Comparing Election Promises to Increase Housing Supply

All parties are pledging to drastically increase housing supply, with the Liberal Party leading the race by pledging 1.4 million new homes; the Conservative Party pledging 1 million new homes; and the New Democrat Party (NDP) promising 500,000 new homes. While these lofty ambitions show that housing is top-of-mind for all three parties, it’s important to have a closer look at the proposed policies that will enable (or not) an increase in housing supply. This article highlights a few marquee policies proposed by the three largest parties. (Note: The Green Party has not released its platform at the time of writing).

 

Liberal Party

“Introduce a new Multigenerational Home Renovation tax credit for families wishing to add a secondary unit to their home for…extended family members to live with them.”

BCREA endorses gentle densification in pre-existing communities, especially those around transit corridors. This measure will assist with incentivizing gentle densification, but there continues to be more that can be done, especially as many local governments have zoning restrictions on this type of housing.

“Establish an anti-flipping tax on residential properties, requiring properties to be held for at least 12 months.”

Canada already has a capital gains tax for non-principal residences in Canada, which seems to make this proposed tax unnecessary.

“Introduce a Home Buyers Bill of Rights.”

We are supportive of the idea of a Home Buyers Bill of Rights and the objective of increasing consumer protection. If well-implemented, ensuring total transparency on the history of recent house sale prices, moving forward with a publicly accessible beneficial ownership registry and establishing a legal right to a home inspection can further protect consumers. We are, however, concerned with the proposed ban to blind bidding. There is no evidence that this would curb a hot market or address issues of housing affordability. The true remedy to rising housing prices during a hot market would be to increase supply across the housing spectrum.

Conservative Party

“Leverage federal infrastructure investments to increase housing supply.”

This policy would implement BCREA’s recommendation, although there are questions that remain. It’s unclear how this would be implemented and how the federal government would hold local governments to account. However, we are hopeful that whomever forms the next government would adopt this policy.

“Remove the requirement to conduct a stress test when a homeowner renews a mortgage with another lender instead of only when staying with their current lender, as is the case today.”

We support this policy as it would allow for more homeowner flexibility. We would additionally ask for reinstating 30-year amortizations and that the stress test be modified to reflect the reduced risk for longer term mortgages.

“Encourage Canadians to invest in rental housing by extending the ability to defer capital gains tax when selling a rental property and reinvesting in rental housing.”

We are supportive of this recommendation as a means to encourage more development of rental housing.

NDP

“Set-up dedicated fast-start funds to streamline the application process for co-ops, social and non-profit housing.”

Red tape and wait times are a huge roadblock in preventing more housing supply from taking place in a reasonable amount of time and these delays increase development costs, which are passed on to buyers. We are encouraged by this proposal and recommend that it be extended to all types of housing.

“Provide resources to facilitate co-housing and ease of access to financing by offering CMHC-backed co-ownership mortgages.”

This policy is positive, and while there’s anecdotal evidence that more people are considering co-ownership, co-ownership makes up only a small portion of mortgages and is unlikely to have a widespread impact.

“Double the Home Buyer’s Tax Credit to $1,500.”

We support this measure as it would increase consumer flexibility and buying power.

We encourage you to learn about each of your parties and your local candidates. Read each parties’ full housing platform here.

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Wildfires in British Columbia

 
 
As of August 26 there were nearly 243 wildfires in BC, impacting over 3,700 properties with evacuation orders. According to a recent report by the Intergovernmental Panel on Climate Change (IPCC), these sorts of extreme weather events are likely to become more severe in the future. If current greenhouse gas emission levels remain the same, global temperatures are likely to increase by 1.5 degrees Celsius by 2040. Even if countries meet their Paris Agreement targets, temperatures are still expected to increase.

Even as the current wildfire season winds down in coming weeks, issues with insurance remain for potential homebuyers. Mortgage companies may not fund mortgages for homes that have not secured insurance. REALTORS® help their clients by reminding them of the importance of home insurance year-round and when buying or selling a home. Realtors remind buyers of the importance of including an insurance clause in their offer of purchase. Securing home insurance early in the sales process can help mitigate these sales completion risks, as buyers may find it more difficult to secure insurance during a wildfire season, causing delays to the sale. Realtors help sellers by advising them to wait to cancel their home insurance until after a deal is closed so that they can remain protected in case the deal is delayed or collapsed.

Wildfires are a reminder for homeowners to better understand risks and improve adaptation and mitigation measures for themselves and their communities. Homeowners can become more resilient to wildfires by incorporating the BC Government’s FireSmart disciplines to reduce the risk to life and property.

