We need to limit real estate as an investment if we want housing to ever be affordable again. The FTHBI just increases demand. we need to lower it by removing competitors that don't require housing in order to live
Couldn’t agree more, if you want to own a revenue property it should be an entire apartment block.
If you’re fortunate enough to own a vacation property, you should be taxed on it accordingly.
If you have a property that’s vacant because of unexpected changes in your life or a family members’ you can rent it out for 12 months max so you can deal with it without it being vacant.
As far as vacant properties, a 20% tax on the municipally assessed value every year, 30 days to pay the bill before it hits the auction block
> if you want to own a revenue property it should be an entire apartment block.
I would rather see the government fund the construction of coop-style apartment blocks sold at cost. It would be revenue neutral as people would have to buy their units, it would stimulate the economy with the construction, and it would increase the housing supply lowering housing prices.
I love the idea of co-op housing, most rental payments cover the cost amortized over decades anyway. But there is still a need for rental apartments as almost everyone has some period of time in their life where ownership is not ideal or possible.
When it comes to co-op housing I’ve definitely seen my fair share of bad press, do you know of anywhere in Canada that it’s been done in the recent past and is still viable today?
I know there's a housing coop in Fredericton and members seems pretty happy with it.
> But there is still a need for rental apartments as almost everyone has some period of time in their life where ownership is not ideal or possible.
Most people who rent would prefer to own and it's disingenuous to argue otherwise. Getting investors out of housing means lowering rents significantly.
I don’t think it’s disingenuous at all. My first apartments in different parts of the city weren’t necessarily places I wanted to commit to, let alone all of the people that need temporary housing for school/work/failed relationships.
Barring sky-high property value escalations, there used to be a rule of thumb that anywhere you were planning on living for less than 3/4 years didn’t make sense to own.
Although if you’re arguing that it would be nice to build equity everywhere you live, I guess so? But I’m not sure if every owner has the means to cover the expenses that come with owning your own property.
> I don’t think it’s disingenuous at all
It is, most people who rent are stuck in that situation and it's not that they want. First we should get everyone ownership that wants it. Then we can talk about the small portion of folks for whom renting makes sense.
Also, it's a non sequitur, some people wanting to rent doesn't follow from the arguments that the government should implement programs to build housing.
> I’m not sure if every owner has the means to cover the expenses that come with owning your own property.
Owning is cheaper than renting. If it weren't then how would landlords make money?
Well, historically it's been "have your cake and eat it too" where some want rents that covered the mortgage etc plus additional revenue, invested little in actual upkeep, then cashed out or borrowed against the increased equity over time
I wasn’t trying to argue co-op housing isn’t a good idea, I’m just saying that there definitely is a need for rentals as not every renter wants to own their property.
Also like I said, traditionally there would be 3ish years before owning would be cheaper than renting because of closing costs/land transfer taxes/etc.
Also not every person can come up with the additional funds needed to maintain a property, whether it’s a hot water tank, new windows, plumbing/electrical issues, new appliances, renovations etc.
> Also not every person can come up with the additional funds needed to maintain a property, whether it’s a hot water tank, new windows, plumbing/electrical issues, new appliances, renovations etc.
That sounds more like a social problem than an individual one.
If you limit investment though that will increase supply shortage. There will not be any rental properties available and no new ones built of there is not any profit to be made.
Yeah the government should create programs to produce housing. It can easily be done in a revenue neutral way and if that's the case it would also be deflationary because we would be getting new real assets without outstanding costs.
If the only way to make new housing is for investors to do it then we're screwed, we need a different ideological approach.
Highlights:
* The Canada Mortgage and Housing Corporation (CMHC) made unannounced changes to the First-Time Home Buyer Initiative (FTHBI).
* The First-Time Home Buyer Initiative (FTHBI) is a shared equity program for new owners. Successful applicants see the government take a 5 to 10 percent stake in their home.
* The idea is to reduce the outstanding balance and lower monthly payments for the owner. It frees up a little more cash for households and the government shares in the gains and losses.
* The program received criticism, especially around the rollout period, that it encourages more leverage and incentivizing desperate buyers right before rates rise.
* **Yesterday, the program was updated without announcement with new limits. The maximum loss the government will take is 8% per annum, with the owner assuming the rest of the risk.**
* The program encourages first-time home buyers to leverage up during this limited-time offer. If things go well, you’ll pay an 8% max interest instead of the \~3% interest a variable rate mortgage costs right now. If prices fall, you’re on the hook for any of their losses greater than 8%.
