Liberals to the rescue?

In the immortal words of Tom Petty “don’t bore us, get to the chorus”. The chorus is:

 “The sooner you buy, the less you pay.” 

Here are the campaign promises from the Liberal party to help housing become more affordable over the next 4 years. 

1) Rent to Own program partnering with not for profit co-ops. While this sounds like a nice and helpful move for some, it’s not addressing the glaring supply issue.

2) Tax Free Home Savings Account. The government will allow an account of up to $40,000 as a tax free account to earn interest tax free towards the downpayment of a house. So this sounds generous, but any property over $1,000,000 requires a 20% downpayment and a 3 bedroom townhouse in Oakville (starter home) costs more than $1m. This does not solve supply issues and could easily have a hand in increasing demand. 3) First Time Home Buyer Incentive which was introduced earlier is a program where the federal government becomes your investment partner by giving you a percentage of the required downpayment for that same percentage of ownership in your house. You only have to repay THE PERCENTAGE when you sell (not the dollar value of the loan, but the percentage). Since this was introduced I have had zero people want to “take advantage” of that program, and it also does not increase supply. 4) The Liberals say they will double the first time home buyer’s tax credit from $5,000 to $10,000. Will this help make housing more affordable? No it certainly will not. 5) They have pledged to reduce the mortgage insurance premium (4% of the home value) by 25% saving up to $6000 over the entire course of a mortgage. Wow, thanks. 6) BUILD MORE HOUSING, now here we go, finally something that could possibly help. The Liberals are committed to proving $4B over the next 4 years to help cities and municipalities reduce the current “red tape” (a.k.a. checks and balances to regulate developers) to speed up the development process and to uncover unused government properties that could be developed or reconfigured to residential housing, and converting unused commercial space into residential housing. All in all the goals are to add 100,000 middle class homes in every major Canadian city over the next 4 years. This will be a great start. Let’s take a look at the current numbers and see what kind of effect it might have on our market. In 2020 we sold 95000 homes in the GTA and we have now 0.8 months of supply.. If we divide 100,000 homes by 4 years, that’s an additional 25,000 homes per year in the GTA. A balanced market is defined as 5-6 months of supply. If we double the current amount of available inventory we would be sitting at 1.6 months of supply which is still a very strong seller’s market. an additional 25,000 homes per year is certainly welcomed but will not make housing more affordable.

7) Ban blind bidding. Banning blind bidding would actually be great in providing a level of confidence in the bidding process, but, it also is not creating any more inventory to choose from and will not lower final sales prices either.

Oakville is still on fire with bidding wars on pretty much every house. With an average sales price of $1,488,000 across all property types and 0.8 months of supply we still hope and pray for more people to want to sell their homes (but then they will need to buy something too).

Burlington also had a slight increase in sales volume up to 279 units from 245 in August. The average sales price increased by 3% due to the drop in inventory down to 0.5 months from 0.6 months. Burlington still represents an easier buying opportunity for potential buyers than Oakville. The bidding wars in Burlington are milder and easier to win.

Milton was down in sales volume by 18% from August but way up in average sales price, up to $1,128,493 from $1,061,000 the month before. That is a 6% jump in one month, and in a month that saw a small bump up in inventory from 0.3 months up to 0.6 months. How does this makes sense? Well an old friend of mine sold an acreage property up in Campbellville for $7,250,000 and that skewed the numbers significantly. I expect that Milton will be back under $1,100,000 next month. Still very high numbers for Milton.