CMHC warns soaring development charges are reshaping Canada’s housing costs

Canada’s housing file has already been under pressure from rates, construction costs and zoning. Now new numbers from Canada Mortgage and Housing Corporation (CMHC) put a sharper price tag on another piece of the puzzle – the development charges that cities levied on every new unit.

The federal housing agency’s latest data set, drawn from 30 municipalities in Ontario, British Columbia, Alberta and Quebec, showed those fees accounted for a material share of new-home prices and varied widely from one market to another.

In Ontario alone, CMHC found development charges could represent 8 to 16% of a new condo price and up to 9% of the cost of a single-detached home in Toronto.

“New data collected by CMHC shows development charges account for a significant part of the cost of a new housing unit in some cities,” said Mathieu Laberge, CMHC’s chief economist and senior vice-president of housing insights.

"Charges vary greatly across the country both in their magnitude and on how they are charged."

He added that “understanding development charges is key to understanding housing supply and affordability across Canada. They shape both the cost of housing and the pace at which communities can grow, while being an important funding source for a broad range of municipal infrastructure.”

For a two-bedroom apartment, CMHC’s pilot data showed per-unit charges of about $39,600 in Ottawa and $121,500 in Markham, equal to 8.2% and 15.7% of average new condo prices in those markets.

In the Greater Toronto Area, charges on a single-detached home ranged from roughly $125,000 in Pickering to about $180,600 in Toronto, or close to 9% of the average absorbed price, CMHC found.

Municipal revenue needs vs affordability goals

Builders and brokers push back on cumulative “cost‑to‑build” pressures. Rising land, labour and material costs in Ontario have been “compounded by high municipal development charges,” contributing to stalled projects and weaker housing starts.

Industry groups also warn homebuyers are “still bearing the burden of soaring development fees,” with the Ontario Real Estate Association estimating that on average, development charges could add “up to $135,000 to the cost of a new home” in some markets. 

The association has proposed alternative models for funding growth. One idea is to let municipalities treat water and wastewater services similarly to energy services – amortized across the broader user base, rather than front-loaded into development charges.

The group is calling for pro-housing policies that meet municipalities' infrastructure needs without pushing costs onto future homeowners. It also encourages the government of Ontario to implement solutions that help “get shovels in the ground.”

CMP

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Toronto's condo market crisis worsened in November

Condo buyers sat out Toronto’s market in November, deepening a downturn that has already rattled investors and developers.

Sales in the 416 core fell 21.8% year over year to 880 units, while transactions in the surrounding 905 dropped 21.4% to 419. That total of 1,299 condo sales was 21.7% lower than a year earlier.

Average prices also slipped, down 1.7% in the 416 to $701,259 and 8.7% in the 905 to $583,578, for a GTA-wide condo average of $663,290 – 3.8% below last November.

The weakness came against a broader slowdown. Across all home types in November, GTA sales fell 15.8% year over year and the average selling price dropped 6.4%, according to the Toronto Regional Real Estate Board.

Condo sentiment turned sharply negative

The data reflects a deeper reset in how Canadians view the condo asset class. Thirty-five percent now believe condos are no longer a good investment, up five percentage points from March 2025, according to a Leger survey commissioned by Rates.ca.

Only 17% said condos had always been a good investment, down from 22% earlier in the year.

“Investor appetite has diminished in the current economic environment, leaving demand primarily driven by owner-occupants who typically seek larger, more functional spaces than smaller condos provide,” said Steven Yanni, managing broker at HouseSigma.

Younger buyers, though, view the same conditions as an opportunity. Among Canadians under 35, 39% said they would consider purchasing a condo, compared with 27% of those over 35, the survey found.

A fragile opening for first-time buyers

“First-time homebuyers have more choices, stronger negotiating leverage, and improved affordability after multiple Bank of Canada rate cuts,” said Clara Leung, real estate broker and mortgage agent at Swivel Mortgages.

“Many are using this window to get into the market and to build equity.”

New federal rules that raised the insured mortgage cap to $1.5 million and extended amortizations to 30 years for new builds, along with Ontario’s 8% HST rebate on homes under $1 million, are touted by brokers as potentially delivering more than $130,000 in combined savings for some borrowers.

Still, affordability remains a stumbling block even as prices fell. “I feel like affordability still seemed to be a lot of concern for the first-time homebuyers,” DLC Clear Trust mortgage broker Micky Khaneka told Canadian Mortgage Professional.

“Even with lower rates, for the people who were most interested, unfortunately when you threw the stress test on there, there was still a relatively high payment. Especially if it was a single individual earning an average salary of $60,000 to $80,000 or $90,000,” he said.

