Potential Uptake of the First-Time Home Buyer Incentive

Summary Findings:

  • Evaluating the First-Time Home Buyer Incentive (FTHBI) based on its principle eligibility criteria, the highest potential uptake of the FTHBI would be in more affordable regions located outside of the Lower Mainland. In contrast, the lowest uptake would be in the Lower Mainland and Victoria, accounting for 44 per cent of sales. This suggests that the FTHBI is expected to have limited impact on provincial home sales.
  • Differences in the potential uptake of the FTHBI across the select regions is largely explained by the allowable maximum house price. As such, the price threshold is the most limiting in regions with higher house prices, which tend to be concentrated in the Lower Mainland and Victoria.
  • The maximum income threshold is less important to potential uptake because the share of first-time homebuyers meeting this threshold is relatively comparable across the select regions.

What is the First-Time Home Buyer Incentive?
On September 2, 2019 the Canada Mortgage and Housing Corporation launched the First-Time Home Buyer Incentive (“FTHBI”), with the aim of helping first-time homebuyers reduce their monthly mortgage payments without increasing their down payments. We describe the FTHBI in detail here.

To be eligible, a first-time homebuyer must have: 1) a minimum down payment of 5 per cent from traditional sources such as savings and RRSPs; 2) a maximum qualifying annual income of no more than $120,000; and 3) a loan amount of no more than 4 times a borrower’s qualifying annual income.

Using these criteria, we examine the potential uptake of the FTHBI in select regions in B.C., broadly representing the province’s 11 real estate boards.

What share of households would be eligible under the $120,000 maximum income threshold?
To be eligible for the FTHBI, first-time homebuyers may have a maximum qualifying annual income of no more than $120,0001. Using a Census 2016 custom tabulation from Statistics Canada on household annual income by age and tenure, we specify first-time homebuyers as renter households between the ages of 25 and 39; this represents the prime home buying age cohort. The data show that more than 65 per cent of first-time homebuyers in each select region would be eligible under the FTHBI’s maximum income threshold, with the lowest share in North Vancouver (66 per cent) and the highest in Penticton (86 per cent). Overall, the share of first-time homebuyers that meet the income criteria is relatively comparable across most regions.

What share of available homes would fall within the FTHBI eligibility criteria?
Using the FTHBI eligibility criteria, we calculate the maximum house price to be $505,2632, assuming a minimum down payment of 5 per cent3 and a maximum qualifying annual income of $120,000.

Using provincial assessment data on 2018 home sales, we find that the lowest shares of homes that would qualify are in North Vancouver (13 per cent) and the City of Vancouver (20 per cent). These regions combined made up 13 per cent of provincial sales in 2018. In contrast, the highest shares of homes that would qualify are in Dawson Creek (97 per cent) and Prince George (91 per cent), making up a combined share of 2 per cent of provincial sales.

The share differences in these select regions are reflective of house prices. For example, the average house price in North Vancouver ($1,092,969) is more than four times higher than in Dawson Creek ($250,348).

What does this mean in terms of the potential uptake of the FTHBI?
The highest potential uptake of the FTHBI would be in more affordable regions located outside of the Lower Mainland, which comprised 20 per cent of provincial sales in 2018. In contrast, the regions with the lowest potential uptake would be in the Lower Mainland4 and Victoria, which comprised 44 per cent of provincial sales5. This suggests that the FTHBI is expected to have limited impact on provincial home sales.

The potential uptake of the FTHBI is not particularly reliant on the income criteria because the share of first-time homebuyers exceeding the maximum income threshold are relatively comparable across the regions.

Unsurprisingly, the differences in the potential uptake of the FTHBI across the select regions is largely explained by the allowable maximum house price. As such, the price threshold is the most limiting in regions with higher house prices, which tends to be concentrated in the Lower Mainland and Victoria.

Appendix: Proposed Changes to the First Time Homebuyer Incentive
The Liberal Party announced on September 12 that if re-elected, it would expand the FTHBI in Toronto, Vancouver and Victoria. The expansion would increase the maximum qualifying annual income from $120,000 to $150,000 and increase the leverage factor from 4 times the maximum qualifying annual income to 5 times.