BCREA is advocating for continued improvements to buildings’ energy improvements through more long-term, widespread programs to help property owners voluntarily retrofit existing buildings to reduce greenhouse gas emissions. However, while reducing greenhouse gas emissions remains a top priority to avoid the most extreme forecasts from becoming a reality, British Columbians need to also work towards improving mitigation of the extreme weather events that are all but certain to be coming.

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Election Housing Promises Destined to Fail Without Detailed Plans to Increase Supply

 

Vancouver, BC – September 1, 2021. The British Columbia Real Estate Association (BCREA) is encouraged by the focus on housing affordability as a key priority in each of the major party’s platforms in the lead-up to September’s federal election. However, while parties pledge to build more homes and make purchasing easier, without detailed plans to quickly turn those promises into action that will increase supply, campaign promises will lead to municipal bottlenecks, failed policy and disappointed homebuyers. 

“We are pleased to see the discussions around housing affordability take center stage during the election campaign,” says BCREA Chief Executive Officer Darlene Hyde. “However, what we’ve seen promised so far falls short of what is needed to make a significant, long-lasting impact. It is important for our new government to make creating a comprehensive housing strategy focused on increasing supply an immediate top priority.” 

Many of the measures proposed so far focus on increasing consumer flexibility and purchasing power and while the Liberals and Conservatives have lofty goals to build more market homes, neither of the parties addresses how they will do so in the face of significant barriers.  To adequately increase supply, establishing a federal housing strategy – one that incentivizes municipalities to speed up development approvals that are getting bogged down by public hearings which cater to airing the grievances of a vocal minority – is key to scaling up the number of units being built in the relative short term. 

While BCREA supports assistance for home buyers and the creation of non-market housing, without detailed plans on increasing supply across the housing spectrum these measures will likely be met with disappointment as prospective buyers will experience a market that can’t meet their demand, causing continued upward pressure on prices. 

“We know through our assessment of the current and historical market conditions that there just aren’t enough listings to satisfy demand,” says BCREA Chief Economist Brendon Ogmundson. “To truly improve housing affordability and help British Columbians and Canadians get in homes, increasing supply is where the focus needs to be. Working with municipalities is essential in achieving this.” 

It’s clear that tackling housing affordability is a primary campaign focus for each of the major parties this election, but without a comprehensive and collaborative strategy to increase supply, can their commitments extend beyond the campaign and into government? Developing the details of these plans needs to be an immediate focus for our new government otherwise their promises to help more Canadians achieve their homeownership dreams will fall flat. 

For the PDF news release, click here.

Federal Election: Housing Affordability and Climate Change Top of Mind in BC

This means that as campaigning (officially) begins, candidates will be listening to the issues that British Columbians are keen to talk about. A recent Angus Reid survey found that housing affordability, along with climate change, are the two issues British Columbians care about the most.

The Canadian Real Estate Association (CREA) and the BC Real Estate Association (BCREA) are taking advantage of election season to highlight the policy solutions that Canadians and British Columbians are looking for. CREA has developed an election website, www.REALideas.ca, which focuses on these election issues:

  • Home supply and infrastructure. Two thirds of Canadians who don’t own a home want to some day. Unfortunately, two thirds of Canadians also believe it has become harder to buy a home in the past year. Creating bilateral agreements between Infrastructure Canada and the BC Government, along with other provinces, would work towards addressing the shortage of housing supply while improving quality of life. Within a BC context, BCREA is also calling on the next federal government to tie transit infrastructure investments to increased density around transit nodes.
  • National housing roundtable. Establishing a national housing roundtable with all levels of government, along with builders, REALTORS® and civil society organizations would help ensure every Canadian has a place to call home.
  • Affordability and debt reduction. Increasing the Registered Retirement Savings Plan (RRSP) withdrawal limit from $35,000 to $50,000 and reintroducing the 30-year amortization for insured mortgages for first-time homebuyers would provide more young Canadians the opportunity to enter the housing market while saving and investing for their futures.
  • Climate change resiliency. Providing more incentives for voluntary energy retrofits to the existing building stock can help reduce greenhouse gas emissions. In addition, providing more leadership in mitigating climate change risks and preparing for disaster recovery from wildfires and floods could assist with BC’s current and future natural disasters.

Once all the party platforms are released, we will write a post comparing the different promises affecting the real estate sector in BC. To keep updated with BCREA’s and CREA’s election publications, visit the Lobbying and Legislation page on REALTOR Link®.