Small “dog crate” units bore the brunt

Khaneka said many investors have been left with cramped, hotel‑sized studios that today’s renters no longer wanted. Those units, he added, are “just not rentable” except to a narrow slice of single professionals, leaving “an oversupply of a specific type of units downtown.”

Toronto’s condo slump has been described a “perfect implosion” in the small‑unit segment, with investors unable to close as appraisals came in below preconstruction purchase prices and rents slipped.

Canada Mortgage and Housing Corporation’s deputy chief economist, Aled ab Iorwerth, recently told CMP he was watching Toronto closely but did not yet see delinquencies at crisis levels, even as they climbed to their highest point since 2012.

He warned that plunging apartment starts could leave the city “back in a shortage” three or four years from now as today’s projects are completed and little new product replaces them.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

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Tariffs remain the biggest question mark over Canada’s 2026 housing market

One of the biggest stories of the year for Canada’s economy looks set to spill into 2026, with no end in sight to the trade war that’s rattled homebuyers and dented the housing market outlook.

Over 12 months have now passed since Donald Trump, then US president-elect, first vowed massive tariffs on Canada – the beginning of a saga that’s dominated headlines throughout 2025.

A series of tariff delays and exemptions for goods compliant with CUSMA (the Canada-US-Mexico Agreement) have staved off financial markets’ worst fears about the impact of the trade war, although it’s pushed plenty of would-be homebuyers to the sidelines amid lingering doubts about the economy.

Continuing economic uncertainty and concern about the labour market are still weighing against the housing outlook in Toronto, according to the Toronto Regional Real Estate Board (TRREB), which said positive developments on the trade front are needed to spur improved sales activity.

For now, prospects of a trade deal appear distant. Negotiators seem to have made little progress since Trump angrily cut off talks with Canada over the airing of anti-tariff ads in the US by the Ontario government. Prime minister Mark Carney, meanwhile, has been frank in his view that tariffs, in some shape or form, are here to stay.

Canadians slowly acclimatizing to stormy economy

Trade uncertainty kept the housing market in a “holding pattern” this year, REMAX Canada president Don Kottick (pictured top) told Canadian Mortgage Professional.

He expressed disappointment that the federal government has yet to reach a trade agreement with the US, seeing little chance of a positive outcome in the final weeks of this year.

But a glimmer of hope for Canada’s housing market, according to Kottick, is the fact that Canadians appear to be adjusting to the new reality and many have accepted that economic volatility will probably stick around in 2026.

Another helpful development: a series of interest rate cuts by the Bank of Canada since the middle of last year has clipped mortgage rates, with the central bank’s benchmark rate sliding by 275 basis points since June 2024.

“I think Canadians have just become comfortable with the uncertainty, and the other thing that’s happened is last year, rate declines brought a few more people off the sidelines,” Kottick said. “And now we’re at a point where I think the general consensus is that we’re not going to see any major rate decreases into Q1 and maybe even Q2 of this year.

“So I think buyers are kind of saying, ‘Hey, this is just the way things are.’ Rates aren’t going to come down substantially, and they’re probably going to start testing the market and coming back in.”

What’s in store for buyers next year?

Homebuyers across the country are likely to enjoy even more choice in 2026, with listings surging throughout this year and prices slipping in several of the most expensive cities.

REMAX’s latest survey looking ahead to the 2026 market showed that over a quarter of Canadians expect their region to be more affordable next year, while many also say another half-point or percentage-point cut to the central bank’s policy rate would boost their chances.

Still, potential homebuyers working in tariff-impacted industries may still be holding off on purchasing plans, with those US levies likely to have a big say in their employment prospects for the coming year.

Steel giant Algoma said this week it’s laying off over 1,000 workers – about 40% of its workforce – over what it described as Trump’s “unprecedented tariffs” and the impact they’re having on business.

Other areas are faring better. “November reports on employment and economic growth were much stronger than expected,” TRREB chief information officer Jason Mercer said. “The Canadian economy may be weathering trade-related headwinds better than expected.

“More certainty on the trade front coupled with positive economic impacts of recently announced infrastructure projects could improve homebuilder confidence moving forward.”

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Toronto home sales, prices slump again

November home sales plunged in Toronto compared with the same time last year as prices and listings also dipped, according to the city’s real estate board.

Last month saw a 15.8% slide in sales year over year, the Toronto Regional Real Estate Board (TRREB) said on Wednesday, with 5,010 sales recorded as the deep freeze in the housing market showed no sign of thawing.

