2017 was a pivotal year in Canadian real estate – from trends to new mortgage rules and policies. Here is the countdown to the top 17 news stories of 2017.
17. Americans to gobble up Canadian homes
After Citizenship and Immigration Canada’s website crashed when Donald Trump was elected in November 2016, Canadians anticipated an onslaught of Americans moving north. But 2017 offered Canadians a reality check. There wasn’t a mass exodus from the U.S., in part due to our immigration laws, complicated tax issues and mortgage qualification rules in Canada.
16. Ontario takes action on housing affordability
Ontario decided to take action on housing affordability in 2017 with the introduction of the Ontario Fair Housing Plan. Sixteen measures were designed to help bring stability to real estate, including: the 15-per-cent Non-Resident Speculation Tax in the GGH; expanding rent control to protect tenants from drastic rent increases; identifying provincially-owned land to be used for new affordable housing; and introducing a $125-million, five-year program to encourage the construction of new purpose-built rental apartment buildings by rebating a portion of Development Charges.
15. The fastest-growing cities in Canada
Statistics Canada released its 2016 population and dwelling figures, providing a clear view of which cities are growing and how fast. The country’s population increased five per cent from 2011 to 2016. Here were the fastest-growing cities in Canada, boasting the highest growth rate.
14. NextHome Rebrand
Similar to how the homebuying process has changed and evolved over the years, so have we! In 2017, our publication New Home & Condo guide was rebranded to NextHome. While we may have a new name and look, NextHome is rooted in more than 25 years of expertise in Canadian real estate.
13. Hamilton enters the real estate big leagues
Hamilton proved to be Canada’s hottest housing market in 2017. ReMax made the declaration, pointing out the Hamilton-Burlington region has benefitted from its proximity to Toronto, garnering interest from move-up and “move-over” buyers. Hamilton had the highest year-over-year price increase in 2016, at 20 per cent, and was also forecasted to lead the country with the strongest price growth in 2017. Welcome to the big leagues, Hamilton.
12. Canada deemed most expensive housing market
Canada is the most unaffordable real estate market in North America, according to a study by Points2 Homes. The affordability ratio was calculated to measure affordability (the median home sale price divided by the median annual family income) in 50 of the most populous cities in Canada, the U.S. and Mexico. The higher this ratio is, the more time it takes to pay off your house, and the wider the affordability gap.
The study found that Canada is North America’s most expensive market, with Vancouver topping the list, and out-ranking pricey U.S. markets such as Manhattan and San Francisco. Other Canadian markets on the list were Toronto (number 13), Mississauga (14), Montreal (31) and Calgary (32).
11. Pricing and supply issues push buyers to the burbs
High home prices and low supply continued to push buyers out of Canada’s two most expensive housing markets – Toronto and Vancouver – and into surrounding areas. The first quarter of 2017 witnessed more buyers leaving Toronto’s downtown core, in search of more affordable markets in southern Ontario.
Meanwhile, in Vancouver, buyers and those migrating from other provinces are fueling activity in Fraser Valley, Kelowna and Victoria, particularly in the upper-end of the market due to relative affordability in these regions.
10. Canadians’ household debt at all-time high
Canadians’ debt levels reached an all-time high in 2017. Statistics Canada reported that credit market debt as a proportion of household disposable income increased to a whopping 167.8 per cent, meaning that for every dollar of household disposable income there was $1.68 in credit market debt.
9. Edmonton on the road to recovery
It was a year of recovery for Alberta, becoming the fastest-growing provincial economy, according to the Conference Board of Canada. In Edmonton, GDP was to increase 3.9 per cent for 2017 and another 2.2 per cent in 2018. The unemployment rate is forecasted to fall from 8.9 per cent in 2016 to 6.9 per cent in 2018.
8. Vancouver welcomes locals-first policy
On Oct. 17, Mayor Gregor Robertson introduced a motion to city council aiming to prioritize new pre-sale homes for Vancouver residents. One day later, the policy was passed.
The policy would require new developments to give Vancouver residents the first opportunity to purchase pre-sale homes in Vancouver. While controversial, the proposed policy would be part of the city’s 10-year housing strategy to relieve the affordable housing crisis.
7. REIN’s top places to invest in
The Real Estate Investment Network (REIN) ranked the top places to invest in BC and Alberta, based on potential for housing market strength over the coming five-year period.
6. 2017 Budget falls short
Budget 2017 proposed to spend more than $11 billion over 11 years in a variety of initiatives, including renewed federal investments combating and preventing homelessness, making more lands available for affordable housing, and a new $5-billion National Housing Strategy, which would be introduced later in 2017 focusing on critical housing issues and support for vulnerable citizens.
However, the budget was criticized after failing to address key market-related issues, such as affordability concerns among first-time buyers.
5. Prices continue upward trajectory
As of October, the national MLS Home Price Index was up 9.7 per cent year over year, the smallest year-over-year increase since March 2015. The decline in growth largely reflects softening price trends in the Greater Golden Horseshoe, according to CREA.
4. Interest rates increase – twice
The Bank of Canada (BoC) raised its benchmark interest rate – for the first time in seven years – in July to 0.75 per cent. In September, the BoC raised the rate again to one per cent. Those with variable-rate mortgages would immediately see an increase. For fixed-rate mortgage holders, they won’t be affected until renewal time.
3. Toronto introduces foreign buyers’ tax
Following Vancouver’s footsteps, Toronto welcomed a 15-per-cent foreign buyers’ tax in April. Between April 24 and May 26, one month after the tax was introduced, foreign investment had dropped to 4.7 per cent. Between May 27 and Aug. 18, transactions involving foreign buyers dropped to 3.2 per cent.
2. New Mortgage Stress Test
The Office of the Superintendent of Financial Institutions (OSFI) announced that, effective Jan. 1, 2018, all uninsured borrowers – those with a down payment of 20 per cent or more – must undergo a “stress test” and qualify at a new minimum rate, which is the greater of the Bank of Canada’s five-year benchmark rate (currently 4.89 per cent) or 200 basis points higher than their actual rate.
The changes will affect the amount buyers can afford; in one example, $706,692 under the old rules, and $559,896 under the new guidelines.
1. National Housing Strategy
After more than a year of consultations with everyday Canadians, experts, stakeholders, provinces and municipalities, the federal government unveiled Canada’s first ever National Housing Strategy in November.
Intended to help reduce homelessness and improve the availability and quality of housing for Canadians in need, the 10-year, $40-billion plan aims to:
- Reduce chronic homelessness by 50 per cent
- Remove more than 530,000 households from housing need
- Create four times as many new housing units as built under federal programs from 2005 to 2015
- Repair three times as many existing housing units as repaired under federal programs from 2005 to 2015, and
- Protect an additional 385,000 households from losing an affordable place to live.