In light of the new tougher mortgage insurance measures and requirements brought in by the federal government, the Canadian Real Estate Association (CREA) has undertaken to closely analyze how they will impact markets across the country. Likewise, local real estate boards, such as WinnipegREALTORS®, will do the same.
The impact will vary as all markets are local with their own set of unique conditions and circumstances.
The higher stress test qualification required now means that first-time buyers, in particular, will have to adjust their sights lower from what they could previously afford. In some cases, especially in higher-priced housing markets, it may prevent them from owning a home.
As CREA and local real estate boards closely monitor MLS® sales activity into 2017, to help determine the extent of reduced sales activity — housing is one of the key economic lynchpins of the Canadian economy — one way to help offset the impact on affordability is for the federal government to follow through on CREA’s recommendations to enhance the Home Buyers’ Plan (HBP).
More specifically, CREA is asking the federal government to keep its election promise to help address affordability and accessibility for home buyers undergoing significant life changes; for example, homeowners having to relocate to a more expensive housing market or a divorced couple still needing a home to support their children. It also may allow someone to accommodate an elderly family member.
Extending the HBP is a fiscally responsive way to help these families. Essentially, the HBP, as it has since its inception in 1992, is not only instrumental in allowing first-time buyers a way to come up with a required down payment through accessing their RRSPs (required to pay them back over a 15-year period), but can ease affordability concerns by allowing Canadians to use their own savings to purchase a home. In total, 2.8-million Canadians have benefited from being able to use the HBP.
REALTORS® have also asked that the HBP be indexed to keep up with inflation to ensure it never loses its purchasing power. The affordability of homeownership is a growing concern for first-time buyers. The HBP currently allows first-time home buyers to borrow up to $25,000 from their Registered Retirement Savings Plan (RRSP) to use as a down payment towards a home purchase. CREA is advocating that the HBP be adjusted incrementally by $2,500 to preserve its purchasing power. Canadians believe it makes sense to index the HBP.
Many Realtors across the country are acting on a CREA call to action to let their own MPs know why making changes to the HBP will make it a more effective vehicle to enable more Canadians to afford their own home. Three local advocates for changes to the HBP are Realtors Deb Goodfellow , Donna Kirsch and Kourosh Doustshenas. Goodfellow and Kirsch met with MP MaryAnn Mihychuk, the federal minister of Employment, Workforce Development and Labour. As a result of their efforts, the cabinet minister and the Kildonan-St. Paul MP wrote a strong letter to her colleague, Finance Minister Bill Morneau, endorsing both of CREA’s HBP recommendations.
Doustshenas was able to work with Winnipeg North MP Kevin Lamoureux to develop a petition and obtain many signatures supporting the recommended HBP changes. To Lamoureux’s credit and his own his unwavering support of homeownership, he was successful in introducing the petition in the House of Commons on November 1, 2016.
“Let me share with the members of the House what that petition stated,” said Lamoureaux in the House. “In 1992, the Home Buyers’ Plan, the HBP, has helped over 2.8-million Canadians achieve their dream of homeownership. Also, the petition goes on to say that due to inflation the HBP has lost about $5,200 in purchasing power compared to 1992. It goes further to say that purchases resulted in over $2.9 billion in spinoff benefits and more than 22,000 jobs. The petition is calling for us to consider indexing the HBP to preserve its purchasing power and allow more Canadians to use it due to significant life changes.”
Let’s hope the federal government agrees with the recommended changes to HBP.