5% rise — and warning of a potential 16.5% hike — they managed to whittle the increase down to just 9.5%. They say the hike is necessary to plug a $1.8 billion hole in the city’s budget without cutting vital city services. The final budget, which was approved by council last week, will cover the remaining 1% by dipping into the city’s reserves, along with $620 million in planned spending cuts.

Rental Rates Soar to New Heights

Canada’s rental market has outdone itself once again, breaking another record for housing affordability — or lack-thereof. According to a new report by Rentals.ca, average rents in Canada reached a record high in January, averaging nearly $2,200. The report found that prices increased 0.8% last month and 10% last year, for a total of 20% since  before-COVID times. That’s costing the average renter an extra $373 per month, or about $4,500 per year. Last month most of the price increases were in the purpose-built rental market, which saw rent hikes of 13.5%, compared to a 4.1% increase among condos.      

Some Good News About Inflation, Finally   

Statistics Canada shared some positive inflation data for the first time in months, but borrowers aren’t out of the woods yet. This week the agency announced that costs had increased 2.9% since last January, thanks to falling gas prices. While still shy of the Central Bank’s 2% target it’s a dramatic improvement over the expected 3.3%, and the 3.4% recorded in December. The surprising development, however, won’t necessarily bring interest rates down faster. That’s because a drop in unemployment and inconsistent inflation data is likely to prevent the Bank from cutting rates ahead of the widely anticipated summertime schedule.   

Canada Experiences a Mass Exodus of Real Estate Professionals  

You can’t blame a crew for not staying aboard a sinking ship, so it shouldn’t be a surprise that Canada’s real estate sector has lost nearly 20% of its workforce since the market started to capsize in early 2022. The downturn in brokers, agents, appraisers, property managers, and rental-housing professionals is especially pronounced in Ontario, which saw an exodus of almost 45,000 workers since rates started rising. After a booming 2020 and 2021, which brought many into the sector, interest rate hikes starting in 2022 led to the lowest sales activity recorded in Toronto in 20 years, leading many new entrants to make a swift exit.    

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