Politicians of all stripes are making major promises to curb Canada’s out-of-control housing market, in an attempt to lock down your vote in the ongoing federal election.
Some are controversial, including a Conservative pledge to ban foreigners from purchasing residential real estate for two years – which was matched by the Liberals this week.
Others, like changes to insured mortgages and transparency on bidding, are just as important, but less high-profile.
Housing experts, who’ve spent years trying to convince the BC and Ottawa governments to intervene in a more direct way, say the election is drumming up some interesting proposals.
“We’ve got to deal with it,” said Tom Davidoff, director of the University of BC’s Centre for Urban Economics and Real Estate.
“It seems like it’s the issue on everybody’s mind, other than COVID. I think it’s terrific if the parties want to get serious. They’re all really putting stuff on the table. There’s an element of pandering to all of them, yet all of the Liberals, NDP and Conservatives have different but decent ideas.”
Conservative leader Erin O’Toole was first out of the gate last week with what was, at the time, the most ambitious platform on housing affordability of all the parties.
“Our housing plan is comprehensive and it will be effective,” he said. “It will give all Canadians a chance to build the life they dream of, to live on a street with good neighbours.”
His party first proposed the two-year ban on foreign ownership of homes, and promised to build one million new homes in the next three years.
That appeared to catch the Liberals off guard, and the party went several days without any new housing ideas of its own before leader Justin Trudeau resorted simply to matching the two-year foreign owner ban from the Conservatives and upping the ante with a promise of 1.4 million new homes in four years.
“If you work hard, if you save, that dream of having your own place should be in reach,” Trudeau said Tuesday, in Hamilton.
That’s exactly what most voters want to hear from their federal party leaders – though, if a tax on foreigners and grandiose promises to build more housing years in the future were enough to slow the country’s superheated real estate sector it would have happened several times over already.
The political leaders have fallen into the familiar trap of labelling foreign owners as the root cause of all that is wrong with the housing market, including NDP leader Jagmeet Singh who pitched a 20% foreign buyer’s tax on the sale of homes to people who aren’t Canadian citizens or permanent residents.
But at this point, it’s not actually foreign buyers perpetuating the market’s sky high prices, fed by low interest rates and limited supply.
The BC government, which created a speculation and vacancy tax in 2018 to target foreign buyers who snatch up properties and leave them underused, reports that there’s actually more BC and Canadian owners with multiple properties speculating in the market and paying the tax than foreigners.
“I don’t think adding taxes on a group that is very small is going to do anything,” said Davidoff, of targeting foreigners.
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There are, thankfully, some other, better, ideas buried in the party platforms.
A Conservative promise to defer capital gains tax for people selling rental properties and reinvesting in rental housing could make a major difference in encouraging developers to build less-lucrative rental buildings by preserving their ability to make a profit, said Davidoff.
“That could really tilt people from building condos to building rental, and maybe building rental where nothing could have been built,” he said. “It’s expensive, and a lot of the benefit goes to rich people who own property, but I think it’s a serious attempt to get more rental properties.”
The Conservatives are also pitching a series of changes to the types of insurable mortgages available, smaller down payments and changes to the mortgage stress test.
The NDP, meanwhile, have focused on renters in their plan in a major way, with a $5,000 annual support to people who pay more than one-third of their income to rent.
“Buying a home, renting a place to call home has gotten worse, not easier,” said Singh. “I want to put a stop to that.”
Davidoff said it’s a better idea than pumping millions of taxpayer dollars into expensive new condo developments to create a handful of affordable rental units, which are so scarce it’s like winning the lottery to get one.
Meanwhile, the Liberal plan hits on an area some Realtors have been calling for reform: Blind bidding.
The move would let people bidding on properties know what other bids are on the table, so that they don’t unnecessarily and blindly offer a higher price and drive the value of the property far above a reasonable level in a frantic pitch just to win a bidding war. It’s been a particular problem in Metro Vancouver’s real estate market, with properties going for hundreds of thousands of dollars over-asking in part due to blind bidding.
“We’ll crack down on predatory speculators,” said Trudeau. “No more blind bidding.”
He failed to point out that it’s mostly regular British Columbians, and not necessarily speculators, getting caught up in blind bidding wars. But, those kinds of details are inconvenient for politicians on the campaign trail.
The Liberal plan also promised to enshrine a legal right to a home inspection – something increasingly being skipped by buyers in a move to bolster their no-condition bids on properties.
The Liberals also tip-toed precariously close to the idea of a capital-gains-like tax on people who flip their homes, with a proposal of an “anti-flipping tax” that would penalize someone who bought and sold a property within 12 months.
It doesn’t appear to be an actual capital gains tax on principal residences sold within a certain timeframe, which some banks have suggested would immediately cool the market by cutting into the profits of actual speculators. The Trudeau and BC governments ruled out considering such a move earlier this year, for fear it would anger voters.
The Liberal plan also calls for boosting first-time homebuyer incentives, which Davidoff said is a “mixed bag” of supports that will sometimes give money to someone who actually can already afford a downpayment for a first home.
Trudeau is also promising $4 billion to incentivize municipalities to approve housing projects with more density, more quickly, a move Davidoff said is much needed and gets to the root cause of some of the country’s issues in failing to build enough housing supply.
In the end, voters have quite a variety of differing housing policies on the table from the parties, and most of the reforms have at least some potential positive impact.
For those who’ve been advocating for more reform, it’s a welcome sight.
“It’s great that the parties are addressing this,” said Davidoff.
Now all that remains to be seen is who wins, and whether the campaign pledges are ever actually enacted.