This week, Statistics Canada reported that, for the first time in over 70 years, the country's population declined. Current estimates indicate a decline of around 102,000 people last year, leaving a total of 41,472,081 people in the country as of January 1, 2026.
Opinions on this are mixed. On the one hand, a declining population can help improve things like housing affordability and increase GDP per capita (total wealth becomes divided by fewer people). It can also help improve productivity by forcing a country to innovate in lieu of relying on physical labor.
But at the same time, there are consequences to a declining population. It can result in economic stagnation and it can topple the equilibrium of pension plans. Not enough young people paying into the system. Fewer savers. Fewer spenders. Fewer innovators.
It can also reduce the soft and hard powers of a country. According to the IMF: "...some historians attribute France’s 1871 defeat in the Franco-Prussian War to the low fertility and slow rate of population growth that stemmed from early and widespread use of contraception among married couples in France."
My own simplistic view is that growth is good. We want Canadians having babies and we want the absolute best and brightest and most ambitious from around the world clamouring to come here to innovate, start companies, and grow the total economy.
The good news is this continues to be our plan.
The leading factor in Canada's current population decline is fewer non-permanent residents. That is, temporary foreign workers, a great number of whom are/were international students. As many of you know, this policy is in response to a demographic shock that the country experienced between 2022 and 2024 that, among other things, lowered productivity levels.
Going forward, the federal plan is as follows:
Dramatically reduce the number of temporary residents (international students and low-skill temporary workers). Again, this specific policy is largely responsible for the current population correction.
Stabilize permanent immigration to 380,000 people per year from 2026 to 2028 (under 1% of the population).
Admit most permanent immigrants under the "economic" classification. The target is 64% of all permanent residents by 2027. This is a class of applicants who are scored based on age (younger is better), education (smarter is better), language proficiency, and relevant work experience, with the goal of having them immediately contribute to the Canadian economy.
Target 12% Francophone permanent resident admissions outside of Quebec by 2029. (As a self-proclaimed Francophile/Quebecophile and proponent of bilingualism, I laud this effort.)
What all of this should mean is that by the end of 2026, we are expected to "burn off" the wave of temporary residents leaving the country and, by 2027, we should return to steady and manageable population growth. This is one of the reasons why I believe that 2026-2027 will be a turning point for many of our housing markets, and hopefully the start of our next economic cycle.
Cover by Robbie Palmer on Unsplash
Chart from the Globe and Mail
Now that the results from Paris' first round of municipal elections are in, I thought I would do a follow-up to my post from a few days ago (which was mostly about bicycles). The second and final round happens this weekend, but here's what we've learned so far:
Emmanuel Grégoire (Union of the Left) is in the lead with 37.98% of the vote:
And Rachida Dati (Union of the Right) is in second with 25.46% of the vote:
What is not unexpected, but super interesting nonetheless, is the clear divide between the west and east within Paris proper. The west voted right, and the east voted left.
Here in Toronto, our voting maps typically exhibit a semi-clear divide between "Old Toronto" and the inner suburbs. For example, these are the results from our 2023 mayoral by-election:
Conveniently, it is a divide that loosely tracks the city's built form. If you live in the oldest parts of the city, where transit usage is higher and there's rail in the middle of the street, there's a higher probability that you voted for Chow. The inner suburbs, on the other hand, tended to vote for Bailão.
In the case of Paris, there isn't the same built form contrast. This is not an urban-suburban divide; it's a socio-economic divide. The western arrondissements have historically been the wealthiest areas of Paris (for a variety of reasons), and that continually appears in the voting patterns.
It also shows up in the modal splits. The western arrondissements tend to have higher car ownership rates compared to the east. These basic facts are interesting because Paris represents more of a controlled urban experiment, in contrast to Toronto's dense downtown and otherwise generally low-rise built form.
But in the end, I'm not sure the political mappings of Paris and Toronto are all that different. If you look closely at Toronto's 2023 by-election map, you'll see that the wealthiest pockets of the city voted exactly as you would expect. Turns out, bank balances may matter more than built form.
Cover photo by Maximilian Zahn on Unsplash
High Art Capital recently announced the launch of a new fund called the Greater Toronto Area (GTA) Rental and Affordable Housing Initiative. It has been anchored by a $300 million mezzanine debt commitment (and a "nominal equity investment") from the Building Ontario Fund (BOF) and is expected to be capitalized in total with a minimum of $1.3 billion.
The objective is to acquire approximately 2,200 rental homes in blocks within newly completed, unsold condominiums across the GTA and convert them into long-term rental housing. Included within this will be approximately 550 affordable rental homes that are expected to be title-protected at rents set at the lower of 25% below local market rent or 30% of median gross household income.
This is interesting, but it's certainly not the first example of investors buying, or wanting to buy, excess condominium inventory. However, it may become the largest in Toronto and, as far as I know, it's the only one to partner with the public sector (BOF is a provincial Crown agency).
The way it is intended to work is as follows:
Condominium developers are sitting on unsold inventory and maybe on inventory they took back after purchasers defaulted (and which may be subject to legal action). What High Art will do is say to developers, "Hey, if you give me a really awesome deal, I'll take 50 of those condominium units off your hands." And if the developer is desperate enough, they will say, "Sure, that sounds good. Let's do a deal and then go for a nice closing dinner."
But at what price?
As we've talked about many times before on the blog, developer pricing is typically based on a cost-plus model. We take our costs, add a margin, and there's the final sticker price. The reason prices haven't fallen as much as one might expect on unsold units is because they're hitting the "cost floor"; developers don't want to lose money, unless they are given no other option.
But for this rental fund model to work at reasonable costs of debt, I suspect that, in many/most cases, deals will need to be struck below a developer's cost basis. So, it'll be very interesting to watch how this fund deploys capital and who the winners and losers are in this market.
Regardless, I think it is good that we are seeing this sort of activity. The faster we deal with the pain, the faster we'll get to the other side.
Cover photo by Patrick Boucher on Unsplash