Lots of promises being made around housing as part of the 2021 Canadian Election! Beth and Ryan Waller take a look at these promises in the media including the Globe and Mail, CBC and Global News.

The snap Canadian election that Justin Trudeau has called for September 20th was, in Trudeau’s mind, strategic. Of course, you want to act while your competitors are complacent. It appeared that the Conservatives, NDP and even the Green Party of Canada were just that.

A win by Trudeau would give him a majority government, free to pass bills through his own party. This is instead of the current minority government where he needs buy in from the opposition.

We’ll take a look at some of the Canadian election promises around housing and give our take. 

Supply is the major issue that needs to be addressed

The main issue here is that there are not enough homes. It’s not that we need more incentives for buyers.

A growing number of housing experts have been flagging housing shortages as a source of soaring prices for years- and it will continue to be a rising housing market until this is addressed. 

As Canada’s population grows, mostly due to immigration, we will need more homes. As the large millennial generation hits the home-buying stage, the country hasn’t been adding enough homes. 

If you think about it, adding more homes does a few things: it puts less pressure on the current supply, giving buyers more options (more supply= more choice= lower prices). 

More supply at varying price points allows more people to get into the market. More supply nationally allows more room to spread out and more towns to prosper for immigration and jobs.

Both the NDP and Conservatives have made it very clear that they blame the Liberals for the supply shortage and have promised increased supply if elected, as read in this National Post article

In summary, each party has their own promise on supply, including:

  • Liberals: “Build, preserve or repair” 1.4 million homes in four years
  • Conservatives: Build 1 million homes in three years
  • NDP: Build 500,000 affordable homes in 10 years

 “Affordable homes”, according to the CHMC means spending less than 30% of your before tax income on a home- or, homes geared to income. 

The Green Party also mentions affordable homes, but doesn’t outline a specific plan.

The promise of the end of “blind bidding”

What is blind bidding? 

Blind bidding is the process in multiple offer situations where other potential buyers are putting in offers, without knowing the details of any competing offers. Unlike an auction, where you know what the current highest price is, blind bidding leaves you- well, blind- to the next best offer. Potential buyers could be $1000 more than the next best offer, or $100,000 and the only people who know that are the sellers and sellers agents who are reviewing the offers.

Trudeau’s Liberals promise an end to this process.  However, the Liberal platform does not shed light on how the federal government would implement the changes since real estate rules are set at the provincial and territorial level.

OREA (Ontario Real Estate Association) published a news release in response to the Liberals plan, identifying an open bid, auction style process like that of Australia as a “circus” saying “Open auctions are the norm in Australia and New Zealand, where sellers overwhelmingly choose to use an open process. Auction fever creates a three-ring circus on front lawns, as hopeful buyers crowd in front of a home with a live auctioneer, or online, and the bidding begins. 

Far from making homes more affordable, auctions can drive prices higher, and dangerously push buyers to make rushed decisions involving tens of thousands of dollars in just minutes.

In the end, the issue is supply- which, blind bidding or not is still going to be an issue. 

Home Buyer incentives proposed for the Canadian election

The Liberal Government in particular has been hot with home buyer incentives. This addresses concerns that the national housing market is too hot.

A few things come to mind here. In particular that home buyer incentives would be more useful in a market where we are trying to encourage people to buy homes. 

However, the current real estate market is exactly the opposite- it’s a sellers market flush with buyers. If incentives should be offered- it’s to sellers to get more supply on the market.

Some proposed programs as outlined in this Global News article on the Canadian election include:

  • Liberals: A tax-free savings account to save for a down payment. Rent-to-own program. 25-per-cent reduction on CMHC’s mortgage insurance rates, raising the home-price cut-off for insured mortgages.
  • Conservatives: Changes to the federal mortgage stress test, promoting seven- to 10-year mortgage terms. Raising the home-price cut-off for insured mortgages and indexing it to home price inflation
  • NDP: Re-introducing 30-year insured mortgages, a $5,000 rental subsidy

How will the Canadian election impact the Guelph real estate market?

The reality is that any promise that a Party makes in order to get your vote for the September 20th Canadian election needs to pass through Parliament. These things take time (if they even happen at all…) and will not have an immediate impact on the market. 

Supply continues to be the biggest challenge in Guelph, in Ontario and in Canada. In Guelph specifically, there are better ways to use the current land we have: 

  • Better use of existing land for infill projects is a start. Under utilized strip plazas with large parking lots could be used for residential housing projects
  • The City is recommending more homes put in accessory apartments to help with the rental supply issues in town 
  • Building vertically with condos allows for new development but requires significantly more resources. This includes infrastructure, city services, traffic congestion, roadways)

Beth and Ryan are Guelph Realtors and you can contact them here anytime with real estate related questions!