How the 2022 Federal Budget Impacts BC Real Estate

Budget 2022 was introduced on April 7 with a significant focus on the supply and affordability of housing in Canada. BCREA was encouraged to hear Canada’s Minister of Finance Chrystia Freeland accurately diagnose the root cause of the country’s housing affordability problem. “Canada does not have enough homes,” Freeland said. “We need more of them, fast.”

New spending towards housing totalled $10.1 billion, which – apart from climate change and Indigenous reconciliation – was the largest area of new spending in the budget and demonstrates that the government is beginning to seriously prioritize tackling Canada’s housing crisis.

Below is an overview of new commitments in the budget that may impact BC’s real estate sector.

Housing supply

Many commitments made to increase housing supply align with BCREA’s ongoing advocacy. The largest of these commitments was a new Housing Accelerator Fund, which will invest in municipal housing planning and delivery processes to speed up developments. Existing infrastructure programs will now tie infrastructure funding to actions by provincial and local governments to increase housing supply, which BCREA called for in our pre-budget submission. Additionally, more funds are being allocated to the National Co-Investment Fund, which will expand co-op housing.

There was also a commitment to launching a Multigenerational Home Renovation Tax Credit, which will allow families to claim 15 per cent (up to a $7,500 credit) in eligible renovation and construction costs incurred to construct a secondary suite for seniors or adults with disabilities.

Several proposals within the budget specifically target housing supply for Indigenous Canadians, including the initiation of an Urban, Rural and Northern Indigenous Housing Strategy.

Assistance for First-Time Homebuyers

The budget also increases much-needed incentives for first-time homebuyers, through a new Tax-Free First Home Savings Account. Beginning in 2023, it will give prospective first-time homebuyers the ability to contribute up to $40,000. Like a Registered Retirement Savings Plan (RRSP), contributions would be tax-deductible, while withdrawals to purchase a first home would be non-taxable, like a Tax-Free Savings Account (TFSA). In addition, the First Time Home Buyers’ Tax Credit will be doubled to $10,000, retroactive to homes purchased on or after January 1, 2022.

Home Buyers’ Bill of Rights

The budget also re-affirmed the government’s commitment to introduce a Home Buyer’s Bill of Rights. This would include a national plan to end “blind bidding” as well as possibly include a legal right to a home inspection and ensuring transparency on the history of sales prices on title searches. While we support the intent to protect homebuyers, independent research shows that banning “blind bidding” would likely lead to higher prices in a hot real estate market.

Reducing Foreign Demand

The budget committed to introducing legislation designed to reduce foreign demand in real estate. The legislation would prohibit non-Canadian citizens or permanent residents as well as non-Canadian commercial enterprises from acquiring non-recreational, residential property in Canada for two years. We are concerned this measure needlessly targets non-Canadians, creating barriers for attracting foreign investment, and will potentially result in reciprocal policies from other countries targeting Canadian “foreign” owners.

Other demand-side measures

In addition to targeting demand from non-Canadians, the government will also conduct a review of housing as an asset class to better understand the role of large corporate players in the market and the impact on renters and homeowners. They will also introduce legislation to introduce an “anti-flipping tax” beginning January 1, 2023.

Energy Retrofits

Another core aspect of the budget was new commitments to improve the energy efficiency of homes. These include strengthening affordability and energy efficiency requirements within the Rental Construction Financing Initiative, developing a Canada Green Buildings Strategy, creating the Deep Retrofit Accelerator Initiative and expanding tax deductions for business investments in clean energy equipment to include air-source heat pumps. These initiatives are designed to reduce Canada’s greenhouse gas emissions reductions targets of 40 per cent below 2005 levels by 2030.

While there are several proposals that raise concern in Budget 2022 and require further consultation, detail and scrutiny before implementation, overall, BCREA is encouraged that the federal government is taking initial steps to tackle the country’s affordability crisis.

What could happen to your property taxes if your assessment is lower, higher or similar to the average change for your property class?

An increase in your assessment does not necessarily mean an increase in your property taxes. Property tax changes are generally impacted by your assessment’s change relative to your community’s average assessment change.

This video explains what could happen to your property taxes if your assessment is lower, higher or similar to the average change for your property class.


Canada 2021 Housing Forecasts Call For A Boom … Or The Worst Crash in 40 Years

Amid an unpredictable pandemic, forecasts for the housing market are pretty much all over the map.

Amid the worst economic slowdown in decades, home sales and prices soared in many Canadian cities in 2020, along with housing markets in many other countries. The average house price in Canada has shot up by 13.8 per cent over the past year, and by 14.6 per cent in the U.S.

No wonder this year’s batch of year-end forecasts for Canada’s housing market are all over the map. From predictions of rapid price growth and housing shortages to warnings of a market crash, there’s a forecast out there for every taste. Which, admittedly, isn’t very helpful.

Broadly speaking, there are two camps: Those who see this year’s hot housing conditions continuing into next year, thanks to low mortgage rates and a lack of housing supply, and those who see trouble coming once mortgage deferrals and government income supports stop.

Not surprisingly, real-estate groups are aboard the boom train. The Canadian Real Estate Association, an umbrella group of local real estate boards, is forecasting a 9.1 per cent jump in house prices in 2021, with Ontario leading the way with a 16.3 per cent jump in prices, followed by Quebec at 13.6 per cent.

