Many Canadians rely on their home as the cornerstone of their personal wealth, but as much as Millennials and Generation Z want to start building their own wealth, for many the dream of homeownership is still painfully out of reach.
The Re/Max Housing Market Drivers Report Published this week, it examines nine major Canadian urban centers over a 30-year period, with triple-digit price increases between 1994 and 2024. The report finds that population growth, along with policy instruments and market events, have long been mainstays of Canada’s housing market, creating periods of prolonged growth and contraction in the country’s largest cities.
The Halifax Regional Municipality reported the largest increase in price rate growth, with an increase of 460 per cent for a compound annual growth rate of 5.91 per cent. The Greater Toronto Area was a close second, with a percentage increase of 436.2 percent and a CAGR of 5.76 percent, while Saskatoon rounded out the top three, with a percentage increase of 377 percent and a compound annual return of 5.35 percent.
Re/Max Canada president Don Kottick said every generation has faced its challenges and obstacles.
“The current trade barriers, high interest rates and tight credit policies may be overwhelming, but this too shall pass,” he said. “Historically, the dynamics evolve from recovery to expansion, from peak to contraction, from trough to recovery. Cyclically, the trough is short and gives way to renewed growth. In retrospect, buyers can look back and realize that this period was the best opportunity in recent years to get into the market at a lower price.”
Market conditions are softening, but new buyers are still struggling
Re/Max brokers report balanced/moderating conditions in most markets, with affordability an ongoing issue despite more favorable conditions including rising inventory levels.
Average price escalation continues to outpace wage growth, making it extremely difficult for first-time buyers across all regions to enter the market, the report said. In addition, many potential buyers are challenged by the mortgage stress test, debt burden, down payment requirements and high carrying costs.
A chronic supply shortage amid lower prices is driving up starter home values, while the cancellation of new construction projects has set the stage for tight market conditions going forward, Re/Max said.
The report also highlights a striking trend: empty-nesters and retirees are now competing with first-time buyers in the market for smaller homes, particularly bungalows, in many parts of the country, making it even more difficult to enter the market.
Unlocking opportunities to ease the path to ownership
Re/Max has added a list of ten possible solutions to put homeownership back within the reach of more Canadians. They are:
- Allow prospective homebuyers to withdraw more than the allotted amount in the first-time homebuyer plan from their RRSPs and from their TFSAs.
- Eliminate the additional two percent requirement to qualify for the mortgage stress test.
- Extend the depreciation periods for starters on the housing market.
- Abolish the transfer tax on purchases below certain price levels (to be determined by the average price in each market).
- Remove GST and HST for all home buyers on a new home product.
- Reduce or eliminate red tape, outdated zoning regulations, and restructure land use policies while speeding up the permitting and approval process.
- Encourage the construction of homes that meet the needs of today’s homebuyers, shifting the focus to end users rather than investors.
- Policies and programs must prioritize starters.
- Invest in and support innovations such as modular or prefab construction techniques that bring supply online faster and at lower costs.
- Treat the supply of affordable housing as a percentage of the available product or new construction.
“Affordability, population growth and supply shortages are the recurring themes shaping housing in Canada,” Kottick said. “While each market has local nuances – Vancouver’s looming apartment shortage, Edmonton’s affordability and Halifax’s steep rise in values are just a few examples – the shared pressure unites all major regions. Governments and private sector players share a major responsibility in shaping Canada’s real estate landscape, addressing the housing crisis and ensuring sustainable urban development. “
Courtney Zwicker is a digital reporter and associate editor for REM. Based in Atlantic Canada, she has more than a decade of experience covering daily business news.
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