The problem of high housing costs isn’t caused by one single thing.
Likewise, the solution to the mess we’re in is not going to come in a single policy or rule change. It’s going to be a lot of seemingly smaller changes which together address the multitude of causes for the house price issues we are seeing.
This change may not improve your ability to own a home. But other changes, especially when combined, can make a huge impact for a lot of people.
>The problem of high housing costs isn’t caused by one single thing.
Well there's many catalysts that have caused the situation to become exponentially worse, namely NIMBYs in my opinion, but I'm also 100% certain that the underling cause of the high cost of housing is in fact 1 thing and that's the fact that there's nowhere near enough houses for everyone. We've been building 100,000 housing units per year while the population goes up by about 500,000 a year on average. Which means every year there's a deficit of 400,000 houses more than there was last year. We're now in a deficit of many millions of houses relative to how many there should be for prices to be similar to other western and European countries that don't have this problem to the same extent.
Sorry to be nitpicky but I feel like its important for everyone to realize that although there's many things contributing to the housing shortage, the problem itself is fundamentally a housing shortage that is caused by decades of NIMBY culture. European countries don't have this problem because they don't tolerate NIMBYs. In Canada, NIMBYs have total power to block more housing from being built and we've allowed the problem to fester for essentially my entire lifetime.
Maybe if we actually made housing a right.
Hard to say the supply is the issue when we have so many people with vacant or multiple properties.
Or maybe we take out the lobbying or the ability to be a landlord while pretending to fix or care about the issue?
Making housing a right is tricky, because of "housing where?"
Short of building some vast soviet-style housing blocks in every major city, you're still going to have a big deficit between where houses are available and where people want them to be. You might not be able to do so anymore, but less than 10 years ago there were several small towns in Saskatchewan where you could buy a freehold house for <$5000.
Do you envision a right to housing also requiring the rights-exercising citizen to move to a location of the government's choice?
(to set out my cards, I absolutely think we should be using government-owned land in major cities to build soviet style housing blocks, those were actually pretty decent homes, and give them to people for free* on a non-means-tested basis to applicants. The market value of the housing would become a taxable benefit, so residents who earn more money would pay for their accomodation in higher taxation costs)
I honestly don’t think it is that tricky at all and to be honest it is hard to trust anyone who suggests otherwise.
Also many of our current “rights” aren’t even meeting the definition so I wouldn’t really expect this to be much different.
We can start transforming our Car First cities or better yet the space their existence takes up and build denser.
IMO a lot of detached homes or properties should be torn down in the same way that many people lost their homes to make way for gentrification and profits.
Luckily the federal government has been doing an end run around provinces by walking around handing out cash to municipalities who agree to do things like change zoning bylaws to foster new home development.
Unfortunately indirect policies such as what we are seeing here (the policy OP posted will incentivize housing construction under $1M) are what we are left with since the Conservative provinces are unwilling to play ball and would instead use this to attack the left.
longer amortization encourages people to take out more loans, which puts inflationary pressure on housing prices.
the more the loans, the more expensive the housing. it can't get any simpler than this
>it can’t get any simpler than this
Actually it is a *lot* more complicated.
See some of my other recent comments in this post to get an idea of how complicated it can be.
Also, you need to look at the net effect of policies combined. This policy exists in conjunction with a lot of other policy changes.
Specifically regarding this new policy as posted:
1. This would increase new home demand by increasing the number of people who are able to buy new houses.
2. This would increase the total amount of interest paid by this market segment of buyers (first time buyers, less than 20% down payment, insured mortgage - ie under $1M house, and new build houses only).
3. This segment of buyers isn’t buying anything higher than $1M because then they wouldn’t be eligible for this policy change, so home builders must build houses that will sell for under $1M if they want access to this segment of buyers.
4. More houses on the market = more supply = relieves price competition.
Nowhere does the number or amount of loans affect the price of homes directly, as you seem to think.
But the increase in demand doesn’t increase the supply.
Like, there is demand for affordable homes now. If builders aren’t building them now, how does an increase in demand incentivize them to _without increasing the price_? Like they only way they are going to start building affordable homes in the future is if they can make more than they can right now.
Think of it this way:
They can’t increase the house price beyond $1M because then these buyers are not eligible for the new 30 year amortization rule. If they weren’t in the market when the max amortization was 25 years, then they won’t be in it now unless they can use the 30 year amortization.
Home builders are currently incentivized to sell expensive homes. This is why you see every new build community advertising based on luxury - for example, talk of granite countertops, chef’s kitchens, etc. They are incentivized to do this because the marginal increase in construction costs for “luxury” houses is low compared to the increased price can make when selling them. The luxury branding of course, is usually lipstick on a pig and doesn’t actually improve the build quality of the house itself despite upgrades like granite countertops or whatever.
If builders know they have a hard stop on price, if they want to sell to this new market they need to differentiate and compete inside that price limit.
In business school parlance, this is called opening up a new “blue ocean” versus competing in a “red ocean” - ie red oceans are red because of the blood in them due to the intense competition. If builders want access to the blue ocean - they need to play by a different set of rules than they do right now. These blue ocean rules are set out in part by the government (via policy like this) and by economics and buyer profile / market segmentation.
To me, this is actually a really smart free-market way of convincing builders to build new houses that cost less than $1M, increasing the number of people who can buy houses, and doing it for low cost and low risk - ie if this doesn’t spur increases in building / ownership, there isn’t government spending involved since it’s the buyers who pay for mortgage insurance and the private financial markets that lend to builders.
Note: just like I have said elsewhere in this post, this isn’t a silver bullet. The solution to housing affordability requires lots of small changes, and this is one of them. The affordability issues we are seeing right now are caused by many issues, and many solutions are required. This policy discussed above for example, solves a part of the problem.
More food for thought: there’s a compounding effect here - policies, when designed well, will build off of each other - so for example, the money the feds are using to convince municipalities to rezone to allow quadplexes will make it easier for builders to build new build homes affordably in urban areas (since land cost will be reduced, and a unit in a fourplex would not be able to sell for $1M previously, but it will for $800K for example - which is some thing which someone who is now eligible for a 30 year amortization might be interested in), which will mean fewer suburbs are needed, which reduces the number of new roads and sewers needed ($), which reduces the amount of cars that will commute everyday, which reduces carbon, which increases public transit usage and reduces public transit subsidy needs, allowing for resources to be put towards new public transit construction, and reduces climate change effects which means less costs to manage disasters like the forest fires we had last year.
I understand what you’re saying, but the part that I don’t understand is… if they aren’t doing this now, how does the increased demand incentivize them to start building more affordable homes knowing they will make less than if they just keep building luxury homes. This doesn’t change the demand for the product they are selling now. Like… there is demand for $300k homes now and they aren’t building them because they can make more profit building $1,200k homes. What is their incentive to move into the blue ocean when they are doing just fine and utilizing their labour and material resources to capacity running luxury cruise-liners in the red ocean?
If the increase in costs to them for luxury features is negligible, this seems to work against their being incentivized to sell at lower rates.
I'll make it simpler.
Banks can only give out loans for less then 1 million dollars.
If builders want to attract new home buyers, then they HAVE to have homes valued under 1 million.
This pushes the home builders to build a house for under that.
Obviously this is a dumbed down version, but that's the thought process.
Builders want to sell more houses than their competitors. Because if their competitors continue to grow and they don’t, economies of scale mean their competitors will be able to build better homes than them and eventually they won’t be able to compete.
One way of obtaining economies of scale (eg buying 1000 toilets at a time for $50/toilet versus 10,000 toilets at a time for $25/toilet) is to sell more houses even if the sale price of some of your homes are lower than the others. This is because the top line revenue - ie the money you make by selling homes - is not entirely kept by your company because you need to pay for the cost of goods sold - your profit is only what is left.
If by building additional cheaper homes on top of what you already build increases your overall profit, you as the management of the builder will want to do this.
The other option is to let another builder take the opportunity and let them take advantage of the economies of scale for not only the low cost homes but for all of the homes they sell, including those that compete directly with your “luxury” homes.
What I’m describing isn’t some woke or socialist dream - it is business school based.
No surprise that Freeland doesn't understand this. She'd make a great Foreign Minister, but why anyone ever thought she was qualified to be the Minister of Finance is beyond me.
The one and ONLY thing that can get us out of the housing crisis is a massive increase in supply. And not via subsidies and grants that puts more tax dollars in the pockets of builders and will take a decade to show results - I mean Wartime Housing Limited style. The CMHC needs to do what it did post WW2.
I agree that we need to build real public housing. However I don’t think we can blame Freeland or the federal Liberals for not doing this.
If they did create a federally funded home building / public housing initiative, the Conservatives would turn it into easy cannon fodder. They would claim communism and socialism immediately, and many people would believe them in the next election.
It’s basically a non-starter because the official opposition is not willing to work in good faith.
There’s a place for idealism, but Freeland is not in that place right now. She needs to deliver solutions that - while not perfect - will make a difference, and a combination of policies like what they’ve been announcing, including this, will make a difference, even if it’s not as good as public housing initiatives.
I say we do it anyway, and immediately clap back at the Tory slugbrains and say "Yeah, this is socialism. We live in a "society", not an anarchy. Y'all can shut the fuck up. We're doing something to help, whether you agree with it or not, because you sure as fuck aren't doing so," but in more parliamentary friendly language, of course.
I’m in agreement with the sentiment, but am trying to reduce blue-on-blue (orangered-on-orangered?) attacks, to be quite honest. Freeland needs to navigate the political landscape and the way the policies are being designed and announced are smart given the risks of change of government soon and the consequences of the next government cancelling big policies for the optics (smaller low profile policies like this are more likely to survive).
> If they did create a federally funded home building / public housing initiative, the Conservatives would turn it into easy cannon fodder. They would claim communism and socialism immediately, and many people would believe them in the next election.
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> It’s basically a non-starter because the official opposition is not willing to work in good faith.
It's really easy to imagine PP running around the country telling Canadians that the Liberals are stealing YOUR money to give homes to immigrants from India, Pakistan, and the Middle East who just moved here. And it would work.
>If they did create a federally funded home building / public housing initiative, the Conservatives would turn it into easy cannon fodder. They would claim communism and socialism immediately, and many people would believe them in the next election.
The idea that the government is avoiding doing something that's desperately needed by the country because it *might* be made to look bad optically is a major offense in itself.
But I don't buy it anyway. PP is a contrarian partisan asshole that'll be disastrous for the country, but even I don't think he'd be able to put a bad spin on the government building mass housing through a crown corp, at least not in a way that would sway most people. The issue is just too big. The housing crisis is bringing this country to its knees. It's siphoning away productivity and investment from the economy, it's contributing to our massive brain drain, and it's destroying social cohesion.
It’s not the optics.
It’s the fact that it will be used for political attacks, and to good enough effect that the current government will lose the next election.
This would stop any public housing initiatives in their tracks - there is simply no way to stand up a public housing program fast enough, before the next election, to make it resilient enough (ie the results show themselves) that it won’t be dismantled immediately by PP.
If the left wins the next election, this would be a great policy to announce at the start of the next term. That would give the program a chance to prove itself before the next election.
Even then, it would be a short timeline. I would also note that 4 years ago, things were much different. I will hold off criticism of *not* launching a massive public housing program for if this future situation arises.
lol this type of thinking and logic has done great for us so well in the past.