Average selling prices remain above the $1 million mark but slipped by 6.4% compared with the same time last year, with the MLS Home Price Index Composite benchmark also falling – by 5.8%.

New listings dropped by 4% from November 2024, falling to 11,134. But active inventory was still higher than a year prior, climbing by 16.8% to 24,549.

The figures reflect a housing market that’s still struggling even despite interest rate cuts and falling prices over the past year.

Concerns over the economy are continuing to weigh on homebuyer optimism, according to TRREB president Elechia Barry-Sproule, as the US-Canada trade war lurches on.

“There are many GTA households who want to take advantage of lower borrowing costs and more favourable selling prices,” she said in remarks accompanying the TRREB statement. “What they need most is confidence in their long-term employment outlook.”

Jason Mercer, TRREB’s chief information officer, suggested recent encouraging signs in the labour market – including stronger-than-expected jobs numbers for October – could boost buyer confidence, although he highlighted the need for “more certainty on the trade front” in the months ahead.

Across the Greater Toronto Area (GTA), sales dropped across all property types. Detached properties posted a 14.8% year-over-year dip in sales activity, while semi-detached sales fell by 5.5% and townhouses saw a drop of 15.5%.

In the city’s beleaguered condo sector, meanwhile, activity continued to nosedive. Condo sales fell by 21.7% across the GTA to 1,299 units, with big slumps in both the 416 (city centre) and surrounding 905 area.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!

Ontario housing report warns of deepening slump in starts, jobs

A new housing report for the Greater Toronto Area and Greater Golden Horseshoe showed an even bleaker outlook for Ontario’s construction activity and jobs than earlier this year.

The study, prepared by the University of Ottawa’s Missing Middle Initiative for the Residential Construction Council of Ontario (RESCON), found that housing starts across 34 municipalities fell 34% in the first nine months of 2025 compared with the same period from 2021 to 2024, with condo starts down 51%.

Purpose-built rental was the rare bright spot, with starts up 42% over the same benchmark.

Researchers graded municipalities on five indicators covering starts and pre-construction sales. Seventeen of the 34 municipalities received an F, nine received a D and only eight earned a C or better (Milton, Newmarket, Richmind Hill, Brantford, Burlington, Kitchener, Waterloo, and Welland).

This was a slight improvement from RESCON’s Q2 analysis, when 22 municipalities failed, but one the authors expected to reverse as lagging-start data caught up.

The report also estimated that weaker construction activity translated into 35,377 fewer person-years of employment over the period, up from 24,195 in job losses outlined in the mid-year report.

“The findings of this report are alarming but confirm what the residential construction industry and our builders have been experiencing and saying for some time now,” RESCON president Richard Lyall said.

“We are staring into the abyss. The new home market has tanked. It is a particularly dark time for those who work in residential construction. There have been significant job losses across the board. Projects are being shelved, and this will have a significant trickle-down effect on Ontario’s economy. We must act quicky to stem the bleeding.”

Mike Moffatt, economist and founder of the Missing Middle Initiative, said the latest results showed that “the negative trend in employment has continued and there is significantly less work in the residential construction sector.”

He added that “the person-years of employment in the industry are down which shows the effect that the lack of housing starts and sales is having on the industry and the economy.”

Broader pressures on builders

The Q3 report followed earlier work for RESCON that concluded most Ontario municipalities were already falling well short of provincial housing targets, with first-half 2025 starts across the region down around 40% on a four-year average.

Nationally, Canadian Mortgage and Housing Corporation data highlighted that total Canadian starts declined on both an annual and month‑over‑month basis in recent months.

In October, national housing starts dropped 17% from the previous month. The seasonally adjusted annualized rate (SAAR) fell to 232,765 units, well below economists’ forecasts of 265,000 and down from September’s revised 279,174 units.

Governments in Ottawa and Queen’s Park pledged to double housing starts, but Moffatt and other analysts warned that target looked remote without major policy changes.

RESCON reiterated its call for broad tax relief, arguing that “taxes, fees and levies account for 36 per cent of the cost of a new home” – a figure the organization said justified eliminating sales tax on all new units, not just first‑time buyer stock. 

“This report is an eye-opener, as it notes we are trending in the wrong direction and the situation could get even worse,” Lyall said.

“Builders need to be able to build homes that people can afford. Steps must be taken to get the industry back on track. Our economy depends on it.”

Canada needs to build 3.2 million new homes over the next decade to restore affordability, the parliamentary budget officer warned. But the country isn’t keeping up—only about 227,000 new homes are expected each year until 2035, falling 65,000 short of the annual target.

CMP

We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market. 

Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome and rewarded!