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Canada's home ownership crisis is projected to deepen as pre-construction sales for proposed projects remain low, delaying necessary funding for new developments. The majority of pre-construction condos, typically small one- or two-bedroom units in cities like Toronto, are bought by investors aiming to rent them out. However, high mortgage rates, minimal capital appreciation, and stagnant rent growth are deterring investors, even as recent rate cuts and relaxed mortgage rules provide little relief for non-investor buyers struggling to afford home ownership.

Investor-driven demand has previously fueled a construction boom in major Canadian cities, but now developers face funding challenges as fewer projects meet the sales thresholds required to secure lender backing. This downturn in pre-sales threatens to delay new construction, compounding an already severe supply shortage and exacerbating the demand-supply imbalance driving the housing crisis. Measures introduced by Prime Minister Justin Trudeau’s administration, including extending mortgage amortization for first-time buyers, have not succeeded in motivating builders to increase supply, leading to a decline in construction starts and putting further strain on the market.

Canada’s population growth, fueled by immigration, continues to drive housing demand, particularly in urban regions like Toronto. Critics argue that even with slower pre-construction sales, the projected demand for housing will remain high, adding pressure to an already strained market. Recent data from CMHC reveals that condominium sales dropped significantly in early 2024 compared to the previous year, signaling that the housing crisis is likely to persist without further interventions or shifts in market dynamics.

Read the full article on: CTV NEWS