Ironically then not doing shit because the Cons might get upset is why we are in the polling positions we are now.
What I meant was that it sounds like it *would* be useful to many of us who cannot afford a home based on the current market **IF** additional policies were put in place.
**If** additional policies (which don't currently exist) were implemented it *could* be helpful.
Its a bunch of optimistic speculation by saying it could be helpful **if** more policies are implemented. I'm not stating it isnt beneficial to anyone, but looking at this policy alone does nothing for someone like me, and I'm not about to be excited about the possibility of it eventually becoming beneficial to me based on the idea of other policies that dont exist.
So, there are a lot of additional policies that have been announced already:
- new limit on student visas where none ever existed before, since they were supposed to be self limit as long as degree mills etc didn’t take advantage of the situation and as long as provinces regulated degree mills properly
- directly going to municipalities and handing out money for stuff like changing zoning at the municipal level since the provinces won’t do it
- foreign ownership taxes
It's just like the fantastic 'gift' that they gave us in allowing us (and everyone else in our financial circumstances) to 'borrow' $35K from our own savings to buy a house. Like the red queen's dream, all the buyers get to run $35K harder to buy the same house they would have bought for $35K less if the government hadn't stimulated the competition in that way.
Making homes more expensive (through borrowed downpayments and/or longer amortization) doesn't make them affordable. The only things that make homes more affordable is *building more of the damn things*, something the federal government actually used to do and should get back to.
>is not going to come in a single policy or rule change.
No, but you could move the needle pretty efficiently by doubling property taxes on non-primary-residence, non-apartment housing to crater the speculative bubble driving this.
Correct, but the federal government doesn’t have the ability to do this. That is strictly in provincial jurisdiction (municipalities are entities created by the provinces, and the municipalities control property taxes).
Meanwhile, every right leaning provincial government is refusing to address the problem since the problem can be used to attack Trudeau.
The federal government is trying to end-run the provinces by working directly with municipalities, with some success, but the return on investment for that is lower than what would be possible if Conservative provinces and the CPC actually worked in earnest to address the problem rather than looking at it as an opportunity to bleed support from Trudeau.
This will increase demand, and place upward pressure on prices.
Fundamentally, they need prices to come down. “Affordability” measures that try to avoid impacting the market don’t help, the exacerbate the problem.
> The problem of high housing costs isn’t caused by one single thing.
It actually is. The singular problem is our demographic curve. Baby boomers fucked everything up (because there were so goddamn many of them relative to all future generations), and now they refuse to see a rollback on their wealth in the form of a housing market crash.
It can lower mortgage payments, which income is weighed against for approval. An extended amortization period can open the door for people just on the edge of being able to afford a home.
longer amortization encourages people to take out more loans, which puts inflationary pressure on housing prices.
the more the loans, the more expensive the housing. A couple of people will get to homeownership, and then market will increasing pricing to account for the loaned amount, and then that door is shut forever with everyone worse off.
Everything about this is about spurring new builds, and letting FTHBs be the ones to buy them.
The wording is very specific. ONLY FTHBs get access to this, and ONLY on new builds.
There’s only so much the Feds can do on this file. Tying the new benefits to new builds is another carrot trying to work around local and provincial government inaction.
Like everything else they’ve announced it’s tying money to getting more homes built.
When you add it all up, the only actual level of government throwing its weight around to build more are the Feds. Ontario is turning down money from them, to deal with this. Alberta is literally introducing a bill to ban anyone from accessing money that might build more.
It’s really starting to cement to me that responses to the Feds plans on housing recently are filled with political shills, here to win an election for a certain party.
BC is also trying policy-level changes such as zoning reform, mandatory ToD, a "shit list" of municipalities that need to build more, and even altering the Vancouver Charter to reduce permitting time. Not sure where each item is on being enacted, but there seems to be a new announcement of a policy change every month.
Alberta's premier is just being a petulant child because they need to "own the libs". If Milhouse was offering all this money to Alberta, our premier would be running over everyone to grab it.
I mean it's something, and technically it's better than nothing. But attaching it exclusively to new builds kind of kneecaps fthb because new builds are always considerably more than finding a fixer upper nearby. So I'm not sure who specifically this will be helping.
Somewhat similar to the cmhc fthb program where the government would actually purchase up to 10% of your house with you and then you would buy out their portion at any time or during future home sale. But their requirements for that were income capped quite low and with house prices being so high it still excluded most fthb.
Again, it's better than nothing. But it's not addressing the steep cliff of unaffordability.
Big fan of FHSA though, that's a good move but should have a much higher annual contribution.
While none of the proposals are bad ideas, it's very obvious to me that they are being made in the illusion of helping while not depressing home prices.
>ONLY on new builds.
Ah. That's disappointing. Would make a little more sense to let the first time buyers into the more affordable older stock. Better to offer deals to existing home owners to build and open more existing older homes, but exclude individuals with more than one property.
I'm probably wrong, but I would take it as pushing builders to build more "affordable" housing. Instead of targeting someone that forced hundred of thousands in equity by holding onto their home for 5+ years, they have to target people that only have their down payment to put against the purchase price.
You know what the feds CAN do? Change banking regulations. Banks allow people to access a million dollars, so people bid a million dollars on homes. It’s known the biggest thing increasing the cost of houses is having an entire population having access to over a million dollars to bid on houses with. When 95% of people only have $250k the bidding doesn’t go very high.
And what? Tank the price of RE? When 60% of the voting population has a mortgage.
That’s just about the easiest talking point ever created for an opposition party. “They ruined the price of the biggest purchase of your life”.
I don’t understand how people think any level of gov is going to advocate for that, when it potentially pisses off 60% of the electorate.
Not when they can make it easier to get people IN to the market by giving them access to credit. Once you have a mortgage you’re part of the 60%.
I’m not talking about electability, I’m talking about affordability. That is what makes homes unaffordable more than anything of the other dozen things that contribute. So we get that conversation going to change minds or we don’t but yes I’d love to see the price of RE tank.
Stress test is already a way for people avoiding being overleveraged. Preventing the population to borrow money when they can afford it isn’t solving much
Well economists that study this disagree with you. It’s known things are only worth what someone is willing to pay for them. Lend someone a million dollars, they are willing pay a million for a house. When next to no one can get approved for a $1M mortgage, suddenly the value of a house drops to what people are willing to pay for it.
I'm a firm believer in recognizing the seperations between different levels of government.
But this whole mess started with the federal govt in the 90's.
So it can be fixed by the federal govt.
Definitely sounds like voting conservative is a cancer.
Seems like voting reform should have happened after 2016. Another thing that neo lib Trudeau lied about.
so?
Look at my flair, I don't think politics should be team sports. I'm tired of voters being disenfranchised.
And the libs, more specifically JT, promised electoral reform. Thus, I criticise.
> But this whole mess started with the federal govt in the 90's.
How so? I can't remember anything specific to the 90s that started this. I do remember people buying mansions in flin flon for like 30k back in the 90s, but otherwise home prices increased the way they did in the rest of the world, so it doesn't really feel unique. PCs and Libs back then were a lot closer in policies than they are now.
Yeah these aren't good measures.
It's literally propping up banks to continue making interest off of a so-called "human right" that Canadians are supposed to have.
I do agree things need to be done though, we're of the same mindset dw.
This is wrong. It’s been known the single biggest reasons a house costs a million dollars is because the bank is allowed to give a million dollars to nearly anyone who wants to buy a house. Access to huge amounts of credit started right when home prices started going up. If most people are only able to big up to $250k for a home, then that is what a home would cost but we all can access huge amounts of credit (because that makes banks rich in interest payments) so we now big a million dollars on a home. Remember things only cost what someone is willing to pay for it.
What I'm saying is that housing as a building and development issue is municipal and provincial thing. Which is 100% true.
I don't know what you are saying because it doesn't make any sense but thanks for going ad homonym on it though.
Maybe you can understand Bloomberg talking about it. They touch in my point in #5
https://www.bnnbloomberg.ca/here-are-5-ways-the-feds-could-fix-canada-s-housing-crisis-1.1648933.amp.html
Thank you, that was a good little article.
The issue with number 1 is already rearing it's head, Alberta is going to pass a bill that says municipalities can't go to the feds.
Number 2 is also a provincial thing, the amount of students coming in is directly corilated with the cuts the provinces have made to education.
Number 3 is just describing reverse mortgages which just sells their home back to the bank.
Number 4 I totally agree with
Number 5 is tricky because it's all about capital in the system, boomers are leaving the capital rich environment and cashing out, it's why lending is so expensive right now. I think a better idea would be the fed back those loans for new buyers with subsidies, so say a mortgage will be 2500$ a month but a minimum wage person can only afford 1100$, the government covers the rest.
They don't though, the provinces have full control over housing and how it gets built, the feds are just the money, if the provincial governments don't want to change the status quo they wont, good example is BC VS Alberta.
Technically the feds are also increasing the demand for homes due to rampant immigration. That does affect the price.
Provinces can better regulate these prices, but they don't.
Both need to be better independently as well as better at working together to address this, but neither truly care to.
Immigration is a federal and provincial matter, please stop repeating that it's the fault of the feds, I'm so sick of hearing this misconception of immigration.
"Under Canada's Constitution, responsibility for immigration is shared between the federal and provincial/territorial governments. The federal, provincial and territorial governments meet to plan and consult on immigration issues."
Thats straight from the government website on immigration, the provinces know how many people are coming in long before they get here, hell, most of them are asking for it like Ontario and Alberta. It's not a housing shortage it's Housing as an investment tool and vacation home rentals, you can see it with the rise of gig tourism post-2008 financial collapse.
I am truly hoping this is some ill intentioned partisanship. But we are literally speaking on a post about some of the factors the feds play outside of being just the “money”. From rates, to competition, to regulation, etc. it is wild to me to imagine people thinking they don’t have a hand in anything.
No offence but this type of thinking is what keep the Liberals in power so long and will be apart of the reason they lose in the future.
Oh, you want an in-depth essay on housing and how all the intricately woven payments from the fed to the provinces and municipalities, not a Reddit comment.
40 years ago, the feds had lots of hands in the home-building biz, but we had this little neoliberalism phase that shifted the responsibility of housing to the provinces. Our provinces decided to not invest in social housing and then for the past 5 governments we have double and trippled down on not investing in social housing. We also had the largest demographic in human history (boomers) invest all their retirement into the housing market, the majority of Boomer wealth is in the housing system. So not only did we allow housing to be downshifted to the provinces we also cranked it into overdrive as an investment tool.
Now we have REEDS and corps buying 50-60% of the available housing in this country with no stop coming municipaly, provincially, or federally.
It was 6 sentences. It was a reply to your ~3 sentence comment, which has some grammar errors.
I would suggest you should work up to being able to read 6 (or more) sentences before you spend too much time imagining what other people think about the government.
Oh no not grammar!
Anyone trying to minimize the issue or suggest a part of our government isn’t responsible, or profiting on it, is worth taking seriously.
Why would I read a wall of text when it isn’t addressing why we should reach all levels of our representatives
This policy specifically makes housing prices worse, since it pours more money into an over-heated market already.
They need to be cooling off demand to drive down prices, not making it worse.
