Is the housing affordability crisis pushing the dream of homeownership beyond the realm of possibility for some Canadians? And while industry insiders believe short-term solutions should be adopted to offer some relief, the head of the country’s housing agency cannot agree on a solution.  

We have come to a point where Canada can’t overcome its housing affordability crisis without adding more supply of homes, but this solution will take years. In addition, Canada is having record rates of immigrated coming into the country which puts more pressure on the hosuing market.  According to a recent study conducted by the Canada Mortgage and Housing Corporation (CMHC), Canada needs to add 3.5 million units by 2030 for affordability to be restored. 

Is this wishful thinking or can this actually come to realization?

Many First Time Home Buyers are looking for some sort of assistance. Whether it be some financial aid from family or the government.  Currently, interest rate levels are high especially when taking into consideration todays housing prices.  We also have persistance inflationary pressure driving up the cost of living.

The director of public affairs, Jasmine Toor, for Mortgage Professionals Canada (MPC) argues that extending amortization periods to 30 years from 25 years for borrowers who get an insured mortgage (those making a down payment of less than 20%) would help more Canadians enter the housing market. She also argues that the current home price cap of $1 million should be bumped up to $1.25 million for insured mortgages.  She believes “these policies would help to eliminate some of the barriers to entry that are causing younger Canadians to give up on the dream of homeownership.”  

I'm going to pause here and ask...Does a First Time Home Buyer need a $1.25 million home?  Could a first time home buyer not purcahse something smaller and at a later date sell this home to purchase something larger when they can afford it?  I have no opnion on this.  It's just a question?

On the flip side CMHC president and CEO Romy Bowers disagrees, recently telling the Canadian Press that extending amortization periods “just makes credit more available.” She argues that while the policy change would lower monthly payments for borrowers, it ultimately increases the cost to homeowners long term, which she fears could exacerbate affordability challenges. “What I worry about is sometimes that seems like a quick fix,” she said. “If you just have 30-year amortizations, everyone’s mortgage payments will go down by $200 and they can actually afford the house, but if you’re in a supply-constrained market and that’s your solution, it’s not going to solve the problem in the long term.”

Instead, Bowers wants the industry to focus on increasing the supply of homes across a wider spectrum of price points, with a better balance between the high and low ends of the market.

I will interject again with my thoughts on this.  Who is increasing the supply of homes?  Where is this magic solution coming from? The government?  Developers?  A combination of both?

Toor agrees that supply will help balance the market in the long run, she says that Canadians need more solutions to ease short-term affordability challenges.

Beyond extending amortization periods and keeping house price limits for insured mortgages in line with prices in Canada’s major cities, she says the federal government could also eliminate the stress test on mortgage transfers, switches and renewals. Toor also encourages the Canadian government to convene a permanent national housing roundtable with stakeholders from across the country to share best practices across jurisdictions.

“Very little has been done to address the housing affordability challenges that Canadians are facing now,” she said. “We believe the federal government, including CMHC, can show more leadership in this area.”