An Angus Reid Institute poll this week highlighted Canadians’ mounting frustration with housing prices, with many desiring additional policy measures from the government.
However, according to Kathleen Black, government intervention in the housing market has had a markedly deleterious effect on buyers, particularly those buying their first homes.
“I think that’s what’s hurting people is the ability to obtain financing,” said Black, president and CEO of Black Coaching & Consulting. “Some of what the restrictions’ intentions are versus how they’re playing out in the market, are very, very different. When we’ve got first-time homebuyers having difficulty getting financing, and having their abilities to access mortgages restricted, we’re seeing the people who need to get into the market cannot. When you look at the idea of having more government intervention, or additional market policies, I would love to think they will support the people who are first-time buyers or who have lower incomes get into the market.”
Black also notes that previous policies slowed the market considerably, to the point of quashing momentous prices surges. Market skepticism first reared its head last year and a slowdown ensued.
“It hasn’t been equal across the board, but some areas had serious adjustments,” she said. “In York and Vaughan, we saw considerable slowdowns and it created skepticism of the market. On top of it, affordability is difficult for the people who should be able to take advantage of the slowdown.
“If they’d intervened two years ago, it still would have restricted the very people it should have helped get into homeownership. It would have been helpful a few years ago to give extra grants, or have opportunities to give money back, to support the very people who need to get into homeownership, rather than restrict them further with their buying dollars.”
Exorbitant price points, even for entry-level housing, are pushing people out of Toronto. John Pasalis, president of Realosophy, says there’s an unmistakable exodus occurring in Canada’s largest city and that it will hurt industry should it continue.
“We’re starting to see it already in Toronto, and probably Vancouver,” he said. “People are deciding to move out of Toronto, whether smaller cities or smaller towns, looking for places more affordable. Interestingly enough, a lot of agents today in our meeting heard from people deciding to leave the city.
“It’s not great because the city, of course, wants to attract immigrants and people, and industry needs labour. They need people, but when housing is so expensive it just pushes people away from living in the city. It’s a negative side effect of rapidly increasing prices.”
Pasalis sees the government’s Fair Housing Plan and tighter mortgage lending criteria as good things for a city like Toronto because they slowed the outlandish pace of price growth.
“Toronto’s bubble really kind of just surged very suddenly around 2015 to 2016, and the government’s measures came at the tail end of that, but at least they came into effect and stopped things,” said Pasalis. “Otherwise the market could have kept going like that for another year. They might have been late but at least it’s positive that they came in.”