With the elections fast approaching, Steve Saretsky gives us a recap of the promised initiatives politicians are making to improve the current real estate condition in Canada. Learn more about the numerous ways Canadian leaders are planning to improve the housing market for developers, home buyers, local and foreign investors.
Latest on Canadian Real Estate Market Trends by Steve Saretsky
September 30, 2019
Happy Monday Morning!
With the Canadian federal election just three weeks away, politicians are unveiling their promises on the housing file. As expected, it remains a contentious hot button topic, what to do about housing affordability?
With Liberal leader Justin Trudeau kicking things off with a proposed nationwide 1% tax on non-resident non-Canadians, the proposed new measure would model a 2% speculation tax that British Columbia imposes on the assessed home value for foreign owners.
“We have seen from British Columbia’s example that even a modest tax can have a significant impact on foreign speculation in housing markets,” Trudeau also suggested the tax had pushed investment capital to other parts of the country.
Adding, “That is why we feel it is important to create a national measure right across the country based on British Columbia’s success with it, to ensure foreign speculation doesn’t make housing less affordable for Canadians.”
Meanwhile, the Liberal Government is also proposing more stimulus for first-time buyers in Toronto, Vancouver & Victoria, aiming to raise the value of homes that qualify for the First-Time Home Buyer Incentive to $789,000 from $505,000 in the nations frothiest of markets.
Of course, not to be outdone, Andrew Scheer of the Conservative Government came bearing his own bag of goodies. Scheer proposed a four-point plan this past week which consists of an idea to “Fix the mortgage stress test to ensure that first-time homebuyers aren’t unnecessarily prevented from accessing mortgages and work with OSFI to remove the stress test from mortgage renewals to give homeowners more options.”
Further, Scheer promised to “Increase amortization periods on insured mortgages to 30 years for first-time homebuyers to lower monthly payments.”
Steps three and four include an inquiry into money laundering, and providing surplus federal real estate available for development. All of the proposed policies were light on details.
Lastly, and not to be forgotten, the NDP’s Jagmeet Singh stuck with the prevailing theme of his competition. The NDP will re-introduce 30-year terms to CMHC insured mortgages while levying a nationwide 15% tax on non-citizens and non-residents purchasing real estate. Singh also announced his party’s plan to provide a rental subsidy of up to $5K/year to help nearly 500K families struggling with paying rent.
Despite the uncertain outlook surrounding the housing market, prices continue to inch higher on a national level, with the home price index expected to reach record highs in September, surpassing previous highs set in May 2018.
Regardless of who gets into power come October 21, it appears politicians are determined to ease the carrying costs of a home by extending payment terms. While this may provide temporary relief, the increase in buyer purchasing power will ultimately negate the benefits through higher home prices in the long run. Onwards and upwards.
Three Things I’m Watching:
1. Per the Bank of Canada, Canadians extracted a whopping $89B of home equity in 2017 through HELOC’s and mortgage refinancing.
2. Construction insolvencies in Canada are rising, although still very low.
3. Small business confidence in BC has taken a hit as the housing market slows.
