Home Sales Up in Biggest Markets, and New Home Prices Drop

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.

Better Late Than Never

Don’t let the snow fool you; spring has finally sprung in the country’s biggest real estate markets, albeit a few months behind schedule. According to both the Toronto Regional Real Estate Board and Greater Vancouver Realtors, November saw the kind of sales growth that usually only comes after the winter slowdown. Home sales were up more than 40% in Hog Town and 28% in Gas Town compared to last November. While home prices remained stable on the West Coast, there was a 2.6% spike in the GTA compared to November 2023. At this rate, it’ll be summer in no time! 

Six Figures is the New Minimum Wage  

Not long ago a six-figure salary meant a two-car garage; now you’re lucky if it’ll cover a two-bedroom condo. According to a new survey by EveryRate.ca 42% of Canadians who earn over $100,000 per year struggle to afford housing costs of $1,749 per month or more. That’s only enough to cover half of an average mortgage payment, and less than the average rent for a one-bedroom. According to the survey, two-thirds of Canadians cannot comfortably afford a monthly payment of that amount, and 38% are unable to comfortably cover costs over $1,000 per month.

One for the Builder, Four for the Tax Man  

The biggest beneficiary of new home sales in Ontario isn’t in the real estate business. According to a new study by the Canadian Centre for Economic Analysis, taxes make up 36% of the sticker price on a new home in the province, up from 31% in 2021. When a new home sells in the province governments now rake in four times more revenue than the builder. The majority, 70%, is in direct fees, and the study finds that development charges in Ontario have increased a whopping 993% since 2010. Another 30% goes to income and corporate taxes paid during construction.

Why Builders Aren’t Building  

The cost to build a new home in Canada is up, while the price of new homes is going down, giving builders little incentive to put shovels in the ground. According to a study by Statistics Canada, new home prices saw their largest drop since 2009 in October, falling 0.4%. Though it may seem like a small dip, the price of a new condo has dropped 15% and the price of a new single-family home is down 13% since the mid-2022 peak. Lower prices are usually better for buyers, but lower values and rising costs are slowing much-needed construction.

The Golden Age of Purpose-Built Rentals  

New home construction may be crashing and burning but purpose-built rentals are rising like a phoenix from the ashes. A report by RBC suggests Canada is in the midst of a “rental construction renaissance” with purpose-built rental construction nearly quadrupling over the past decade, and accelerating significantly since 2018 following the introduction of new government incentives. The boom has been felt most significantly in Toronto and Vancouver, where the increase in unit completions outpaced population growth in recent quarters. With lower immigration targets and greater supply, the report suggests rentals will only get more affordable in the years ahead. 

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