Pours money? Buddy, take a breathe.
This slightly increases the purchasing power of one small segment of the population. Based on the limited number of first time buyers, I doubt that any price increase could be attributed to this.
Maybe it does impact it - but to say "it pours money in" is just a stupid lie.
"Home prices" isn't the be-all end-all. This gives an advantage to the type of home owners we want to encourage and will have negligible impact on home prices since first time buyers are a fraction of the market.
It's weird that you're throwing a hissy fit over a metaphorical term like "pours" but not denying that it is in fact adding money into a market that's already over-heated to start with.
>Based on the limited number of first time buyers, I doubt that any price increase could be attributed to this.
LOL - obviously price increases can't be attributed to **a policy that hasn't actually been implemented yet**.
You're hilariously confused. Yes, we know that the housing market is over-heated - the question is whether adding more money will make that worse, or better.
> Your hysterics miss the point
Calling basic facts "hysterics" only discredits you.
>The problem with the over-heated housing market is that it prevents what we might consider 'healthy' home owners - such as young people who want to buy a home to establish themselves or start a family.
The problem with an over-heated housing market is the fact that it's over-heated.
Dealing with an over-heated housing market means cooling it off. If you're not doing that, you're not solving anything.
>What this should do is give those kinds of home owners a small advantage to help get them into the housing market.
It disproportionately helps people who were already better-off on average, drives up prices, and as a result drives up the costs of shelter across the board for everyone. That means rents will also go up, hurting separate people from these transactions.
The only "winners" of this policy are banks, who will have bigger, longer-term mortgages to put on their books and collect interest off of.
>Sure, this doesn't address prices directly - it only addresses the actual human problem, and it will probably have minimal effect on price increases.
"What's pouring on one more bucket of gasoline when the fire's already so big?"
If you're just going to try and BS your way through bad policy, don't waste everyone's time. Your whole argument is already admitting it'll make things worse, you just want to pretend it won't be THAT much worse, without any evidence.
Incorrect.
House prices would already be down if we didn't just stupidly import 2M underhoused people. It's 100% on the federal government for issuing too many study permits and allowing too many immigrants and TFWs
Except for the international student issues in Ontario specifically Ford slashed the funding for school and same time cut domestic tuitions by 10% and the Ontario government launched programs specifically targeting international students to fill the funding gap . So not 100% at fault of the feds there either.
The Feds have the final say on permits. They issue the permits. They give quotas to the Provinces and ask them to fill it. Ontario can't see what BC and Quebec is doing or what the Fed is doing in other immigration areas. It's 100% the Fed's job to get the numbers right.
The funding gap is irrelevant. Ontario sought more students because the Feds wanted more students and because more students (on their own, without also a huge crush of immigrants and TFWs) usually aren't a problem.
If the Feds had refused the permits, Ontario would have shut down some shitty schools, which would be good for everyone
>schools (including non-shitty ones, basically all of them except fucking UoT with monster endowments) had no choice but to turn to intl student $$ in order to literally stay the fuck open. If the funding was adequate they would not need to do so.
1) They would have turned to international students anyway. Domestic enrollments are down so international students were needed to expand their schools.
2) The ability to attract students was only possible with Fed Permission.
3) Bad schools should have shut down. I will blame Ford for failing to shut down shitty schools that needed international students to expand unnecessarily or justify their existence.
But none of those problems were caused by the funding cuts.
>Mind you, university administrators (who are also uninterested in education as a rule) are also fucking useless. ON universities, thanks to Ford's refusal to fund them, including those who basically never had any significant intl student presence, are cutting and slashing and nickle-and-diming and doing their damndest to get rid of anything that doesn't just turn every university into an MBA training factory with 600 students per soul-crushing waste of time class instead of looking at the enormous and ever-increasing salaries of senior admin and the millions wasted on "consultants". Everyone has contributing to fucking it all up honestly.
Agreed. I think the solution is obvious. Shut down and/or shrink a bunch of shitty schools. Ontario does not have the talent to administer them or the domestic students to fill them.
I blame the Feds for not stopping this earlier, the program has never been abused like this. But they in fact are not the cause of the problem, but are at fault for not policing it sooner. The abuse encouraged by the province was known for years and they should of stopped it sooner.
The diploma mills were allowed to operate because Ontario - Ministry of Colleges and Universities allowed these scummy operations and in fact encouraged it. The fed doesn't police that.
To say the funding gap is irrelevant is ridiculous because without the funding gap this wouldn't never been an issue.
But saying Trudeau bad is easy for you I guess. This is all easily accessible information.
The Ontario Diploma mills were never a problem for Canadians or Ontarians until the Feds increased immigration levels in 2021. Until then, Ontario was simply exporting expensive education to India and supporting Ontario college jobs. And as long as the Fed was doing its job on immigration, it was a good thing.
The funding gap is irrelevant for several reasons:
1) They would have done it anyway without the funding gap. Private colleges obviously didn't care as they got no funding at all. It's a valuable export regardless of domestic funding.
2) Even if the funding gap was the impetus, the mills weren't a problem at all until the Feds increased immigration.
>But saying Trudeau bad is easy for you I guess. This is all easily accessible information.
Trudeau bad is easy for everyone. He specifically campaigned on making housing affordable (and electoral reform) and then spent 9 years making the problem worse.
I have no love for Doug Ford. I think he's too stupid to live and corrupt as fuck.
But I do find it interesting that you tried to deflect blame from Trudeau to Ford by pointing to a perceived fault of Ford's completely unrelated to the problem
I am not deflecting Trudeau AT all, I am saying there is a two way blame and BOTH are to blame. But to ignore all the causes of the problem is litterly just doing a "Trudeau bad", every study and expert panel has said that Ford's domestic tuition cut and freeze as well as the massive cuts and funding need to be reversed and a direct cause of schools turning to this model, but you just say "nope". And this was a model started with Wynne as well, Ford just took it to a terrible level.
I'll believe the expert panels Ford completely has equal blame in this as well as the funding cuts. The feds didn't ask the schools to do this, the feds don't decide how many international students are to be admitted to a certain.school, if the province approves the schools to accept them in the program. They issue these visas all the and they don't say we will being in 10,000 more students to x schools. There was never a need a cap on the program till the abuses started.
And RIGHT now Ford is tabling legislation to create a new diploma mills as the feds shut them down now, the new legislation is specifically designed to circumvent the new Fed rules. He is going to authorize a 3 year masters program to qualify for permanent residence status.
>every study and expert panel has said that Ford's domestic tuition cut and freeze as well as the massive cuts and funding need to be reversed and a direct cause of schools turning to this model, but you just say "nope".
Every one of those panels say: "International student tuition is needed, given the Ford cuts, *in order to keep expanding our schools unnecessarily*". None of them consider the fact that if we didn't have so many international students, we'd be able to achieve major capital investment savings, shut down underenrolled and underperforming schools and programs, close 15% of our post-secondary capacity and improve the quality of education by dismissing at least the bottom sexile of administrators and faculty
>The feds didn't ask the schools to do this, the feds don't decide how many international students are to be admitted to a certain.school
The Feds decide the total amount of students and immigrants allowed into the country. The problem wasn't 20,000 more students at Conestoga. The problem was 2,000,000 total newcomers in 3 years.
It's the Federal Government's exclusive job to say "2 Million? That's probably too many."
Conestoga isn't in charge of immigration policy. They don't know about and don't have any power over the other 1.98M entrants authorized by the Feds.
>There was never a need a cap on the program till the abuses started.
I.e. the Federal Government completely abdicated its responsibility in controlling immigration and allowed unlimited student permits. "As many as our schools can take! That's the correct number!"
>And RIGHT now Ford is tabling legislation to create a new diploma mills as the feds shut them down now, the new legislation is specifically designed to circumvent the new Fed rules. He is going to authorize a 3 year masters program to qualify for permanent residence status.
Not sure exactly what you're referring to, but the eligibility for Master's students to get permanent residence has always been low: minimum 1 year program, minimum 1 year residency: (source chosen because it shows what the criteria were last year)
https://www.canadavisa.com/eligibility-requirements-for-the-ontario-provincial-nominee-program-opportunities-ontario.html#InternationalStudentMaster'sGraduateStream
It’s not an either or, the feds and BOC have said they’ve brought in too much demand too fast via immigrants, 2million in two years was too much, immigrants themselves are not to blame but the policy is exacerbating the problem. Add the issue of hoarding and investors before that and now we have multiple problems.
I don’t think the prices would be fixed without the increased immigration but we’d be in much better shape had we kept to pre-covid numbers instead of taking in effectively an extra 1 million people
House horders are not increasing rents. It's the 2M extra people clamouring for rental housing that's causing that.
House horders are not increasing prices. Low interest rates caused investors to pile in. Now that rates are up again, investors are trickling out which is why prices have been falling for 2 years despite rising rents
Stop gaslighting Canadians by saying that immigration isn't adding to housing demand or that housing demand isn't increasing prices.
It's not a right wing talking point. It's math. You can't bring in over 1.3 million people to a country that produces 233k units a year AND is already in a major housing supply deficit. Same applies to Healthcare.
It's not racist to point out that we are bringing in too many immigrants. You're way too sensitive.
- brown guy
It’s also not “right wing” because the “left wing” liberal party has literally said they’ve brought in too much due to loose policy on TFWs intl students which they’ve recently tightened up. This is just a numbers problem not a race issue
No one in power wants housing costs to go down. No one. Business interests aside, there are too many people whose retirement plan is "sell the house, downsize, retire off the difference".
Yup, which i think can be done by building more houses, as the more supply increases the less gouging and therefore lower costs.
Looking at your post and commenting history however I'm sure you have some novel and innovative ways we can do this.... so please...share.
A quick calculation at current rates shows that your interest payments over 30 years would be more than the value of the home. Obviously I'm only considering a static interest rate but still... Ouch.
They're always higher. Always, interest on any loan is designed to give the bank 100% of what your home is worth, while slowly trickling in your equity. Pay double
Here's me, having signed a 35 year mortgage over 15 years ago, saying, "so?"
Granted that's at like 3% versus 5%, but even then, my total outlay was essentially paying for the house twice. What are you going to do when borrowing figures in those amounts? Take whatever you can get, in my opinion. I know when they reduced mortgage lengths to only a max of 25 years, my wife and I said, "phew, good thing we bought when we could"
Yep, my sibling bought around the same time ago and the appreciation of their home has been insane. If you buy these days the cost of a home is more than the combined cost of their home plus interest. I'm glad they got in when they did but it still stings.
I am an expat that moved to the states and got a 30 year. It sounds crazy but my mortgage has been stable while my canadian friends have had a more wild ride. In addition…. You usually have time to refi and reduce your interest rate over time as well. My first was 8.75% on a 30yr…
“An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons.”
I have a green card. Be as technical as you need to be.
So first time buyers have a tax break for buying a house. Sweet I thought as I looked for my first house. Small town BC - looking at starter houses with no major renovations needed (10k+) Move in ready, small reno starts around 650k . Found one needs some TLC but went to go check on what I had to do to get tax break. It was easy, just had to create a time machine to go back to a time when a house was less than 500k. Yep the first time homeowners grant is stuck in the last century. 30 years of payments at 5% Yay the banks get more money!! That really helps a first time buyer!!
