The discussion around housing affordability in Canada, particularly in the media and among some federal officials, focuses heavily on the impact of an interest rate increase and high household debt levels on Canada’s financial stability. In response, federal officials have applied demand-side measures that limit access to homeownership. Only recently has the discussion about housing supply started to get the attention it needs, and even then, the discussion is focused extensively on social housing investments for vulnerable Canadians, rather than a system-wide set of solutions.
CHBA continues to put forward smart and sensible recommendations to help Canadians access homeownership by advocating for both demand and supply measures and flexible, well-thought out evidence-based solutions.
As Parliamentarians return to Ottawa, we continue to call for:
A return to 30-year amortizations for insured mortgages, just for well-qualified first-time buyers.
Reintroducing 30-year insured mortgages – not for all buyers, but for well-qualified first-time buyers – will address growing inequities in mortgage access and will deliver financial benefits to younger Canadians and Canada as a whole. To suggest this will excessively accelerate house prices or result in too much debt is disingenuous. Homeowners tend to move up the market over time, taking on their next mortgages when they buy their next home (freeing up their starter homes for others). Right now you can only get a 25-year (insured) mortgage as a first-time buyer, but as a move-up buyer, you can take on a 30-year (uninsured) mortgage. This isn’t fair, nor does it make sense.
Adjustments to the mortgage stress test to better align with current market conditions
Adjusting the mortgage stress test by replacing the current universal two percent with a declining rate stress test based on the mortgage term makes sense. The longer your mortgage term, the lower the stress test percentage. Adding flexibility to the stress test will improve housing affordability while allowing people to make responsible choices, especially first-time buyers who just need to get their foot in the door of homeownership. Encouraging longer-term mortgages also provides more security for homebuyers and the financial system alike.
A commitment to work with provinces and municipalities to increase market-rate housing supply
CHBA research has shown that at current rates, Canada will be short 300,000 market-rate ground-oriented housing units over the next decade. We need more of the right kind of housing, in the right places. Governments at all levels need to target getting more market-rate housing supply available. This will help keep prices down for all homes, while also freeing up rental properties as people move into their first homes. We also need more rental properties.
Climate change solutions developed with affordability in mind
The federal government has policy levers to address climate change and improve affordability in tandem—and it will take smart policy to get it right. If done wrong, house prices will escalate, more buyers will be locked out, and the existing housing stock (the principle emitter of green house gases) will not improve.
Affordability and the National Building Code
The ‘affordability gap’ that currently exists with respect to higher energy performance housing, like Net Zero Ready, must be closed before code changes are made. CHBA is leading the way with innovation and a voluntary program for homeowners that want to invest in their homes by making them Net Zero, but R&D and innovation are needed before higher levels of energy efficiency are affordable for all. We must work to enshrine affordability as a core objective of the National Building Code, particularly as it relates to greenhouse gas mitigation and climate change adaptation and invest more in research and development for innovative solutions.
Support the EnerGuide Rating System for Houses
Having the EnerGuide label on all houses at the time of resale has the potential to dramatically raise the energy literacy of Canadians, help home valuations truly reflect energy efficiency, and further encourage Canadians to make energy efficiency and retrofit investments at an accelerated pace in ways they can afford. The Government of Canada’s EnerGuide Rating System for Houses should be expanded and promoted as the backbone of all housing incentives, tax credits, and other energy efficiency initiatives by governments, utilities and other organizations. Consistency and clarity can help homeowners tackle climate change. The government’s new interest-free loan program should also require use of the EnerGuide Rating System.
A Permanent Renovation Tax Credit
A permanent, modest energy retrofit tax credit – based on the use of EnerGuide Rating System (ERS) – would help Canadians improve the energy efficiency of their homes, benefitting themselves, the economy, and national competitiveness. Every dollar invested in upgrading the energy performance of an existing home will yield four to seven times more GHG reductions than the same dollar invested in a new home. By fighting the underground economy and bringing cash deals above board, it also has the capacity to have increased tax revenues essentially pay for the tax credits.
CHBA looks forward to working with the federal government and fellow housing stakeholders to improve access to homeownership, through affordability and choice, for Canadians. For more information and updates, stay tuned to affordability.ca and chba.ca.
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