Tag Archives: Justin Trudeau

BILD Outlook 2020

Outlook 2020 – what’s in store for GTA housing next year?

Latest News


Outlook 2020 – what’s in store for GTA housing next year?

Global and even some Canadian economic and political uncertainty shouldn’t derail growth in the GTA housing market next year, according to experts at the Building Industry and Land Development Association’s (BILD) recent Outlook 2020 event.

Craig Wright, senior vice-president and chief economist at RBC, and Peter Donolo, political and communications strategist with Hill + Knowlton Canada, said that overall, the fundamentals for the economy and housing market in Ontario and the GTA bode well for 2020. There are some challenges, however – namely the ongoing new home supply issue.

With Justin Trudeau’s Liberals re-elected as a minority government, Canada will see a relatively stable left-leaning federal government that will focus on environmental issues, affordability and redistribution rather than on economic growth, Donolo says.

BILD Outlook 2020
Left to right, Dave Wilkes, Peter Donolo and Craig Wright

Globally, geopolitical uncertainty and softening economic growth mean that Canada faces challenges with export and investment, leaving the heavy lifting to the consumer, according to Wright. Economic growth is expected to be modest and in line with employment and income, at about 1.7 per cent, and interest rates will likely continue to be low.

Strong employment growth

For Ontario, GDP growth will likely be a notch below, about 1.5 per cent, with housing starts for 2019 and 2020 at about 72,000 units, compared to about 79,000 in 2018, Wright says.

“That reflects a number of factors,” Wright told HOMES Publishing. “We continue to see strong employment gains, Ontario is leading Canada in terms of employment growth on a year-over-year basis, and strong population growth. So, strong fundamentals supporting it, in a low rate environment.”

BILD Outlook 2020 Craig Wright
Craig Wright, senior vice-president and chief economist, RBC

The GTA’s robust population growth will continue to drive demand for both ownership and rental housing, Wright says. Municipal and provincial governments are shifting to supply-side solutions for balancing the housing market.

“As you look at the structural reality of the GTA market, where we have immigration coming in… we have 140,000 to 150,000 people coming to this region each and every year,” adds BILD President Dave Wilkes. “That really does bode well for our industry.”

The mortgage stress test needs to be revisited in light of the continued low interest rates, Wright says.

Millennial attitudes

Another issue that might affect the Canada and the building industry is Millennials and their views on the environment and the economy – attitudes Donolo describes as “absolute.”

BILD Outlook 2020 Peter Donolo
Peter Donolo, political and communications strategist, Hill + Knowlton Canada

“When I say absolute, you talk about the oil sands and it’s like you’re talking about the Medellin drug cartel,” he says. “They’re not conscious or interested in the fact that the oil sands and Canada’s oil and gas sector is a kind of the backbone of the Canadian economy, that millions of jobs depend on it… They’re not interested in a kind of slow transition or weaning away from it. They think it’s immoral… and this is a very widespread view.”

Millennial views on homeownership are also different, Donolo says.

“Do Millennials look differently at what homeownership is about? Are they less interested in owning a traditional detached house with a backyard and property? If you look at rates of drivers licenses among Millennials, there is perhaps an indication.”

RELATED READING

5 things we can learn from real estate in 2018

Building and development brings benefits to the GTA

City of Toronto councillors decision irresponsible and will worsen housing affordability and supply problems

 

 

SHARE  

Featured Products


RealEstateOct2019_Election_all_parties

What you need to know about housing in the upcoming federal election

Latest News


What you need to know about housing in the upcoming federal election

Canadians head to the polls on Oct. 21, and as you sift through the sensational news dominating the front pages, you may be wondering where the various major parties stand on another important issue – housing.

With average home prices as of August 2019 of about $493,500 for Canada, but $818,715 in Toronto and $779,690 in rest of the GTA, housing is an important election issue.

Here’s a primer on what we know so far.

