Eleven Ideas for How the Feds Can Improve Housing Affordability: CHBA

November 24, 2016

Following the federal government’s announcement of its priorities for the new National Housing Strategy, a national association has put forward its suggestions for how the federal government can improve housing affordability.

In Continuing the Conversation about Homes, Communities and Canadians, the Canadian Home Builder’s Association outlines 11 ideas for federal policies to ease the home unaffordability crisis, especially in high-priced cities such as Vancouver and Toronto.

The ideas range from ways to help homebuyers get on the property ladder to cutting development fees and charges on new homes to improving home-building innovation.

The association says that the government should:

  • Give 80,000 families the opportunity to be homeowners by providing 30-year amortization periods for well-qualified first-time homebuyers of homes under $500,000.
  • Remove the “tax on tax” that homebuyers face when GST is applied to municipal taxes on new residential development - a federal cost imposed only on new homebuyers.
  • Provide 50 per cent of funding for infrastructure projects, especially transit, to help relieve the development tax burden levied on buyers of new homes.
  • Encourage affordable rental units by modernizing the tax regime related to purpose-built rentals, including infill secondary suites.
  • Fight the underground economy with a permanent, refundable home renovation tax credit for first-time homebuyers by requiring receipts.
  • Harmonize codes, standards, trades and qualifications to increase efficiencies, productivity, and reduce home construction cost.
  • Focus federal research on bringing better-built homes that cost the same or less to market.
  • Open training support to all Canadians pursuing a career as skilled workers and boost employerled training and immigration programs.
  • Revive the Energy Retrofit Homes Program as a permanent, refundable renovation tax credit for energy retrofits of existing homes – supporting the improvement of the housing stock, homeowner equity, affordability through lower operating costs, and fighting the underground economy by requiring receipts.
  • Use the EnerGuide Rating System as a single, standardized national system for rating and comparing home energy performance – this will support energy literacy and valuation of the energy performance of homes.
  • Leverage federal investment in social housing to address energy and water-use efficiency for long-term benefit – government-supported housing should lead the way in energy retrofitting to the benefit of the owners and tenants, as well as society.

The report also asserts that there is no imminent risk of a housing market crash in Canada, identifying seven “new fundamentals” that are propping up the market.

“Do we have a housing bubble? No,” the report states. It adds, “There has been a lot of confused speculation about a Canadian housing bubble, fuelled largely by international economists who don’t understand the Canadian market. Talk of overvaluation in hot markets like Toronto and Vancouver does not consider underlying new fundamentals of supply and demand. High house prices do not necessarily reflect overvaluation if they are supported by fundamentals.”

The CHBA says that high home prices are being supported by the following factors:

  1. High demand and low supply of the family-friendly housing Canadians want.
  2. Development taxes placed onto buyers of new homes.
  3. Shortfalls in infrastructure funding delaying development and increased development taxes.
  4. Development and construction regulations and approval delays, caused by red tape, NIMBYism and slow processes.
  5. Increasingly divergent housing market conditions across the country, making national mortgage policies (including interest rates) to deal with regional issues less and less effective.
  6. Low interest rates masking underlying affordability problems.
  7. Affordability problems in markets like Toronto and Vancouver magnified even more because of robust economies, growing populations and increasing foreign investment.

To read the full CHBA report, click here.