Global Courant 2023-05-07 15:05:41
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First-Time Home Buyer Incentive should help 100,000 households. The actual number is less than 18,000.
Published on May 07, 2023 • Last updated 5 minutes ago • read for 4 minutes
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If the federal government seems completely out of touch with would-be homeowners, it’s probably because most MPs have no personal interest in it. On the contrary. Many of them have a vested financial interest in housing being astronomically unaffordable for Canadians younger than themselves.
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One in three Liberal cabinet ministers supplement their taxpayer-funded salaries with rental or investment income. About 40 percent of all MPs do the same, according to an analysis of public disclosures. While many have owned these properties for years and have not purposefully purchased them in a national crisis, the same cannot be said of Housing Minister Ahmed Hussen, who was disclosure count now owns three rental properties.
Hussen, who has led the Liberals’ housing dossier since 2019, bought an investment property midway through the 2021 federal election campaign — an act that would be a clear conflict of interest if we were talking about any industry other than housing. Imagine the Minister of Fisheries buying a lobster fishery, or the Minister of Health becoming co-owner of a private clinic. It would be disqualifying.
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It’s no surprise that so many young Canadians report feeling not only frustrated, but also frustrated “ferocious” when it comes to housing. The lack of reasonably priced housing is bad enough in itself, but the feeling that elected leaders, when not actively working against our interests, are perfectly content to reap not only the political, but financial benefits of our pain is nothing less than furious.
The continued total failure of the First-Time Home Buyer Incentive (FTHBI) is a perfect example of a program that exposes federal liberals’ incompetence, lack of commitment, or dual approach to the issue. The liberals would have us believe the program is a crown jewel of their affordability agenda, when it’s clear to just about everyone that it’s a complete dud.
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The FTHBI was proudly announced as part of the 2019 federal budget as an equity-shared mortgage program between first-time buyers and the government, with qualifying limits on household income and mortgage size. The government borrows up to 10 percent of the purchase price of a house, interest-free, in exchange for a capped share in any increase in value.
Since its implementation a little over three years ago, Globe and Mail analysis finds a grand total of 385 households have used it in the country’s most unaffordable markets, Toronto, Vancouver and Victoria.
The numbers outside those hubs aren’t much better. The stated goal was to help approximately 100,000 buyers secure their first home. Total take-up: about 17,500 nationwide. Faced with evidence that their program isn’t working, the Liberals decided to double down and extend it through May 2025, as if buyers not taking advantage of a totally awesome stimulus are the problem rather than the stimulus being totally out of touch with reality.
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Initially, the FTHBI was entirely limited to helping households with a maximum household income of $120,000 buy a home four times that amount ($505,000). As prices continued to rise, the government adjusted for major metropolitan areas such as Toronto and Vancouver. In those regions, the limit has been raised to a maximum household income of $150,000 to buy a home that is 4.5 times that amount ($722,000).
A big problem is that most properties, especially those that most deem large enough to raise one or more children in, are priced much higher than those limits. The average price of a two-bedroom apartment in Toronto fluctuates around $1 million. Row houses even hours outside of the downtown area also go for about that number, let alone anything detached. Finding even a small war bungalow under a million dollars is almost unheard of.
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Hardly any starter within these income brackets can afford to enter the market without parental help or inheritance. If they’re lucky in any of those scenarios, it’s still highly unlikely they’ll find a property that falls within the FTHBI’s rigid rules.
This is all before we even get to the frenzy of trying to fix housing affordability by subsidizing exorbitant values. Every time the government does this with one of their programs, it just sets a new floor for prices.
At the same time, the liberals are also driving up prices by, for example, encouraging banks to extend depreciation periods. Perhaps an argument can be made for protecting prime residences during a tumultuous period, but protecting investors from the ups and downs of a supposed free market cannot be combined with a commitment to solving the crisis.
The truth is that the liberals’ affordable housing strategy is not a strategy at all. Rather than recommit and expand floundering programs like the FTHBI, the government needs to completely rethink its approach – or the disturbing lack thereof.
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