While prices are down nationally, in Ontario they are up almost 7% year-over-year with the average price of a home coming in at $932,000 in 2022, according to CREA’s residential sales data. Thanks to increasing interest rates and a lack of homes on the market, affordability of home ownership for young families is at historic lows. According to the Royal Bank of Canada (“RBC”),  middle-class families now have to dedicate 85% of their after-tax income to carrying the costs of a single-detached bungalow in the Greater Toronto Area. To make matters worse, today’s data revealed that new listings are shrinking meaning that fewer homes will be on the market heading into 2023 for buyers to see.

Ontario must continue to be bold in the coming months to get more housing supply built. Now is not the time to take our foot off the gas. Policymakers should not make the mistake that a slower housing market means that housing affordability issues are being solved. The case is quite the opposite – the housing affordability crisis has deepened, and we need to double down on getting more homes built, not ease off.

The Province should, for example, act to end exclusionary zoning in high-traffic urban areas. This change would, open the door to tens of thousands of new homes in existing communities. Ending exclusionary zoning also has cross-party support and is proven to be a very effective policy for boosting housing supply in other jurisdictions. The province should also consider further action to expedite the sale of underutilized provincial property and buildings for homes that average Canadians can afford and introducing stronger rules to intensify around transit lines and hubs.” – Tim Hudak, CEO of the Ontario Real Estate Association

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Conducted by Abacus Data for OREA, the Housing Affordability in Ontario: Perceptions, Impacts, And Solutions (Wave 3) report found that 64% of Ontarians spend over 30% of their household budget on housing. Further, 95% agree life is more expensive today than it was just two years ago, with nearly half reporting they may have to make difficult choices to make ends meet. Many Ontario families are reducing entertainment or meals out, driving less, and spending less on groceries to cut back in light of rising rates.

However, the desire to own a home is growing, particularly among the province’s renters, with 69% of non-homeowners saying they are someone who ‘really wants to own a home’ (+9). Just 5% identified as ‘someone who would be happy renting forever’ – a 17% drop from January.

“At a time when homeownership rates are on the decline, the desire to own a home is still growing,” said OREA President Stacey Evoy. “But these rapid, outsized increases we have been seeing to curb inflation are hurting Ontario’s families – it’s clear Ontarians are feeling the financial pressures of inflation amid an existing housing affordability crisis. Housing remains a spectrum issue across the province, and we must work together to keep housing affordable and the dream of homeownership within reach.”

While decreasing home prices may address one aspect of affordability, it does not help overall affordability: 82% of Ontarians say today’s higher mortgage rates are making buying a home more (37%) or much more (45%) difficult.

Some jurisdictions – like the Province of Ontario and City of Toronto – are making long overdue changes that will improve long-term outlooks on affordability, including changes being implemented through pro-housing legislation like the More Homes Built Faster Act provincially and the HousingTO Action Plan in Toronto.

“Now is the time to stay the course on these important changes. Rising rates might mask the problem as prices dip, but lack of supply remains a key issue,” said OREA CEO Tim Hudak. “The Ford Government’s More Homes Built Faster Act will help bring affordability closer to hand and ensure future generations have a fair shot at getting the keys to their own home. But more can still be done, and governments at all levels should be considering policy changes that will help increase both affordability and supply in Ontario’s market, particularly when it comes to providing more immediate relief.”

To help solve the crisis, Ontario’s REALTORS® have put several ideas on the table for consideration, including:

1. Providing further financial relief for young families and millennials, by doubling the current land transfer tax rebate from $4,000 to $8,000, helping first-time buyers afford their first home.
2. Revisiting the mortgage stress test to make it more dynamic and responsive to a changing market – currently, homeowners hopefuls must qualify two per cent higher than current rates, or at around 8%.
3. Extending the amortization period for CMHC insured mortgages from 25 to 30 years, allowing buyers with less than 20% down to spread their payments out over a longer period of time, reducing their monthly carrying costs.
4. Ending exclusionary single-family zoning in high-demand urban areas such as Toronto, allowing for much-needed gentle density and increased supply.
5. Utilizing surplus government lands and commercial conversions to increase housing supply and encourage development of transit-oriented communities.

Housing is a spectrum issue, and Ontario needs new supply at any and every level in order to address the affordability crisis and help ensure everyone has a fair shot at owning a home.

