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 Contributions to the account would be deducted from income, as with an RRSP, and remain tax-sheltered until withdrawn tax-free as with a TFSA, up to a maximum of $40,000.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 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.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