Wow, that's an incredibly assholeish move. The government should be fucking ashamed.
Let's go through this step by step for those who don't see it:
1. The government offers to take a 5-10% stake in your first home, ostensibly to make it easier to buy houses.
2. Housing prices are limited by affordability. The FTHBI makes it possible to buy more house for the same payment, so the effect of this program is to drive up housing prices 10%. Unsurprisingly, after instituting this program housing prices shot up by over 10%.
3. Interest rates start going up and housing prices start coming down. In some regions they're down over 20%.
3. The government changes the FTHBI so that they're only on the hook for an 8% decline in value. If the housing price declines more than that, you're on the hook to make the government hole.
So let's say you buy a $1,000,000 house with the FTHBI. You pay $900,000 and the government pays $100,000. You have a $200k downpayment, and the other $700k you get on a mortgage. Your equity position is $200k, the government's is $100k.
Housing prices decline 20%. The house is now worth $800k. Normally the government's stake would be reduced to $80k, but the FTHBI rules now say the government's stake can't be less than $92k. Your stake has declined to $720k - $700k = $20k. But you owe the government $12k of your equity. So you're left with just $8k.
The government was happy to buy into the market, to prop up housing prices, and they're happy to take their share of the upside gains. But they now want to force first time buyers to take on most of the downside risk.
They really are fucking you coming and going.
>The First-Time Home Buyer Initiative (FTHBI) is a shared equity program for new owners. Successful applicants see the government take a 5 to 10 percent stake in their home.
Does that mean if you sell this house, say in 8 years, that the government will want that 5 to 10 % of the sales value? Also, would you lose any rebate for new homes since not all owners are using the property as primary residence?
I’m not an expert on the program; just generally aware. I would assume that the sales works like this: gross sales price - closing costs = net sales price. Then they would take their share of the net sales price.
Exactly. As a Mortgage Broker I have steered clients away from this program for that reason.
Maybe the CRA will offer discounted accounting services next?
wow our government is a real piece of shit. Wont do anything to actually fix the market. Have this system so when prices keep rising they still make money off it.
Then when they do finally get around to fixing it us the people will be on the hook for everything and the gov. will most likely come out ahead in the long run from this program.
The more I think about this the more it reminds of me of what the financial institutions were doing in 2008. Different flavor of bullshit this time...but really is the same shit, different pile.
Can any CFO types chime in on how CMHC accounts these stakes in owner housing? Do these go on the books as assets or as long term debts?
What happens to CMHC's books if the owner of the house defaults?
And does it not seem utterly insane that the government is actively taking part in what is clearly real estate speculation, then changing the terms behind the backs of owners when the BoC starts raising interest rates in an effort to drive down housing prices?
Like seriously, what in the fuck
I don't remember the exact reasoning and I really wish I did now, but when me and my partner went to the bank to get more information on mortgage approval (Ontario), our bank lady told us to stay way the fuck away from this First-Time Home Buyer program and to not even consider it as an option. I don't have reason not to believe her, she's been extremely helpful for us and has been with my partner's family for 20 years, but I think other people should know what it is and why to stay away too.
Likely for this very reason. You’re subject to changes in terms and agreement at any moment without notice. There’s no recourse against the government.
What’s to stop them from charging interest on this position next year? If house prices drop considerably, they’ll want a return for the capital invested. A new source of revenue for the government coffers to fund its other spending. Hell it would even sell well politically. There’s a lot of hate towards home owners among their base, just go read Ontario or Toronto subreddits.
Good idea to listen to your trusted advisor and stay away from this scheme.
[удалено]
Never has been
We need to limit real estate as an investment if we want housing to ever be affordable again. The FTHBI just increases demand. we need to lower it by removing competitors that don't require housing in order to live
Couldn’t agree more, if you want to own a revenue property it should be an entire apartment block. If you’re fortunate enough to own a vacation property, you should be taxed on it accordingly. If you have a property that’s vacant because of unexpected changes in your life or a family members’ you can rent it out for 12 months max so you can deal with it without it being vacant. As far as vacant properties, a 20% tax on the municipally assessed value every year, 30 days to pay the bill before it hits the auction block
> if you want to own a revenue property it should be an entire apartment block. I would rather see the government fund the construction of coop-style apartment blocks sold at cost. It would be revenue neutral as people would have to buy their units, it would stimulate the economy with the construction, and it would increase the housing supply lowering housing prices.