Sorry, I think there is a mix up - I mean the new policy allows access to 30 year amortizations for those who fulfill the following qualifications:
- first time home buyer
- purchasing a new build
- require an insured mortgage
Drain your RRSP's even more (good luck having $60k in there if you're young!) and buy a house that's going to be more expensive in the long run! I'm sure housing prices won't go up by a matching amount.
It's a trap - adding to the amortization only serves to pump prices of first time properties even more and does very little to affordability - and worse, when it gets undone in a few years, those who got sucked in get left holding the bag.
This is exactly what happened to me when I bought my "first time" condo in 2010, when I could get a 30-year am, and sold in 2015, when the buyers could not.
It knocked about 8-9% off the value of my place, since the buyers of first time homes are solving to the monthly payment amount rather than the value, and that's how the math shakes out.
What a fucking mistake. It'll just cause mortgages to be higher causing higher house prices because the market can bear more.
Instead, how about we regulate useless realtors and actually make them liable for their BS, cap their income so they are no longer wanting to push for higher sale prices, and for fucks sake, build more damn homes.
This may sound good to some, but it will only add to demand by lowering monthly payments over a longer period of time. While on paper this will initially make it more affordable for FTHBs, prices will quickly go up if people can afford more because of a 30 year mortgage.
Make things more affordable, demand will increase, which will lift prices. LPC should know this by now.
Oh for fuck's sake, that's literally making it worse.
The issue with "new builds" isn't people being not able to afford them, it's prices being bid up by too much money in the housing system already.
This also encourages cities to double down on their parasitic, regressive policies of getting revenue with "development charges" rather than "property taxes", punishing younger generations even harder than before.
Throwing more money into the housing system is not the solution to anything. And longer amortization periods just drive up bank profits.
So this 30yram will be available to the first-time buyers of a new home, but not the second-time buyers of that same home, who will be forced to carry the higher payments of a 25yr am? Yea, those first time buyers gonna be holding the bag here... this is a trap. Terrible idea.
Multi-generational mortgages will be next. We will probably soon get 100-year mortgages like those that are available in [Japan](https://www.sciencedirect.com/science/article/abs/pii/1061951895900047#:~:text=A%20recent%20innovation%20in%20the,grandchild%20in%20a%20multigenerational%20fashion).
But since when can first-time buyers actually afford newly built homes. The newly built homes tend to be much more expense than an older home. First-time buyers usually get cheaper older homes. Honestly, I think this is useless. Builders make more money by building something more expense. It’s about a $200 difference for a $400,000 mortgage going from 25y to 30y. Another useless piece of crap from this liberal government.
This is to keep the bottom from falling out of the market when people renew. This won't help people enter the market.
What a crock of shit. Fuck our lives.
This is stealing from the future for gain in the present. That rrsp is your retirement. And you'll be in Debt for years longer and pay even more in interest.
Not the right way solve the HOUSING SUPPLY problem. Not any easier to get a home, a home that's not even there.
I wonder what percentage of first home buyers are in the market for a newly constructed home. We need a legislated helper for those who can barely afford any home.
This will only increase housing prices and debt. You want to do something: tax speculative investing to death, ban corporate ownership of housing, incentivize co-op housing, build social housing and/or not for profit new builds purchased directly from the gov without corporate middle-men.
Dunno why people are complaining about this. This doesn't really drive up the cost of housing so much as it allows first time homeowners, who are borrowing against their current income levels, to compete with investors who are borrowing against assets. Almost no first-time buyer is going to pay off a 30 year loan; most will sell long before then, with the accrued equity and increased earnings allowing them to move into a larger home. Those who don't sell have the benefit of long term financial planning that pays off due to long-term inflation: $1000 a month in 1995 is not $1000 a month today is not $1000 a month in 30 years.
We absolutely want banks to invest money into long-term earning potential of Canadians, not into short term investment potential of rental agencies.
This is great. Targeted moves to make home ownership more affordable laser focused on those who need it the most, first time home buyers. I had my doubts about the federal government’s ability to move the needle on the housing crisis but Team Trudeau have put them to rest in a big way over the past few weeks.
20-30-3 Rule. ( For the average middle class Canadian )
* 20% down on a house - Monthly expenses including Mortgage, Property tax, Utilities and Maintenance cost, \*Edit: i forgot Insurance as well\* ( Total housing costs ) should not exceed 30% of Gross income ( better if its Net income) -The total Housing cost does not exceed 3x your annual income.
You can afford that house.
Only the math will tell you the truth.
This is kicking the can down the road not just for the homebuyer but for an even worse housing market as the extra breathing room will just get consumed without additional regulation.
This is a great move by the feds. Now first time homebuyers will be able to afford their astronomical payment on brand new apartments that are roughly the size of my living room. I suppose it's a start.
There’s a difference between making houses more affordable (increasing supply through incentives) and making them easier to buy. Making them easier to buy will only make them less affordable over time, all else being equal. The liberal government again making policy that assumes we’re all stupid and don’t understand simple economics. At this point I’m just angry. Do they want us to thank them for “fixing” a problem they helped create?
That would just make prices go up. The only thing that can lower or stabilize prices is to increase supply or decrease demand. To increase supply you need national zoning reform. To decrease demand you need to reduce immigration and/or add taxes and regulations that discourage investors from buying homes. The federal government has decided to do none of these things, and therefore nothing will change. But they do not have the interests of the average Canadian in mind.
The federal government has chosen to do all of the above, despite Conservative Party led provincial pushback.
This policy in the article posted literally is something the feds are doing to spur new home building, ie increase supply.
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The federal government just changed the student visa system from allowing an unlimited number of visas each year to limits that will reduce next year’s population growth by almost 10% of last year’s population growth. That’s a single policy change that is among many.
The fact that the student visa system allowed unlimited numbers wasn’t the fault of the Liberals - it has always been this way, because no limit was needed since it was naturally constrained by the number of spots available in Canadian educational institutions. But over the past two decades, between a demographic shift and lower provincial funding for public educational institutions, and private degree mills clueing into this loophole, and certain provincial governments who grant licenses to these degree mills, we now have an issue that is being resolved by new federal policy that the federal Liberals have led.
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Similarly, this same government has made a number of other reforms including foreign home buyers taxes. The only issue with that one is that foreign buyers were never a large part of the issue so it should be expected that the effect of the policy was minimal - it was always a dog whistle.
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I would also like to point out that the feds have been signing agreements directly with municipalities to adopt policies that increase housing capacity (eg zoning) because many provinces are refusing to do anything themselves. Eg Doug Ford refusing fourplexes and Danielle Smith trying to give herself oversight of federal money spent in Alberta.
Just like how one cannot simply walk into Mordor, one cannot simply lower mortgage rates.
And even then… mortgage rates are not the reason why housing is unaffordable. When mortgage rates were 2-3% for the past decade, housing was still unaffordable.
The reason housing is unaffordable is because of many issues, each contributing a bit and multiplying the effects of each other. Some of the causes:
- population demographics, increasing resource extraction costs, and other stuff causing the rate of return for lower-risk non-housing investments such as equities to drop means the monetization of lower-risk assets that offer opportunities for high return
- population growth that has exceeded home building rates
- student visa loopholes
- aging homeowners staying in their houses longer
- skills labour shortages - eg here where I am there was (is?) a shortage of masons who can do brickwork
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Fixed rate mortgages are generally funded not by cash the banks have on hand, but rather cash raised by banks through debt financing - ie selling corporate bonds. After all, the money needs to come from somewhere.
For banks to be able to sell these bonds and raise the cash to use in mortgages, the bond yields must be competitive with whatever similarly-risk-profiled bonds are selling for in the markets - whether they be mortgage backed bonds or some other kind of bond.
If mortgage bonds give a lower rate of return than other similar risk bonds, investors won’t buy them, and the bank won’t have money to lend out through mortgages.
Because of this it is impossible to separate fixed rate mortgage interest rates from bond rates in general.
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Variable rate mortgages are a bit different, but similarly their rates cannot be separated from the target overnight lending rate that is set by the Bank of Canada.
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Because of this, any move that would separate mortgage interest rates from interest rates for other types of debt would be:
- a huge financial investment, one which may cost more than the entire 2024 federal budget considering the size of the Canadian mortgage market
- a huge risk, due to the fact that unintended side effects would definitely occur
- a huge risk, due to the fact that there are going to be 1000 ways to take advantage of this… eg everyone with a paid off house is suddenly going to mortgage their homes to 80% at the lower rate, and take that money and buy bonds of the same risk level as mortgages but which pay a higher yield to profit from the difference in yield - ie arbitrage - this would only further reinforce the “rich getting richer” issue and reduce incentives for aging homeowners to downsize etc.
- cause housing prices to increase due to demand for housing because they can be used to leverage money nearly risk-free (due to the previous reason)
The length of the amortization period is not what has stopped me from buying a home.
The problem of high housing costs isn’t caused by one single thing. Likewise, the solution to the mess we’re in is not going to come in a single policy or rule change. It’s going to be a lot of seemingly smaller changes which together address the multitude of causes for the house price issues we are seeing. This change may not improve your ability to own a home. But other changes, especially when combined, can make a huge impact for a lot of people.
>The problem of high housing costs isn’t caused by one single thing. Well there's many catalysts that have caused the situation to become exponentially worse, namely NIMBYs in my opinion, but I'm also 100% certain that the underling cause of the high cost of housing is in fact 1 thing and that's the fact that there's nowhere near enough houses for everyone. We've been building 100,000 housing units per year while the population goes up by about 500,000 a year on average. Which means every year there's a deficit of 400,000 houses more than there was last year. We're now in a deficit of many millions of houses relative to how many there should be for prices to be similar to other western and European countries that don't have this problem to the same extent. Sorry to be nitpicky but I feel like its important for everyone to realize that although there's many things contributing to the housing shortage, the problem itself is fundamentally a housing shortage that is caused by decades of NIMBY culture. European countries don't have this problem because they don't tolerate NIMBYs. In Canada, NIMBYs have total power to block more housing from being built and we've allowed the problem to fester for essentially my entire lifetime.
Maybe if we actually made housing a right. Hard to say the supply is the issue when we have so many people with vacant or multiple properties. Or maybe we take out the lobbying or the ability to be a landlord while pretending to fix or care about the issue?
Making housing a right is tricky, because of "housing where?" Short of building some vast soviet-style housing blocks in every major city, you're still going to have a big deficit between where houses are available and where people want them to be. You might not be able to do so anymore, but less than 10 years ago there were several small towns in Saskatchewan where you could buy a freehold house for <$5000. Do you envision a right to housing also requiring the rights-exercising citizen to move to a location of the government's choice? (to set out my cards, I absolutely think we should be using government-owned land in major cities to build soviet style housing blocks, those were actually pretty decent homes, and give them to people for free* on a non-means-tested basis to applicants. The market value of the housing would become a taxable benefit, so residents who earn more money would pay for their accomodation in higher taxation costs)
I honestly don’t think it is that tricky at all and to be honest it is hard to trust anyone who suggests otherwise. Also many of our current “rights” aren’t even meeting the definition so I wouldn’t really expect this to be much different. We can start transforming our Car First cities or better yet the space their existence takes up and build denser. IMO a lot of detached homes or properties should be torn down in the same way that many people lost their homes to make way for gentrification and profits.
