In the news release, Home ownership challenges compounded by the country's housing crisis lock aspiring first-time homebuyers into rental markets, says RE/MAX Canada, issued 11-Feb-2025 by RE/MAX Canada over PR Newswire, we are advised by the company that updates have been made to the following sections: "Problematic Policy" and "Market-by-Market Overview," specifically in the "Calgary" and "Greater Toronto Area" sub-sections. The complete, corrected release follows:

Home ownership challenges compounded by the country's housing crisis lock aspiring first-time homebuyers into rental markets, says RE/MAX Canada

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/MAX Canada.

RE/MAX Canada's Nation 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's Ottawa-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 made changes to its amortization periods 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 Department of Finance shortened the amortization period 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."

The Department of Finance began rolling back home-ownership incentives and established the stress test on all government-backed insured mortgages in 2016. In 2018, the OSFI added the stress test to uninsured mortgages. 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. The Department of Finance 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