Home ownership in Ontario is at risk of largely slipping out of reach, but the government's Fair Housing Plan could be the key to keeping the dream alive.
We all know that millennial stuck in mom and dad’s basement who dreams of owning a place of her own.
That’s why Ontario realtors have rolled up their sleeves: to help preserve the Canadian dream of home ownership. Ontario realtors have become increasingly concerned about the risk of sustainable home ownership slipping out of reach especially in the Greater Toronto Area.
OREA CEO Tim Hudak on AM640 discussing the Ontario government’s Fair Housing Plan.
So, we delivered some thoughtful, doable ideas to the provincial government to fix the root cause of escalating home prices: lack of housing supply. While we didn’t get everything on our home ownership wish list, to its credit, the government did check off a lot of our boxes in its Fair Housing Plan and 2017 Budget.
For one, we won a commitment from the government to address the artificial barriers holding back housing supply. Record low levels of new homes and resale listings have essentially created a housing drought in the province causing intense bidding wars on the homes that are on the market and reducing home buyer choice.
What are the artificial barriers standing in the way of housing supply? For starters, the home development approvals process takes far too long — layers of red tape and bureaucratic stalling mean it can take more than 10 years to get a new housing development approved! These unnecessary delays stall housing construction, leaving less housing supply available for a growing population, while contributing to escalating prices.
Another barrier to building new homes is the lack of land serviced by critical infrastructure. Ontario realtors strongly recommended that some of the infrastructure spending announced in the budget be put towards servicing housing-ready land. You can't sell a house if you can't flush the toilet. The province can dramatically increase new housing supply by streamlining the process and targeting infrastructure funds to water, sewer, road and rail projects that will unlock the potential of housing-ready land. And as people move to new homes, more resale and starter homes come onto the market as well.
The Ontario government seems to be listening to our advice. We are also pleased that it took our advice to fix outdated rules that restrict “missing middle” housing types, like mid-rise buildings, townhomes and stacked townhomes in the province. “Missing middle” housing is affordable for first-time buyers and young families and is also an attractive option for empty-nesters looking to stay close to their grandchildren. More homes on the market means more choice for buyers and a better chance at home ownership for millennials and young families.
New real estate landscape
A home is the biggest purchase most people will make in their lives, and as such, we need higher standards in all professionals and practices involved in a real estate transaction. Ontario realtors have been calling for an update of the rules governing our profession — including education and stronger enforcement against anyone who doesn't follow the rules. The Real Estate and Business Brokers Act, 2002 (REBBA) was last updated 15 years ago, and the real estate world has changed tremendously since then. Those rules need to be updated to reflect the new real estate landscape, and to ensure the highest level of professionalism, fair practices and consumer protection. We are thrilled the government has heeded our call.
Finally, we wanted to make sure that when a foreign home buyer tax is implemented in Ontario, it won’t unfairly penalize major contributors to our society. For instance, the international MBA student at University of Toronto who would one day start her own business in our province, or the specialist surgeon aspiring to work at The Hospital for Sick Children should not be pushed away with a punishing tax grab.
The government saw our point that these folks are not speculators and exempted them from the proposed Non-Resident Speculation Tax (NRST), which is a 15 per cent tax on the price of homes in the Greater Golden Horseshoe purchased by individuals who are not citizens or permanent residents of Canada or by foreign corporations.
Increase in listings
Will the government’s Fair Housing Plan work to calm housing price increases? It's far too early to say. In the short term, we have seen an increase in listings as more home owners respond to high prices by putting their homes on the market. Though the demand for homes is still there, cautious buyers may be taking a “wait and see” approach before jumping into the market.
However, while the psychology of buying and selling may have been temporarily affected, our main point is that the underlying drivers of demand remain strong. Mortgage rates are near record lows, the economy is improving, the GTA is a prime destination for immigrants and other Canadians, millennials are desperate to get a place of their own. None of this has changed
In the medium and long term, it's all about housing supply. The government took up many of our good ideas for increasing supply and printed them in its plan and budget. Now it’s time to aggressively transform those words into action. The sooner, the better. Increasing the supply of homes is the best long-term solution to giving buyers a better shot at realizing their dreams of home ownership (and freeing up your basement).