Canadian Real estate industry worried Liberal housing plan won’t alleviate supply issues
TORONTO — Liberal leader Justin Trudeau presented Tuesday his party’s housing program, but members of the real estate industry are concerned that it won’t address a shortage of supply.
Trudeau’s plan was announced in Hamilton, Ont. at a Tuesday campaign stop. It focuses on helping renters become homeowners with $1 billion in loans, grants, and also includes a two-year moratorium for foreign buyers, prohibiting blind bidding, and a Bill of Rights that gives them a legal right of a home inspection.
Liberals will help first-time buyers under 40 with a new savings account that allows them to save up to $40,000 towards their first home. They can also withdraw the tax-free money to use for their purchase.
Plan also includes a Housing Accelerator Fund that would provide $4 billion to large cities for their housing plans. This fund could be used to build 100,000 middle-class homes in the hopes of reaching 2024-25.
“They treat the symptoms of the problem and not what the real problem is, which is the supply,” stated Ben Young, senior vice-president for development at Southwest Properties, Halifax.
He would like to see the federal and provincial governments open up to development to increase housing stock, as there has been a decline in the number of homes available.
He believes parties should not be as focused on housing tax incentives.
He said, “It’s almost like saying, “Come on, in my shop, it’s 100 percent off but I don’t own any inventory.”
Bosley Real estate Ltd.’s Toronto broker Davelle Morrison believes that the Liberal’s incentive to people under 40 years old is “nice to possess,” but doesn’t “move the needle.”
She believes that the country’s housing sector would be more successful if it had a 30-year amortization, paid more attention to Indigenous needs, and provided more allowances for basement apartments and laneway housing.
She also urges politicians to stop focusing on foreign buyers who are often blamed for driving up home values in recent years.
Morrison stated that foreign buyers should not be treated as the Bogeyman or blamed for everything. He noted that studies have shown they make up less than 5% of all homes in the Greater Toronto Area.
We have seen very few foreigners buy into the market due to COVID-19, but real estate prices are still climbing.
According to the Canadian Real Estate Association, July saw an increase of 15.6 percent in the average home price, which was $662,000 more than the previous month.
According to Toronto’s local board, the average home price in July was just over $1million, an increase of 12.6 percent compared with a year ago.
As these prices rose, bidding wars intensified. Brokers complained about a shortage of supply, and potential buyers felt the pressure to spend more on already expensive homes and stretch their budgets.
Liberals would like to relieve some of the pressure by banning blind bidding. But Morrison stated that open auction systems where all parties are familiar with each other’s offices have not helped to cool the Australian market.
The Ontario Real Estate Association also made the same observation.
OREA President David Oikle said in a statement that auction fever causes a three-ring-circus of hopeful buyers to crowd into front of homes with live auctioneers or online and then the bidding starts.
Auctions are not affordable. They can increase prices and push buyers to make rushed decisions that could cost them thousands of dollars.
Blind bidding is often criticized for its secrecy. Sandra Pike, a Halifax broker, said that her region is different from others because it has easy access to lots of data so people can make informed offers.
She said that local real estate websites can show when a property was listed, how long it has been on the market, and what prices nearby properties are at.
She stated, “Our customers here already have all that transparency.”
Sandi Branker is a Real Estate agent and a Think Ely Real Estate Team member at Zolo Ottawa. She can be reached at (613) 408–7935 or by email at sandi@thinkelyrealestate.com. Facebook| Google My Business |