With a minimum down payment of 5 per cent and a maximum qualifying annual income of $150,000, these changes would increase the maximum house price from $505,263 to $789,4746. The impact would be most noticeable in the share of homes that would be eligible under the FTHBI. In the Lower Mainland, the share of eligible homes would increase from an average of 28 per cent to 62 per cent, and from 49 per cent to 78 per cent in Victoria.


Notes and References:

1. This is subject to qualifying income requirements set out by the mortgage lender and mortgage loan insurer. Examples of qualifying annual income include a salary before taxes and investment income.

2. Calculated as 4 times the maximum qualifying annual income of $120,000 divided by the fraction of the borrower’s minimum down payment of 5 per cent (i.e., 1-0.05).

3. A potential first-time homebuyer could put down up to a maximum of 14.99 per cent, which would then put the maximum house price at $565,000. A maximum of 14.99 per cent plus 5 per cent equity from the Government of Canada would place the borrower just under the 20 per cent threshold to qualify for an insured mortgage.

4. Lower Mainland includes Burnaby, Coquitlam, Langley, New Westminster, North Vancouver, Richmond, Surrey and Vancouver City.

5. The shares quoted here do not add up to 100 per cent because we only include select regions in B.C. 6. Changing the income threshold has no impact on the share of eligible first-time homebuyers, except for a minimal impact in Vancouver (increase of 1 per cent).

For more information, please contact:
Brendon Ogmundson
Deputy Chief Economist
Direct: 604.742.2796
Mobile: 604.505.6793
bogmundson@bcrea.bc.ca

Kellie Fong
Economist
Direct: 778.357.0831
Mobile: 604-366-6511
kfong@bcrea.bc.ca

REALTORS® and Radon: Protecting Buyers and Sellers

Radon, a naturally occurring odourless and colourless radioactive gas, may be out of sight but it certainly shouldn’t be out of mind when it comes to real estate transactions. In fact, radon is present at different concentrations (depending on the makeup of bedrock or sediment) throughout Canada. If radon levels are too high in a home, the health risks are so significant that it becomes a material latent defect. But understanding radon risks is more than just a professional responsibility under the Real Estate Council of British Columbia’s Professional Standards Manual. It’s an opportunity to give clients peace of mind as they make the biggest financial decision of their lives.

How radon enters a home
Radon typically seeps through the ground and into buildings through cracks in the foundation and/or floor slabs. According to the Canadian Real Estate Association’s Homeowners Guide to Radon, radon can also enter through other openings, like unfinished dirt floors, window casements or gaps around service pipes. Factors like bedrock and soil types, soil moisture level, and seasonal temperature fluctuations also influence indoor radon levels.

Radon and lung cancer
High levels of radon in a home is the second leading cause of lung cancer in Canadians. A report from the Canadian Association of Radon Scientists and Technologists (CARST) explains why:

When inhaled, radon gas particles remain in lung tissue and begin to decay. As the radon particles decay, they release bursts of radiation that can damage the lung tissue cells. Over time, the cell damage can lead to the development of lung cancer.

What is considered a “high level” of radon? While Health Canada advises Canadians to pursue a radon level “as low as reasonably achievable,” 200 becquerels per cubic metre is considered the maximum allowable. There is no lowest threshold, as risk of lung cancer increases with radon concentration. For that reason, the World Health Organization suggests homeowners take action if concentrations are over 100 becquerels.

Testing and mitigation
The good news about radon is that testing and mitigation are relatively affordable and easy. Anyone can test their home for radon. All it takes is a radon testing device that can be found at stores like Home Hardware, Walmart or Home Depot or ordered online from the BC Lung Association’s RadonAware homepage.

While radon mitigation is also relatively straightforward, it’s best to hire a radon mitigation specialist certified by the Canadian – National Radon Proficiency Program (C-NRPP) to take on the job, which can cost between $500 – $3000 depending on the size and style of the home. Fixes can involve improving ventilation, sealing cracks in foundation walls and floors, or installing a depressurization system to draw radon away from the basement.

