GDP

• RBC’s Outlook on Interest Rates: RBC expects the Bank of Canada (BoC) to announce a big 50 basis point (bp) rate cut in December, driven by weak economic growth and ongoing declines in GDP per capita.

• Per-Capita GDP Recession:

  • While total GDP grew 1.0% (Q3 2024), per-capita GDP fell 1.7%, marking the 6th straight quarterly decline.

  • Without government spending, GDP would have contracted outright.

• Government-Driven Growth:

  • Government spending contributed 1.2 percentage points to GDP growth, covering weak private sector performance.

  • Business investment dropped 11%, showing cheaper credit isn’t boosting productive sectors.

• RBC vs. Other Banks:

  • RBC predicts a supersized 50 bp rate cut.

  • BMO and others expect a smaller 25 bp cut, citing slightly better data and inflation concerns.

  • Future rate cuts may slow in 2025, with possible hikes by 2026.

In short, RBC sees a fragile economy needing significant stimulus, while other institutions advocate a more cautious approach.

• Rising Development Charges:

  • A 2020 study by Urban Capital compared a 2005 project to a 2020 project, revealing an astronomical 3,244% increase in development charges over 15 years.

  • By comparison, inflation during this period was only 27.43%, with an average annual rate of 1.63%.

  • These charges have become a major driver of rising housing costs, as they are baked into the final prices of homes.

• Developers’ Challenges:

  • Developers must plan for these steep development charges while also setting aside funds for future increases, which often occur multiple times during a single project.

  • The unpredictability of these costs makes long-term budgeting nearly impossible, straining projects and increasing the financial burden on homebuyers.

• Inflation vs. Reality:

  • While some claim development charges have risen in line with inflation, the numbers show otherwise. A 3,244% increase versus 27.43% inflation isn’t even close.

  • Municipalities have leaned heavily on taxing new housing developments because it’s politically easier than raising general property taxes.

• Consumer Impact:

  • For years, complaints about development charges were dismissed as developers being "greedy." However, the cumulative impact on affordability has now become clear to consumers.

  • These charges allow municipalities to keep property taxes low for existing residents, while future homebuyers—often those who don’t yet live in the city—bear the cost.

• City of Vaughan’s Leadership:

  • Last week, Vaughan Council made a groundbreaking decision to roll back development charges to 2018 levels, cutting rates for a single-family home from $95,466 to $50,193 per unit.

  • This reduction is locked in until November 19, 2029, giving developers and homebuyers long-term certainty.

• Potential Savings for Buyers:

  • These reduced charges could have a direct impact on housing prices, with savings passed on to homebuyers.

  • Developers participating in the CANT pledge have committed to transferring any reductions in taxes or fees dollar for dollar to consumers, making this move a significant step toward improving affordability.

• Quote from Vaughan Mayor Steven Del Duca:

  • "Development charges have become an unfair tax burden on homebuyers. Too many of our residents, particularly young families, have seen their dream of buying a home disappear completely as housing prices spiral out of control. We have a housing affordability crisis, and it’s time to get real about solutions."

  • His call to action challenges municipalities across Ontario to take similar steps in addressing housing affordability.

• Call to Action for Other Cities:

  • Vaughan’s decision could set a precedent for other cities to reevaluate their development charges.

  • Ontario is facing a severe housing supply and affordability crisis, and reducing development charges is one actionable step municipalities can take to help alleviate the pressure.

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Market stats - What's happening in Ottawa?

Ottawa Housing Market – December 1, 2024

• Average Home Price: $664,475 (+4.5% YoY).

  • Freehold Houses: $757,814 (+4.5%).

  • Condos: $445,843 (+3.3%).

• Sales Volume: 735 homes sold in November (+27.4%).

  • Freehold Sales: 518 (+29.2%).

  • Condo Sales: 217 (+23.3%).

• Days on Market:

  • Freeholds: 36 days (vs. 31 last year).

  • Condos: 35 days (vs. 34 last year).

• Inventory: 1,860 homes for sale, representing 2.4 months of supply.

• Market Type: Seller’s Market.

Sales volume is up 27.4% year over year which is insane. I've been telling buyers myself this has been the busiest November I've sen in a while. The majority of buyers are looking to beat out the expected spring market increase we'll see in 2025, due to lower rates and more affordability.

Starting December 15th, first-time buyers with less than 20% down will have access to a 30-year amortization on any home. This change is a game-changer for many, especially those with tighter budgets. It could mean the difference between getting into the market or being priced out entirely. For some, it may also allow them to upgrade to the home they truly want rather than settling for something at the lower end of their budget.

I expect this shift to drive significant activity in the $600K–$800K price range, as more buyers gain approval for homes in this segment. In contrast, the $1M+ market will likely remain more subdued, with higher price points continuing to face affordability challenges. This policy update could be pivotal in shaping market dynamics heading into 2025.

Buyers be proactive - Pre approve yourselves, get your down payments ready, talk with the realtor you'd like to work with even if you're 6 months - 1 year out start preparing. Additionally ask yourselves when do I want to buy and why?

Sellers - I urge you to prep your homes and get ready for spring, this will be a great opportunity to sell your home but I suspect many others are thinking the same, painting your home getting a consultation on what fixes to do to make it look good will be your best bet at selling your home.

Mortgage talk

Some of the top rates that we are seeing today are:

Fixed

3-Year Fixed: 4.14% (less than 20% down payment)
4-Year Fixed: 4.44% (less than 20% down payment)
5-Year Fixed: 4.09% (less than 20% down payment)
5-Year Fixed: 4.19% (20% down payment or more)

5-Year Fixed: 4.19% (35% down payment or more)

Variable
5-Year Variable: 4.90% (less than 20% down payment)
5-Year Variable: 5.15% (20% down payment or more)
5-Year Variable: 4.90% (35% down payment or more)

Contact for a free pre approval.

Preferred Lenders:

Chris Allard

Allard Mortgage
[email protected]

Cell: (613) 324-2389

 Carlos Mora

 TD BANK

[email protected] 

 Cell: 587-434-7696

 Edward Dahan

 RBC [email protected] 

Cell: 613-261-1847

Ahmad Al-Shraify

AKAS Mortgages
[email protected]
Cell: 613-501-5973

Ron Gusinjac
Realtor®,
Royal LePage Performance Realty

613-890-0444  |  [email protected]

201-1500 Bank St, Ottawa, ON, K1H 7Z2