An extra $10 billion in federal spending on housing will help increase a much-needed supply, but that won’t result in an erosion to current house values, warns the head of the area’s realtors’ group.
Thursday’s federal budget includes about $8.8 billion toward the building of affordable homes, and another $1.4 billion in programs to help Canadians buy their first homes.
Michael Johns, an instructor at Georgian College and visiting professor at York University, said it truly is a housing budget, focusing on increasing the number of homes available to Canadians.
“It’s a recognition that things are now untenable,” he told BarrieToday.
Although Johns points out that building houses won’t happen immediately and it will take some time for the federal funding to have any impact. Perhaps the most immediate impact the budget will have on housing is a two-year ban on foreign buyers, he added.
But Luc Bouillon, president of the Barrie and District Association of Realtors (BDAR), doesn’t expect that to have much of an impact on this area. He also doesn’t expect to see much of an impact from another budget item that increases taxes for people who sell their home within a year.
Bouillon said any incentive to increase the housing supply, however, will be helpful. But he doesn’t expect to see a downward movement of current housing values.
“We’re big proponents of anything that’s going to increase supply,” said Bouillon, adding the association has been involved in lobbying for the creation of more homes. “I’m glad that message at least got through to the government.
“We are so short in the amount of housing available that we will not crawl out of that hole for many years," he added.
Currently, the county-wide association has about 132 homes listed when 500 to 700 was previously considered normal.
The average Simcoe County home is now at $1.1 million, increasing 36.4 per cent over the past year.
Bouillon said initiatives to cool the housing market, such as increased stress tests, were not helpful to first-time buyers, many of whom are being left out with rising real estate prices. He welcomes the current focus on supply.
The local housing market has seen a bit of cooling in recent weeks and less competition for the homes that are listed, said Sarah Stevens, who teaches economics at Georgian College and is a real-estate agent.
Stevens says the supply can be increased more quickly through duplexing and adding more units to existing properties, which has been a focus for the province and municipalities in recent years.
“We are still seeing strong demand and not enough supply for certain properties,” she said.
There has been a bit of a slowdown in offers in recent weeks and less competition. She sees something of a normalization of the market, but adds that there are signs that it might be picking up again.
Housing initiatives include a $40,000 lifetime limit tax through a Free First Home Savings Account to help Canadians purchase their first home. The first-time home buyers’ tax credit will also be doubled to $10,000 to offset closing costs.
“The reality is that this is the new base of this market, so anyone thinking that they should be waiting for this market to crash or this bubble to burst is, unfortunately, going to end up seeing being priced out as these prices continue to increase,” added Bouillon.