Your responsibilities as a REALTOR®
Above all, don’t forget that if a property has been tested for radon and shown to have levels above 200 becquerels per cubic metre, this is a material latent defect. If you’re representing a client selling such a property, you must disclose this information in the Property Disclosure Statement. But there’s more to upholding professional standards than just disclosure when it comes to radon. Here’s how you can help:

  • First, educate yourself about radon. There are many good sources such as Health Canada and Take Action on Radon. The Real Estate Council of Alberta has also prepared a checklist for realtors working for sellers and another one for buyers.
  • Educating yourself about radon also means understanding the radon levels in the region where you do business. Health CanadaRadonAware, and the British Columbia Centre for Disease Control all offer great resources.
  • Participate in BC Lung Association’s Radon in Real Estate project. Take an online survey to test your knowledge of radon, learn about upcoming workshops and webinars for real estate professionals, and even watch one-on-one interviews with researchers.
  • Ask sellers if they have had radon testing done. If they have, ask for a copy of the test results. If test results fall below 100 becquerels per cubic metre, this is an added selling feature.
  • If it is 200 becquerels or higher and remediation hasn’t been done, be sure your client understands your duty to disclose this as a material latent defect.
  • If your seller has already done remediation using a C-NRPP certified professional, ask for confirmation that the work has been done and that the radon levels are now in safe zones. Completed remediation is another selling point to highlight.
  • In cases where remediation hasn’t been done, you can add value to your client by connecting them with a C-NRPP certified professional to get the work done.
  • When representing a buyer, consider including a radon holdback (retention) clause in the contract. This involves the buyer and seller agreeing to set aside a sum of money from the purchase price that is likely to be enough to cover the cost of a typical radon remediation system. The money is held by a third party (for example, a solicitor) until the test result is known and any reduction measures have been done. If the test shows low radon levels and that no further action is necessary, the bond money is released to the seller. If the test shows that high radon levels are present and that remediation is necessary, the work is paid for from the bond money; any excess is released to the seller.
  • If your buyer is planning on doing major renovations after buying, make sure they understand that this could impact radon levels in the home, even if it has been remediated in the past.

Posted by: April van Ert

JUST ANNOUNCED: Penticton to Welcome KIDZ BOP, the #1 Music Brand for Kids, in March 2020!

KIDZ BOP World Tour

Saturday, March 7, 2020
South Okanagan Events Centre – Penticton, BC
Doors: 6:00PM | Show: 7:00PM

Tickets: Start at $35.00 (additional fees apply)

GET TICKETS

KIDZ BOP, the #1 music brand for kids, in partnership with Live Nation, announced today The KIDZ BOP Kids first-ever headlining Canadian tour with a stop in Penticton on Saturday, March 7.

The KIDZ BOP Kids, Billboard Magazine’s “#1 Kids’ Artist” for nine consecutive years, are bringing their interactive family-friendly concert experience to new cities and will perform some of today’s biggest global pop hits live on stage. The concert features awesome set design, costumes, exciting choreography, and tons of cool surprises! Dads even have the chance to show off their best dance moves on stage during the “Daddy Dance Off.”

Tickets start at $35.00* and go on sale Friday, September 27 at 10:00AM. Tied to the fall leg of the KIDZ BOP World Tour 2019, KIDZ BOP will release their new album, KIDZ BOP 40, on November 15.

KIDZ BOP World Tour 2020 Canada Dates

21-February – London, ON – Centennial Hall
22-February – Kitchener, ON – Centre In The Sqaure
23-February – Hamilton, ON – FirstOntario Concert Hall
28-February – Winnipeg, MB – Burton Cummings Theatre
29-February – Regina – Conexus Arts Centre
1-March – Saskatoon, SK – TCU Place
6-March – Calgary, AB – Southern Alberta Jubilee Auditorium
7-March – Penticton, BC – South Okanagan Events Centre
8-March – Vancouver, BC – Doug Mitchell Thunderbird Sports Centre

About KIDZ BOP
KIDZ BOP connects with kids and families through its best-selling albums, music videos, consumer products and live tours. In the US, KIDZ BOP is the No. 1 music brand for kids, featuring today’s biggest hits “sung by kids for kids.” KIDZ BOP has sold over 20 million albums and generated over 3 billion streams since the family-friendly music brand debuted in 2001. The best-selling series has had 24 Top 10 debuts on the Billboard 200 Chart; only three artists in history—The Beatles, The Rolling Stones, and Barbra Streisand—have had more Top 10 albums. For more information, visit www.kidzbop.com.

