OREA Statement on Latest Ford Government Housing Bill Focused on Consumer Protection and Transit-Oriented Communities

The Government of Ontario announced the Homeowner Protection Act, 2024, which includes banning registrations for Notices of Security Interest (NOSIs), implementing a 10-day cooling-off period for purchases of newly built freehold homes, consulting on illegal building and selling, and building more housing near transit.

In response to this announcement, the Ontario Real Estate Association (OREA) has expressed strong support for the legislation, recognizing its potential to shield homeowners from predatory practices and facilitate more transparent and fair real estate transactions. Tim Hudak, CEO of OREA, commended Minister of Public and Business Service Delivery Todd McCarthy and the Ford Government for their proactive stance on these crucial issues.

One of the key highlights of the Homeowner Protection Act, 2024, is the ban on registrations for Notices of Security Interest (NOSIs). These NOSIs have long been a hidden trap for many homeowners, buried in the fine print of contracts for items such as water coolers, furnaces, or security systems. Homeowners often face exorbitant buyout charges upon the sale of their property, an unexpected financial burden that can complicate and delay transactions. By prohibiting NOSI registrations, the government aims to eliminate these surprise fees, ensuring that the price tag of a home is more transparent and reflective of its true cost.

The implementation of a 10-day cooling-off period for purchasers of newly built freehold homes marks another significant advancement in consumer protection. This provision, which mirrors protections already in place for pre-construction condo sales in Ontario, gives buyers a crucial window to review their purchase agreement and reconsider their decision without penalty. This measure is especially important given the complex and often high-stakes nature of real estate transactions, leveling the playing field between individual homebuyers and well-resourced corporate developers who typically have the upper hand in negotiations.

OREA has also welcomed the decision to exclude resale homes from this cooling-off period. This decision reflects a nuanced understanding of the real estate market, recognizing that resale transactions generally involve private citizens rather than corporate entities, and that introducing a cooling-off period in this context could lead to increased uncertainty and speculative behavior.

Transparency is further bolstered by the mandate for public disclosure of a builder’s history of canceled purchase agreements. This requirement ensures that consumers are informed about a builder’s track record, fostering greater accountability and trust in the homebuilding process. Such transparency is expected to set a higher standard of honesty and integrity in the industry, benefiting both buyers and reputable builders.

In addressing the broader issue of housing supply, the Homeowner Protection Act, 2024, includes measures to modernize zoning and support greater density along transit corridors. By exempting specific transit-oriented community lands from immunity provisions in the Planning Act, the government is facilitating the addition of ‘missing-middle’ homes to Ontario’s housing stock. This approach is aimed at increasing overall density in areas best equipped to handle high population levels, promoting sustainable urban development and easing housing shortages.

The introduction of this legislation represents a comprehensive effort to protect homeowners from unscrupulous practices and to address the pressing need for more housing in Ontario. The Homeowner Protection Act, 2024, is a forward-thinking policy that not only safeguards consumer interests but also lays the groundwork for a more efficient and equitable housing market.

As the province moves forward with these initiatives, it is crucial to consider the broader implications of these reforms. How will these measures reshape the dynamics between homebuyers, sellers, and builders? And what additional steps can be taken to ensure that all Ontarians have access to affordable and secure housing? The Homeowner Protection Act, 2024, sets a strong foundation, but the conversation on housing reform and consumer protection is far from over. What further innovations and protections should the government explore to continue improving Ontario’s real estate landscape?

Trudeau Says Housing Needs to Retain Its Value

Prime Minister Justin Trudeau has made it clear that his government aims to strike a delicate balance: making housing more affordable for younger Canadians while ensuring that current homeowners do not see their property values diminish. This objective, outlined in a recent interview with The Globe and Mail’s City Space podcast, comes at a time when the housing market is a hot-button issue across Canada.

Trudeau emphasized that “housing needs to retain its value” because for many Canadians, their home is a critical component of their retirement plan and a significant part of their wealth. This statement highlights the dual challenge facing the government: addressing the housing affordability crisis without undermining the financial security of millions of homeowners who view their property as their largest asset and a crucial part of their future nest egg.

