* The government is implementing two new measures: increasing the $1-million price cap for insured mortgages to $1.5-million and expanding the eligibility for 30-year amortizations to all first-time homebuyers and all buyers of new builds.
* Both are flawed. The message, “Don’t worry, millennials, you can buy a home, you’ll just have a lot more debt for a lot longer,” isn’t the winning policy the government seems to think it is.
* Providing more paths to finance million-dollar homes is simply failing to address the core issues of limited supply and out-of-control prices.
* These latest mortgage reform policies will only spur demand – and demand is already spinning out of control.
2peg2city on
They have a massive program to address supply? What’s up with the globe today.
Though I agree these changes aren’t going to help the demand side
Fluid_Lingonberry467 on
Easier to address demand
akd432 on
Simple- the majority of Canadians are homeowners and they ALL love the housing crisis. There is a reason why they are opposed to all development in their neighbourhood.
Politicians are just catering to their voters.
It’s really not that complicated, lol.
Chemical_Signal2753 on
Supply is remarkably inflexible.
1. To increase supply you require a large increase of skilled labor.
2. Increasing supply requires a large capital investment.
3. There is tons of bureaucracy that limits supply.
To make matters worse, if there is a drop in prices new construction will fall dramatically.
GameDoesntStop on
Supply isn’t the issue. They simply need to reduce the demand that they’ve stoked by lowering immigration back down to historical levels (and stopping nonsense like these policies of extending amortizations).
NorthernHusky2020 on
Ottawa needs to stem population growth via immigration to lower demand for housing and therefore lowering prices. Nothing else works, never mind 30 year mortgages. It’s all just so delusional and tiring.
Construction of new homes will never outpace our current levels of population growth. Period.
Single_Rain4899 on
Because the only way to protect the wealth of homeowners is to keep the Ponzi scheme running. And the only way to keep it running is to make sure house prices stay high, and keep going higher. *These people have no savings but the equity in their house.*
It’s all about making sure that the majority of Canadians’ single-asset investment/retirement strategy doesn’t blow up, further straining government welfare systems. Cuz sure as shit people aren’t saving money, or using their tax shelters.
Hydraulis on
Because they’re incompetent?
chewwydraper on
The answer is simple: Liberals want housing prices to continue to rise. They’ve created a country that relies on its real estate, if that collapses we have nothing.
Less_Clothes_5994 on
The simple answer is we need housing to continue raising in price much faster than inflation to make up for our increased lack of productivity.
With our economy lagging as it has been for the past few years rents and home prices must continue to rise to prevent a depression. I haven’t looked at the data in a while but last I looked (4-5 yrs ago) selling house and rental costs accounted for over 20% of our GDP.
It’s all a giant house of cards propped up by real estate and immigration. This problem did not start with the current government but they have went all in exacerbating the problem.
Difficult-Yam-1347 on
The title should be “Why does Ottawa keep stoking housing demand instead of reducing demand?”
The federal government has limited direct control over many supply-side issues (and housing starts can’t increase meaningfully anyway). This focus on demand-side policies (e.g., immigration increases, homebuyer incentives, mortgage changes) without corresponding supply increases leads to worsening affordability long-term.
undoingconpedibus on
Maybe real estate investors who own multiple properties should be taxed way more! Which would mean raising taxes on half our politicians!
taxrage on
And to think in the 1980s the fed/prov government had to give out loans and grants to homebuyers to stimulate the housing industry.
bdigital1796 on
because over 6 million aging Canadians will be perishing in their existing homes come next .01 ~ 15 years.
There is your supply, go have it and don’t put a whole wet log in hopes to stoke a fire.
note to selves, once those homes are taken over, the next starter home/condo/broom closet will be north of 1M dollars as starting price. the ~~penny~~ hundred dollar bill is discontinued. be ready by year 2040.
Windatar on
Its intentional. The harper government and the Trudue government afterwards both realized that Canadians were putting nearly all their wealth into real estate to build their retirement because it was the last way to do it. However, because of this they couldn’t allow it to fail. since 2005 there should have been 3 housing crashes, however the federal governments have done everything in their power to keep the housing sector afloat.
They did this by making it extremely hard to default on a home, where if you start missing payments the bank can take those missing payments and add it at the tailend of your mortgage, you face increased fees and interest for it, forcing Canadians to borrow even more money.
30-40 year amorizations, this allows people with lower incomes to afford more expensive homes by saddling them with forever debt. Creating house poor Canadians.
Importing slave labour with TFWP’s, since housing and cost to build housing is going up construction companies and trades have been the two biggest pushers for federal governments to keep the low wage slave labour pooling into the country to continue affording building.
Trudue is on record for saying. “We need more housing, to make them affordable to younger Canadians.” however a day later said. “We will do everything in our power to make sure peoples homes never fall in price.” Essentially sacrificing Canadians today so Canadians of the past have their retirement.
The two main reasons why Canada at a federal level is dragging its feet on sending people back and stopping immigration is due to a simple math problem. Canada needs 3 million homes today, and there are 2.8 million non Canadian’s in Canada. If they were sent back the housing problem would be fixed over night. Because of this the demand for housing would crash. Property values would plummet because demand would be gone and there would be so much housing stock that people would have to take losses.
Not to mention with removal of immigrants in Canada corporate employers and rich in general would be forced to invest in Canadians. If they need employees they would need to employee Canadians.
The loss of this many people would also put massive deflation into the economy, which would stall GDP growth massively for a good couple years however but GDP per capita would explode.