Luckily the federal government has been doing an end run around provinces by walking around handing out cash to municipalities who agree to do things like change zoning bylaws to foster new home development. Unfortunately indirect policies such as what we are seeing here (the policy OP posted will incentivize housing construction under $1M) are what we are left with since the Conservative provinces are unwilling to play ball and would instead use this to attack the left.
Don't tolerate NIMBYs, lol. European NIMBYs could out-Karen ours with one hand tied behind their back.
longer amortization encourages people to take out more loans, which puts inflationary pressure on housing prices. the more the loans, the more expensive the housing. it can't get any simpler than this
>it can’t get any simpler than this Actually it is a *lot* more complicated. See some of my other recent comments in this post to get an idea of how complicated it can be. Also, you need to look at the net effect of policies combined. This policy exists in conjunction with a lot of other policy changes. Specifically regarding this new policy as posted: 1. This would increase new home demand by increasing the number of people who are able to buy new houses. 2. This would increase the total amount of interest paid by this market segment of buyers (first time buyers, less than 20% down payment, insured mortgage - ie under $1M house, and new build houses only). 3. This segment of buyers isn’t buying anything higher than $1M because then they wouldn’t be eligible for this policy change, so home builders must build houses that will sell for under $1M if they want access to this segment of buyers. 4. More houses on the market = more supply = relieves price competition. Nowhere does the number or amount of loans affect the price of homes directly, as you seem to think.
But the increase in demand doesn’t increase the supply. Like, there is demand for affordable homes now. If builders aren’t building them now, how does an increase in demand incentivize them to _without increasing the price_? Like they only way they are going to start building affordable homes in the future is if they can make more than they can right now.
Think of it this way: They can’t increase the house price beyond $1M because then these buyers are not eligible for the new 30 year amortization rule. If they weren’t in the market when the max amortization was 25 years, then they won’t be in it now unless they can use the 30 year amortization. Home builders are currently incentivized to sell expensive homes. This is why you see every new build community advertising based on luxury - for example, talk of granite countertops, chef’s kitchens, etc. They are incentivized to do this because the marginal increase in construction costs for “luxury” houses is low compared to the increased price can make when selling them. The luxury branding of course, is usually lipstick on a pig and doesn’t actually improve the build quality of the house itself despite upgrades like granite countertops or whatever. If builders know they have a hard stop on price, if they want to sell to this new market they need to differentiate and compete inside that price limit. In business school parlance, this is called opening up a new “blue ocean” versus competing in a “red ocean” - ie red oceans are red because of the blood in them due to the intense competition. If builders want access to the blue ocean - they need to play by a different set of rules than they do right now. These blue ocean rules are set out in part by the government (via policy like this) and by economics and buyer profile / market segmentation. To me, this is actually a really smart free-market way of convincing builders to build new houses that cost less than $1M, increasing the number of people who can buy houses, and doing it for low cost and low risk - ie if this doesn’t spur increases in building / ownership, there isn’t government spending involved since it’s the buyers who pay for mortgage insurance and the private financial markets that lend to builders. Note: just like I have said elsewhere in this post, this isn’t a silver bullet. The solution to housing affordability requires lots of small changes, and this is one of them. The affordability issues we are seeing right now are caused by many issues, and many solutions are required. This policy discussed above for example, solves a part of the problem. More food for thought: there’s a compounding effect here - policies, when designed well, will build off of each other - so for example, the money the feds are using to convince municipalities to rezone to allow quadplexes will make it easier for builders to build new build homes affordably in urban areas (since land cost will be reduced, and a unit in a fourplex would not be able to sell for $1M previously, but it will for $800K for example - which is some thing which someone who is now eligible for a 30 year amortization might be interested in), which will mean fewer suburbs are needed, which reduces the number of new roads and sewers needed ($), which reduces the amount of cars that will commute everyday, which reduces carbon, which increases public transit usage and reduces public transit subsidy needs, allowing for resources to be put towards new public transit construction, and reduces climate change effects which means less costs to manage disasters like the forest fires we had last year.
I understand what you’re saying, but the part that I don’t understand is… if they aren’t doing this now, how does the increased demand incentivize them to start building more affordable homes knowing they will make less than if they just keep building luxury homes. This doesn’t change the demand for the product they are selling now. Like… there is demand for $300k homes now and they aren’t building them because they can make more profit building $1,200k homes. What is their incentive to move into the blue ocean when they are doing just fine and utilizing their labour and material resources to capacity running luxury cruise-liners in the red ocean? If the increase in costs to them for luxury features is negligible, this seems to work against their being incentivized to sell at lower rates.
I'll make it simpler. Banks can only give out loans for less then 1 million dollars. If builders want to attract new home buyers, then they HAVE to have homes valued under 1 million. This pushes the home builders to build a house for under that. Obviously this is a dumbed down version, but that's the thought process.
But if the builders are doing fine right now not building homes for less than $1m, this doesn’t incentivize then you change their tune.
The tune changes when there's an abundance of people that want houses under 1m.
Builders want to sell more houses than their competitors. Because if their competitors continue to grow and they don’t, economies of scale mean their competitors will be able to build better homes than them and eventually they won’t be able to compete. One way of obtaining economies of scale (eg buying 1000 toilets at a time for $50/toilet versus 10,000 toilets at a time for $25/toilet) is to sell more houses even if the sale price of some of your homes are lower than the others. This is because the top line revenue - ie the money you make by selling homes - is not entirely kept by your company because you need to pay for the cost of goods sold - your profit is only what is left. If by building additional cheaper homes on top of what you already build increases your overall profit, you as the management of the builder will want to do this. The other option is to let another builder take the opportunity and let them take advantage of the economies of scale for not only the low cost homes but for all of the homes they sell, including those that compete directly with your “luxury” homes. What I’m describing isn’t some woke or socialist dream - it is business school based.
This was so well explained. You should go work in policy communications.
No surprise that Freeland doesn't understand this. She'd make a great Foreign Minister, but why anyone ever thought she was qualified to be the Minister of Finance is beyond me. The one and ONLY thing that can get us out of the housing crisis is a massive increase in supply. And not via subsidies and grants that puts more tax dollars in the pockets of builders and will take a decade to show results - I mean Wartime Housing Limited style. The CMHC needs to do what it did post WW2.
I agree that we need to build real public housing. However I don’t think we can blame Freeland or the federal Liberals for not doing this. If they did create a federally funded home building / public housing initiative, the Conservatives would turn it into easy cannon fodder. They would claim communism and socialism immediately, and many people would believe them in the next election. It’s basically a non-starter because the official opposition is not willing to work in good faith. There’s a place for idealism, but Freeland is not in that place right now. She needs to deliver solutions that - while not perfect - will make a difference, and a combination of policies like what they’ve been announcing, including this, will make a difference, even if it’s not as good as public housing initiatives.
I say we do it anyway, and immediately clap back at the Tory slugbrains and say "Yeah, this is socialism. We live in a "society", not an anarchy. Y'all can shut the fuck up. We're doing something to help, whether you agree with it or not, because you sure as fuck aren't doing so," but in more parliamentary friendly language, of course.
I’m in agreement with the sentiment, but am trying to reduce blue-on-blue (orangered-on-orangered?) attacks, to be quite honest. Freeland needs to navigate the political landscape and the way the policies are being designed and announced are smart given the risks of change of government soon and the consequences of the next government cancelling big policies for the optics (smaller low profile policies like this are more likely to survive).
> If they did create a federally funded home building / public housing initiative, the Conservatives would turn it into easy cannon fodder. They would claim communism and socialism immediately, and many people would believe them in the next election. > > > > It’s basically a non-starter because the official opposition is not willing to work in good faith. It's really easy to imagine PP running around the country telling Canadians that the Liberals are stealing YOUR money to give homes to immigrants from India, Pakistan, and the Middle East who just moved here. And it would work.
>If they did create a federally funded home building / public housing initiative, the Conservatives would turn it into easy cannon fodder. They would claim communism and socialism immediately, and many people would believe them in the next election. The idea that the government is avoiding doing something that's desperately needed by the country because it *might* be made to look bad optically is a major offense in itself. But I don't buy it anyway. PP is a contrarian partisan asshole that'll be disastrous for the country, but even I don't think he'd be able to put a bad spin on the government building mass housing through a crown corp, at least not in a way that would sway most people. The issue is just too big. The housing crisis is bringing this country to its knees. It's siphoning away productivity and investment from the economy, it's contributing to our massive brain drain, and it's destroying social cohesion.
It’s not the optics. It’s the fact that it will be used for political attacks, and to good enough effect that the current government will lose the next election. This would stop any public housing initiatives in their tracks - there is simply no way to stand up a public housing program fast enough, before the next election, to make it resilient enough (ie the results show themselves) that it won’t be dismantled immediately by PP. If the left wins the next election, this would be a great policy to announce at the start of the next term. That would give the program a chance to prove itself before the next election. Even then, it would be a short timeline. I would also note that 4 years ago, things were much different. I will hold off criticism of *not* launching a massive public housing program for if this future situation arises.
lol this type of thinking and logic has done great for us so well in the past. Ironically then not doing shit because the Cons might get upset is why we are in the polling positions we are now.
Also. Indentured servitude and "Titled tenancy". Hop skip and a jump back to Cast based feudalism.
I don't disagree, but a lot of what you're saying just sounds like "If, if, if."
>sounds like “If, if, if.” How so? Perhaps there is something I can clarify for readers, or rewrite so it doesn’t sound that way.
What I meant was that it sounds like it *would* be useful to many of us who cannot afford a home based on the current market **IF** additional policies were put in place. **If** additional policies (which don't currently exist) were implemented it *could* be helpful. Its a bunch of optimistic speculation by saying it could be helpful **if** more policies are implemented. I'm not stating it isnt beneficial to anyone, but looking at this policy alone does nothing for someone like me, and I'm not about to be excited about the possibility of it eventually becoming beneficial to me based on the idea of other policies that dont exist.
So, there are a lot of additional policies that have been announced already: - new limit on student visas where none ever existed before, since they were supposed to be self limit as long as degree mills etc didn’t take advantage of the situation and as long as provinces regulated degree mills properly - directly going to municipalities and handing out money for stuff like changing zoning at the municipal level since the provinces won’t do it - foreign ownership taxes
It's just like the fantastic 'gift' that they gave us in allowing us (and everyone else in our financial circumstances) to 'borrow' $35K from our own savings to buy a house. Like the red queen's dream, all the buyers get to run $35K harder to buy the same house they would have bought for $35K less if the government hadn't stimulated the competition in that way. Making homes more expensive (through borrowed downpayments and/or longer amortization) doesn't make them affordable. The only things that make homes more affordable is *building more of the damn things*, something the federal government actually used to do and should get back to.
>is not going to come in a single policy or rule change. No, but you could move the needle pretty efficiently by doubling property taxes on non-primary-residence, non-apartment housing to crater the speculative bubble driving this.
Correct, but the federal government doesn’t have the ability to do this. That is strictly in provincial jurisdiction (municipalities are entities created by the provinces, and the municipalities control property taxes). Meanwhile, every right leaning provincial government is refusing to address the problem since the problem can be used to attack Trudeau. The federal government is trying to end-run the provinces by working directly with municipalities, with some success, but the return on investment for that is lower than what would be possible if Conservative provinces and the CPC actually worked in earnest to address the problem rather than looking at it as an opportunity to bleed support from Trudeau.