Justin Trudeau, Liberal

First-Time Home Buyer Incentive

The new First-Time Home Buyer Incentive (FTHBI) program took effect on Sept. 2. Initially announced in the 2019 budget in March, with further details released in June, the program is intended to reduce monthly mortgage payments for first-time homebuyers, without increasing the amount they need to save for a down payment. The maximum mortgage limit was to be $505,000.

The program complements other measures in Budget 2019 to support first-time homebuyers with their down payment, such as increasing the RRSP withdrawal limit to $30,000 from $25,000. The incentive is available to first-time buyers with qualified annual household incomes up to $120,000.

Then on Sept. 12, the Liberals promised to expand the program to reflect the realities of higher priced markets. The move would provide more help to buyers in Toronto, Vancouver and Victoria, where the originally announced mortgage limit is unrealistic, by allowing homes valued at up to $789,000 to qualify.

What others are saying

“Realtors welcomed the FTHBI when it was announced in the spring because it represents tangible support for millennials, new Canadians and other first-time buyers hoping to fulfill their homeownership dreams,” says Jason Stephen, president of The Canadian Real Estate Association (CREA). “The extension of eligibility requirements is great news that will allow Canadians in Canada’s highest priced markets take advantage of the program and start building their lives in a home of their own. We have long pointed out that housing markets vary from region to region and market to market. (This) announcement shows that policymakers are receptive to that message.”

But even with these new allowances for higher priced markets, some in the mortgage industry say the program still falls short.

“In the three selected ‘high-cost’ cities for the First-Time Home Buyer Incentive expansion, the combined maximum between your mortgage and the FTHBI is now five times household income,” says James Laird, president of CanWise Financial and co-founder of Ratehub Inc. “However, using the stress test and OSFI-enforced debt servicing ratios, consumers will only be able to qualify for a home valued at 4.5 to 4.7 times their income regardless of their participation in the FTHBI. In cities where five times the income is the limit, the standard debt-servicing ratios will be a constraint, and buyers will qualify for 4.5 to 4.7 times their income, as usual. However, in cities where FTHBI limits buyers to four times their income, that will remain the qualifying constraint. Homebuyers will always be subject to the more stringent of the two qualifying constraints.

Laird also points out that the numbers used by the Liberals for the FTHBI expansion are incorrect, for two reasons. First, the minimum down payment amount used for their calculations is five per cent. However, when a home’s value is between $500,000 and $999,999, a homebuyer is required to put a 10-per-cent down payment. And second, the mortgage would still be susceptible to debt servicing ratios based on the stress test. With no other debt, a buyer can qualify only for a maximum of 4.5 to 4.7 times their income.

“This program is being positioned to first-time home buyers as a way to save money, which is misleading because it defers the amount they owe, and doesn’t save them anything. The program will lower a buyers’ monthly mortgage payment, but in exchange they have a growing debt burden. This burden grows by the amount that your house appreciates, which is often between five to 10 per cent per year.

“The program requires homebuyers to repay this obligation at the earlier of either when they sell their house, or 25 years,” says Laird. “Those who remain in their home for the full 25 years can expect the government to knock on their door and tell them that they owe two to three times the initial incentive that they took from the government. These will be people nearing retirement age, and close to paying off their mortgage, but the government’s ownership stake in their house will remain.”

Those who sell their first home and buy another home may be surprised when the government eats into the equity from the sale. This may limit their ability to afford the home they want to move into.

Bottom line? Ratehub does not recommend this program for any Canadians.

A better alternative, for buyers hoping to buy in expensive markets such as Toronto, would be a policy to allow first-time buyers have a 30-year amortization period, says Laird. “The 30-year amortization increases affordability by 10 per cent, while keeping mortgage payments exactly the same. This sets a homebuyer up to pay principle and interest in a manageable way, with the final outcome being that they own their home 100 per cent without the government owning a portion of their home. It is also easy to understand and implement.”

