Capital gains tax reform needed to boost housing market, says RE/MAX Canada president

Canada’s housing market has remained frozen throughout most of 2025, with many buyers holding off on entering the fray and plenty of sellers still unwilling to slash their asking price despite falling values.

But there’s another factor preventing many would-be sellers from listing their properties, according to Don Kottick, president of real estate giant RE/MAX Canada: the national capital gains tax, a measure he views as excessive and one that’s keeping quality inventory off the market.

In March, prime minister Mark Carney cancelled a proposed hike in Canada’s capital gains inclusion rate, using his opening weeks in office to ax an unpopular measure planned by his predecessor Justin Trudeau.

Currently, Canadians do not have to pay tax on the sale of a home if it was their principal residence for every year they owned it, but might not benefit from that exemption if there was a period when they didn’t live mainly in that property.

When selling another property, 50% of capital gains are taxable at a rate that depends on the seller’s income. However, Kottick said that rule is a punitive one that leads many property owners to conclude it makes no sense to sell a home.

“If the government wants to see more inventory come on the market, they need to stop the high level of capital gains tax that they’re charging,” he told Canadian Mortgage Professional. “People aren’t going to sell places if they’re paying high capital gains taxes on their investments.

“If you want to see more inventory come in the market, then look at the capital gains as an incentive to reduce so that people will bring their investments onto the market. I think you’d be surprised how much inventory would flow on if we reduced our capital gains taxes. So that’s one area that the government doesn’t talk about – but I think that’s an area that should be looked at.”

Long-term supply crisis shows no sign of easing

The pendulum in Canada’s housing market has recently swung firmly in favour of buyers, with demand plunging compared with the amount of supply currently available.

But experts including Canada Mortgage and Housing Corporation (CMHC) economists have flagged that the country still faces a long-term housing supply shortage, particularly as construction and housing starts plummet amid high-profile condo crises in Toronto and Vancouver.

Kottick said the capital gains tax in its current form would only worsen that supply shortage in the years ahead, and urged the Canadian government not to use homeowners’ equity as a way to raise taxes further.

“I think the general consensus we’re finding is Canadians still want to own homes. Obviously because of the high taxes that we pay in Canada, there aren’t too many ways that we can accumulate wealth in real estate,” he said.

“It continues to be part of our culture: it’s who we are, and Canadians want to own homes. And as long as the government doesn’t play with the equity in our homes, I think it will continue to be something that people aspire to and continue to go as an asset class for accumulating wealth.”

‘It is what it is’: Trade war continues to impact market

Cancelling the proposed hike – which would have increased the capital gains tax rate to two-thirds for businesses, individuals, trusts, and corporations, Carney appeared to acknowledge the detrimental effect it would have on Canada’s homebuilding outlook.

“Canada is a country of builders,” he said in a statement. “Cancelling the hike in capital gains tax will catalyze investment across our communities and incentivize builders, innovators and entrepreneurs to grow their businesses in Canada, creating more higher-paying jobs.”

Still, another huge challenge for the housing market has also emerged this year: the US-Canada trade war, launched by US president Donald Trump shortly after taking office.

That continuing impasse has weighed against homebuying activity across the country, and Kottick expressed disappointment that a resolution still hasn’t been reached.

“It is kind of disheartening that they’re not taking these discussions seriously and looking to a resolution like other countries have,” he said. “It is what it is.”

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The Bank of Mom and Dad is still alive and well in Canada’s housing market

Ask any hopeful buyer on the margins of Canada’s housing market – particularly in its most expensive cities – and chances are they’ll tell you scraping together the funds required to afford a downpayment is the biggest hurdle they face.

Even falling property values over the past two years have failed to change that picture substantially, with buyers who want to avoid having to pay mortgage insurance still facing a huge downpayment requirement (including for average homes).

That means a troubling division that’s emerged in the market shows little sign of fading: the gap between buyers trying to afford a downpayment on their own, and those able to turn to the so-called “Bank of Mom and Dad,” financial assistance from parents or other family members to fund their purchase.

Eyewatering prices still a factor despite recent drops

Markets like Toronto and Vancouver, where housing is far more expensive than other cities in Canada, are still likeliest to see parents chip in to support a property purchase by their children, according to Statistics Canada.

And while those markets have cooled over the past 18 months, with bidding wars and rampant price appreciation no longer common, first-time buyers are still struggling to get their foot on the ladder alone.

“You see the Bank of Mom and Dad still going on because of the downpayment – now, though prices have softened up, it’s still a lot to save up,” Toronto-based mortgage agent Christelle Mwamba (pictured top) of Mortgage Scout told Canadian Mortgage Professional.

For a $1 million home, a minimum downpayment comes to $75,000 (5% of the first $500,000, which equals $25,000, and 10% of the portion of the purchase price above $500,000 – in this case, $50,000), with mortgage insurance also tacked onto the monthly payments.

New buyers can put money away in a first-home savings account, but the maximum contribution allowed is $40,000. “You still have that big difference that you need to come up with if you were to buy a house for a million dollars,” Mwamba said. “So I still see the Bank of Mom and Dad helping the kids.”