“Current trends and the outlook for housing market fundamentals suggest activity will remain relatively healthy through 2021, with prices either continuing to climb or remaining steady in all regions,” CREA said in a forecast published in mid-December.

Mortgage rates have fallen, including the rate on the Bank of Canada’s stress test for borrowers, CREA noted. On top of that, record levels of migration into Canada in recent years have pushed up demand for housing, and CREA expects that to continue once the pandemic ends.

‘Supply shocks’ could hit market

But right now, with border shutdowns in effect, immigration into Canada is at historic lows, and several provinces ― including Ontario and British Columbia ― saw their populations decline in 2020, the first time that has happened in records going back to 1946.

That’s one reason why some forecasts are calling for a decline in house prices in 2021.

In a forecast this month, investment research group Veritas said there are two possible “supply shocks” headed for Canada’s housing market, which could flood the new market with new listings and push prices down.

The first is from the tanking rental market, which has seen double-digit declines in the largest cities this year. Renters in lower-income jobs were the most affected by business shutdowns amid the COVID-19 pandemic, and the result has been rental markets in free fall in many major cities. In a survey of its investor clients, Veritas found signs a growing number of investors are planning to sell.

The other “supply shock” could come from the wrap-up of mortgage deferral programs. According to Canada Mortgage and Housing Corp., as many as 16 per cent of Canada’s mortgage borrowers got a six-month payment holiday in 2020, the result of a program set up by the major lenders to prevent a wave of defaults in the pandemic’s first wave.

Veritas looked at three scenarios in which 5 per cent, 10 per cent or 15 per cent of houses with a mortgage in deferral were put on the market after the deferrals ended. Excluding other factors, this would bring real estate prices down by 4 per cent to 11 per cent across Canada, including a 10 to 17 per cent decline in Vancouver and a 15 to 26 per cent decline in Toronto, Veritas predicted.

Downturn triggered by a ‘return to normal’?

In fact, some analysts fear that a “return to normal” could be the trigger for a housing correction. With emergency government and lender supports in place, the market has fared well. But what happens when the pandemic passes, and the support ends? Financial reality could make a sudden comeback.

Royal Bank of Canada’s chief risk officer told listeners on the bank’s quarterly earnings call this fall that its baseline scenario is for an 8-per-cent drop in house prices over the next year, with prices remaining depressed “until late 2023.” In regulatory filings, the bank’s best-case scenario calls for a 6.1-per-cent increase in house prices, while its worst-case scenario calls for a whopping 29.6-per-cent drop.

“Canada hasn’t seen such a significant decline at the national level since the early 80s,” noted Better Dwelling, which first reported on RBC’s forecast.

Detached homes beat condos, small cities beat large

RBC isn’t the only one saying Canada faces a potentially historic housing correction. Ratings agency Moody’s put out a report this fall where it warned of falling house prices in 2021, though with big regional differences.

“We expect greater resilience in lower-density markets outside Canada’s large urban cores,” Moody’s economist Abhilasha Singh wrote. “The pandemic has boosted demand for properties offering more space for working from home and fewer shared areas with neighbours. Smaller markets where such properties are more affordable will particularly benefit from this trend.”

Within large cities, condos will fare worse than single-family homes because of the problems in the rental market, the Moody’s economist predicted.

All of this means “the pandemic will lead to even further widening in economic inequality, including housing,” Singh added.

But one thing the forecasts seem to agree on, all in all, is that whatever happens in the next few years, the long-term outlook for Canada’s housing markets is bright. And Canadian homeowners are unlikely to see the sort of financial hardships Americans saw during their housing market bust a decade ago.

“Although we expect delinquencies to increase in 2021, we do not expect the level of delinquencies, distressed sales or foreclosures to increase to the levels seen in the U.S. during the financial crisis,” wrote Susan Hosterman, a senior director at Fitch Ratings.

“This is due to (lenders) having strong relationships with their borrowers and their close monitoring of their borrowers’ financial situations after putting them on payment plans. Historically, the (lenders) have been proactive in offering modifications or working with borrowers to make payments affordable. We forecast delinquencies to return to the pre-pandemic levels in 2022 as the economy improves.”

BC Housing Markets Bounce Back in June

Vancouver, BC – July 14, 2020. The British Columbia Real Estate Association (BCREA) reports that a total of 8,166 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in June 2020, an increase of 16.9 per cent from June 2019. The average MLS® residential price in BC was $748,155, a 9.1 per cent increase from $685,968 recorded the previous year. Total sales dollar volume in June was $6.1 billion, a 27.5 per cent increase over 2019.


“Sales around the province surged back to pre-COVID-19 levels in June,” said BCREA Chief Economist Brendon Ogmundson. “While there are some temporary factors that may have pushed demand forward, we are cautiously optimistic that market activity will remain firm.”

Although listings activity has normalized along with sales, active listings are still down close to 20 per cent year-over-year and, as a result, many markets are seeing upward pressure on prices.

Year-to-date, BC residential sales dollar volume was up 0.6 per cent to $24.7 billion, compared with the same period in 2019. Residential unit sales were down 8 per cent to 32,875 units, while the average MLS® residential price was up 9.4 per cent to $751,722.