 

BCREA 2021 Third Quarter Housing Forecast Update: Provincial Housing Market Activity Normalizing into 2022

BCREA 2021 Third Quarter Housing Forecast Update: Provincial Housing Market Activity Normalizing into 2022

To view the BCREA Housing Forecast PDF, click here.

Vancouver, BC – August 17, 2021. The British Columbia Real Estate Association (BCREA) released its 2021 Third Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to rise 26 per cent to 118,350 units this year, after recording 94,007 sales in 2020. In 2022, MLS® residential sales are forecast to pull back 15 per cent to 100,150 units.

“The pace of home sales in the province has slowed in recent months but an unprecedented start to the year still has BC on track for a record-breaking year,” said Brendon Ogmundson, BCREA Chief Economist.

With strong demand being supported by low mortgage rates and a rapidly rebounding post-COVID economy, the more significant concern is whether there will be an adequate supply of listings in the market. The supply situation is especially severe in markets outside the Lower Mainland, where new listings activity has been lackluster. As a result, the average price in 2021 is on track to post a second consecutive year of double-digit gains. We are forecasting the provincial average price to rise 16.6 per cent to $911,300 this year, followed by a 2.9 per cent gain next year to $937,300.

Five Insurance Tips for Wildfire Season

 

Sadly, it seems that in addition to spring, summer, fall and winter, BC now has a fifth season: wildfire season. What’s worse is that this year the wildfire season has gotten off to an early start, making it more important than ever for REALTORS® to help clients manage wildfire risks. While there are some things homeowners can do to make their properties more wildfire-resilient (check out the province’s FireSmartTM website), it largely comes down to homeowner insurance. Here are five insurance tips for buying and selling during wildfire season.

1. Know the 50km radius rule.

During wildfire season, most insurance providers won’t bind insurance policies on properties within a certain radius – typically 50km – of an active and uncontained wildfire. However, there are a few that will consider insuring a home with a wildfire more than 25km away but less than 50k on a case-by-case basis. For example, if there is a fire that is considered to be under control within a 50km radius (shown as green on the BC Wildfire Dashboard), an insurer may be willing to bind a policy.

2. Consider wildfire risks when drafting a contract.

Buyers can help mitigate some of the risks of buying a home in wildfire season by including a “subject to insurance” clause in their offer. If the buyer can’t secure insurance by the completion date, the mortgage company may not fund the mortgage, which could lead to the buyer not being able to complete, based on the terms of the contract. Click here for a sample clause from the Real Estate Council of BC. As always, advise clients to seek legal advice regarding the addition of clauses to the Contract of Purchase and Sale.

Another way to help mitigate wildfire risks from the get-go is by asking for a long completion. For example, a buyer could ask for a fall completion or at another time when wildfire activity has decreased.

3. Get a “binder” from an insurance provider, not just a quote.

There’s a big difference between getting a quote from an insurance provider and an insurer “binding” a policy. A quote just summarizes the coverages being offered and the annual premium (price). When an insurance provider binds an insurance policy, it means they’ve issued the policy and coverage will come into effect on the agreed-upon date. Buyers should request that the insurer binds the policy to align with the closing date so that coverage is active when the sale has been completed. However, if the closing date changes, a bound offer won’t become valid until the buyer becomes the owner and the buyer should notify the insurer to change the effective date.

Once a policy has been bound, the insurer is generally bound to honour the policy (assuming there is no misrepresentation on the buyer’s part), even if a fire were to ignite that is a potential threat to the home or a pre-existing wildfire were to spread.

4. Buyers: secure insurance as early as possible!

Since buyers are likely to find it more difficult to secure insurance during wildfire season, it’s important that they begin shopping around as early as possible. Delays in securing insurance can hold up the sale process and even cause a deal to collapse if a buyer’s financing depends on securing insurance. And, as per tip 3, don’t forget the importance of getting a binding offer and not just a quote for a policy!

5. Get legal advice.

In situations where buyers and sellers are in a legally binding contract and are facing the potential of a sale not completing or requiring extensions, they should be advised to seek legal advice as soon as possible. Remember, changing dates on a contract effectively reopens the contract. Obtaining legal advice will help ensure buyers and sellers are aware of their rights and obligations.

For more information on helping clients manage wildfire risks, go to:

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Housing Market Update – July 2021

 

Watch BCREA Chief Economist Brendon Ogmundson discuss the June 2021 statistics.

 

Click here to visit our YouTube channel. Read the news release here.

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

BCREA 2021 Second Quarter Housing Forecast: Provincial Housing Market on a Record-Setting Pace

 

To view the BCREA Housing Forecast PDF, click here.

