Ah, the circle of real estate! It all begins with first-time buyers who get their foot in the door, eventually have families and become move-up buyers, and later on, right-sizers before the circle closes. If we miss out on one of these steps, we are not serving our communities well. Considering the challenges first-time buyers face today, we are missing out on the foundation that keeps our real estate circles dynamic. Canada’s proposed Federal Budget 2019 addresses this situation in part with a provision to help first-time buyers achieve homeownership. Called the CMHC First-Time Home Buyer Incentive, the program will enabled qualified buyers (with combined incomes lower than $120,000 annually) to finance up to 10 per cent of the price of a new home or 5 per cent on an existing home through a shared equity mortgage with Canada Mortgage and Housing Corporation.
Let’s say someone wants to purchase a home for $500,000, which requires a minimum 5 per cent down payment of $25,000. Through the program, CMHC would provide up to $50,000 (which would eventually have to be paid back), meaning that instead of a $475,000 mortgage, buyers would have to borrow only $450,000. This would lower their monthly mortgage payments and help them pass the stress test imposed by the federal government last year.
Certainly, this is good news for first-time buyers, but the Budget does not address the biggest problem in housing today: the shortage of supply. We see it all the time in the Greater Toronto Area. Our developers and builders are bogged down in red tape at the municipal level, causing approvals on new projects to be delayed, often for years. This situation results in making new homes and condominiums more expensive than necessary. The Ontario Municipal Board was disbanded, and we now have the Local Planning Appeal Tribunal to hear cases dealing with everything from zoning by-laws to subdivision plans, but I have not seen any proof that this process is any less cumbersome and time-consuming than before. What good is the provision for first-time buyers in the Budget, if they have nothing available to buy?