HOUSING & THE ELECTION
It’s become a bit cliché to say we’ve witnessed a lot of ‘firsts’ over the past 18 months as a result of this pandemic. If you’re like me, you are probably pretty tired of all these new experiences, and hope for a little more consistency to return.
Snapping back to reality, one more ‘first’ is the pandemic federal election.
Today we’re taking a look at what the federal parties are proposing for the housing market. In past years, housing would warrant barely a mention while the party leaders were out competing for your vote. Given the excited condition of the real estate market across Canada, it was inevitable that the real estate market, and housing in general, would play a prominent role in this election.
The low hanging fruit for all of the parties is to make housing more affordable for entry level buyers and renters. Let’s dig into what each party is proposing beyond this, and what that means to you as a homeowner or soon to be homeowner.
THE LIBERAL PLATFORM
A rent-to-own program (cost: $1 billion): loans and grants that allow landlords to accept lower than market rents, maximum 5 year term or less, and safeguards to protect the future homeowner
Tax-free first home savings account: if you’re under 40 you can save up to $40K tax free in and out, if used for a first home and before turning 40
An expanded first time home buyer incentive: this is where the government takes an equity position in your home as a second mortgage; the expansion on this policy is that instead of an equity position, the government would see this as a repayable loan at time of sale instead of sharing your increased equity with the feds
Doubling of first time tax credit from $5K to $10K
Mortgage insurance premiums: if you have less than 20% down, the mortgage needs to be insured; the premiums will be reduced by 25% and the insured cut-off increased from $1 million to $1.25 million
Multigenerational home renovation tax credit: 15% credit up to $50K in renovation and construction costs ($7,500 max) to help families create secondary units for immediate or extended family members
Convert excess commercial and retail space to residential rental spaces
$2.7 Billion for the National Housing Co-investment Fund over 4 years to help to acquire land and buildings for vulnerable groups
$4 Billion for a Housing Accelerator Fund to create 100,000 new homes by 2025; money will be used by municipalities to speed up the approval process
Anti-flipping tax on residential properties
Ban new foreign ownership for 2 years and a national tax on non-resident, non-Canadian owned vacant properties and land
Home buyer’s bill of rights
Banning blind bidding, legal right to home inspections, transparency and disclosure, mortgage deferrals of up to 6 months and stopping ‘renovictions”
READ THE FULL PLATFORM
Lots of ideas pushed in this platform and probably the “biggest” offering. Biggest in the sense of what they are prepared to spend, and the overreach: a lot of promises that will likely be non-starters because they are outside of federal jurisdiction or just won’t be able to execute on. A lot of this could have been put forth much earlier in the Liberal mandates.
THE NDP PLATFORM
500,000 affordable housing units with 250,000 completed within 5 years
Streamline application process to kickstart construction of co-ops, social and non-profit housing
Use federal lands and underutilized properties to meet the above goals
Waive federal portion of HST on new affordable housing units being built
30 year terms for CMHC insured mortgages for entry level and first-time home buyers
Double the home buyers tax credit to $1,500
20% foreign buyers tax on sale of homes to non-Canadian citizens or permanent residents
READ THE FULL PLATFORM
Some doable items here. Extending the term (not just the amortization) of mortgages will stabilize tapped out buyers if rates increase. Like every other party, they are piling on foreign buyers as if they are a major player in every market. This is an easy villain to point the finger at.
If you are a middle class or professional home buyer or owner,, you won’t find much here. The NDP will target resources to their base and those that are struggling to find safe and affordable rentals. A very worthy cause and one that should be addressed, but really is not impactful on the real estate market most Canadians are referring to.
THE GREEN PARTY PLATFORM
Moratorium on evictions
National standards for rent and vacancy control
Raise the “empty home” tax for foreign and corporate owners
Assess the role of REITs in the housing market
Closing tax loopholes around names of beneficial owners of properties in Canada
Reinvest in affordable, nonprofit and co-operative housing
Construction of 50,000 supportive housing units over 10 years
Creating 300,000 affordable non-market, co-op and non-profit housing over 10 years
Increase housing for people with disabilities – 30% of units in a development that gets federal funding will be deeply affordable and or available to people with disabilities
READ THE FULL PLATFORM
The Greens are going toe to toe with the NDP in terms of social responsibility – and that’s reflected in their platform as well. Their platform is strongly ikn support of creating more affordable and accessible housing. Like the other parties, they too have rolled out the strawman called Foreign Buyers.
THE CONSERVATIVE PLATFORM
A plan to build 1 million homes in the next three years
Build public transit infrastructure that connects homes and jobs
Require municipalities receiving federal funding for public transit to increase density near the funded transit
Review the extensive real estate portfolio of the federal government and designate 15% for housing
Encouraging Canadians to invest in rental housing by extending the ability to defer capital gains tax when selling a rental property and reinvesting in rental housing
Converting unneeded office space to housing
Enacting a “For Indigenous, By Indigenous” strategy by empowering Indigenous Peoples with the autonomy to meet their own housing needs
Using Community Land Trusts for affordable housing by creating an incentive for corporations and private landowners to donate property to Land Trusts for the development of affordable housing
READ THE FULL PLATFORM
Slim pickings here. The Conservatives at least seem to be focused on trying to create more supply rather than incentivize buyers further. Lots of “encouraging”, reviewing and suggestions; short on “we will”. Clearly this part of the platform was bolted on more as a result of polling data showing housing to be a priority.
It was an interesting exercise reviewing the proposals of all four parties. In my opinion, there are no clear cut winners here.
The Liberal strategy seems to be the most comprehensive at first glance, and is the one that has the most overreach. Great sound bites around the home buyer’s bill of rights – which is entirely the responsibility of the provinces. The overall theme is that if you are already a homeowner or an investor, you are part of the problem.
All of the parties acknowledge that housing is in crisis at the moment. They want to stimulate the supply side, and much of it is geared towards affordable and accessible housing, which has been overlooked and neglected for years. They all struggle in addressing the biggest issue on the supply side, which is keeping the pace of new house construction up with the growth rates we are experiencing in Canada. Demand is not going away, and the biggest challenge we have in the real estate market today is satisfying the demand for affordable family housing on all levels of the affordability scale.
Foreign buyers, speculators and flippers are a small part of the problem, and because it’s easy to convince the public that these are the real bad guys manipulating the market, the politicians can avoid creating long term, sustainable strategies that meet the needs of all Canadians.
Take the time to review the platforms. They are all long on rhetoric, but there are some valid ideas.
Call me naive in my hope that rather than pie in the sky promises or saccharine soundbites, politicians would actually work together at all levels and help create a national housing policy that addresses all aspects of the housing market.
The majority of Canadians believe this election was not necessary and ill-timed. $600 million being spent on an election mid-way through the existing mandate is money that could have been better spent on housing supply initiatives that many parties have advocated for. It’s too bad that money wasn’t better allocated.
Despite the pandemic, please do your civic duty. Regardless of your political bend, make sure you vote on Monday. The results of the election will make it clear how we all feel.
THE PAST WEEK IN THE GUELPH REAL ESTATE MARKET
Activity levels have rebounded from last week’s back to school/holiday weekend lull, and are now on par with previous years.
Take a look at the full key week comparison below:
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