The Liberals’ plans for solving housing affordability and the Home of the Week: Canadian real estate news for the week of May 2

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This week, we ask experts what they think about Prime Minister Mark Carney’s housing promises. Plus, COVID-era buyers sell at a loss, and one home worth a look.

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Analysis

Will Carney end the housing crisis? The promise and peril of the Liberals’ plan

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Prime Minister Mark Carney and his Liberal minority government will have their work cut out for them as Canadians face the financial impacts of the trade war and ongoing cost-of-living concerns. And tackling the housing affordability crisis won’t get easier in this environment.

During the campaign, the Liberals promised to increase housing supply by doubling the speed of construction to 500,000 new homes a year. To do that, the party pledged to create an entity called “Build Canada Homes,” that acts as a developer to oversee the construction of affordable housing.

First-time homebuyers were also promised some relief, no longer having to pay GST on purchases of homes priced at or less than $1-million, and lower GST on homes between $1-million and $1.5-million.

But the question is, as Erica Alini writes, will Carney be able to deliver on his ambitious pledges? Alini asked three housing experts and advocates to share what they’re optimistic about — and skeptical of — in the Liberals’ housing plans.

Affordability crisis

When exactly did Canadian housing become so unaffordable – and who’s to blame?

Home prices in Canada began rising steadily starting in 2001, but the true inflection point came around 2007 and 2008. Since then, the the ratio between home affordability and average disposable income has steadily rose, reaching a peak in 2022. So what changed in 2007-08?

As Hanif Bayat writes, the primary factor that shifted the supply-demand balance toward unaffordability appears to be demand driven by speculative investment. Ultralow interest rates made borrowing inexpensive and encouraged investors to use mortgage leverage for large returns on relatively small down payments. This led not only to worsening affordability, but Canadians now also carry the highest levels of personal debt in the top 10 world economies.

Sitting empty

Vancouver swamped by unsold condos as supply outpaces demand

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Vancouver’s number of unsold, newly built condo units is expected to increase by 60 per cent by year’s end. As Kerry Gold writes, it’s a bleak situation for developers, hampered by trade wars, an uncertain interest rate, rising costs and regulations designed to thwart a previous market that was driven by speculation and investment. Those days are over. One economist says the condo industry is currently “out of gas” as investors flee the housing market.

This week’s lowest fixed and variable mortgage rates in Canada

Rates shown are the lowest available for each term/type and category (insured versus uninsured) as of market close on Thursday May 1.

Cold feet

In areas outside the GTA, homebuyers are wary

Real estate agents say move-up buyers in cities around Ontario’s Greater Golden Horseshoe are rare and first-time purchasers are wary. As Carolyn Ireland writes, weakening labour markets and U.S. tariffs are still souring market activity. As for whether the end of the federal election will encourage more buyers to come out of the woodwork, Ireland told me it’s too soon to tell.

“Certainly agents hope it will remove one element of uncertainty but we don’t know yet if their wishes will come true,” she said. “There are just so many other, bigger unknowns.”

Diminishing returns

In Ontario, selling at a loss becomes commonplace

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A quarter of homeowners who bought during the COVID-era real estate price bubble would lose money if they sold in 2024. As Shane Dingman writes, 25 per cent of properties bought in 2022 and sold in 2024 lost value. The highest median losses came from high-end cottages in Muskoka, which dropped $240,000 in value. One broker said some of the COVID-era buyers may have been reckless with their purchases because the money didn’t seem real, as they sold their homes for exorbitant prices to upgrade to more expensive properties.

“I have often heard sales people say a house is ‘worth’ what someone will pay for it,” Dingman told me. “What is true is that some of these houses gave back the ‘on paper’ equity gains they made during the pandemic buying frenzy, but many of them are still selling for more than they would have prior to 2019.”

I asked him if this downward trend in prices could benefit potential homebuyers, and he told me it depends.

“Some areas in Ontario have seen dramatic price swings in the last five years, so while some who own property may not be so keen to lock in losses by selling now after buying high, others may find value if they are downsizing to a cheaper property if they are selling one that has held its gains,” he said. “First-time buyers remain the most stressed group as home values are still mostly at all-time highs compared to relatively stagnant wages or earning power.”

Home of the Week

A sprawling mansion for a connoisseur of meat and motocross

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1546 Maryhill Rd., Woolwich, Ont. – Full gallery here

The four-bedroom, eight-bathroom home just 20 minutes outside Kitchener-Waterloo sits on a 122-acre plot of land — something the current owners have taken advantage of. The land surrounding the home was used for snowmobile racing in the winter, and motocross in the summers. Once you tire yourself out and finally go inside, the home is designed with both Muskoka cottage life and West Coast sensibilities in mind. The front foyer sits at the middle of the home’s central mass with four small wings extending in an almost X-shape: one for the triple-car garage; one for the family room and barbecue wing; one for laundry and kids’ bedrooms; and one wing for the primary suite.