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Tuesday, April 23, 2024

Affordable prices and high spur ‘exodus’ from Canada’s priciest cities

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According to a recent report, affordability challenges and increased taxes have prompted homebuyers post-pandemic to exit the largest real estate markets in Canada and move to other provinces.

Christopher Alexander, President of RE/MAX Canada, believes that given the current housing market reality, it’s not surprising that buyers are willing to travel across the country to own a home.

The report, published on February 6, examined market conditions in six provinces, including Vancouver, Calgary, Winnipeg, Toronto, Montreal, and Halifax.

The increase in taxes, record-high land prices, and rising mortgage rates have fueled a “post-pandemic migration” away from more expensive markets like Toronto or Vancouver, leading to an increased interprovincial migration to Alberta and Atlantic Canada in 2023.

The report notes that nearly 60,000 homebuyers in Canada have shifted provinces, primarily to Alberta, but also to Nova Scotia, New Brunswick, and Prince Edward Island.

According to Alexander, buyers with cash from provinces like Ontario and British Columbia understand that selling their property in Toronto or Vancouver will yield significantly more value when investing in major centers in Alberta or Atlantic Canada.

Tax burden

This report comes amid the attention-grabbing increase in urban taxes in Canada.

Last week, Toronto Mayor Olivia Chow announced plans to raise property taxes to 9.5% for the country’s largest real estate market. This proposal will be discussed by the city council on February 14.

RE/MAX’s report also emphasizes the tax burden related to new home construction in Toronto.

Research shows that taxes, fees, and development charges for new condos make up about 25 to 30% of the total purchase price.

For example, a $717,000 condominium in Toronto would include fees of approximately $180,000 to $215,000 added to the overall price.

According to the report, low-rise homes also face a significant tax burden. This conclusion is based on a 2019 study by the Altus Group, indicating that government fees, taxes, and charges added $222,000 to the cost of a new family home in the Greater Toronto Area.

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