Housing industry executives had great expectations as they anticipated what was in the Singh/Trudeau government’s budget, which was unveiled on Thursday..The general reaction was “meh.”.The budget focused on housing, with proposals including:.Providing $4 billion for a new Housing Accelerator Fund that includes an annual per-door incentive or up-front funding for investments in municipal housing planning to speed up housing development.Providing $1.5 billion to extend the Rapid Housing Initiative, expected to create 6,000 new affordable homes with at least 25% of funding going towards women-focused housing projects.Introducing a Multi-generational Home Renovation Tax Credit, providing up to $7,500 for constructing a secondary suite for a senior or an adult with a disability.Introducing the Tax-Free First Home Savings Account, allowing first-time homebuyers to save up to $40,000. Doubling the First-Time Home Buyers’ Tax Credit to $10,000.Doubling the qualifying expense limit of the Home Accessibility Tax Credit to $20,000 for the 2022 and subsequent tax year.Taking foreign buyers out of the market..A lot of proposals, but few details for execution, says Paul Betts, president of GAP Marketing and a 40-year veteran of the Calgary housing market..“It was anti-climactic,” says Betts, stressing adding to supply is critical. “I am glad to see a focus finally on supply, however the budget was long on theory and short on substance. The goal to significantly increase construction over 10 years is great but where’s the plan?”.“There are 4 significant requirements, in my opinion, for addressing the rising costs of housing; those would be zoning, land-use, supply and density.” .Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA) says, of the incentives identified in the budget, the government must concentrate on the ones that encourage adding to supply..“Home prices are high in Canada because there are not enough of them,” says Lee. ” Canada has far fewer housing units per person than other developed countries. In fact, recent estimates suggest Canada is about 1.8 million homes short of the G7 average.”.“It’s good old economics. When you don’t have enough of something, prices go up and that’s what we’re seeing.”.Throwing billions of dollars at the supply problem is not the answer..The most difficult challenge to be overcome is dealing with new development policies which differ, sometimes wildly, in cities and towns across the country..“If the government wants to deal with affordability and are serious about it, deal with developers/builders on things such as GST exemptions, vacant land use, reduced development cost charges, incentives around density, and more,” says Betts..“It is typical for governments to default to the policy side of issues and look for solutions there rather than the fundamentals of the business. I am afraid the policies they create are a result of flawed input data. Affordability starts with the land, not the houses.”.Complicated development policies, often based on ideology rather than what actually works, need to be removed..“The only long-term way to build more housing, to improve affordability, is to make it easier to build,” says Andrey Pavlov of Simon Fraser University, who specializes, among other things, in risk management for real estate. “There are certainly enough people interested in building housing right now. The bottleneck is not money for housing, it’s waiting for city approval and inspection and a confusing provincial building code.”.The heads of the Greater Toronto and Greater Vancouver Real Estate Boards weighed in on the budget..In Toronto, Kevin Crigger doesn’t think banning foreign buyers will add to affordability..“It’s really not an effective policy objective,” said Crigger. “Supply really is what will ultimately alleviate the concerns that are around affordability and availability.”.“Certainly, any incentive (such as) the Tax-free First Time Home Savings Account, that adds affordability is a positive first step. But I think that’s a program that could be refined to reflect regional differences and ultimately would be a much more equitable program for people across the country.”.In Vancouver, Daniel John cautioned the government when dealing with policy measures that inserted the government into the sale of private property..“That kind of intervention should be done seldomly, carefully and with the rights of all parties in mind,” John said..To paraphrase Ronald Reagan, one of the scariest things you can hear is “Hello, we’re the government and we’ve got a lot of money we’re going to spend.”.The money should be put into the hands of the CHBA. Let the association entertain proposals from builders to increase supply and fund those proposals..The last thing Canadians need is another government bureaucracy managing a project better suited to the private sector. .A new bureaucracy would eat up most of the money on salaries, ‘research’ and other traditional government spending waste..Myke Thomas is a Western Standard contributor.Mykethomas@live.com
