Higher interest rates and resilient home prices mean most Canadians are getting less for their homes at the $1-million benchmark, according to a new Royal LePage report.
The analysis comes as would-be homebuyers continue to struggle with housing affordability, which market watchers say worsened again at the end of last year.
Royal LePage released a study Thursday morning that reviewed the average square footage, bathrooms and bedrooms available for homes listed around the $1-million price tag (give or take $50,000 or so) in major cities across Canada in December 2023.
The national average for a million-dollar home comes with an average of 3.2 bedrooms, 2.6 bathrooms and 1,760 square feet of space, according to the national real estate brokerage.
That’s relatively consistent with a similar report from last year, but in most cities, the amount of space available in the typical $1-million home shrank year-over-year.
And across those cities, there was a steep variability between what homebuyers are getting for a million dollars.
“It is all about perspective,” Karen Yolevski, COO of Royal LePage, tells Global News. “Depending on where you are in Canada, where you may be looking for a home, $1 million can mean something dramatically different.”
If you had a million dollars…
Coming in at the bottom of the pile was the core of Vancouver, which offers an average 900 square feet of space at the million-dollar mark. That’s roughly a third of what a homebuyer can get in Edmonton for the same amount.
A million dollars can get a homebuyer in the core of Toronto a home with an average of 2.8 bedrooms, 1.9 baths and 1,218 square feet of space, though those figures rise a bit higher if the lens is expanded to include the wider Greater Toronto Area.
The Greater Toronto and Vancouver areas, as well as their respective cores, all fell below the national average for space in million-dollar properties. Montreal and Calgary boast 300-400 extra square feet over the national average, while Regina, Winnipeg Halifax, Ottawa and Quebec City were well above that bar.
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Edmonton topped out among the major cities surveyed with an average of 2,675 square feet of space for a million-dollar home and was the only region to see its average size improve over last year’s report.
Million-dollar homes in some markets like Regina put the property firmly in the luxury category, the Royal LePage report notes, while Vancouver and Toronto buyers are more likely getting condominiums or bungalows for that amount.
Yolevski says that a million dollars can represent a “move up” home for markets like Calgary, but it’s closer to a starter home in Canada’s largest cities.
Though home prices have declined modestly or plateaued in most Canadian housing markets over the past year amid higher interest rates from the Bank of Canada, Yolevski says a million dollars is not what it used to be with prices in markets like Toronto essentially doubling over the past decade.
“One million dollars is essentially the median price, or even a bit of a starter price for homes in our big cities,” she says.
A home listed at just under $1.1 million dollars in Edmonton with four bedrooms and four baths, 3,613 square feet.
Royal LePage
A home listed at just under $1 million in North Vancouver with two bedrooms and two baths, 1,058 square feet.
Royal LePage
Royal LePage also provided a snapshot of homes around the $2-million price mark in its report.
For Toronto, $2 million means an average of more than 2,000 square feet of space; in cities like Ottawa or Montreal, that amount of money gets a buyer closer to 3,000 square feet. Yolevski says these homes likely look like the kinds of luxury properties that Canadians might have considered a million-dollar home over a decade ago.
“In some markets, the new ‘million dollars’ is $2 million,” she says.
Housing affordability worsens again in Q4
Also on Thursday, National Bank of Canada released its fourth quarter housing affordability index, which held little good news for renters and would-be homebuyers.
The index, which factors in home prices, mortgage rates and income levels in gauging how affordable homes in different Canadian markets are, degraded for the second quarter in a row to end 2023.
Every city saw the average mortgage payment as a proportion of income rise in the fourth quarter, according to National Bank, putting overall housing affordability almost back at its worst levels since the 1980s and nearing a recent peak in the second quarter of 2022.
That came as overall home prices ticked up 1.8 per cent quarter-to-quarter and mortgage rates rose amid expectations the Bank of Canada’s benchmark rate would stay higher for longer.
Mortgage rates remain elevated as the central bank holds its benchmark rate steady and has yet to signal that rate cuts are imminent. Economists expect the policy rate to ease this year as inflation cools with many penciling in June for the first cuts.
There’s little respite expected for renters, either, with National Bank noting its rental affordability index is at its worst-ever levels amid a tight rental vacancy rate across Canada. That report flagged a dearth of building permits in many Canadian cities issued at the end of 2023 as likely to keep supply strained in the rental market in the near future.
3:57 Housing affordability a focal point of B.C. throne speech
But a Ratehub.ca analysis released Wednesday shows signs of affordability improving in January as lower mortgage rates on offer and declining housing prices in some markets saw the income needed to afford a home drop in all major cities included in the report.