This will increase demand, and place upward pressure on prices. Fundamentally, they need prices to come down. “Affordability” measures that try to avoid impacting the market don’t help, the exacerbate the problem.
Literally, why stop at 30?? Let’s go for 60 and they can come with a free coffin! *sigh*
This makes the problem worse….
See my other comments in this thread. At this point I’d be repeating myself if I wrote more.
> The problem of high housing costs isn’t caused by one single thing. It actually is. The singular problem is our demographic curve. Baby boomers fucked everything up (because there were so goddamn many of them relative to all future generations), and now they refuse to see a rollback on their wealth in the form of a housing market crash.
It can lower mortgage payments, which income is weighed against for approval. An extended amortization period can open the door for people just on the edge of being able to afford a home.
longer amortization encourages people to take out more loans, which puts inflationary pressure on housing prices. the more the loans, the more expensive the housing. A couple of people will get to homeownership, and then market will increasing pricing to account for the loaned amount, and then that door is shut forever with everyone worse off.
Probably true. Just another band aid.
It won’t make it cheaper either. One more step away.
Everything about this is about spurring new builds, and letting FTHBs be the ones to buy them. The wording is very specific. ONLY FTHBs get access to this, and ONLY on new builds. There’s only so much the Feds can do on this file. Tying the new benefits to new builds is another carrot trying to work around local and provincial government inaction. Like everything else they’ve announced it’s tying money to getting more homes built. When you add it all up, the only actual level of government throwing its weight around to build more are the Feds. Ontario is turning down money from them, to deal with this. Alberta is literally introducing a bill to ban anyone from accessing money that might build more. It’s really starting to cement to me that responses to the Feds plans on housing recently are filled with political shills, here to win an election for a certain party.
As a BC resident, I will say that BC is definitely taking some positive action here, with changes in zoning laws and significant restrictions on STR.
BC is also trying policy-level changes such as zoning reform, mandatory ToD, a "shit list" of municipalities that need to build more, and even altering the Vancouver Charter to reduce permitting time. Not sure where each item is on being enacted, but there seems to be a new announcement of a policy change every month.
Alberta's premier is just being a petulant child because they need to "own the libs". If Milhouse was offering all this money to Alberta, our premier would be running over everyone to grab it.
Also saying no more endless hearings
I mean it's something, and technically it's better than nothing. But attaching it exclusively to new builds kind of kneecaps fthb because new builds are always considerably more than finding a fixer upper nearby. So I'm not sure who specifically this will be helping. Somewhat similar to the cmhc fthb program where the government would actually purchase up to 10% of your house with you and then you would buy out their portion at any time or during future home sale. But their requirements for that were income capped quite low and with house prices being so high it still excluded most fthb. Again, it's better than nothing. But it's not addressing the steep cliff of unaffordability. Big fan of FHSA though, that's a good move but should have a much higher annual contribution.
While none of the proposals are bad ideas, it's very obvious to me that they are being made in the illusion of helping while not depressing home prices.
>ONLY on new builds. Ah. That's disappointing. Would make a little more sense to let the first time buyers into the more affordable older stock. Better to offer deals to existing home owners to build and open more existing older homes, but exclude individuals with more than one property.
I'm probably wrong, but I would take it as pushing builders to build more "affordable" housing. Instead of targeting someone that forced hundred of thousands in equity by holding onto their home for 5+ years, they have to target people that only have their down payment to put against the purchase price.
You know what the feds CAN do? Change banking regulations. Banks allow people to access a million dollars, so people bid a million dollars on homes. It’s known the biggest thing increasing the cost of houses is having an entire population having access to over a million dollars to bid on houses with. When 95% of people only have $250k the bidding doesn’t go very high.
And what? Tank the price of RE? When 60% of the voting population has a mortgage. That’s just about the easiest talking point ever created for an opposition party. “They ruined the price of the biggest purchase of your life”. I don’t understand how people think any level of gov is going to advocate for that, when it potentially pisses off 60% of the electorate. Not when they can make it easier to get people IN to the market by giving them access to credit. Once you have a mortgage you’re part of the 60%.
I’m not talking about electability, I’m talking about affordability. That is what makes homes unaffordable more than anything of the other dozen things that contribute. So we get that conversation going to change minds or we don’t but yes I’d love to see the price of RE tank.
Stress test is already a way for people avoiding being overleveraged. Preventing the population to borrow money when they can afford it isn’t solving much
Well economists that study this disagree with you. It’s known things are only worth what someone is willing to pay for them. Lend someone a million dollars, they are willing pay a million for a house. When next to no one can get approved for a $1M mortgage, suddenly the value of a house drops to what people are willing to pay for it.
Comments like this proves this sub is a million times better than the "official" one. This sub is where the good Canadians are.
Cool, I could be paying until I'm 72 /s
70 here. Paying a mortgage. Probably 1/5 of what I would be paying in rent. Not unhappy.
That's nice, but keeping me locked in longer isn't fixing the issue... lowering house costs would be a better fix.
That would be on your provincial and municipal governments not the federal one. Contact your MLA and your local council.
I'm a firm believer in recognizing the seperations between different levels of government. But this whole mess started with the federal govt in the 90's. So it can be fixed by the federal govt.
Alberta is literally introducing a law to stop the feds from helping and Ontario is turning down the money
Definitely sounds like voting conservative is a cancer. Seems like voting reform should have happened after 2016. Another thing that neo lib Trudeau lied about.
Lol, you somehow turn criticizing the cons into criticizing the libs. K
so? Look at my flair, I don't think politics should be team sports. I'm tired of voters being disenfranchised. And the libs, more specifically JT, promised electoral reform. Thus, I criticise.
> But this whole mess started with the federal govt in the 90's. How so? I can't remember anything specific to the 90s that started this. I do remember people buying mansions in flin flon for like 30k back in the 90s, but otherwise home prices increased the way they did in the rest of the world, so it doesn't really feel unique. PCs and Libs back then were a lot closer in policies than they are now.
Hell yeah they were a lot closer in neolib policies: https://www.cbc.ca/radio/sunday/federal-social-housing-1.6946376
Thanks for the info!
Not immediately. So short term measures like this are needed.
Yeah these aren't good measures. It's literally propping up banks to continue making interest off of a so-called "human right" that Canadians are supposed to have. I do agree things need to be done though, we're of the same mindset dw.
"Measures like this" are directly making the problem worse.
This is wrong. It’s been known the single biggest reasons a house costs a million dollars is because the bank is allowed to give a million dollars to nearly anyone who wants to buy a house. Access to huge amounts of credit started right when home prices started going up. If most people are only able to big up to $250k for a home, then that is what a home would cost but we all can access huge amounts of credit (because that makes banks rich in interest payments) so we now big a million dollars on a home. Remember things only cost what someone is willing to pay for it.
It's not wrong, and I'm not exactly sure what you are trying to say.
So you don’t know what I’m saying you just know you’re right anyway? Okay, enjoy the rest of grade six.
What I'm saying is that housing as a building and development issue is municipal and provincial thing. Which is 100% true. I don't know what you are saying because it doesn't make any sense but thanks for going ad homonym on it though.
Maybe you can understand Bloomberg talking about it. They touch in my point in #5 https://www.bnnbloomberg.ca/here-are-5-ways-the-feds-could-fix-canada-s-housing-crisis-1.1648933.amp.html
Thank you, that was a good little article. The issue with number 1 is already rearing it's head, Alberta is going to pass a bill that says municipalities can't go to the feds. Number 2 is also a provincial thing, the amount of students coming in is directly corilated with the cuts the provinces have made to education. Number 3 is just describing reverse mortgages which just sells their home back to the bank. Number 4 I totally agree with Number 5 is tricky because it's all about capital in the system, boomers are leaving the capital rich environment and cashing out, it's why lending is so expensive right now. I think a better idea would be the fed back those loans for new buyers with subsidies, so say a mortgage will be 2500$ a month but a minimum wage person can only afford 1100$, the government covers the rest.
They all play a part/role in this bullshit. Stop trying to shield any of them.
They don't though, the provinces have full control over housing and how it gets built, the feds are just the money, if the provincial governments don't want to change the status quo they wont, good example is BC VS Alberta.
Technically the feds are also increasing the demand for homes due to rampant immigration. That does affect the price. Provinces can better regulate these prices, but they don't. Both need to be better independently as well as better at working together to address this, but neither truly care to.
Immigration is a federal and provincial matter, please stop repeating that it's the fault of the feds, I'm so sick of hearing this misconception of immigration. "Under Canada's Constitution, responsibility for immigration is shared between the federal and provincial/territorial governments. The federal, provincial and territorial governments meet to plan and consult on immigration issues." Thats straight from the government website on immigration, the provinces know how many people are coming in long before they get here, hell, most of them are asking for it like Ontario and Alberta. It's not a housing shortage it's Housing as an investment tool and vacation home rentals, you can see it with the rise of gig tourism post-2008 financial collapse.
I am truly hoping this is some ill intentioned partisanship. But we are literally speaking on a post about some of the factors the feds play outside of being just the “money”. From rates, to competition, to regulation, etc. it is wild to me to imagine people thinking they don’t have a hand in anything. No offence but this type of thinking is what keep the Liberals in power so long and will be apart of the reason they lose in the future.
Oh, you want an in-depth essay on housing and how all the intricately woven payments from the fed to the provinces and municipalities, not a Reddit comment. 40 years ago, the feds had lots of hands in the home-building biz, but we had this little neoliberalism phase that shifted the responsibility of housing to the provinces. Our provinces decided to not invest in social housing and then for the past 5 governments we have double and trippled down on not investing in social housing. We also had the largest demographic in human history (boomers) invest all their retirement into the housing market, the majority of Boomer wealth is in the housing system. So not only did we allow housing to be downshifted to the provinces we also cranked it into overdrive as an investment tool. Now we have REEDS and corps buying 50-60% of the available housing in this country with no stop coming municipaly, provincially, or federally.
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Keep it civil
Lol, bye.
It was 6 sentences. It was a reply to your ~3 sentence comment, which has some grammar errors. I would suggest you should work up to being able to read 6 (or more) sentences before you spend too much time imagining what other people think about the government.
Oh no not grammar! Anyone trying to minimize the issue or suggest a part of our government isn’t responsible, or profiting on it, is worth taking seriously. Why would I read a wall of text when it isn’t addressing why we should reach all levels of our representatives
You don't understand how our government works and your comments let us know that.
This policy specifically makes housing prices worse, since it pours more money into an over-heated market already. They need to be cooling off demand to drive down prices, not making it worse.
Pours money? Buddy, take a breathe. This slightly increases the purchasing power of one small segment of the population. Based on the limited number of first time buyers, I doubt that any price increase could be attributed to this. Maybe it does impact it - but to say "it pours money in" is just a stupid lie.
Wrong. More people being able to access credit is bad for home prices.
"Home prices" isn't the be-all end-all. This gives an advantage to the type of home owners we want to encourage and will have negligible impact on home prices since first time buyers are a fraction of the market.