The good news for hopeful buyers who want to put together the downpayment themselves without turning to family help: prices may not be expected to plunge in the next year or two, but most forecasts suggest they still have some way to fall at the beginning of 2026.

Rule changes could bring some relief for new buyers

Measures introduced by the federal government last year could also boost first-time buyers’ purchasing power, Mwamba said, even if they haven’t had a massive impact just yet.

Those include the extension of 30-year amortizations to buyers, allowing them to lower their monthly mortgage payments, and a hike in the mortgage insurability cap to $1.5 million, up from the previous limit of $1 million.

In Ontario, meanwhile, the provincial government has proposed tax relief for some first-time homebuyers, including a rebate of the 8% HST for new buyers purchasing a home for up to $1 million.

“All of these things are good,” Mwamba said. “I think this year was really about building a foundation and then next year, we’re going to see the impact of it. For the past few months, affordability has not changed for first-time homebuyers. It’s been a modest improvement, but it hasn’t been so drastic compared to during the pandemic.”

First-time buyers will hope that those government moves, and the prospect of slightly lower rates and prices in 2026, could improve an affordability picture that still looks bleak this year.

If rates fall far enough to allow borrowers to qualify at 5.25%, Mwamba said, that could prove a big positive development for the housing market. The stress test means borrowers are currently required to show they can afford a mortgage payment of either 5.25% or their contract rate plus 2%, whichever is higher.

“I can’t wait until we’re able to qualify at 5.25%,” she said. “I’ve yet to see it since the pandemic, but we’ll see. I think that will also be a big factor next year because this year, it hasn’t changed in a major [way] for people to have the incentive to come into the market.”

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!

Real estate giant sees cause for cautious optimism in 2026 housing market

The Canadian housing market is positioned for modest growth in 2026, with more buyers preparing to enter the market as inventory normalizes and price pressures ease, according to REMAX Canada's latest outlook released this week.

The brokerage expects national home sales to climb 3.4% next year, a turnaround from 2025's decline across most regions.

One in 10 Canadians said they plan to purchase a home in the next 12 months, with half being first-time buyers, according to a Leger survey commissioned by REMAX Canada conducted October 24-26, 2025.

"Amid looming economic clouds, Canadians are maintaining their interest in homeownership," said Don Kottick, president of REMAX Canada.

"The resilience that began to emerge in the fall is anticipated to continue into 2026, with first-time buyers in particular finding creative ways to save and enter the market."

The market's shift from shortage to surplus is beginning to favour buyers. Inventory increased year-over-year across 75.8% of regions in 2025, contributing to steeper price declines. REMAX projects average national prices will moderate a further 3.7% in 2026.

Rate sensitivity remains a key variable

Perhaps more tellingly, 23% of Canadian respondents said they would be ready to buy if the Bank of Canada reduced rates by another 0.5 to 1%. This underscores how rate-sensitive demand remains, even as economic conditions gradually improve.

The BoC will move away from rate hikes and toward cuts next year as inflation stabilizes and employment concerns take center stage, according to IG Wealth Management's 2026 Market Outlook.

Among younger Canadians aged 18-35, optimism runs higher. Twenty-one percent believe the economy will improve next year, compared to just 16% of all respondents.

However, this demographic faces return-to-office mandates. Some 17% of Canadians expressed concern about RTO policies affecting their housing search, with younger buyers more likely to factor commute times and transit access into their decisions.

"Transit access is becoming an increasingly important factor for younger Canadians seeking their first home," Kottick said. "Many are weighing commute times and workplace flexibility more carefully in their search."

Some provinces are seeing fewer remote workers moving from Toronto and Vancouver, but other buyer types are still moving to less pricey areas.

“I’m seeing more and more young people come here, renting and setting up shop here,” Sarah Albert, a Moncton-based mortgage broker with Premiere Mortgage, told Canadian Mortgage Professional.

“They’re not coming here right from Ontario and buying – they’re just switching provinces.”

Regional divergence persists

Market conditions remain uneven across the country. In the Greater Toronto Area, prices fell 3.5% year-over-year through October, while Vancouver's high-end segment dropped 6.3%.

Atlantic Canada, on the other hand, projects 3-5% price growth, backed by steady in-migration and new construction activity.

While uncertainty lingers, shifting supply-demand dynamics are creating windows for motivated buyers, particularly first-time purchasers willing to act strategically.

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!

First-time homebuyers still aren’t flocking to the market despite big-city price drops

House prices have been on a months-long slide across several major Canadian markets – but that still hasn’t seen a flood of first-time buyers stepping off the sidelines.

In Toronto, the MLS Home Price Index (CPI) composite benchmark, a key gauge of housing values in the city, fell by 5% last month, according to the Toronto Regional Real Estate Board (TRREB), while average selling prices were down 7.2% year over year.

Vancouver, meanwhile, saw its HPI composite benchmark slip by 3.4% compared with October 2024 and inch lower from the previous month.

But both those markets are still experiencing a deep freeze, with sales activity much lower than the same time in 2024 and little sign of a resurgence anytime soon.