Other Liberal initiatives

In addition to the FTHBI, the Liberals, if re-elected, also plan to address the impact of foreign speculation, which they say drives up housing costs, by putting in place a consistent national speculation and vacancy tax for non-resident, non-Canadians. Also, the government had earlier:

  • Introduced Canada’s first-ever National Housing Strategy, a 10-year plan to help Canadians find safe and affordable places to live
  • Funded the construction of nearly 140,000 more housing units to be built by 2028, and
  • Created the new Canada Housing Benefit to help 300,000 Canadians with the high costs of rent

Andrew Scheer, Conservative

  • 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
  • Increase amortization periods on insured mortgages to 30 years for first-time homebuyers to lower monthly payments
  • Launch an inquiry into money laundering in the real estate sector and work with our industry partners to root out corrupt practices that inflate housing prices
  • Make surplus federal real estate available for development to increase the supply of housing

What others are saying

“The measures announced by the Conservative party include suggestions we’ve been making to policymakers, such as fixing the mortgage stress test and removing it for mortgage renewals,” says CREA’s Stephen. “We’re also pleased with the proposal to increase amortization periods, which ultimately provides greater flexibility for homebuyers looking at financing to purchase a home of their own.”

Surplus federal land being made available for development to increase housing will help with home prices, as increased supply will help satisfy increasing demand for housing across the country, CREA says. “We also welcome the opportunity to address money laundering and other corrupt practices in the housing sector.”

Jagmeet Singh, NDP

  • Promises to create 500,000 units of quality, affordable housing in the next 10 years, half within five years
  • Will also spur the construction of affordable homes by waiving the federal portion of the GST/HST on the construction of new affordable rental units – a simple change that will help get new units built faster and keep them affordable for the long term
  • Will re-introduce 30-year terms to CMHC insured mortgages on entry-level homes for first time homebuyers
  • Will double the Home Buyer’s Tax Credit to $1,500
  • Implement a foreign buyer’s tax on the sale of homes to individuals who aren’t Canadian citizens or permanent residents

Elizabeth May, Green Party

  • Promises to appoint a Minister of Housing to strengthen the National Housing Strategy so that it meets the needs for affordable housing that are unique to each province, and oversee its implementation in collaboration with provincial ministers. The target would be 25,000 new and 15,000 rehabilitated units annually for the next 10 years
  • Increase the National Housing Co-investment Fund by $750 million for new builds, and the Canada Housing Benefit by $750 million for rent assistance for 125,000 households
  • Create a Canada Co-op Housing Strategy that would update the mechanisms for financing co-op housing, in partnership with CMHC, co-op societies, credit unions and other lenders
  • Eliminate the first-time homebuyer grant
  • Restore tax incentives for building purpose-built rental housing and provide tax credits for gifts of lands, or of land and buildings, to community land trusts to provide affordable housing
  • Remove the “deemed” GST whenever a developer with empty condo units places them on the market as rentals
  • Refocus the core mandate of CMHC to support the development of affordable, non-market and cooperative housing, as opposed to its current priority of supporting Canadian lenders to de-risk investment in housing ownership. With many housing markets demonstrably overvalued, and homeownership rates among the highest in the world, individual homeownership should not be the preoccupation of a public service housing agency and a national housing strategy.

What others are saying

The Toronto, Calgary and Vancouver real estate boards, together with the Quebec Professional Association of Real Estate Brokers, the Realtors Association of Edmonton and the Nova Scotia Association of Realtors are urging the federal political parties to commit to policies that will help remove barriers and reduce the cost of homeownership. These organizations are asking the federal political parties to adopt the following housing affordability recommendations:

  • Revise the mortgage stress test to take into account its impact on different real estate markets across the country. The federal government should view the stress test as a flexible policy and adjust it based on changing economic trends and interest rates
  • Replace the $750 First-Time Home Buyers Tax Credit with a $2,500 non-refundable tax credit for first-time homebuyers
  • Reintroduce 30-year mortgage amortizations
  • Consider regional differences when implementing nation-wide measures that affect homebuyers