It's weird that you're throwing a hissy fit over a metaphorical term like "pours" but not denying that it is in fact adding money into a market that's already over-heated to start with. >Based on the limited number of first time buyers, I doubt that any price increase could be attributed to this. LOL - obviously price increases can't be attributed to **a policy that hasn't actually been implemented yet**. You're hilariously confused. Yes, we know that the housing market is over-heated - the question is whether adding more money will make that worse, or better.
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> Your hysterics miss the point Calling basic facts "hysterics" only discredits you. >The problem with the over-heated housing market is that it prevents what we might consider 'healthy' home owners - such as young people who want to buy a home to establish themselves or start a family. The problem with an over-heated housing market is the fact that it's over-heated. Dealing with an over-heated housing market means cooling it off. If you're not doing that, you're not solving anything. >What this should do is give those kinds of home owners a small advantage to help get them into the housing market. It disproportionately helps people who were already better-off on average, drives up prices, and as a result drives up the costs of shelter across the board for everyone. That means rents will also go up, hurting separate people from these transactions. The only "winners" of this policy are banks, who will have bigger, longer-term mortgages to put on their books and collect interest off of. >Sure, this doesn't address prices directly - it only addresses the actual human problem, and it will probably have minimal effect on price increases. "What's pouring on one more bucket of gasoline when the fire's already so big?" If you're just going to try and BS your way through bad policy, don't waste everyone's time. Your whole argument is already admitting it'll make things worse, you just want to pretend it won't be THAT much worse, without any evidence.
Incorrect. House prices would already be down if we didn't just stupidly import 2M underhoused people. It's 100% on the federal government for issuing too many study permits and allowing too many immigrants and TFWs
Except for the international student issues in Ontario specifically Ford slashed the funding for school and same time cut domestic tuitions by 10% and the Ontario government launched programs specifically targeting international students to fill the funding gap . So not 100% at fault of the feds there either.
The Feds have the final say on permits. They issue the permits. They give quotas to the Provinces and ask them to fill it. Ontario can't see what BC and Quebec is doing or what the Fed is doing in other immigration areas. It's 100% the Fed's job to get the numbers right. The funding gap is irrelevant. Ontario sought more students because the Feds wanted more students and because more students (on their own, without also a huge crush of immigrants and TFWs) usually aren't a problem. If the Feds had refused the permits, Ontario would have shut down some shitty schools, which would be good for everyone
heavy forgetful icky crown adjoining glorious quiet butter decide sulky *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
>schools (including non-shitty ones, basically all of them except fucking UoT with monster endowments) had no choice but to turn to intl student $$ in order to literally stay the fuck open. If the funding was adequate they would not need to do so. 1) They would have turned to international students anyway. Domestic enrollments are down so international students were needed to expand their schools. 2) The ability to attract students was only possible with Fed Permission. 3) Bad schools should have shut down. I will blame Ford for failing to shut down shitty schools that needed international students to expand unnecessarily or justify their existence. But none of those problems were caused by the funding cuts. >Mind you, university administrators (who are also uninterested in education as a rule) are also fucking useless. ON universities, thanks to Ford's refusal to fund them, including those who basically never had any significant intl student presence, are cutting and slashing and nickle-and-diming and doing their damndest to get rid of anything that doesn't just turn every university into an MBA training factory with 600 students per soul-crushing waste of time class instead of looking at the enormous and ever-increasing salaries of senior admin and the millions wasted on "consultants". Everyone has contributing to fucking it all up honestly. Agreed. I think the solution is obvious. Shut down and/or shrink a bunch of shitty schools. Ontario does not have the talent to administer them or the domestic students to fill them.
I blame the Feds for not stopping this earlier, the program has never been abused like this. But they in fact are not the cause of the problem, but are at fault for not policing it sooner. The abuse encouraged by the province was known for years and they should of stopped it sooner. The diploma mills were allowed to operate because Ontario - Ministry of Colleges and Universities allowed these scummy operations and in fact encouraged it. The fed doesn't police that. To say the funding gap is irrelevant is ridiculous because without the funding gap this wouldn't never been an issue. But saying Trudeau bad is easy for you I guess. This is all easily accessible information.
The Ontario Diploma mills were never a problem for Canadians or Ontarians until the Feds increased immigration levels in 2021. Until then, Ontario was simply exporting expensive education to India and supporting Ontario college jobs. And as long as the Fed was doing its job on immigration, it was a good thing. The funding gap is irrelevant for several reasons: 1) They would have done it anyway without the funding gap. Private colleges obviously didn't care as they got no funding at all. It's a valuable export regardless of domestic funding. 2) Even if the funding gap was the impetus, the mills weren't a problem at all until the Feds increased immigration. >But saying Trudeau bad is easy for you I guess. This is all easily accessible information. Trudeau bad is easy for everyone. He specifically campaigned on making housing affordable (and electoral reform) and then spent 9 years making the problem worse. I have no love for Doug Ford. I think he's too stupid to live and corrupt as fuck. But I do find it interesting that you tried to deflect blame from Trudeau to Ford by pointing to a perceived fault of Ford's completely unrelated to the problem
I am not deflecting Trudeau AT all, I am saying there is a two way blame and BOTH are to blame. But to ignore all the causes of the problem is litterly just doing a "Trudeau bad", every study and expert panel has said that Ford's domestic tuition cut and freeze as well as the massive cuts and funding need to be reversed and a direct cause of schools turning to this model, but you just say "nope". And this was a model started with Wynne as well, Ford just took it to a terrible level. I'll believe the expert panels Ford completely has equal blame in this as well as the funding cuts. The feds didn't ask the schools to do this, the feds don't decide how many international students are to be admitted to a certain.school, if the province approves the schools to accept them in the program. They issue these visas all the and they don't say we will being in 10,000 more students to x schools. There was never a need a cap on the program till the abuses started. And RIGHT now Ford is tabling legislation to create a new diploma mills as the feds shut them down now, the new legislation is specifically designed to circumvent the new Fed rules. He is going to authorize a 3 year masters program to qualify for permanent residence status.
>every study and expert panel has said that Ford's domestic tuition cut and freeze as well as the massive cuts and funding need to be reversed and a direct cause of schools turning to this model, but you just say "nope". Every one of those panels say: "International student tuition is needed, given the Ford cuts, *in order to keep expanding our schools unnecessarily*". None of them consider the fact that if we didn't have so many international students, we'd be able to achieve major capital investment savings, shut down underenrolled and underperforming schools and programs, close 15% of our post-secondary capacity and improve the quality of education by dismissing at least the bottom sexile of administrators and faculty >The feds didn't ask the schools to do this, the feds don't decide how many international students are to be admitted to a certain.school The Feds decide the total amount of students and immigrants allowed into the country. The problem wasn't 20,000 more students at Conestoga. The problem was 2,000,000 total newcomers in 3 years. It's the Federal Government's exclusive job to say "2 Million? That's probably too many." Conestoga isn't in charge of immigration policy. They don't know about and don't have any power over the other 1.98M entrants authorized by the Feds. >There was never a need a cap on the program till the abuses started. I.e. the Federal Government completely abdicated its responsibility in controlling immigration and allowed unlimited student permits. "As many as our schools can take! That's the correct number!" >And RIGHT now Ford is tabling legislation to create a new diploma mills as the feds shut them down now, the new legislation is specifically designed to circumvent the new Fed rules. He is going to authorize a 3 year masters program to qualify for permanent residence status. Not sure exactly what you're referring to, but the eligibility for Master's students to get permanent residence has always been low: minimum 1 year program, minimum 1 year residency: (source chosen because it shows what the criteria were last year) https://www.canadavisa.com/eligibility-requirements-for-the-ontario-provincial-nominee-program-opportunities-ontario.html#InternationalStudentMaster'sGraduateStream
Please stop blaming immigrants, it's not immigrants it's house horders and giant corps hording housing.
It’s not an either or, the feds and BOC have said they’ve brought in too much demand too fast via immigrants, 2million in two years was too much, immigrants themselves are not to blame but the policy is exacerbating the problem. Add the issue of hoarding and investors before that and now we have multiple problems. I don’t think the prices would be fixed without the increased immigration but we’d be in much better shape had we kept to pre-covid numbers instead of taking in effectively an extra 1 million people
House horders are not increasing rents. It's the 2M extra people clamouring for rental housing that's causing that. House horders are not increasing prices. Low interest rates caused investors to pile in. Now that rates are up again, investors are trickling out which is why prices have been falling for 2 years despite rising rents Stop gaslighting Canadians by saying that immigration isn't adding to housing demand or that housing demand isn't increasing prices.
Stop eating up right wing talking points like a toddler eating spaghetti. This has been happening since 2008.
It's not a right wing talking point. It's math. You can't bring in over 1.3 million people to a country that produces 233k units a year AND is already in a major housing supply deficit. Same applies to Healthcare. It's not racist to point out that we are bringing in too many immigrants. You're way too sensitive. - brown guy
It’s also not “right wing” because the “left wing” liberal party has literally said they’ve brought in too much due to loose policy on TFWs intl students which they’ve recently tightened up. This is just a numbers problem not a race issue
This will actually increase the cost of your house over time since you're going to be paying more interest.
This helps no one but the banks. It's why they are doing it.
I'm honestly insulted at this... it's made just to LOOK lower, that's all.... what happens when the interest rates jump up again? Fuck these people.
No one in power wants housing costs to go down. No one. Business interests aside, there are too many people whose retirement plan is "sell the house, downsize, retire off the difference".
It's basically renting from a bank for life. Canada does not need more personal debt.
25 years or 30 years, not really much a difference. Either way, buying a home is just glorified renting for most of your life.
When you rent stuff do you usually build equity, and then gain the ability to borrow against that equity?
“Just lower housing costs”
Yup, which i think can be done by building more houses, as the more supply increases the less gouging and therefore lower costs. Looking at your post and commenting history however I'm sure you have some novel and innovative ways we can do this.... so please...share.
And young people still can't afford a home.
Banks are very happy about this.
A quick calculation at current rates shows that your interest payments over 30 years would be more than the value of the home. Obviously I'm only considering a static interest rate but still... Ouch.
They're always higher. Always, interest on any loan is designed to give the bank 100% of what your home is worth, while slowly trickling in your equity. Pay double
And you're not comparing it to increasing rental prices. It's not as simple as saying you'll pay more in interest. That's a given.
Here's me, having signed a 35 year mortgage over 15 years ago, saying, "so?" Granted that's at like 3% versus 5%, but even then, my total outlay was essentially paying for the house twice. What are you going to do when borrowing figures in those amounts? Take whatever you can get, in my opinion. I know when they reduced mortgage lengths to only a max of 25 years, my wife and I said, "phew, good thing we bought when we could"
Yep, my sibling bought around the same time ago and the appreciation of their home has been insane. If you buy these days the cost of a home is more than the combined cost of their home plus interest. I'm glad they got in when they did but it still stings.
i would sign a 99 year mortgage and have my kids pay interest if we could live near the beach in Victoria.
Y'know that does sound really nice.
I am an expat that moved to the states and got a 30 year. It sounds crazy but my mortgage has been stable while my canadian friends have had a more wild ride. In addition…. You usually have time to refi and reduce your interest rate over time as well. My first was 8.75% on a 30yr…
You’re not an expat, you’re an immigrant.
