The First Home Savings Account would allow Canadians under 40 to set aside up to $40,000 toward the purchase of a first home, with no tax on contributions or withdrawals. Contributions to the account would be deducted from income, as with an RRSP, and remain tax-sheltered until withdrawn tax-free as with a TFSA, up to a maximum of $40,000. If funds held in the account weren’t used for a home purchase by the age of 40, they would convert to normal RRSP savings, the Liberals proposed.
In their campaign documents, the Liberals indicated that the $40,000 threshold was chosen because it “represents roughly 5% of the average home price in Canada.” The Liberals would put in place integrity measures to deter avoidance and ensure the program “supports genuine savings towards a first home and the people who need it.”
The Liberals would also “help Canadians save on closing costs” by doubling the First-Time Home Buyers’ Tax Credit, from $5,000 to $10,000, representing a savings of $1,500 and make the First-Time Home Buyer Incentive more flexible by giving Canadians the option of choosing a deferred mortgage loan as an alternative to the current shared equity model.
The Liberals also promised to reduce monthly mortgage costs by lowering the price charged by the Canadian Mortgage and Housing Corporation on mortgage insurance by 25% and committing $1 billion in loans and grants to develop and scale up rent-to-own projects “creating a pathway to homeownership for renters in five years or less.”
Under addressing housing supply, the Liberals promised a “multigenerational home renovation” tax credit to support families looking to add a secondary unit to their homes. They also promised to make $4 billion available to Canada’s largest cities to accelerate their housing plans toward creating 100,000 new “middle-class homes by 2024–25” and $2.7 billion over four years to the National Housing Co-Investment Fund to build and repair more affordable housing, and $600 million toward converting office space to housing.
Under protecting homeowner rights, the Liberals promised to ban new foreign ownership of Canadian houses for the next two years and to expand on an already promised tax on vacant housing owned by non-resident non-Canadians. They also promised to introduce an “anti-flipping tax” on the speculation of residential homes, requiring property to be held for at least 12 months.
The real estate industry was critical of the Liberal plan, saying it doesn’t do enough to address the lack of supply.
“They’re treating the symptom of the problem and not the real problem, which is the supply,” said Ben Young, the senior vice-president of development at Southwest Properties in Halifax.
With the number of available homes failing to keep up with demand in recent years, he would like to see federal and provincial government lands opened up for development, which could boost housing inventory.
He also thinks parties should be less focused on housing tax incentives, even though he admitted they garner broad appeal, because he said they don’t often help supply.
“It’s like saying, ‘come on in my store, it’s 100% off, but I don’t have any inventory,” he said.
Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd., thinks the Liberal’s incentive for people under 40 is “nice to have,” but “doesn’t really move the needle.”
She believes the country’s housing sector would be better off if it had a 30-year amortization rate, more attention paid to Indigenous needs and more allowances for laneway housing and basement apartments.
She also wants politicians to stop fixating on foreign buyers, who some have blamed for driving up home prices in recent years.
“We need to stop making foreign buyers the Bogeyman and saying that everything is their fault,” said Morrison, noting studies show they account for less than 5% of homes owned in the Greater Toronto Area.
“We have had very few foreigners buying into the market because of Covid-19, and real estate prices have still climbed.”
The average price of a home sold reached $662,000 in July, up 15.6% from the same month last year, the Canadian Real Estate Association said earlier this month.
The average price of a Toronto home was just over $1 million in July, up 12.6% compared to a year ago, the city’s local board said.
As those prices climbed, bidding wars intensified, brokers complained of a lack of supply and prospective buyers felt pressure to stretch their budget and drop more cash on already expensive homes.
The Liberals want to take some of the pressure out of that process by banning blind bidding, but Morrison said open auction systems, where all parties know each others offices, have done little to cool the Australian market.
The Ontario Real Estate Association made the same observation.
“Auction fever creates a three-ring circus on front lawns, as hopeful buyers crowd in front of a home with a live auctioneer, or online, and the bidding begins,” said OREA President David Oikle in a statement.
“Far from making homes more affordable, auctions can drive prices higher, and dangerously push buyers to make rushed decisions involving tens of thousands of dollars in just minutes.”
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