Vancouver, BC – May 5, 2021. The British Columbia Real Estate Association (BCREA) released its 2021 Second Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to rise 33.6 per cent to 125,600 units this year, after recording 94,013 sales in 2020. In 2022, MLS® residential sales are forecast to pull back 20.3 per cent to 100,150 units.

“Home sales across the province are on pace to shatter previous records,” said Brendon Ogmundson, BCREA Chief Economist. “However, there are early signs that markets are calming from the frenetic pace of recent months and could balance out over the second half of this year.”

Many markets, especially those outside of major metro areas, remain very low on supply. As a result, market conditions are extraordinarily tight and prices are rising rapidly. We are forecasting a 14.3 per cent rise in the MLS® average price this year, followed by a further 3.1 per cent in 2022.

For the complete news release, including detailed statistics, click here.

2021 Changes to Your Anti-Money Laundering Obligations

 
     
On June 1, 2021, big changes are coming to real estate practice and your anti-money laundering obligations. The Financial Transactions & Reports Analysis Centre of Canada (FINTRAC) has introduced regulatory amendments that will come into effect on June 1 and create new or change existing obligations for all reporting entities (REs), including real estate brokerages. BCREA will support brokerages and REALTORS® through these changes and ensure you have the tools and resources you need to continue meeting your FINTRAC obligations.

Additionally, the Land Owner Transparency Registry (LOTR) becomes publicly searchable on April 30, 2021, and guidance from the Real Estate Council of BC (RECBC) on how to use LOTR in real estate practice is coming soon. BCREA will support brokerages and Realtors in adapting their practice in accordance to the RECBC guidance once it’s available. In the meantime, Realtors can prepare by familiarizing themselves with LOTR and the new public search tool. Watch this page for more updates on the RECBC guidance and using LOTR when working with buyers and sellers.

BCREA has created this landing page so that Realtors and brokers have access to the resources and information they need to implement the June 1 FINTRAC changes and use LOTR in their real estate practice.   

FINTRAC Changes: What to Expect

The June 1 FINTRAC amendments that will create new or change existing obligations for all REs, including real estate brokerages, include:

While BCREA has been working tirelessly to determine how these changes will impact real estate practice, the real estate sector is still awaiting additional sector-specific guidance from FINTRAC. BCREA will add this guidance, as well as resources from the Canadian Real Estate Association, to this landing page as soon as they are available and develop additional guidance as needed.

BCREA will also host a Community of Practice session for managing brokers on the coming FINTRAC changes on May 19 (register here) and a webinar for all Realtors on June 2. We will create videos, podcast episodes and blog posts; update and offer our Mastering Compliance anti-money laundering training program again this fall; and host our first-ever anti-money laundering symposium later this year. Watch this page for updates on these events and resources!

LOTR Search

As we work with RECBC to understand how the LOTR public search tool can be used in real estate practice, we will prepare Realtors to use the tool by sharing information and resources from the Land Survey Titles Authority (LTSA), who is responsible for developing and operating LOTR. We will also host a Community of Practice session on April 21 on using the LOTR public search function (register here).

If you’re not familiar with LOTR or the Land Owner Transparency Act (LOTA), we have also created a number of resources on LOTR, found in the resources section below.

Resources

FINTRAC Changes

LOTR Search

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BCREA Supports Housing Funding for Middle-Income Families, Encourages Additional Supply-Side Action

Vancouver, BC – April 19, 2021. The British Columbia Real Estate Association (BCREA) welcomes the province’s recent announcement that $2 billion in development financing will be committed to the HousingHub program to help create affordable housing choices for middle-income families.

“With home prices having risen over the last decade and that trend continuing, we know securing housing – whether through ownership or rental – is not easy,” says BCREA CEO Darlene Hyde. “This type of action, which focuses on adding supply to meet overwhelming housing demand, is a meaningful step in the right direction.  But of course, there’s more work to be done.”

Housing prices in BC have risen 52 percent since 2012, and these costs are often passed on to home buyers and tenants. While there are many factors – like interest rates – which affect housing prices, one of the biggest factors is the limited housing supply relative to the demand.

BCREA encourages the province to continue to focus on supply-side measures in order to create more housing options for the people of BC. These measures might include, but are not limited to, reducing public hearing times in the development approvals process, as well as leveraging transportation funding to encourage gentle densification.

“There isn’t a silver bullet when it comes to housing affordability,” adds Hyde. “But there is a clear way forward and that is evidence-based policy focused on creating more housing options for British Columbians. We are pleased to see the government’s action with the HousingHub commitment and we look forward to working with the government on future action.”