Recapping A Wild Year in Real Estate

 📉 5 Rate Cuts Boost Market Confidence

• The Bank of Canada made five consecutive rate cuts in 2024, including a 50-basis-point cut in December.

• The benchmark interest rate was reduced from 5% earlier in the year to 3.25% by year-end.

• Analysts predict a busier-than-usual spring market as buyers take advantage of improved affordability.

Why This Matters: Lower borrowing costs create opportunities for investors to refinance existing loans or fund new purchases. Competition is also expected to rise as affordability improves and sidelined buyers return.

🏗 Tridel Takes Over Toronto’s Struggling Mega-Tower

• The One entered receivership in October 2023 with $1.6 billion in debt after years of delays and cost overruns.

• Over 70% of the upper luxury units remain unsold, and 9 out of 19 sold units are in default on deposits.

• Tridel has been appointed to complete the construction of The One, Toronto’s 85-storey luxury condo tower at Yonge and Bloor.

Why This Matters: Falling interest rates may revive preconstruction demand, but high borrowing costs still pose challenges for financing and profitability. Investors may find opportunities in distressed assets like The One as developers seek partnerships or funding to complete projects.

 🚧 Canada’s Construction Productivity Hits 30-Year Low

• Canada’s construction productivity is at a 30-year low, with the residential sector being the worst performer.

• Canada faces a housing deficit of 3.5 million homes, but the federal plan targets only 1 million homes by 2031, falling short by 2.5 million.

• Rising regulatory barriers, labor shortages, and material costs make it unlikely the federal housing targets will be met.

• The construction sector now represents 12.6% of all labor hours worked in Canada as of 2023.

Why This Matters: The ongoing housing shortage may drive long-term demand for residential development despite productivity issues. Modular and prefabricated construction projects offer new investment opportunities as the industry shifts to more efficient methods.

 🌇 Toronto Condo Oversupply Leaves 40,000 Units Unsold

• New condo sales are down 80% year-over-year, hitting a 30-year low in Q3 2024.

• The Greater Toronto Area has nearly 40,000 condo units sitting unsold, including new developments, assignments, and resale listings.

• At current sales levels, it would take over 50 months to absorb the available condo supply, more than 3.5 times the typical 14–16 months.

Why This Matters: Rising interest rates and high borrowing costs have pushed many pre-construction buyers to sell units before closing, driving assignment sales. Buyers now have more options and negotiating power, slowing price growth and pushing sellers to lower prices.

📝 Canada Rolls Out New Mortgage Rules for First-Time Buyers

• New Mortgage Rules

  • Effective Dec. 15, 2024:

    • Extended 30-year amortizations for first-time buyers and new builds.

    • The insured mortgage limit was raised from $1M to $1.5M.

• Additional Rules

  • Effective Nov. 21, 2024: Exemption from the 2% stress test for homeowners transferring mortgages.

  • Effective Jan. 15, 2025: Up to 90% refinancing for secondary suites to increase rental supply.

Why This Matters: Mortgage rate reductions are expected to further stimulate market activity in 2025. The ability to refinance up to 90% for secondary suites could increase property value and rental yield, particularly in high-demand urban areas.
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💸 Toronto's New Short-Term Rental Rules for 2025

• New bylaws come into effect on January 1, 2025.

• Short-term rental operator registration and renewal fee increases to $375.

• Operators must choose between renting an entire unit or just a room.

• Partial-unit rental operators can advertise only one fewer than the number of bedrooms in their home.

• Annual inspections for registered rentals are now required.

• Registration is tied to the principal residence address, and revocation leads to a 1-year ban on reapplying.

• Multi-tenant house operators cannot apply for registration.

• All of these details can be found on the City's page.

Why This Matters: Government spending on luxury properties during a domestic housing crisis undermines public confidence and highlights misaligned priorities. The lack of transparency and foresight in these acquisitions emphasizes the risks of overreliance on government-driven real estate investments.

 🤔 WTF of The Week

Some Ontario cities charge over $200,000 per unit in development charges, which has a severe impact on housing affordability.

These fees inflate prices, stall projects, and burden buyers already struggling to enter the market.

For years, development charges have propped up property values and kept property taxes artificially low, benefiting long-time homeowners while shifting the costs to new buyers.

As development revenue dwindles, municipalities like Toronto are grappling with significant property tax hikes, revealing the shaky foundation of relying on these fees to balance budgets.

🛠 Our Trusted Providers

Tired of dealing with riff-raff service providers in real estate? These are our Trusted Providers—handpicked by Urban 411, so you can leave the guesswork at the door.

Cardinal Law

The law firm for real estate investors in Ontario
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Zown

Empowering Canadian home buyers with innovative solutions.
Zown is reshaping the home-buying journey with offerings like 1.5% cash back on purchases. Their growing realtor network also enables licensed agents to unlock additional income while providing unmatched value to homebuyers. 👉 See Zown’s Offering

HomeAbroad

Your One-Stop Solution for Canadian Investments in U.S. Real Estate
Unlock the U.S. property market with HomeAbroad’s 30-year fixed-rate mortgages, tailored specifically for Canadian investors! With no need for a U.S. credit history, you can qualify based on the property’s income rather than personal income or assets. Start your U.S. investment journey with ease. 👉 Get a Free Mortgage Rate Quote Now

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Your solution for better mobility and pain relief.
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