At the end of February, the Canadian Home Builders’ Association Day on the Hill took place, where CHBA met with members of parliament and senators to provide potential solutions to the housing affordability challenges Canadians face across the country.
A national poll conducted last year for CHBA by Earnscliffe Strategy Group found that three quarters of Canadians believe that middle-class households should be able to afford a home, and roughly the same amount of people believed that soon only the rich would be able to afford a home. Two-thirds of the respondents said that changes need to be made to help first-time buyers.
In January 2019, CHBA surveyed its members and discovered that 95% of builders and developers said that the stress test negatively impacted sales. There was also a 33% drop in first-time buyer activity.
“It is an election year, and people across Canada, especially millennials and new Canadians, see homeownership under threat,” says CHBA CEO, Kevin Lee. “CHBA’s membership has been gravely concerned about decreasing affordability for years, and last year’s implementation of the stress test has added more challenges. There are indeed steps that Parliamentarians can take to help Canadians achieve their goal of homeownership, and our members are here to discuss CHBA’s recommendations.”
Fixing the stress test is a top priority
The main priority for CHBA is to get the federal government to fix the mortgage stress test. CHBA recommends a varied stress test for different mortgage terms and conditions. They also want first-time buyers to have the option of an insured 30-year mortgage.
Once this issue is tackled, there are a few other actions to be taken:
Adjust tax systems
CHBA recommends increasing the limits on the First Time Home Buyers Plan, which currently allows you to withdraw up to $25,000 from your RRSPs to buy or build a qualifying home. It’s also suggested to increase the GST/HST rebate.
Avoid increasing costs through Code changes
According to the CHBA, as the Building Code changes to improve energy efficiency, it can heavily impact building costs. CHBA would like the government to invest in research and development to discover cost neutral solutions that address energy efficiency.
Tackle climate change through renovations
CHBA believes that homeowners would benefit from an energy retrofit tax credit that uses the EnerGuide Rating System.
Increase supply strategically
Use federal data to address specific housing supply issues in different markets across the country, then leverage federal transit investments to support and encourage the development of affordable, mixed-use communities.
“The combination of changing economic times and mortgage rule changes has really put would-be first time home buyers at a disadvantage,” says Lee. “If implemented, CHBA’s recommendations, would make a big difference in the lives of thousands of young families and new Canadians across the country looking to secure their financial futures by accessing homeownership. We are hopeful that parliamentarians will join us in our call to unlock the door to homeownership. We must work together to return Canada to a country where hard-working young families and new Canadians have a fair chance to realize their dream of homeownership.”