Canada’s millennials want to own homes: it’s part of the Canadian Dream. But the housing affordability crisis means that dream is slipping out of reach for first-time buyers and young families.
“If the last election was about jobs, jobs, jobs, this election is about homes, homes, homes,” said Ontario Real Estate Association (OREA) President David Oikle. “Ontario’s Realtors are thrilled to see housing affordability is a top election issue with voters. All three major federal parties – the Liberal Party of Canada, the Conservative Party of Canada, and the New Democratic Party of Canada – have put ideas on the table to make the Canadian Dream of home ownership more affordable.”
OREA wants to keep that dream alive, but that will only happen if governments make it easier for first-time buyers to own a home, through increasing housing supply, reducing or eliminating unnecessary government red tape, and addressing affordability, especially for first-time buyers.
Increasing Housing Supply
Canadians want to own homes, but the lack of supply is causing a crisis with more buyers chasing fewer and fewer homes. Creating more supply is essential in addressing the affordability crisis:
- Liberals: Building, preserving, or repairing 1.4 million homes over four years; converting empty office spaces into housing with $300 million in new funding; creating the Multigenerational Home Renovation Tax Credit to support secondary suites in homes; creating a Housing Accelerator Fund worth $4 billion to help cities build homes faster.
- Conservatives: Build 1 million homes in the next three years; release 15% of federal real estate for housing; encourage developers to invest in rental housing by extending the ability to defer capital gains tax when selling a rental and reinvesting in rental housing.
- NDP: Set up a dedicated fast start fund to streamline the application process; mobilize federal resources for co-op, social and non-profit housing by repurposing unused and under-used properties; spur the construction of affordable homes by waiving the federal portion of the GST/HST on the construction of new affordable rental units.
When it comes to increasing housing supply, all three parties have promised to build more homes, and all three have a plan to repurpose underutilized federal properties, a move that OREA strongly supports. Repurposing such properties will create thousands of new housing supply options and encourage further development.
The Liberal multi-generational renovation tax credit could encourage provincial governments to continue creating policy that would reduce red tape on things related to the development of secondary suites and give more Ontarians access to this affordable form of housing.
The CPC’s commitment to building homes alongside transit infrastructure aligns with OREA’s position on using zoning to encourage the development of transit-oriented communities and encourage density near transit hubs by removing barriers to housing construction.
The NDP’s idea to waive the GST/HST on affordable rental housing addresses the need for a wide range of new housing to young families. A lack of housing supply causes a ripple effect: because first-time buyers can’t get into the market, they are staying in rental units longer, which means people can’t move out of social housing and into apartments.
Money Laundering in Real Estate
All three parties have a plan to get dirty money out of the real estate industry: money laundering is keeping hardworking families from accessing homes. OREA is a strong supporter of getting dirty money out of real estate. A public beneficial ownership registry would require purchasers to identify themselves to land title authorities, ensuring criminals who are laundering money through real estate can no longer remain anonymous.
Supporting First-Time Buyers
It is not a surprise that first-time home buyers are facing the greatest challenge when it comes to Ontario’s real estate market. Millennials and young families want to own homes, but it has never been tougher to achieve due to rising home prices pushing home ownership out of reach. New supports for first-time buyers are sorely needed:
- Liberals: Introduce a tax-free First Home Savings Account to allow Canadians under 40 to save up to $40,000 for a home; make the first-time home buyer (FTHB) incentive more flexible to give Canadians the option of a deferred mortgage loan as an alternative to the current shared equity model; double the FTHB Tax Credit.
- Conservatives: Encourage a new market in seven- to ten-year mortgages to provide stability for first-time buyers and lenders; increase the limit on eligibility for mortgage insurance and index it to home price inflation to allow those in high-priced real estate markets with less than a 20% down-payment an opportunity at homeownership.
- NDP: Double the FTHB tax Credit; re-introduce 30-year terms on CMHC insured mortgages on entry-level homes for FTHB.
Both the Liberals and NDP have promised to double the first-time homebuyer tax credit (taking it from $5,000 to $10,000), which will save the average buyer roughly $1,500 at closing.
OREA has previously called on the federal government to rebalance strict mortgage rules and extend the amortization period for CMHC insured mortgages from 25 to 30 years, which the NDP plan includes. This allows buyers to make smaller monthly mortgage payments, and in turn, makes homeownership an option for more first-time buyers.
Canadians want government to take action to make home ownership more affordable, so OREA is pleased all three parties have proposals to help with the cost of homeownership:
- Liberals: Reduce monthly mortgage costs by reducing the price charged by the CMHC on mortgage insurance by 25%.
- Conservatives: Fix the stress test to stop discriminating against small business owners, contractors, non-permanent employees, and casual workers; remove the stress test requirement on mortgage renewals.
- NDP: Provide resources to facilitate co-housing (co-ownership agreements) and ease access to financing by offering CMHC-backed co-ownership mortgages.
The Liberal plan to lower mortgage insurance rates by 25% would result in an average of $6,100 in savings for an insured mortgage holder and broaden the pathway to home ownership.
Government restrictions like the mortgage stress test are unfairly disadvantaging home buyers, especially millennials looking to enter the market for the first time or young families looking to move up.
One of the biggest barriers to entering the market for first-time homebuyers is coming up with the cash capital needed to afford a down payment. The Liberals and NDP both support co-ownership/share equity models as a solution to improving housing choice and making it easier for more people to enter the market, adding legitimacy to the rent-to-own model.
“It’s clear our federal leaders are paying attention, and this election has brought Canada’s housing affordability crisis to the forefront of the political debate,” said Oikle. “The Liberals, Conservatives, and NDP all have their own plans on how to best address the crisis, and have put their ideas on the table, leaving the decision with voters.”