Canada’s real estate market has been getting increasingly competitive over the last few years. During the Coronavirus pandemic, conditions picked up with a vengeance as potential buyers searched for homes with more space. Ultra-low interest rates also added fuel to the fire. As the Bank of Canada began to raise the rates, the market experienced a brief lull.

However, the fast growing population means that any “slow period” typically won’t last long. The demand for housing never goes away, even when buyers move temporarily to the sidelines. And with the new immigration targets, conditions may be about to get even more competitive. 

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The Immigration Plan at a Glance

With an aging population and shrinking birth rate, Canada depends on immigration to grow and maintain its economy. Many current residents are approaching retirement age and are leaving the workforce in unprecedented numbers.

Nearly every industry struggles to attract and retain qualified staff, from hospitality to healthcare and especially the skilled trades. To address this issue, Canada has enacted a plan to welcome 1.5 million new residents by the end of 2025.

The latest developments may make buying a home more competitive than ever. But not to worry! The following resources will help:

Complications of the Plan

Bringing in new immigrants may help to solve the employment crisis. Unfortunately, it contributes to another problem that is close to all of our hearts – housing supply and affordability. Currently, there are already not enough listings, leaving buyers to scramble for a suitable home. The housing market is so taxed that prices have tripled over the last 10 years. Now that we are about to add another 500,000 people per year for the next three years, the market will be bursting at the seams.

Housing values could rise even more, pricing them out of reach for many young families who need them the most. Unless, that is, the government steps up in a big way to address the issue.

The Proposed Solutions

The good news is that all three levels of government are finally paying attention and taking steps to address the housing shortage. Over the past two to three years, several recommendations have been enacted into law. Here are a few of those measures at the municipal, provincial, and federal levels.

Municipal Housing Plans in the GTA

Every solution starts at home, and the municipality has its boots on the ground to try to make housing more available and affordable. Here are a few initiatives that are on the table:

  • Modular Housing Initiative: Under this plan, the city plans to build up to 1000 modular units to assist those experiencing or at risk of homelessness. 
  • 2023 Housing Action Plan: The intention is to construct 285,000 homes throughout the GTA while furthering climate goals and creating vibrant “15-minute neighbourhoods.”
  • Housing Now: This initiative aims to complete 10,000 homes throughout mixed-income communities, including 3,700 affordable rental units.

Provincial Initiatives

Near the end of 2021, the provincial government introduced the Housing Affordability Task Force. Their job is to submit recommendations to the Minister of Municipal Affairs and Housing. The February 2022 report suggests a focus on building more homes across the province, increasing the amount of land available, and removing red tape to support faster construction and reduced costs.

Other provincial initiatives include:

  • Ontario Priorities Housing Initiative: This plan will provide flexible funding to support access to affordable housing. It supports the construction of new homes and repairs and renovations to existing structures.
  • Canada-Ontario Community Housing Initiative: Ontario will work to protect tenants in rent-geared-to-income residences in non-profit and co-operative housing projects. Over time, the province may expand the supply of rent-assisted housing.
  • Canada-Ontario Housing Benefit: This initiative provides financial assistance to some of Ontario’s most vulnerable residents, including victims of human trafficking and domestic abuse, seniors, and those at risk of homelessness. The benefit is calculated by the difference between a percentage of average market rent in the community and 30% of the household’s net income.

Do you have plans to sell you home and move on? The following will help you maximize your results:

Federal Legislation to Address the Housing Crisis

As expected, the federal government has several plans to address the housing crisis over the long term. The goal is to increase the housing supply while making homes more affordable to young families and first-time buyers. These initiatives include:

  • A ban on foreign buyers: With limited exceptions, foreign investors are banned from buying residential properties in Canada for two years. 
  • Anti-speculation legislation: GST will now be applied to all assignment sales of newly constructed and significantly renovated homes. In addition, an anti-flipping tax will apply when selling a residential property you have owned for less than 12 months.
  • The Tax-Free First Home Savings Account: This new legislation allows first-time buyers to save up to $8,000 per year (capped at $40,000) towards the purchase of a home. When buying as a couple, the benefit doubles to $80,000, which helps cover the down payment and closing costs.
  • Multi-Generational Home Renovation Tax Credit: You can receive a $7,500 reimbursement when building a secondary suite for a senior or adult with a disability.

Will any of these initiatives work to make housing more affordable for Canadian residents and those coming into the country? Like any plan, there will be obstacles to overcome. It will be interesting to see how the next few years play out. However, the fact that action is being taken may provide hope to potential buyers that the dream of home ownership may one day become a reality.

Do you have questions about buying or selling a home in the GTA? I am here to provide you with the accurate and unbiased advice you will need. If you’re ready to get started or just want more information, reach out today at damir@damirstrk.com or call 416.884.7925.