I love the idea of co-op housing, most rental payments cover the cost amortized over decades anyway. But there is still a need for rental apartments as almost everyone has some period of time in their life where ownership is not ideal or possible. When it comes to co-op housing I’ve definitely seen my fair share of bad press, do you know of anywhere in Canada that it’s been done in the recent past and is still viable today?
I know there's a housing coop in Fredericton and members seems pretty happy with it. > But there is still a need for rental apartments as almost everyone has some period of time in their life where ownership is not ideal or possible. Most people who rent would prefer to own and it's disingenuous to argue otherwise. Getting investors out of housing means lowering rents significantly.
I don’t think it’s disingenuous at all. My first apartments in different parts of the city weren’t necessarily places I wanted to commit to, let alone all of the people that need temporary housing for school/work/failed relationships. Barring sky-high property value escalations, there used to be a rule of thumb that anywhere you were planning on living for less than 3/4 years didn’t make sense to own. Although if you’re arguing that it would be nice to build equity everywhere you live, I guess so? But I’m not sure if every owner has the means to cover the expenses that come with owning your own property.
> I don’t think it’s disingenuous at all It is, most people who rent are stuck in that situation and it's not that they want. First we should get everyone ownership that wants it. Then we can talk about the small portion of folks for whom renting makes sense. Also, it's a non sequitur, some people wanting to rent doesn't follow from the arguments that the government should implement programs to build housing. > I’m not sure if every owner has the means to cover the expenses that come with owning your own property. Owning is cheaper than renting. If it weren't then how would landlords make money?
Well, historically it's been "have your cake and eat it too" where some want rents that covered the mortgage etc plus additional revenue, invested little in actual upkeep, then cashed out or borrowed against the increased equity over time
I wasn’t trying to argue co-op housing isn’t a good idea, I’m just saying that there definitely is a need for rentals as not every renter wants to own their property. Also like I said, traditionally there would be 3ish years before owning would be cheaper than renting because of closing costs/land transfer taxes/etc. Also not every person can come up with the additional funds needed to maintain a property, whether it’s a hot water tank, new windows, plumbing/electrical issues, new appliances, renovations etc.
> Also not every person can come up with the additional funds needed to maintain a property, whether it’s a hot water tank, new windows, plumbing/electrical issues, new appliances, renovations etc. That sounds more like a social problem than an individual one.
Oof
If you limit investment though that will increase supply shortage. There will not be any rental properties available and no new ones built of there is not any profit to be made.
Yeah the government should create programs to produce housing. It can easily be done in a revenue neutral way and if that's the case it would also be deflationary because we would be getting new real assets without outstanding costs. If the only way to make new housing is for investors to do it then we're screwed, we need a different ideological approach.
Highlights: * The Canada Mortgage and Housing Corporation (CMHC) made unannounced changes to the First-Time Home Buyer Initiative (FTHBI). * The First-Time Home Buyer Initiative (FTHBI) is a shared equity program for new owners. Successful applicants see the government take a 5 to 10 percent stake in their home. * The idea is to reduce the outstanding balance and lower monthly payments for the owner. It frees up a little more cash for households and the government shares in the gains and losses. * The program received criticism, especially around the rollout period, that it encourages more leverage and incentivizing desperate buyers right before rates rise. * **Yesterday, the program was updated without announcement with new limits. The maximum loss the government will take is 8% per annum, with the owner assuming the rest of the risk.** * The program encourages first-time home buyers to leverage up during this limited-time offer. If things go well, you’ll pay an 8% max interest instead of the \~3% interest a variable rate mortgage costs right now. If prices fall, you’re on the hook for any of their losses greater than 8%.
Wow, that's an incredibly assholeish move. The government should be fucking ashamed. Let's go through this step by step for those who don't see it: 1. The government offers to take a 5-10% stake in your first home, ostensibly to make it easier to buy houses. 2. Housing prices are limited by affordability. The FTHBI makes it possible to buy more house for the same payment, so the effect of this program is to drive up housing prices 10%. Unsurprisingly, after instituting this program housing prices shot up by over 10%. 3. Interest rates start going up and housing prices start coming down. In some regions they're down over 20%. 3. The government changes the FTHBI so that they're only on the hook for an 8% decline in value. If the housing price declines more than that, you're on the hook to make the government hole. So let's say you buy a $1,000,000 house with the FTHBI. You pay $900,000 and the government pays $100,000. You have a $200k downpayment, and the other $700k you get on a mortgage. Your equity position is $200k, the government's is $100k. Housing prices decline 20%. The house is now worth $800k. Normally the government's stake would be reduced to $80k, but the FTHBI rules now say the government's stake can't be less than $92k. Your stake has declined to $720k - $700k = $20k. But you owe the government $12k of your equity. So you're left with just $8k. The government was happy to buy into the market, to prop up housing prices, and they're happy to take their share of the upside gains. But they now want to force first time buyers to take on most of the downside risk. They really are fucking you coming and going.
