COLUMN: Federal budget addresses housing issue – sort of

Government’s ideas to help people to buy homes could leave them further behind, writes Frank Bucholtz

The federal budget released March 19 was supposed to address the issue of housing, which for many people in urban B.C. (including Surrey and White Rock), has become a critical matter. It sort of did so.

The government has come up with two ideas which will help a few people to buy homes, but could leave them further behind in other ways. One is to, in effect, put Canada Mortgage and Housing Corporation on the title. CMHC will provide some interest-free funds for a mortgage for first-time buyers with an annual household income below $120,000. This would act as an additional down-payment, but must be repaid when the home is sold.

Sounds good – but a recent report stated that the annual income needed to pay down a mortgage in the Metro Vancouver area is $211,000.

While the homeowners may gain some equity if the value of the home goes up and they have paid down a good portion of the mortgage, there is a possibility that the value of the home could decrease. Housing prices do not always rise. If they fall, buyers who take out the CMHC mortgage will be even further behind.

The other idea is to allow first-time buyers to take more money out of their existing Registered Retirement Savings plans and use that for a house down payment. The government won’t charge them tax on the withdrawal, as is currently the case. However, those people will have now have quite a bit less in their RRSPs. They will likely be even more poorly prepared for retirement than many are already.

A subsidized interest program to spur construction of rental projects has also been extended. Other than that, there wasn’t much of a sense of urgency on building social housing – subsidized rental units, co-ops and other forms – for the increasing number of people who cannot even dream of owning a home. The federal government has promised money for such types of housing, but it is very slowly trickling out of Ottawa.

What’s also missing is any change in rules for the mortgage stress test, imposed by CMHC in January, 2018. It has kept many people out of the market, and has forced a significant number to downsize because the banks won’t renew their mortgages. It was supposed to ease concerns about too much debt, but recent figures show household debt is rising anyway. Many in the real estate community blame the stress test for seriously limiting the flow of buyers.

Also missing is pressure on provincial and local governments to move more quickly in approving housing projects. Ottawa has the ability to apply pressure – it has more fiscal clout than any other government. It has issued a “housing supply challenge,” but that sounds more like a carnival game than a program leading to meaningful changes.

Anne McMullin, president of the Urban Development Institute’s Pacific region, noted last week that it can take as long as eight years from when a housing project is first proposed until it is ready for occupancy. That is unacceptable.

McMullin also noted, in a pre-budget interview, that federal incentives to build rental housing stock would help ease the very low vacancy rate by leading to more rental stock being built. The extended subsidies will help, but the slow pace of approvals means that help will be a long time coming.

Another missing piece was a pledge to restrict foreign ownership, or at the very least, tax owners of homes who are not resident in Canada. There was a vague promise to boost tax compliance.

Most Surrey residents have assumed foreign ownership was more of a problem in Vancouver, Richmond or Burnaby. In fact, newly-released information from CMHC shows that 20.5 per cent of condo units built in Surrey over the past decade have at least one non-resident owner. These owners do not pay taxes in Canada and their overweight presence in the Metro Vancouver housing market is one of the prime reasons that house prices, for both owners and tenants, are so high.

People with concerns about housing issues, whose numbers are growing daily, , whose numbers are growing daily, likely are skeptical about whether any of these proposed changes will truly ease housing shortages, sale prices or rents.

Frank Bucholtz writes Wednesdays for Peace Arch News, as well as at frankbucholtz.blogspot.ca

Just Posted

Vaisakhi voices in Surrey: What does Vaisakhi mean to you?

‘Vaisakhi is fundamentally about community, progress and celebration’

White Rock’s Memorial Park re-opens to the public without fanfare

Formal ceremonies expected to take place in late May or early June

Surrey cooking program for seniors receives $25,000 boost

Minister of Seniors announces funds during visit to South Surrey Come Share Society

BC Ferries to pilot selling beer and wine on select routes

Drinks from select B.C. breweries and VQA wineries to be sold on Swartz Bay to Tsawwassen route

Eggs in South Surrey bald-eagle preserve hatch

Douglas-area eagle nest livestreamed online

Man in hospital after crash involving parked car in Vancouver

It is unclear what led to the collision involving a black Acura and a parked Land Rover

Elizabeth May’s B.C. wedding will be a ‘low carbon affair’ on Earth Day

Green party leader’s wedding party to depart in a cavalcade of electric cars

5 to start your day

Police identify victim in Vancouver shooting, Trans Mountain pipeline decision extended and more

4 victims killed in Penticton shooting spree remembered at vigil

John Brittain, 68, is charged with three counts of first-degree murder and one count of second-degree murder

B.C. awaits Kenney’s ‘turn off taps,’ threat; Quebec rejects Alberta pipelines

B.C. Premier John Horgan said he spoke with Kenney Wednesday and the tone was cordial

Federal government extends deadline to make Trans Mountain decision to June 18

The National Energy Board endorsed an expansion of the Trans Mountain pipeline on Feb. 22

Prince George sweeps to first-ever BC Hockey League crown

Spruce Kings beat Vernon Vipers 3-1 in the Okanagan Wednesday for 13th straight playoff win

Hwang’s first MLS goal lifts Whitecaps to 1-0 win over LAFC

Vancouver picks up first victory of season

Most Read

l -->