The annual income needed to buy the typical home in Vancouver dropped by nearly $10,000 month-to-month and fell nearly $7,800 in Toronto, Ratehub said, though both markets still required households to earn more than $200,000 to make homeownership accessible.
Ratehub co-CEO James Laird tells Global News that Canadians will need “top tier incomes” in their household to be able to afford the average home in the most expensive markets.
“The frustration is going to continue. It is not easy and will never be easy again to buy a home in Vancouver or Toronto,” he says.
Affordability still a challenge at the $1M price point
As part of the Royal LePage report, Leger surveyed more than 1,500 Canadians in late January about whether they thought $1 million was enough to buy the size of home they needed.
While 64 per cent of those polled indicated $1 million was sufficient, that tumbled to 42 per cent in British Columbia and 53 per cent in Ontario. Quebec topped out in this regard with 80 per cent indicating a million dollars was enough for their housing budget.
The average homebuyer indeed needs close to $1 million to afford the typical home in some of Canada’s most expensive housing markets, according to the Ratehub analysis.
The average home price in Toronto was just over $1 million in January 2023, roughly on par with December’s figures.
While most cities have not had much fluctuation year-over-year in the space-per-dollar in their millionaire markets, Yolevski notes that the carrying costs for those properties have changed as the Bank of Canada’s policy rate continued to rise in 2023.
Canadians buying million-dollar properties today are forced to pay more expensive mortgages in most cases than those who bought a year ago, she notes.
“So that million dollars is costing more per month now than it did a couple of years ago, when interest rates were much lower,” she says.
In addition to higher borrowing costs – and a tougher mortgage stress test, making it more difficult for prospective buyers to qualify for the loan – Yolevski notes there’s an additional hurdle for million-dollar properties.
Homes bought for more than $1 million in Canada do not qualify for mortgage insurance, which allows buyers to put down less than 20 per cent in a down payment on a home.
This means that in many cases Canadians are forced to put down $200,000 or more on a million-dollar starter home in markets like Toronto and Vancouver, Yolevski explains.
”Twenty per cent on $1 million is a large amount of money and can be a challenge for people, particularly first-time buyers looking to get on the property ladder for the first time, where they don’t have any equity in a pre-existing home already to contribute to that down payment,” she says.
Yolevski says the Royal LePage report shows that, outside Canada’s biggest housing markets, there’s more space for homebuyers who can qualify for the million-dollar price point and an easier path to homeownership for those short of that bar.
She says she expects the lingering remote and hybrid work opportunities from the pandemic, alongside the affordability crunch from higher interest rates and still elevated home prices, will push more Canadians to look outside their home provinces to the Maritimes and Alberta in particular to break into the housing market in 2024.
GENEVA (AP) — Lebanon filed a complaint against Israel at the U.N.’s labor organization over the string of deadly attacks involving exploding pagers, saying workers were among those killed and injured, a Lebanese government minister said Wednesday.
The wave of remotely triggered explosions that hit pagers and walkie-talkies carried by Hezbollah members in mid-September were widely blamed on Israel, which has neither confirmed nor denied involvement. The blasts which went off in grocery stores, homes and on streets killed at least 37 people, including two children, and wounded around 3,000 people, according to Lebanese authorities, deeply unsettling even Lebanese who have no Hezbollah affiliation.
In addition to fighters, the detonating devices hit workers in Hezbollah’s civilian institutions, including its health care and media operations.
Lebanese Labor Minister Moustafa Bayram and other officials said he traveled to Geneva and formally filed the complaint Tuesday against Israel at the International Labor Organization, a sprawling U.N. agency that brings together governments, businesses and workers.
“This method of warfare and conflicts may open the way for many who are evading international humanitarian law to adopt this method of warfare,” he told reporters at the U.N. compound in Geneva.
“It’s a very dangerous precedent, if not condemned,” he said. “We are in a situation where ordinary objects — objects used in daily life — become dangerous and lethal.”
Speaking in Arabic, Bayram insisted that ILO conventions guarantee the safety and security of workers, who “were in their workplace and had their pagers or walkies-talkies exploding all of a sudden,” according to an interpreter.
“I do not know where the outcome (of the complaint) will go, but at least we raised our voices to say and warn against this dangerous approach that strikes at human relations and leads to more conflicts,” he added.
An ILO spokeswoman said she was not immediately aware of the complaint or what redress might be possible through it.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TAIPEI, Taiwan (AP) — The first time China faced Donald Trump in the White House, there was a trade war, a breach of protocol involving Taiwan’s former leader, and a president-to-president bromance that turned sour.
