The Real Estate market has been super active since the pandemic: leases, sales, new condo development launches, historically low interest rates, some policy changes and proposals as well.
Here is what’s making Real Estate News in December as we wrap up the year.
The First-Time Home Buyer Incentive is a shared-equity mortgage to reduce payments, with the Government of Canada taking on 5-10% of the loan on a new home and 5 per cent on a resale home or mobile home. It’s being expanded for the high-priced Toronto, Vancouver, and Victoria markets.
The changes mean the maximum home price for eligible first-time buyers in the three markets goes from $505,000 to about $722,000.
Who Does this Benefit?
First time home buyers who have a 5% down payment with a max purchase power of $722,000 with a good credit score can use this program to purchase to purchase a home in Toronto!
Targeting foreign buyers another measure announced is a national foreign buyer’s tax. Though details were lacking, the federal government says it will take steps to implement one over the next year.
What impact can this have on the housing market?
If the Government of Canada is only trying to tax vacant properties owned by non-resident non-Canadians, then this is likely a small share of properties and will likely not have any major impact.
Perhaps the most impactful approach would be to target major urban centres keeping in mind that there are many resort towns that rely on substantial foreign ownership, and those places will suffer if they apply the tax there. Choosing where to apply it – more targeted than a blanket national approach – will involve some challenges.
Toronto just moved one step closer to a Vacant Home Tax. The proposed program’s aim is to influence a homeowner to either occupy or rent out their dwelling for at least six months of the year, or pay up.
The city of Toronto is estimating that program start-up costs could be in the $10 million to $13 million range over a two-year period.
The city of Vancouver implemented this tax in 2018 and since its inception, the tax has helped reduce the number of empty homes in the city by 25% and according to CMHC the tax, combined with other market forces, helped push 5,000 condominiums to the rental market in 2019, including 3,000 in downtown Vancouver.
Could it have the intended impact of making more housing available? We would have to wait and see…
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Other blog posts, that you may be interested in:
Government Assistance Programs to help
5 Tips for Starting Your Pre-construction Condos Search
5 Common Sources of Down Payment