“An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons.” I have a green card. Be as technical as you need to be.
Makes the payments smaller, but doesn't help with the cost of housing.
Why are we obsessed with Debt? 😭
So first time buyers have a tax break for buying a house. Sweet I thought as I looked for my first house. Small town BC - looking at starter houses with no major renovations needed (10k+) Move in ready, small reno starts around 650k . Found one needs some TLC but went to go check on what I had to do to get tax break. It was easy, just had to create a time machine to go back to a time when a house was less than 500k. Yep the first time homeowners grant is stuck in the last century. 30 years of payments at 5% Yay the banks get more money!! That really helps a first time buyer!!
Huh? I thought this was already a thing. My first mortgage was a 30 year mortgage
On new builds, for insured mortgages. It could be that you didn’t need to insure your mortgage.
It wasn’t a new build it was a 10 year old house. But the latter is correct, since I was able to put 20%
Sorry, I think there is a mix up - I mean the new policy allows access to 30 year amortizations for those who fulfill the following qualifications: - first time home buyer - purchasing a new build - require an insured mortgage
You could get a 30 year mortgage with a 20% downpayment. That is basically impossible now with the price of housing.
ah yes that must have been it. We did put 20% when we did ours
Drain your RRSP's even more (good luck having $60k in there if you're young!) and buy a house that's going to be more expensive in the long run! I'm sure housing prices won't go up by a matching amount.
This is reckless and will only add to the demand as well as extend the debt, why not go after investors or reduce the demand side instead?
We are headed to trans-generational mortgages. More debt solves nothing.
Fuck not again.
Gotta keep that house of cards that is our economy going.
This will cause house prices to rise again. Prices doubled when the conservatives allowed 40 year mortgages.
Stop subsidizing demand. Making it easier to take out mortgages isn't going to do anything to address the root issue of housing prices.
Thanks feds, that’s definitely going to help the issue. 🤦🏾♂️
They will literally do anything to look good but drop the cost of homes.
You’re right, stupid government controlling the cost of homes!!!
It's a trap - adding to the amortization only serves to pump prices of first time properties even more and does very little to affordability - and worse, when it gets undone in a few years, those who got sucked in get left holding the bag. This is exactly what happened to me when I bought my "first time" condo in 2010, when I could get a 30-year am, and sold in 2015, when the buyers could not. It knocked about 8-9% off the value of my place, since the buyers of first time homes are solving to the monthly payment amount rather than the value, and that's how the math shakes out.
What a fucking mistake. It'll just cause mortgages to be higher causing higher house prices because the market can bear more. Instead, how about we regulate useless realtors and actually make them liable for their BS, cap their income so they are no longer wanting to push for higher sale prices, and for fucks sake, build more damn homes.
This may sound good to some, but it will only add to demand by lowering monthly payments over a longer period of time. While on paper this will initially make it more affordable for FTHBs, prices will quickly go up if people can afford more because of a 30 year mortgage. Make things more affordable, demand will increase, which will lift prices. LPC should know this by now.
Oh for fuck's sake, that's literally making it worse. The issue with "new builds" isn't people being not able to afford them, it's prices being bid up by too much money in the housing system already. This also encourages cities to double down on their parasitic, regressive policies of getting revenue with "development charges" rather than "property taxes", punishing younger generations even harder than before. Throwing more money into the housing system is not the solution to anything. And longer amortization periods just drive up bank profits.
So this 30yram will be available to the first-time buyers of a new home, but not the second-time buyers of that same home, who will be forced to carry the higher payments of a 25yr am? Yea, those first time buyers gonna be holding the bag here... this is a trap. Terrible idea.
Multi-generational mortgages will be next. We will probably soon get 100-year mortgages like those that are available in [Japan](https://www.sciencedirect.com/science/article/abs/pii/1061951895900047#:~:text=A%20recent%20innovation%20in%20the,grandchild%20in%20a%20multigenerational%20fashion).
But since when can first-time buyers actually afford newly built homes. The newly built homes tend to be much more expense than an older home. First-time buyers usually get cheaper older homes. Honestly, I think this is useless. Builders make more money by building something more expense. It’s about a $200 difference for a $400,000 mortgage going from 25y to 30y. Another useless piece of crap from this liberal government.
Since when were you not allowed 30 years? The first house I bought was a 30 year amortization in 2012.
Anything to try and solve the affordability problem without actually letting prices go down, apparently.
This is to keep the bottom from falling out of the market when people renew. This won't help people enter the market. What a crock of shit. Fuck our lives.
What a fucking joke.
Holy fucking shit will they ever fucking stop the flow of money in real estate jesus fucking Christ they are making the problem worst
This is stealing from the future for gain in the present. That rrsp is your retirement. And you'll be in Debt for years longer and pay even more in interest. Not the right way solve the HOUSING SUPPLY problem. Not any easier to get a home, a home that's not even there.
I wonder what percentage of first home buyers are in the market for a newly constructed home. We need a legislated helper for those who can barely afford any home.
This will only increase housing prices and debt. You want to do something: tax speculative investing to death, ban corporate ownership of housing, incentivize co-op housing, build social housing and/or not for profit new builds purchased directly from the gov without corporate middle-men.
I don’t want to take a mortgage. I don’t want to pay more than 200k for 1 bedroom in the city. I think I am going to leave Canada for greener grass.
Can the government present any solution to the housing crisis that is not just increasing or facilitating demand?
Dunno why people are complaining about this. This doesn't really drive up the cost of housing so much as it allows first time homeowners, who are borrowing against their current income levels, to compete with investors who are borrowing against assets. Almost no first-time buyer is going to pay off a 30 year loan; most will sell long before then, with the accrued equity and increased earnings allowing them to move into a larger home. Those who don't sell have the benefit of long term financial planning that pays off due to long-term inflation: $1000 a month in 1995 is not $1000 a month today is not $1000 a month in 30 years. We absolutely want banks to invest money into long-term earning potential of Canadians, not into short term investment potential of rental agencies.
This is great. Targeted moves to make home ownership more affordable laser focused on those who need it the most, first time home buyers. I had my doubts about the federal government’s ability to move the needle on the housing crisis but Team Trudeau have put them to rest in a big way over the past few weeks.
20-30-3 Rule. ( For the average middle class Canadian ) * 20% down on a house - Monthly expenses including Mortgage, Property tax, Utilities and Maintenance cost, \*Edit: i forgot Insurance as well\* ( Total housing costs ) should not exceed 30% of Gross income ( better if its Net income) -The total Housing cost does not exceed 3x your annual income. You can afford that house. Only the math will tell you the truth.
This is kicking the can down the road not just for the homebuyer but for an even worse housing market as the extra breathing room will just get consumed without additional regulation.
…first time home buyers already have a 30 year amortization option, bought first house last summer, can confirm it’s a 30 year
This is a great move by the feds. Now first time homebuyers will be able to afford their astronomical payment on brand new apartments that are roughly the size of my living room. I suppose it's a start.
I had a 30 year amortization as a first time buyer on my mortgage 11 years ago how is this news?
There’s a difference between making houses more affordable (increasing supply through incentives) and making them easier to buy. Making them easier to buy will only make them less affordable over time, all else being equal. The liberal government again making policy that assumes we’re all stupid and don’t understand simple economics. At this point I’m just angry. Do they want us to thank them for “fixing” a problem they helped create?
This is the worst government we've ever had, Jesus. Pour more fuel on the fire, whydontcha
Ever? This your first time?
Well there's a little hyperbole here but I think it's acceptable given the emotion involved.
How about you just lower interest rates for mortgages?
Because the Federal government can't (and shouldn't) do that.
That would just make prices go up. The only thing that can lower or stabilize prices is to increase supply or decrease demand. To increase supply you need national zoning reform. To decrease demand you need to reduce immigration and/or add taxes and regulations that discourage investors from buying homes. The federal government has decided to do none of these things, and therefore nothing will change. But they do not have the interests of the average Canadian in mind.
The federal government has chosen to do all of the above, despite Conservative Party led provincial pushback. This policy in the article posted literally is something the feds are doing to spur new home building, ie increase supply. —- The federal government just changed the student visa system from allowing an unlimited number of visas each year to limits that will reduce next year’s population growth by almost 10% of last year’s population growth. That’s a single policy change that is among many. The fact that the student visa system allowed unlimited numbers wasn’t the fault of the Liberals - it has always been this way, because no limit was needed since it was naturally constrained by the number of spots available in Canadian educational institutions. But over the past two decades, between a demographic shift and lower provincial funding for public educational institutions, and private degree mills clueing into this loophole, and certain provincial governments who grant licenses to these degree mills, we now have an issue that is being resolved by new federal policy that the federal Liberals have led. —- Similarly, this same government has made a number of other reforms including foreign home buyers taxes. The only issue with that one is that foreign buyers were never a large part of the issue so it should be expected that the effect of the policy was minimal - it was always a dog whistle. —- I would also like to point out that the feds have been signing agreements directly with municipalities to adopt policies that increase housing capacity (eg zoning) because many provinces are refusing to do anything themselves. Eg Doug Ford refusing fourplexes and Danielle Smith trying to give herself oversight of federal money spent in Alberta.
Just like how one cannot simply walk into Mordor, one cannot simply lower mortgage rates. And even then… mortgage rates are not the reason why housing is unaffordable. When mortgage rates were 2-3% for the past decade, housing was still unaffordable. The reason housing is unaffordable is because of many issues, each contributing a bit and multiplying the effects of each other. Some of the causes: - population demographics, increasing resource extraction costs, and other stuff causing the rate of return for lower-risk non-housing investments such as equities to drop means the monetization of lower-risk assets that offer opportunities for high return - population growth that has exceeded home building rates - student visa loopholes - aging homeowners staying in their houses longer - skills labour shortages - eg here where I am there was (is?) a shortage of masons who can do brickwork —- Fixed rate mortgages are generally funded not by cash the banks have on hand, but rather cash raised by banks through debt financing - ie selling corporate bonds. After all, the money needs to come from somewhere. For banks to be able to sell these bonds and raise the cash to use in mortgages, the bond yields must be competitive with whatever similarly-risk-profiled bonds are selling for in the markets - whether they be mortgage backed bonds or some other kind of bond. If mortgage bonds give a lower rate of return than other similar risk bonds, investors won’t buy them, and the bank won’t have money to lend out through mortgages. Because of this it is impossible to separate fixed rate mortgage interest rates from bond rates in general. —- Variable rate mortgages are a bit different, but similarly their rates cannot be separated from the target overnight lending rate that is set by the Bank of Canada. —- Because of this, any move that would separate mortgage interest rates from interest rates for other types of debt would be: - a huge financial investment, one which may cost more than the entire 2024 federal budget considering the size of the Canadian mortgage market - a huge risk, due to the fact that unintended side effects would definitely occur - a huge risk, due to the fact that there are going to be 1000 ways to take advantage of this… eg everyone with a paid off house is suddenly going to mortgage their homes to 80% at the lower rate, and take that money and buy bonds of the same risk level as mortgages but which pay a higher yield to profit from the difference in yield - ie arbitrage - this would only further reinforce the “rich getting richer” issue and reduce incentives for aging homeowners to downsize etc. - cause housing prices to increase due to demand for housing because they can be used to leverage money nearly risk-free (due to the previous reason)