December 22, 2023 THIS YEAR’S BIGGEST CONVERSATIONS: POLICIES, AFFORDABILITY AND INTEREST RATES

Objects in the rear-view mirror are closer than they appear, particularly when it comes to Canada’s real estate market. As we look back at 2023, the themes that permeated the news are still front of mind – and will likely continue to dominate the headlines of 2024. Of the articles that we shared and the articles that we wrote, those discussing policy, affordability and interest rates were the most sought-after pieces by far. Of course, as is glaringly evident, there’s a symbiotic relationship between the three topics, as each contains a lever that directly affects the others.

Throughout the year, MLA Canada’s Newswire shared the most pressing and important news in Canadian real estate. Here’s a look back at the top-read articles from 2023, starting with the most clicked-on piece (click the headlines to read the articles):

BANK OF CANADA SAID IT CAN PAUSE RATE HIKES

In January, the Bank of Canada increased its key interest rate to 4.5%, reaching its highest level since 2007. This move concluded a series of eight consecutive hikes over a year, cumulatively adding 4.25 points. Aimed at reducing inflation, this step was anticipated to be the climax of the tightening cycle. Inflation, which had peaked at 8.1%, was expected to significantly decrease, projected to reach 3% by mid-2023 and 2% the following year.

TRUDEAU UNVEILED FIRST FUNDING AGREEMENT IN THE HOUSING ACCELERATOR FUND

Prime Minister Justin Trudeau announced the first funding agreement under the federal government's Housing Accelerator Fund in September, a $74-million initiative with London, Ontario. This agreement, designed to create over 2,000 housing units in three years, was part of a wider strategy to address Canada's housing challenges. The fund, introduced in the 2021 election, aims to facilitate 100,000 new housing units across Canada and seeks to improve affordability and accessibility in urban areas by promoting high-density development and simplifying zoning laws.

BC CRACKED DOWN ON SHORT-TERM RENTALS

After British Columbia introduced policies to restrict short-term rentals, November saw an increase in furnished properties in Vancouver seeking long-term tenants, indicative of Airbnb owners adapting to the new regulations. This shift, seen on platforms like Craigslist, indicated a move towards more stable, long-term leasing in the rental market.

SHORT-TERM RENTAL RULES SPARKED DEBATE

Another article from September on British Columbia's new short-term rental laws summarized the debate over their potential impact on affordable housing and tax fairness. Critics targeted the decision to allow secondary suites for short-term rentals and called for harsher penalties on online platforms for non-compliance. Some experts expressed the legislation is lenient on rental platforms and emphasized the importance of enforcement and data sharing for effectiveness.

RBC FORECASTED A SLOW FALL FOR TORONTO AND VANCOUVER

Economist Robert Hogue from RBC predicted a subdued fall for Canadian real estate, mirroring the sluggish market trends observed during the summer due to high-interest rates and economic challenges. Despite an increase in available properties, buyer sentiment remained low, particularly in Toronto and Vancouver, where demand-supply conditions had eased significantly. Hogue suggested the broader market recovery will depend on a potential decrease in interest rates in 2024.

AMENDMENTS TO THE FOREIGN BUYER BAN WERE INTRODUCED

In March, the federal government announced amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act, easing restrictions of the foreign buyer ban. Key changes included raising the foreign control threshold in entities from 3% to 10%, permitting non-Canadians to buy residential properties for development purposes, lifting the ban on purchasing vacant land zoned for residential use, and allowing work permit holders with at least 183 days remaining on their permit to purchase residential property. These amendments aimed to balance housing affordability for Canadians with the needs of newcomers and businesses, allowing them to contribute more effectively to Canada's housing market and development.

HOUSING CRISIS THROUGH THE EYES OF A DEVELOPER

In an interview in March, Michael Audain of Polygon Homes discussed the high housing costs in Metro Vancouver and Victoria, advising young people to adapt to changing neighbourhoods. Audain advocated for higher density and supporting immigration to address housing needs, and criticized single-family zoning and housing taxes, seeing them as counterproductive to solving the housing crisis. Audain shared his belief in the necessity of diverse housing options and the preservation of heritage neighbourhoods, while also expressing concerns about regional migration patterns within B.C.

Beyond sharing on the Newswire, we like to take a more in-depth look at what’s going on in the industry. Our own articles discuss a range of the most pertinent and timely topics, bringing in expert opinions and market overviews. In 2023, the themes that grabbed the most attention were our series on affordability and pieces on the policies that are forming the landscape.

HOUSING POLICY ROUND-UP: NAVIGATING THE NEWEST DEVELOPMENTS IN VANCOUVER'S HOUSING LANDSCAPE

Policy changes discussed in November focused on development near transit hubs, eliminating parking requirements in Vancouver, building homes on public land, and revising fees for developers. These measures were designed to increase housing supply and affordability, though they come with varying impacts on developers, homeowners, and community dynamics.

HOUSING POLICY ROUND-UP: UPDATES AND THEIR IMPACT ON AFFORDABILITY

September saw significant government actions to improve Canada's housing affordability. Key measures discussed included removing GST on purpose-built apartment buildings, increasing Vancouver's short-term rental fees, approving 'Missing Middle' housing zoning, launching the $4B Federal Housing Accelerator Fund, updating BC's Building Code for better accessibility and efficiency, introducing the Single Housing Application Service for streamlined permitting, and capping rental increases at 3.5%.

EXAMINING APPROVAL TIMELINES AND THE IMPACT ON HOUSING AFFORDABILITY

In August, the focus on Canada's housing affordability crisis highlighted the need for 3.5 million new housing units by 2030. A CMHC survey linked regulatory approval delays to lower affordability, particularly in regions with stringent land use regulations like Toronto and Vancouver. British Columbia's government responded with two initiatives: accelerating permitting and approval processes and adopting digital permitting technologies.

FINDING SOLUTIONS: HOW THE SMALL HOUSING INITIATIVE CAN INCREASE DENSITY TO INCREASE AFFORDABILITY

Richard Bell, Chair of Small Housing B.C., discussed the organization's role in promoting gentle densification of single-family lots for affordable housing. SHBC focuses on creating ground-oriented housing options through initiatives like the Gentle Density Network and the PAtH model, which offers density bonuses for affordable units. Bell presented an outline of various benefits for multigenerational living, aging in place, and creating new rental units, contributing to solving the affordability problem.

THE POTENTIAL PATH TO HOUSING AFFORDABILITY

In the final part of our series on housing affordability, we interviewed Hani Lammam of Cressey Development Group. Lammam emphasized that increasing housing supply is key to affordability and advocates for government-led collaboration with the private and non-profit sectors. He suggested that the most effective strategy is to incentivize participants to increase housing supply, and then proposed additional strategies like reducing regulations, allowing smaller home sizes, and rethinking parking and balcony requirements to improve affordability and create vibrant communities.

LOOKING TOWARDS 2024

It's not a stretch to say that much of the conversation that will happen in 2024 will continue along the same topical themes. Where 2023 was a year of realization and the start of a course of action, much of what has been implemented or outlined from a policy standpoint has yet to have its full effect on the market and its affordability – if affordability in its current definition is even a realistic goal. Let’s see where 2023’s planning will take us in the next year on that path to affordability. To keep on top of the latest news, subscribe to our Newswire.