In my previous blog post, I got a little political, discussing the idea of expanding the First-Time Home Buyer Incentive to allow for first-timers in the Greater Toronto Area to take on more debt when buying a home. This week, I’m sharing my opinion on other housing issues and solutions proposed by the leading federal parties.
The Liberals said they would introduce a vacancy tax for non-residents and non-Canadians. My first reaction is that there is not enough vacant homes for this to be meaningful, but it seems like the vacancy tax made a strong impact in British Columbia. Even if it doesn’t generate revenue for the country or force more foreign owners to rent their properties, I don’t think it will do any harm. Perhaps the resources and funding put into this would be better used elsewhere though?
The Green Party and the NDP want to update the National Building Code to make every new building net-zero certified by 2030. I feel like net-zero homes today are more expensive because of the costs to build, but this could also be due to the low amount of builders
embracing the net-zero philosophy. If every builder in Canada had to meet net-zero standards, costs would eventually drop and construction timelines would adjust.
I’ve been in a net-zero home built by Reid’s Heritage Homes
, and I will say that I’m all for it. The air quality is better, the homes are more energy efficient, and it’s better for the environment. By definition, a net-zero home produces as much energy as it consumes. If this shift to net-zero standards occurs, there will be a sharp increase in home prices, but it will moderate over time.
The mortgage stress test
Seems like the Conservatives are the only ones willing to look at the mortgage stress test. The idea is to make it more flexible and potentially eliminate it for renewals. I’m for reviewing the stress test to make it more customizable depending on the market, but what troubles me is the Conservative party’s willingness to lean into the Office of the Superintendent of Financial Institutions, which is supposed to be an independent organization.
30-year insured mortgages
I’m all for 30-year insured mortgages. Yes, it means you’re paying more interest in the long run, and therefore taking on more debt, but it also lowers monthly carrying costs, which is essential for young, first-time buyers. This would help more first-time buyers qualify and be comfortable with their living expenses. It looks like the Conservatives are the only ones promising longer mortgage terms.
One thing to consider though is that extending amortizations just fuels demand, and there’s no point in doing that if not enough homes are being built.
Surplus federal land
The Conservatives are also planning on making surplus federal land available for housing development. I’m open to this, but it’s a long-term solution, and the affordability crisis needs immediate attention.
Home Buyer’s Tax Credit
The NDP wants to double the Home Buyer’s Tax Credit to $1,500. I’m in favour of increasing the HBTC because closing costs have only gone up with home prices, but I don’t think $1,500 is enough. I feel like it should definitely be in the $2,000 to $2,500 range.
Foreign buyers tax
A 15% foreign buyers tax is also on the NDP agenda, which I’m fine with. Despite what the general population thinks, foreign buyers actually play a pretty small role in the GTA housing market, so I don’t think it would make much of an impact. And if it does free up some inventory and generate more revenue to go towards developing affordable housing, then great!
Both the NDP and Conservatives want to do something about money laundering in the country’s housing market, but there seems to be a distinct difference between the two approaches. The Conservatives want to review the issues, and I’m not sure what that entails. The NDP wants to make home ownership more transparent to fight money laundering, which sounds like a more concrete plan.
I can’t tell you who to vote for, but I can help keep you informed and invite you to do more research at REALideas.ca
I’m feeling optimistic with all leading federal parties prioritizing housing issues leading up to the October 21 election. Remember, do your research before heading to the polls!