However, all levels of government must work together and take quick, meaningful action to increase supply and improve affordability, creating future generations of Canadian homeowners. More homes and more affordable choices is what will help frustrated young families finally get the keys to a new home.

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Released today and written in partnership with StrategyCorp, the Accelerating Ontario’s Green Future: New Approaches to Housing and Climate Change report tackles GHG emissions in the resale housing market by providing more supports to homeowners in reducing their energy use and saving costs on their monthly bills. The report also proposes a plan to help address a major climate threat looming over Ontario homeowners from – flooding.

“Climate change is a major threat to our way of life and the residential housing sector has to do its part to lower emissions and mitigate risks,” said Tim Hudak, OREA CEO. “Through these recommendations, Ontario can help homeowners reduce their carbon footprint, safeguard their homes against climate change, and keep more money in their pockets.”

Three of the major planks in OREA’s policy paper will support homeowners in making building envelope improvements to their properties. Envelope improvements (upgrades to outer barriers supporting energy efficiency, from windows to walls) have been shown to be one of the best ways to reduce the consumption of natural gas – a major driver of GHG emissions from housing.

“On-bill financing is a great way to provide homeowners with upfront help to do a green renovation, which they can then pay off using the savings on their energy bills,” said Hudak. “The planet gets lower GHG emissions from homes, jobs get created in the renovation sector and homeowners get long term savings – it’s a win-win.”

Recent environmental and climate change events across Canada – from heat waves in British Columbia to coastal erosion in Nova Scotia – have highlighted the significant challenges and issues that arise when housing is not prepared for rapidly changing environmental conditions.

Annual catastrophic insurance pay outs in Canada averaged $400 million until 2008 but are now approaching $2 billion each year. With higher insurance pay outs inevitably comes rising premiums – in Ontario, they have grown by 64% over the last decade – making it more costly to own a home in an already expensive market.

Together, the recommendations within create the conditions for Ontario to reduce emissions, mitigate the impacts of climate change on homeowners, and support societal uptake of measures that will encourage the overall “greening” of the housing sector. They include:

1. Creating a New Green Home Renovation Tax Credit: The Government of Ontario should create a targeted green home renovation tax credit explicitly for green renovations—including those that enable a work-from-home setup. This credit should only apply to homes built before 2010 and include an income cap, to help focus on improving existing middle-class homes.
2. Introducing On-Bill Financing (OBF) for Building Envelope Improvements: The Ontario government should work with their energy sector stakeholders to offer OBF residential energy efficiency programs for their customers, allowing upfront costs to be paid down over time. This would help reduce emissions, create high-skill construction jobs, improve energy-efficiency, lower household energy bills, and does not require a new spending line in government budgets.
3. Developing Flood Mapping for Home Flood Protection: Flooding is cited as the costliest climate event in Canada in terms of damage and impact with respect to insurable losses. To allow Ontarians to make better-informed decisions when buying or selling a home, the Government of Ontario should develop a user-friendly system that establishes the flood risk of residential properties across the province to fill in gaps in existing flood mapping.

“Without action to address emissions in Ontario’s residential building space, it will be difficult for Ontario to meet its existing targets and even harder to meet its future targets,” said Stacey Evoy, OREA President. “In order to do so, the Ontario Government must also consider improving the climate resiliency of Ontario homes. Akin to GHG reduction improvements, increasing a home’s climate change adaptation protection will only increase the value of the home.”

The eight policy options outlined in this paper, together, will help bring the province closer to meeting its GHG emissions reductions targets and commitments and contribute to Canada becoming net zero by 2050. Further, they are beneficial for the environment, while also aligning with Ontarians’ desire to take climate action and protect the value of their most important asset: their home.

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“If the last election was about jobs, jobs, jobs, this election is about homes, homes, homes,” said Ontario Real Estate Association (OREA) President David Oikle. “Ontario’s Realtors are thrilled to see housing affordability is a top election issue with voters. All three major federal parties – the Liberal Party of Canada, the Conservative Party of Canada, and the New Democratic Party of Canada – have put ideas on the table to make the Canadian Dream of home ownership more affordable.”

OREA wants to keep that dream alive, but that will only happen if governments make it easier for first-time buyers to own a home, through increasing housing supply, reducing or eliminating unnecessary government red tape, and addressing affordability, especially for first-time buyers.