Tour Sponsors
Subway Fresh Fit for Kids® and KIDZ BOP Radio on SiriusXM’s Channel 77 are official partners of the KIDZ BOP World Tour 2019. Subway Fresh Fit for Kids® is a leader in offering on-the-go families balanced, customizable meals, and better-for-you kids’ meals. SiriusXM’s KIDZ BOP Radio (Ch. 77) features The KIDZ BOP Kids hosting a 24/7 party, which includes today’s biggest hits, sung by kids for kids.

1 – 101 Clearview Cres in Apex, Penticton is Sold!

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– The apartment at 1 – 101 Clearview Cres has been sold.

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107 – 3146 Paris Street in Penticton South, Penticton is Sold!

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– The townhouse at 107 – 3146 Paris Street has been sold.

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16 – 360 Strayhorse Road in Apex, Penticton is Sold!

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– The townhouse at 16 – 360 Strayhorse Road has been sold.

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Single Story For Sale in Duncan / Columbia, Penticton

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Home is a must see

•  1,724 sq. ft., 2 bath, 2 bdrm single story – $695,000 CAD. Brand new home
MLS® #163670

– This brand new 1,724 square foot home features 2 bedrooms, 2 bathrooms plus den and is located on the creek in the quaint and peaceful development called “Bridgewater” All homes located in Bridgewater offer hardwood flooring, quartz or granite kitchen & bathroom countertops, stainless steel appliances, all window coverings, central air, xeriscaping design, double attached garage and much more. Bridgewater offers an amazing park like setting alongside trees, walking paths and creek. Only a short distance from: shopping, boutiques, hospital, local restaurants, farmers market and Okanagan Lake Marina. G.S.T. is included in your purchase price. All measurements are approximate.

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Single Story For Sale in Duncan / Columbia, Penticton

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Quaint and peaceful development

•  1,264 sq. ft., 2 bath, 2 bdrm single story – $515,000 CAD. Brand new
MLS® #163673

– This brand new 1,264 square foot home features 2 bedrooms, 2 bathrooms plus den and is located on the creek in the quaint and peaceful development called “Bridgewater” All homes located in Bridgewater offer hardwood flooring, quartz or granite kitchen & bathroom countertops, stainless steel appliances, all window coverings, central air, xeriscaping design, double attached garage and much more. Bridgewater offers an amazing park like setting alongside trees, walking paths and creek. Only a short distance from: shopping, boutiques, hospital, local restaurants, farmers market and Okanagan Lake Marina. G.S.T. is included in your purchase price. All measurements are approximate.

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Single Story For Sale in Duncan / Columbia, Penticton

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Quaint and peaceful development

•  1,400 sq. ft., 2 bath, 2 bdrm single story – $635,000 CAD. Brand new
MLS® #163671

– This brand new 1,400 square foot home features 2 bedrooms, 2 bathrooms plus den and is located on the creek in the quaint and peaceful development called “Bridgewater” All homes located in Bridgewater offer hardwood flooring, quartz or granite kitchen & bathroom countertops, stainless steel appliances, all window coverings, central air, xeriscaping design, double attached garage and much more. Bridgewater offers an amazing park like setting alongside trees, walking paths and creek. Only a short distance from: shopping, boutiques, hospital, local restaurants, farmers market and Okanagan Lake Marina. G.S.T. is included in your purchase price. All measurements are approximate.

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102-270 Douglas Street in Penticton Main North, Penticton is Sold!

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– The 2 story at 102-270 Douglas Street has been sold.

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