“The Toronto Real Estate Board is encouraged by the attention being paid by federal political parties, during the current election campaign, on key housing issues affecting homebuyers,” says TREB President Michael Collins. “Specifically, the Liberal Party’s expansion of the First-Time Home Buyers Incentive Program, and the Conservative Party’s plan announced today to fix the mortgage stress test, increase mortgage amortization periods and make federal real estate available to increase the supply of housing.

“Housing affordability is one of the most important issues facing Canadians. We are glad that the federal political parties are acknowledging this with their respective plans. Two key issues that TREB believes have negatively impacted affordability are the federal mortgage stress test and mortgage amortization periods. TREB has been strongly calling for changes to the federally imposed mortgage stress test, since it was imposed, and for a 30-year amortization period for insured mortgages to be re-introduced, to give home buyers more flexibility and assist with affordability.”

SHARE  

Featured Products


January 2017 eNewsletter

Prime Minister and Maple Leafs boost Habitat for Humanity

Latest News


Prime Minister and Maple Leafs boost Habitat for Humanity

As Habitat for Humanity organizations across Canada prepare to celebrate Canada’s 150th anniversary in 2017 by hosting the 34th annual Jimmy and Rosalynn Carter Work Project, Habitat GTA was thrilled to receive a message of support from Prime Minister Justin Trudeau. Habitat for Humanity GTA will be building 30 homes in Toronto as part of a nationwide effort to build 150 homes in partnership with 150 families.

While the Carters will focus their energy on major builds in Edmonton and Winnipeg, Habitat GTA will mark Canada’s 150th by building 30 safe, decent and affordable homes as part of the Carter Work Project.

Given the shortage of decent, affordable housing in the GTA and in many other communities across Canada, it couldn’t be a better time for the Carters to be coming to Canada to help build affordable homes.

The celebratory build will be held at Habitat’s Pinery Trail build site in Toronto during the week of July 9-14, 2017.

See a video of Jimmy Carter and Justin Trudeau at blog.habitatgta.ca/jimmy-rosalynn-carter-work-project

Leafs Score One for Family of Nine

On December 17, the Toronto Maple Leafs hosted a special pre-game Centre Ice Dedication ceremony at the ACC to present the Yousuf family with a commemorative key to their new Habitat for Humanity home.

Alternate Captains Matt Hunwick, Tyler Bozak, Morgan Rielly and Leo Komarov gathered on the ice with the Yousuf family for the key presentation, followed by the singing of the Canadian and American national anthems before a crowd of 20,000 fans.

Earlier in the year, the Maple Leafs partnered with Habitat GTA as Title Home Sponsor of the new family home of Eskinder Yousuf, his wife Sayo and their seven children. Leafs players and staff volunteered their time and energy to help build and paint the home, and returned to deliver “Welcome Home” gifts to the family when the build was complete.

“The Toronto Maple Leaf franchise is woven into the fabric of Toronto; the communities and the people that make up this great city,” said Brendan Shanahan, president of the Toronto Maple Leafs. “Giving back to the city and the people who have given so much to the team is a priority for the Toronto Maple Leaf players, and our partnership with Habitat for Humanity GTA is an important part of this tradition.”

“Thanks to the great community support of the Toronto Maple Leafs and Brendan Shanahan,” said Ene Underwood, CEO of Habitat for Humanity GTA, “the Yousuf family is now living in an affordable home of their own where their seven children can grow and thrive. We truly appreciate the team’s community spirit and support throughout this project.”

See a video of the key ceremony at blog.habitatgta.ca/toronto-maple-leafs-host-pre-game-dedication-ceremony-for-yousuf-family

habitatgta.ca


SHARE  

Featured Products