Canada To Pay 10% Of Mortgage For Poor First-Time Buyers

[Economy 52,837]

https://www.bnnbloomberg.ca/trudeau-s-budget-targets-home-buying-millennials-with-equity-plan-1.1231420

 

With severe housing unaffordability a top election issue the Liberals have unveiled a new housing plan to help get modest income people into the market for the first time

 

Households earning less than $100,000 a year (Roughly $74,000 USD) will be able to apply to have the Government pay 10% of their mortgage if it is their first time buying a home

 

The catch is that the Canadian Housing Corporation will stay owning 10% of the houses equity. If the house is ever sold, that money must be payed back

[JustAnother 5,113]

On my way to Canada 

[Economy 52,837]

55 minutes ago, JustAnother said:

On my way to Canada 

Honestly I don't know if I agree with this measure...

 

It's putting tax payers money on the line if there's a big housing downturn and there's also a risk this is only gonna inflate prices yet again and they finally started cooling a bit last year

 

I think they should focus in putting money on affordable housing construction and looking to reduce regulatory burden that construction companies complain delay new construction projects up to a decade and raise the cost of building a home

 

Here in Canada the big issue is that many regions despite high prices, homes simply don't keep up with population growth

 

In Toronto for example vacancies are at extreme historic lows and despite high prices for many years which should encourage construction, new housing supply still is 20% below population growth requirements

 

This is the fundamental issue that must be fixed. This 10% pitch in is just bandaid patch work that doesn't deal with the real fundamental problem for housing unaffordability and in the long term will probably only inflate prices further

[Economy 52,837]

I'm curious at what fellow Canadians or (or non Canadians who I've had economic conversations with) think of this. Is this a good idea? In my comment above I wrote why I think it's not the best way to deal with the problem

 

@OBEY @Woolfsmck @Teal Ambition @Luc @Woolfsmck @StrawberryBlond @juicyjuicy @PartySick

[Delulu Rogers 7,652]

I don't agree with this idea either. For the same reasons that you said but also, even people making $100,000 still find it difficult to afford houses. Like you said, the problem is that our population is growing too fast for houses to keep up. To me it's rather logical, if the population is growing too fast simply slow it down to a rate that housing, transportation and health care can keep up. It would put less strain on these services which would increase efficiency and might even allow for a more opportunistic job market. I think Canada accepts like 250,000 immigrants every year and that number always seems to increase with the liberals in power. If they were to cut it down to 150,000 I think the housing prices would come down significantly. Also, the government needs to discourage forge in investment and buying, but that's a separate story 

[Economy 52,837]

10 minutes ago, ChrisC said:

I don't agree with this idea either. For the same reasons that you said but also, even people making $100,000 still find it difficult to afford houses. Like you said, the problem is that our population is growing too fast for houses to keep up. To me it's rather logical, if the population is growing too fast simply slow it down to a rate that housing, transportation and health care can keep up. It would put less strain on these services which would increase efficiency and might even allow for a more opportunistic job market. I think Canada accepts like 250,000 immigrants every year and that number always seems to increase with the liberals in power. If they were to cut it down to 150,000 I think the housing prices would come down significantly. Also, the government needs to discourage forge in investment and buying, but that's a separate story 

250,000 was the old number but now it's over 300,000, it was raised last year... Next year it's supposed to be 330,000... But that 250,000 a year had been the standard for a long time already without being raised

 

But tbh that's not an excuse. Immigration has been high in Canada relative to population for many decades without problems (even when baby boomers reached age to buy homes) but housing only became a serious issue last 10-15 years. Birth rates have been at record lows for years now and overall population growth now is nothing compared to how high in was in many decades of the 1900s but affordability wasn't such an issue last century despite faster growth

 

I think the explanation is simple. It should not take 10 years for major contruction projects to get built. Canada ranked second last in the OECD for competitiveness in getting permits and approvals (of anything) in a timely manner

 

Zoning laws and required studies have become so long and complicated in this Country that it's stopping something that usually happens in the free market...

 

When home prices go up, construction companies are encouraged to build more. In fact in the US from 2002-2006 when prices went up so much new supply came online that vacancies went up and that played a role in prices crashing back down (too much in fact)

 

In Canada our housing market doesn't respond to supply and demand properly because it doesn't matter how high prices get, the construction sector is held back by red tape

[Curunir 7,510]

3 hours ago, Economy said:

With severe housing unaffordability a top election issue the Liberals have unveiled a new housing plan to help get modest income people into the market for the first time

Households earning less than $100,000 a year (Roughly $74,000 USD) will be able to apply to have the Government pay 10% of their mortgage if it is their first time buying a home

So earning less than $100k a year is considered modest? 

[Economy 52,837]

1 hour ago, Curunir said:

So earning less than $100k a year is considered modest? 

If ur a new buyer that never got a chance to buy a house years ago when the market was more affordable... Trust me even ppl making $100,000 struggle to pay a mortgage in some parts of the country

 

The average house in Vancouver for example is still over $1M despite finally dropping a bit this last year

 

So even making $100,000 a year a house would still cost over 10X before tax annual income

 

Add taxes it's like 13X actual take home pay and then add life expenses and your looking at over 20 years of left over income to out towards a mortgage. This does NOT factor in interest which adds to the total mortgage on top of principal

 

The maximum amortizations allowed in Canada are 25 years

 

So in some markets... If u make $100,000 a year and ur a young person new to the market... Good luck

 

Housing has become such a serious issue here that even the highest earners I know under 40 who never got to buy real-estate before the era of crazy prices struggle

 

Ppl in small homes still rent out rooms to help pay for the mortgage that's how bad it's gotten