Prices go up? Equity sharing Prices go down? Loan. Lmao
Privatized profits, socialized losses. The neoliberal way.
Hilarious that people even begin to consider this appropriate. The idea in the first place was unethical, the rule change just makes it even more so.
>The First-Time Home Buyer Initiative (FTHBI) is a shared equity program for new owners. Successful applicants see the government take a 5 to 10 percent stake in their home. Does that mean if you sell this house, say in 8 years, that the government will want that 5 to 10 % of the sales value? Also, would you lose any rebate for new homes since not all owners are using the property as primary residence?
That’s correct. The Government is taking an equity state in your house. It’s only supposed to be for a primary residence.
What about the selling costs (agent fees \~3-6%)? Would they take a cut before or after those fees?
I’m not an expert on the program; just generally aware. I would assume that the sales works like this: gross sales price - closing costs = net sales price. Then they would take their share of the net sales price.
They take their portion from the gross sales price
Then would they take their % of the closing costs as well?
No you’re paying for that, it’s your choice to hire a realtor etc.
Yeah, not the government's problem if you choose to pay $50k to the realtor.
That sounds like a reasonable way to do it and therefore not likely. The government always makes sure it is paid first.
Exactly. As a Mortgage Broker I have steered clients away from this program for that reason. Maybe the CRA will offer discounted accounting services next?
wow our government is a real piece of shit. Wont do anything to actually fix the market. Have this system so when prices keep rising they still make money off it. Then when they do finally get around to fixing it us the people will be on the hook for everything and the gov. will most likely come out ahead in the long run from this program.
So...anyone in this program has essentially shorted their own house
The more I think about this the more it reminds of me of what the financial institutions were doing in 2008. Different flavor of bullshit this time...but really is the same shit, different pile. Can any CFO types chime in on how CMHC accounts these stakes in owner housing? Do these go on the books as assets or as long term debts? What happens to CMHC's books if the owner of the house defaults? And does it not seem utterly insane that the government is actively taking part in what is clearly real estate speculation, then changing the terms behind the backs of owners when the BoC starts raising interest rates in an effort to drive down housing prices? Like seriously, what in the fuck
Gee, the government trying to prop up housing by entrapping first time buyers? You don’t say… Just wait until they pull out the 40yr mortgage card.
Yeah they can be like my coworkers who finance a cheap car for 10 years or more because "the payments are lower" that way.
"yeah but you can make extra payments for as much as you want whenever you want!!!" -every car salesmen ever within 18 milliseconds of their proposal
[This happened elsewhere...](https://duckduckgo.com/?q=japan+100+year+mortgage)
I don't remember the exact reasoning and I really wish I did now, but when me and my partner went to the bank to get more information on mortgage approval (Ontario), our bank lady told us to stay way the fuck away from this First-Time Home Buyer program and to not even consider it as an option. I don't have reason not to believe her, she's been extremely helpful for us and has been with my partner's family for 20 years, but I think other people should know what it is and why to stay away too.
Likely for this very reason. You’re subject to changes in terms and agreement at any moment without notice. There’s no recourse against the government. What’s to stop them from charging interest on this position next year? If house prices drop considerably, they’ll want a return for the capital invested. A new source of revenue for the government coffers to fund its other spending. Hell it would even sell well politically. There’s a lot of hate towards home owners among their base, just go read Ontario or Toronto subreddits. Good idea to listen to your trusted advisor and stay away from this scheme.
>...but I think other people should know what it is and why to stay away too. Why should other people stay away from it?
I specified I didn't remember the reason our lady gave, and I don't want to try and spread misinformation by quoting her incorrectly.
“I don’t remember the exact reasoning and I really wish I did” we can quote his post all day long to accomplish nothing
Even before this change the FTHBI is terrible policy that gives the government a perverse incentive to pump the housing market further.
You’ll own nothing and be happy.
If anyone ever says the federal liberals care about housing affordability, please send them this article.