In the wake of the pandemic, soaring housing prices and escalating taxes are steering homebuyers away from Canada's major real estate markets, triggering what experts are calling a "post-pandemic exodus," according to a recent report by RE/MAX Canada.
Christopher Alexander, the president of RE/MAX Canada, commented on the findings, stating, “Given today’s housing market realities, it comes as no surprise that buyers are willing to travel across the country to achieve home ownership.”
The report, published on Tuesday, delved into market conditions in six provinces, including Vancouver, Calgary, Winnipeg, Toronto, Montreal, and Halifax. It highlighted tax rate hikes, record-breaking housing prices, and increased mortgage rates as catalysts for the exodus, with many buyers seeking more affordable options in provinces like Alberta and Atlantic Canada.
In 2023, approximately 60,000 Canadian homebuyers made the decision to relocate, with Alberta being the primary destination. However, Nova Scotia, New Brunswick, and Prince Edward Island also saw an influx of newcomers.
The appeal of Alberta extends beyond affordable housing values. Alexander pointed out that the province's tax policies, including the absence of a provincial sales tax and zero land transfer tax on residential real estate, make it an attractive option for cash-rich buyers from pricier provinces like Ontario and British Columbia.
“In addition to affordable housing values and extensive job opportunities, Alberta is well known for its position on taxation, with no provincial sales tax and zero land transfer tax on residential real estate,” Alexander said.
The report comes at a time when municipal tax increases are grabbing headlines across Canada. Toronto, in particular, is facing a proposed 9.5% property tax hike, which will be discussed by the city council on February 14.
RE/MAX’s report also shed light on the tax burdens associated with new home construction in Toronto. It revealed that taxes, levies, and development fees on new condos make up an estimated 25 to 30 percent of the overall purchasing price. For instance, a $717,000 condominium unit in Toronto includes approximately $180,000 to $215,000 in fees integrated into the overall price.
The burden of taxes is not limited to condos, as the report highlighted a 2019 study from Altus Group, indicating that government fees, taxes, and charges added $222,000 to the cost of a new single-family home in the Greater Toronto Area.
“Affordability and opportunity are key to healthy and sustainable real estate market activity and a vibrant economy,” emphasized Alexander. “As such, the potential economic impact of ongoing out-migration on the future of individual provinces should raise alarm bells.”
In conclusion, the report underscores the shifting landscape of the Canadian real estate market, driven by a pursuit of affordability and an aversion to high taxes, prompting residents to seek new opportunities in provinces offering a more favorable economic environment.