First-time purchases still out of reach for scores of buyers

The main reason first-time buyers aren’t entering the market in droves despite falling home prices: those values are coming down, but they’re still prohibitively high for many young professionals in Canada.

That’s according to DLC Clear Trust mortgage broker Micky Khaneka (pictured top), who told Canadian Mortgage Professional those price drops – and the Bank of Canada’s series of interest rate cuts to date – still haven’t moved the needle for plenty of hopeful first-time buyers in Toronto.

“I feel like affordability still seems to be a lot of concern for the first-time homebuyers,” he said. “Even with lower rates, for the people who are most interested, unfortunately when you throw the stress test on there, there’s still a relatively high payment. Especially if it’s a single individual earning an average salary of $60,000 to $80,000 or $90,000.”

Canadians have had plenty to ponder about the economy in 2025. The trade war launched by US president Donald Trump at the beginning of the year has dominated headlines and sparked speculation of a potentially heavy hit to Canada’s economy as a result.

What’s more, Toronto’s condo market is still mired in crisis, with prices plunging and buyers often saddled with big losses – and plenty of regret – when closing time on their purchase comes around.

The Vancouver condo outlook may not be quite as bleak as in Toronto, but presale buyers there are also seeing challenges with appraisals frequently coming in well below the agreed price.

Buyer hesitation, caution continue to weigh against housing outlook

Amid that economic volatility, it’s perhaps no surprise that first-time buyers are hesitant to take the plunge, Khaneka said.

“For people who’ve been waiting on the sidelines, considering everything that’s coming up in the news and everything that they hear, they’re still hesitant because the consensus is that we’re probably going to see turbulent times for the next six to eight months before the market starts to come up, stabilize, or maybe even stop falling,” he said.

“Condos are a very scary part for most people because they’re just not sure. It seems like [the market] is in freefall at the moment and there’s not a light, at least in the near term, that makes people confident in a purchase – especially for first-time buyers. It’s a big purchase for them, so a lot are very hesitant or cautious before they make any decisions on that specific sector.”

That suggests it could take a calmer outlook for the condo market – and progress on the trade war question – before first-time buyers on the fence decide it’s the right time to make their move.

Canada Mortgage and Housing Corporation (CMHC) believes it could take years before demand begins to eat meaningfully into oversupply in the condo market, while there’s been no indication that a trade deal is on the way between the US and Canada despite months of negotiations and stalled talks.

“People don’t like making big decisions at times when there’s so much uncertainty,” Khaneka said. “And I feel like the uncertainty about everything around us from the economy to real estate is at an all-time high. And it makes people very, very nervous.”

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!

More BoC cuts could be ahead in 2026

Canada's monetary policy framework has fundamentally shifted. The Bank of Canada will move away from rate hikes and toward cuts next year as inflation stabilizes and employment concerns take center stage, according to IG Wealth Management's 2026 Market Outlook released this month.

The investment firm expects at least one additional 25-basis-point cut from the Bank of Canada in 2026, likely in March. This marks a clean break from the inflation-fighting stance that dominated policy from 2022 through 2024.

"Inflation control is no longer the binding constraint; employment is," the Outlook stated. The shift arrives as the United States Federal Reserve has already begun its own easing cycle, with expectations for four additional cuts through September 2026.

For mortgage professionals, the implications are straightforward: lower borrowing costs should continue flowing through the housing market. The outlook complements fiscal measures the federal government has announced, with Ottawa front-loading spending on housing, productivity and infrastructure.

This dual approach, where both monetary and fiscal policy support economic growth rather than restrain it, creates what IG calls a tailwind for the broader economy.

Philip Petursson, chief investment strategist at IG Wealth Management, said the combination of forces positions Canada favorably.

"Investors can expect the global economy to continue on a positive trajectory in 2026 as we move past the rolling recessionary environment of 2023 and tariff uncertainty over the last year," he said.

On the other hand, trade dispute continues to loom over the market and cloud the housing outlook, according to Royal LePage vice president, research and communications Anne-Elise Cugliari Allegritti.

“We’ve seen borrowing rates improve dramatically over the last two years and we know that in markets that have typically been very undersupplied, there’s lots of inventory available,” Cugliari Allegritti said. “All of those components are working in favour of buyers.

“What’s really holding them back is this uncertainty in the economy. There’s some hesitancy because of the trade dispute with the US. I think what’s really going to change that is some certainty, some sort of vote of confidence from our government that a trade deal can be made or is in the works.”

However, the Canadian dollar is expected to remain relatively stable, trading in a range between US$0.69 and US$0.71, offering predictability for cross-border transactions and trade relationships.

IG's analysis rests on what it identifies as four pillars: monetary easing from central banks, fiscal stimulus from governments, accelerating AI-driven capital investment, and a so-called wealth effect where rising equity markets boost household spending.

The wealth effect proves particularly relevant to housing markets. When stock portfolios gain value, households tend to increase discretionary spending and pursue larger purchases. The highest income quintile, which owns 85% of equities and drives roughly 40% of aggregate consumption, becomes the primary driver of this cycle.

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!