SeriousGeorge2 on
How is this even a question? We’ve heard the answer straight from the horse’s mouth, on a Globe and Mail podcast no less: housing needs to retain its value.
17 Comments
Paywall Bypass: [https://archive.ph/876Zf](https://archive.ph/876Zf)
In Brief:
* The government is implementing two new measures: increasing the $1-million price cap for insured mortgages to $1.5-million and expanding the eligibility for 30-year amortizations to all first-time homebuyers and all buyers of new builds.
* Both are flawed. The message, “Don’t worry, millennials, you can buy a home, you’ll just have a lot more debt for a lot longer,” isn’t the winning policy the government seems to think it is.
* Providing more paths to finance million-dollar homes is simply failing to address the core issues of limited supply and out-of-control prices.
* These latest mortgage reform policies will only spur demand – and demand is already spinning out of control.
They have a massive program to address supply? What’s up with the globe today.
Though I agree these changes aren’t going to help the demand side
Easier to address demand
Simple- the majority of Canadians are homeowners and they ALL love the housing crisis. There is a reason why they are opposed to all development in their neighbourhood.
Politicians are just catering to their voters.
It’s really not that complicated, lol.
Supply is remarkably inflexible.
1. To increase supply you require a large increase of skilled labor.
2. Increasing supply requires a large capital investment.
3. There is tons of bureaucracy that limits supply.
To make matters worse, if there is a drop in prices new construction will fall dramatically.
Supply isn’t the issue. They simply need to reduce the demand that they’ve stoked by lowering immigration back down to historical levels (and stopping nonsense like these policies of extending amortizations).
Ottawa needs to stem population growth via immigration to lower demand for housing and therefore lowering prices. Nothing else works, never mind 30 year mortgages. It’s all just so delusional and tiring.
Construction of new homes will never outpace our current levels of population growth. Period.
Because the only way to protect the wealth of homeowners is to keep the Ponzi scheme running. And the only way to keep it running is to make sure house prices stay high, and keep going higher. *These people have no savings but the equity in their house.*
It’s all about making sure that the majority of Canadians’ single-asset investment/retirement strategy doesn’t blow up, further straining government welfare systems. Cuz sure as shit people aren’t saving money, or using their tax shelters.
Because they’re incompetent?
The answer is simple: Liberals want housing prices to continue to rise. They’ve created a country that relies on its real estate, if that collapses we have nothing.
The simple answer is we need housing to continue raising in price much faster than inflation to make up for our increased lack of productivity.
With our economy lagging as it has been for the past few years rents and home prices must continue to rise to prevent a depression. I haven’t looked at the data in a while but last I looked (4-5 yrs ago) selling house and rental costs accounted for over 20% of our GDP.
It’s all a giant house of cards propped up by real estate and immigration. This problem did not start with the current government but they have went all in exacerbating the problem.
The title should be “Why does Ottawa keep stoking housing demand instead of reducing demand?”
The federal government has limited direct control over many supply-side issues (and housing starts can’t increase meaningfully anyway). This focus on demand-side policies (e.g., immigration increases, homebuyer incentives, mortgage changes) without corresponding supply increases leads to worsening affordability long-term.
Maybe real estate investors who own multiple properties should be taxed way more! Which would mean raising taxes on half our politicians!
And to think in the 1980s the fed/prov government had to give out loans and grants to homebuyers to stimulate the housing industry.
because over 6 million aging Canadians will be perishing in their existing homes come next .01 ~ 15 years.
There is your supply, go have it and don’t put a whole wet log in hopes to stoke a fire.
note to selves, once those homes are taken over, the next starter home/condo/broom closet will be north of 1M dollars as starting price. the ~~penny~~ hundred dollar bill is discontinued. be ready by year 2040.
Its intentional. The harper government and the Trudue government afterwards both realized that Canadians were putting nearly all their wealth into real estate to build their retirement because it was the last way to do it. However, because of this they couldn’t allow it to fail. since 2005 there should have been 3 housing crashes, however the federal governments have done everything in their power to keep the housing sector afloat.
They did this by making it extremely hard to default on a home, where if you start missing payments the bank can take those missing payments and add it at the tailend of your mortgage, you face increased fees and interest for it, forcing Canadians to borrow even more money.
30-40 year amorizations, this allows people with lower incomes to afford more expensive homes by saddling them with forever debt. Creating house poor Canadians.
Importing slave labour with TFWP’s, since housing and cost to build housing is going up construction companies and trades have been the two biggest pushers for federal governments to keep the low wage slave labour pooling into the country to continue affording building.
Trudue is on record for saying. “We need more housing, to make them affordable to younger Canadians.” however a day later said. “We will do everything in our power to make sure peoples homes never fall in price.” Essentially sacrificing Canadians today so Canadians of the past have their retirement.
The two main reasons why Canada at a federal level is dragging its feet on sending people back and stopping immigration is due to a simple math problem. Canada needs 3 million homes today, and there are 2.8 million non Canadian’s in Canada. If they were sent back the housing problem would be fixed over night. Because of this the demand for housing would crash. Property values would plummet because demand would be gone and there would be so much housing stock that people would have to take losses.
Not to mention with removal of immigrants in Canada corporate employers and rich in general would be forced to invest in Canadians. If they need employees they would need to employee Canadians.
The loss of this many people would also put massive deflation into the economy, which would stall GDP growth massively for a good couple years however but GDP per capita would explode.
How is this even a question? We’ve heard the answer straight from the horse’s mouth, on a Globe and Mail podcast no less: housing needs to retain its value.