Increasing Housing Supply

Canadians want to own homes, but the lack of supply is causing a crisis with more buyers chasing fewer and fewer homes. Creating more supply is essential in addressing the affordability crisis:

• Liberals: Building, preserving, or repairing 1.4 million homes over four years; converting empty office spaces into housing with $300 million in new funding; creating the Multigenerational Home Renovation Tax Credit to support secondary suites in homes; creating a Housing Accelerator Fund worth $4 billion to help cities build homes faster.
• Conservatives: Build 1 million homes in the next three years; release 15 per cent of federal real estate for housing; encourage developers to invest in rental housing by extending the ability to defer capital gains tax when selling a rental and reinvesting in rental housing.
• NDP: Set up a dedicated fast start fund to streamline the application process; mobilize federal resources for co-op, social and non-profit housing by repurposing unused and under-used properties; spur the construction of affordable homes by waiving the federal portion of the GST/HST on the construction of new affordable rental units.

When it comes to increasing housing supply, all three parties have promised to build more homes, and all three have a plan to repurpose underutilized federal properties, a move that OREA strongly supports. Repurposing such properties will create thousands of new housing supply options and encourage further development.

The Liberal multi-generational renovation tax credit could encourage provincial governments to continue creating policy that would reduce red tape on things related to the development of secondary suites and give more Ontarians access to this affordable form of housing.

The CPC’s commitment to building homes alongside transit infrastructure aligns with OREA’s position on using zoning to encourage the development of transit-oriented communities and encourage density near transit hubs by removing barriers to housing construction.

The NDP’s idea to waive the GST/HST on affordable rental housing addresses the need for a wide range of new housing to young families. A lack of housing supply causes a ripple effect: because first-time buyers can’t get into the market, they are staying in rental units longer, which means people can’t move out of social housing and into apartments.

Money Laundering in Real Estate

All three parties have a plan to get dirty money out of the real estate industry: money laundering is keeping hardworking families from accessing homes. OREA is a strong supporter of getting dirty money out of real estate. A public beneficial ownership registry would require purchasers to identify themselves to land title authorities, ensuring criminals who are laundering money through real estate can no longer remain anonymous.

Supporting First-Time Buyers

It is not a surprise that first-time home buyers are facing the greatest challenge when it comes to Ontario’s real estate market. Millennials and young families want to own homes, but it has never been tougher to achieve due to rising home prices pushing home ownership out of reach. New supports for first-time buyers are sorely needed:

• Liberals: Introduce a tax-free First Home Savings Account to allow Canadians under 40 to save up to $40,000 for a home; make the first-time home buyer (FTHB) incentive more flexible to give Canadians the option of a deferred mortgage loan as an alternative to the current shared equity model; double the FTHB Tax Credit.
• Conservatives: Encourage a new market in seven- to ten-year mortgages to provide stability for first-time buyers and lenders; increase the limit on eligibility for mortgage insurance and index it to home price inflation to allow those in high-priced real estate markets with less than a 20% down-payment an opportunity at homeownership.
• NDP: Double the FTHB tax Credit; re-introduce 30-year terms on CMHC insured mortgages on entry-level homes for FTHB.

Both the Liberals and NDP have promised to double the first-time homebuyer tax credit (taking it from $5,000 to $10,000), which will save the average buyer roughly $1,500 at closing.

OREA has previously called on the federal government to rebalance strict mortgage rules and extend the amortization period for CMHC insured mortgages from 25 to 30 years, which the NDP plan includes. This allows buyers to make smaller monthly mortgage payments, and in turn, makes homeownership an option for more first-time buyers.

Housing Affordability

Canadians want government to take action to make home ownership more affordable, so OREA is pleased all three parties have proposals to help with the cost of homeownership:

• Liberals: Reduce monthly mortgage costs by reducing the price charged by the CMHC on mortgage insurance by 25 per cent.
• Conservatives: Fix the stress test to stop discriminating against small business owners, contractors, non-permanent employees, and casual workers; remove the stress test requirement on mortgage renewals.
• NDP: Provide resources to facilitate co-housing (co-ownership agreements) and ease access to financing by offering CMHC-backed co-ownership mortgages.

The Liberal plan to lower mortgage insurance rates by 25 per cent would result in an average of $6,100 in savings for an insured mortgage holder and broaden the pathway to home ownership.

Government restrictions like the mortgage stress test are unfairly disadvantaging home buyers, especially millennials looking to enter the market for the first time or young families looking to move up.