Perhaps the biggest consequence for China — if Trump stays true to his campaign promises — is his threat to slap blanket 60% tariffs on all Chinese exports to the U.S.
Tariffs like that would be a blow to China’s already unstable economy, which is suffering from high youth unemployment, a lengthy property slump and government debt. A 60% duty on Chinese imports could shave off 2.5 percentage points, or about half, of China’s projected economic growth, according to an analysis published earlier this year by UBS.
During Trump’s previous term in office, the U.S. imposed tariffs on more than $360 billion of Chinese products. That brought Beijing to the negotiating table, and in 2020 the two sides signed a trade deal in which China committed to improve intellectual property rights and buy an extra $200 billion of American goods. A research group a couple of years later showed China had bought essentially none of the goods it had promised.
President Joe Biden retained most of those tariffs and added fresh duties this year on imports including steel, solar cells and electric vehicles.
Like last time, tariffs could serve as a tool to force Beijing back to the negotiating table, said Henry Gao, a law professor at Singapore Management University who focuses on international trade.
“Given the weak economic position of China this time, I think there will be more willingness to talk,” he said. “Thus, while the tariff might have some short-term effects on the Chinese economy, the situation might improve once they reach a deal.”
Factoring into the trade talks could be Trump’s appeals to Chinese President Xi Jinping to help negotiate a resolution to the Ukraine war, which Trump has boasted he’ll be able to do quickly, without saying how.
Trump previously sought Xi’s help in dealing with North Korea’s rogue leader Kim Jong Un. That dynamic could repeat itself, with Trump weighing trade grievances against seeking China’s support in global crises, according to Wang Huiyao, founder of the Beijing-based think tank Center for China and Globalization.
“China is the largest trading partner of both Russia and Ukraine,” Wang wrote in a recent commentary. “These close economic ties give China a unique opportunity to play a greater role in peace-making efforts.”
Willing to go ‘crazy’ over Taiwan
There is one scenario in which Trump has threatened to impose even higher tariffs — 150% to 200% — on Chinese goods: if China invades Taiwan, a self-ruled democracy that Beijing claims as its own.
The U.S. does not recognize Taiwan as a country, but is its strongest backer and biggest arms provider.
Trump angered Beijing in December 2016 by taking a congratulatory call from Taiwan’s then-president Tsai Ing-wen in a breach of diplomatic protocol. No U.S. president had spoken directly to a Taiwanese leader since Washington and Beijing established ties in 1979.
Trump’s move created anxiety in China-watching circles, but ultimately, he stuck to supporting the status quo in relations between Taipei and Beijing.
China expects him to continue to do so, said Zhu Feng, dean of the School of International Relations at Nanjing University.
“Will (he) want to turn to support Taiwan independence? It is unlikely,” he said.
As for China’s repeated threats to annex Taiwan, Trump told The Wall Street Journal last month that he would not have to use military force to prevent a blockade of Taiwan because Xi “respects me and he knows I’m (expletive) crazy.”
On the campaign trail, Trump sometimes talked up his personal connection with Xi, which started exuberantly during his first term but soured over disputes about trade and the origins of the COVID-19 pandemic.
Trump has purposely maintained a sense of uncertainty in his relationship with China, said Da Wei, director of the Center for International Security and Strategy at Tsinghua University in Beijing.
“We are clear about the challenges,” he said. “As for opportunities, we are yet to see them clearly.”
Disputes over chips
During his first term, Trump began targeting Chinese technology firms over security concerns, focusing on large companies like the telecoms giant Huawei. Biden continued in that direction by placing curbs on China’s access to advanced semiconductors, which are needed to develop strategic industries such as artificial intelligence.
But Trump has criticized Biden’s CHIPS and Science Act, a bipartisan bill that earmarked $53 billion to build up domestic manufacturing of semiconductors. Currently, Taiwan produces nearly 90% of the world’s supply of the most advanced chips.
The island’s largest semiconductor manufacturer, TSMC, expanded production in Arizona, partly to respond to the CHIPS Act, and to be prepared to withstand any other protectionist policies in the U.S., said Shihoko Goto, director of the Indo-Pacific Program at the Wilson Center.
Trump has promised to do away with the CHIPS Act, though critics say that would undermine his campaign to reindustrialize the U.S. The president-elect has also accused Taiwan of “stealing” the chip industry from the U.S. decades ago.
“Rather than providing a silicon shield, Taiwan’s dominance in the chip industry could actually be the source of tension between Taipei and Trump, as Taiwan’s successes in the chip sector may be seen as having only been possible as a result of the United States being taken advantage of,” Goto said.
