Post Election - What does this mean for the Canadian housing market?
Horse races go on and night clubs stay open! This quote, originated in Hong Kong in the eighties. is associated with the smooth transition of the sovereignty of Hong Kong from the British to the China motherland. However, I think it is very appropriate to describe the trend of Canadian real estate. after the election. Let's take a look at the National Housing stats in August. I don't think it would be any different moving forward.
August was the second highest ever in the history of home sales in the country. The map below shows that the appreciation of the suburbs is much higher than that of major cities such as Metro Vancouver and Metro Toronto.
Greater Vancouver - 13.3% growth
Greater Toronto - growth of 17.3%
Calgary - up 10%
Edmonton - up 5.9%
Ottawa - up 18.6%
Montreal - an increase of 21.7%
The highest appreciation was in Barrie, Ontario-up 35.1%
Average down payment for the first quarter of 2021:
British Columbia-$159,762,64
Ontario-$140,215.37
Quebec-$58,571.16
Alberta-$62,929.45
Nova Scotia-$57,781.46
Greater Vancouver - 13.3% growth
Greater Toronto - growth of 17.3%
Calgary - up 10%
Edmonton - up 5.9%
Ottawa - up 18.6%
Montreal - an increase of 21.7%
The highest appreciation was in Barrie, Ontario-up 35.1%
Average down payment for the first quarter of 2021:
British Columbia-$159,762,64
Ontario-$140,215.37
Quebec-$58,571.16
Alberta-$62,929.45
Nova Scotia-$57,781.46
Trudeau promised a number of "hot tricks", here are a few I want to share with you. However, these are only promises so far but it takes time for the policy makers to iron out all the details. You should keep this newsletter and see how many of his promises actually put in place:
1) Introduce a bill of rights for buyers that prohibits blind bidding
2) Impose anti-dumping duties on residential properties that require the property to be held for at least 12 months
3) Foreign nationals are prohibited from buying Canadian residential properties for 2 years. Well, until it becomes law, foreign national are free to buy anytime.
Here are other promises:
1) Committing $1 billion in loans and grants to develop and scale up rent-to-own projects with private, not-for-profit, and co-op partners, creating a pathway to homeownership for renters in five years or less.
2) Introduce a tax-free First Home Savings Account, which will allow Canadians under 40 to save up to $40,000 toward their first home and withdraw it tax-free to put toward their purchase.
3) Give Canadians the option of a deferred mortgage loan as an alternative to the current shared equity model and reduce their monthly mortgage costs.
4) Doubling the First-Time Home Buyers Tax Credit, from $5,000 to $10,000.
5) Reduce the price charged by the Canadian Mortgage and Housing Corporation (CMHC) on mortgage insurance by 25%.
6) Build, preserve, or repair 1.4 million homes in the next four years.
7) Create a Housing Accelerator Fund, which will make $4 billion available to challenge the country’s largest cities to accelerate their housing plans, creating a target of 100,000 new middle-class homes by 2024-25.
8) Permanently increase funding to the National Housing Co-investment fund for a total of $2.7 billion over four years.
9) Introduce the Multigenerational Home Renovation tax credit to support families looking to add a secondary unit to their homes to allow a family member to live with them.
10) Co-develop a housing strategy with Indigenous partners and creating a National Indigenous Housing Centre.
11) End chronic homelessness by supporting communities in delivering locally oriented homelessness prevention and reduction programs.
Stop ‘renovictions’ by deterring unfair rent increases that fall outside of a normal charge in rent.
12) Review tax treatment of large corporate owners and speculators trying to amass large portfolios of Canadian rental housing and putting in place policies to curb excessive profits.
13) Establish the Canadian Financial Crimes Agency to investigate and combat all forms of major financial crime, including money laundering in the housing market.
1) Introduce a bill of rights for buyers that prohibits blind bidding
2) Impose anti-dumping duties on residential properties that require the property to be held for at least 12 months
3) Foreign nationals are prohibited from buying Canadian residential properties for 2 years. Well, until it becomes law, foreign national are free to buy anytime.
Here are other promises:
1) Committing $1 billion in loans and grants to develop and scale up rent-to-own projects with private, not-for-profit, and co-op partners, creating a pathway to homeownership for renters in five years or less.
2) Introduce a tax-free First Home Savings Account, which will allow Canadians under 40 to save up to $40,000 toward their first home and withdraw it tax-free to put toward their purchase.
3) Give Canadians the option of a deferred mortgage loan as an alternative to the current shared equity model and reduce their monthly mortgage costs.
4) Doubling the First-Time Home Buyers Tax Credit, from $5,000 to $10,000.
5) Reduce the price charged by the Canadian Mortgage and Housing Corporation (CMHC) on mortgage insurance by 25%.
6) Build, preserve, or repair 1.4 million homes in the next four years.
7) Create a Housing Accelerator Fund, which will make $4 billion available to challenge the country’s largest cities to accelerate their housing plans, creating a target of 100,000 new middle-class homes by 2024-25.
8) Permanently increase funding to the National Housing Co-investment fund for a total of $2.7 billion over four years.
9) Introduce the Multigenerational Home Renovation tax credit to support families looking to add a secondary unit to their homes to allow a family member to live with them.
10) Co-develop a housing strategy with Indigenous partners and creating a National Indigenous Housing Centre.
11) End chronic homelessness by supporting communities in delivering locally oriented homelessness prevention and reduction programs.
Stop ‘renovictions’ by deterring unfair rent increases that fall outside of a normal charge in rent.
12) Review tax treatment of large corporate owners and speculators trying to amass large portfolios of Canadian rental housing and putting in place policies to curb excessive profits.
13) Establish the Canadian Financial Crimes Agency to investigate and combat all forms of major financial crime, including money laundering in the housing market.
In my opinion, all the incentives are great for home buyers but without sufficient supply, incentive can only solve the affordability issue for a short term. Housing prices will heat up again after a small dip.
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