One of the biggest barriers to entering the market for first-time homebuyers is coming up with the cash capital needed to afford a down payment. The Liberals and NDP both support co-ownership/share equity models as a solution to improving housing choice and making it easier for more people to enter the market, adding legitimacy to the rent-to-own model.

“It’s clear our federal leaders are paying attention, and this election has brought Canada’s housing affordability crisis to the forefront of the political debate,” said Oikle. “The Liberals, Conservatives, and NDP all have their own plans on how to best address the crisis, and have put their ideas on the table, leaving the decision with voters.”

The post 2021 Federal Election Shines A Light On Canada’s Housing Affordability Crisis appeared first on Muskoka411.

It is time for the next round of game-changing infrastructure investments.

Today, the Ontario Real Estate Association (OREA) released The Ten Infrastructure Projects for a More Competitive Ontario, a research report written in partnership with KPMG Global Infrastructure Advisory, outlining large infrastructure projects that will support a robust economy, creating new jobs and opportunities across the province.

To select the top ten, OREA and KPMG looked at economy-impacting projects across all infrastructure asset classes, then assessed them against specific criteria. Each of the ten projects selected for inclusion addresses multiple strategic challenges, has a direct link to Ontario’s economic competitiveness, and is a project both of an ambitious scale, and is conceptual or in early planning stages. They also take into consideration the new ways of working, regional supply chains, and the extraordinary growth of e-commerce brought upon by the COVID-19 pandemic.

“These large infrastructure projects will support a robust provincial economy by acting as magnets for talent and investment, creating a strong cycle of economic growth,” said OREA CEO Tim Hudak. “This allows Ontario to pay for the types of infrastructure and public services that spur productivity and improve quality of life, leading to higher paying jobs, business investment, and more opportunities to increase housing supply and affordability.”

One project that would have incredible impact on Ontario’s future economic prosperity is the proposed Pearson Transit Hub. The area surrounding Toronto Pearson Airport, dubbed Ontario’s Airport Employment Zone (AEZ) by economists, is the second largest employment area in the province, boasting 330,000 jobs, behind only downtown Toronto’s employment cluster.

The proposed Pearson Transit Hub could nearly double that number of jobs by 2035, further increasing the AEZ’s GDP contribution by 2.2%.

“Toronto Pearson is Canada’s gateway to the world and an economic anchor for the region,” said Deborah Flint, President and CEO, GTAA. “Improved transit connectivity in the heart of Canada’s second largest employment zone will fight climate change, improve access to jobs, and contribute economically in a growing province. We stand alongside leaders and experts from across the region to support government as they use the transformative power of transit connectivity.”

In order to reach this full potential, the Ontario government must do its part to integrate and advance several existing and planned transit lines into a new multimodal transportation anchor – the Pearson Transit Hub. Currently underserved by transit, this project would cut through the current traffic congestion at Pearson Airport, unlocking the door to the AEZ’s economic growth.

“Lack of transit connectivity and traffic congestion often rank as Ontario’s most challenging economic problem, so we need to address this barrier to economic competitiveness if we want to bring the dream of home ownership closer to more Ontarians,” said Hudak. “With the infrastructure project proposals in this report, we hope to inspire future generations and generate sustained prosperity for everyone, resulting in strong and vibrant communities across the province.”

The Ten Infrastructure Projects for a More Competitive Ontario span the province from corner to corner both in location and impact:

The Greater Toronto Area

1. A Pearson Transit Hub
2. A New Bypass for GTA Freight Rail
3. Extending the Yonge Subway into York Region
4. An Eastern GTA Transit Hub

Toronto

1. Rapid Transit in Toronto

Ottawa & Eastern Ontario

1. Frequent and Reliable Rail Service between Toronto, Ottawa, and Montreal

Niagara & Southwestern Ontario

1. A New Freeway and 21st Century Border Infrastructure for the Niagara Peninsula

Northern Ontario

1. A Strategic Transportation Link to Ontario’s Ring of Fire

Province-wide

1. Broadband to address the Urban-Rural Digital Divide
2. Ontario’s Clean Energy Potential

OREA invites Ontarians to take these ten infrastructure projects list as a starting point and to engage the association in an important dialogue about how we can use infrastructure to enhance Ontario’s competitiveness. To learn more about all ten projects, please visittop10projects.ca.

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