The Canadian housing market has indeed seen skyrocketing prices, with typical home values averaging over $735,000 nationwide and surpassing $1 million in major cities like Toronto. This dramatic increase has effectively priced many residents out of the market, exacerbating frustrations, particularly among younger voters who feel left behind in their quest for homeownership.

In response to these challenges, Ottawa has revised programs aimed at first-time homebuyers. Notable changes include allowing insured mortgages with a 30-year amortization for preconstruction homes and introducing billions of dollars in incentives and tax breaks designed to stimulate the creation of more rental housing. These measures are part of a broader strategy to alleviate housing costs and improve accessibility.

Over the past two decades, the value of residential real estate in Canada has tripled, significantly enhancing the wealth of homeowners. This appreciation has not only provided financial security but also created a pronounced wealth gap between homeowners and renters. Homeowners have been able to build substantial equity, often viewing their property as a cornerstone of their retirement plans and a means to pass on wealth to future generations. Renters, on the other hand, have not enjoyed the same benefits, leading to a stark disparity in financial outcomes.

Trudeau acknowledged this growing inequality, pointing out the unfairness in the financial disparity between lifetime renters and homeowners. He stated, “The difference between someone who’s rented all their lives versus someone who is a homeowner in terms of the money they have for retirement is massive, and that’s not necessarily always fair.”

Despite the government’s efforts, the housing affordability crisis is not expected to see immediate relief. The country is experiencing its fastest population growth in decades, driven by immigration and natural increases, which adds pressure to the housing market. Furthermore, high borrowing costs have slowed new home construction, despite government pushes for faster development. As a result, new housing projects take years to come to fruition, complicating efforts to quickly expand the housing supply.

Douglas Porter, chief economist with the Bank of Montreal, highlighted the key factors influencing the housing market. He stated, “Supply can only change gradually, so realistically it’s the demand side that will drive the market over the short haul.” Porter identified three potential drivers of improved affordability: stronger incomes, lower borrowing costs, and lower home prices. However, achieving these conditions simultaneously presents a significant challenge.

The housing market has experienced a lull over the past two years due to the Bank of Canada’s interest rate hikes aimed at controlling inflation. Although home prices have dipped about 10 percent from their pandemic peak in early 2022, they remain significantly higher than pre-pandemic levels, still 37 percent above 2019 values according to data from the Canadian Real Estate Association.

As Canada grapples with these complex housing issues, the conversation continues. Trudeau’s approach seeks to balance the needs of existing homeowners with the aspirations of prospective buyers, yet the path forward is fraught with challenges. How can the government effectively bridge the gap between affordability for new buyers and value retention for current homeowners? What innovative solutions could address the root causes of the housing crisis without unintended consequences? The debate on housing policy remains one of the most critical and contentious issues facing Canadians today.

Quebec City or Edmonton? Who’s Moving Where for Affordable Housing

A recent Royal LePage report has shed light on the shifting dynamics of Canada’s housing market, revealing surprising trends in affordability and relocation preferences among Canadians. As housing costs continue to soar in major urban centers like Toronto, Vancouver, and Montreal, many first-time buyers and renters are exploring more affordable alternatives across the country.

The report, based on data from the first quarter of 2024 and a survey conducted via Leger’s online platform, ranks 15 of Canada’s most affordable housing markets. Leading the pack is Thunder Bay, Ontario, where only 22.2 percent of monthly income is needed to service a typical mortgage. Following Thunder Bay are Saint John, New Brunswick; Red Deer, Alberta; Trois-Rivières, Quebec; and Edmonton, Alberta. These cities represent the top five affordable destinations, with mortgage payments ranging from 22.2 percent to 28.9 percent of monthly income.

The concept of “drive until you qualify” has long been a strategy for Canadians seeking affordable housing, urging buyers to look beyond expensive urban cores. However, the current trend seems to be “fly to qualify,” as many Canadians consider interprovincial moves to find more budget-friendly options.

For residents of the Greater Toronto and Vancouver areas, Edmonton emerged as the top choice for relocation, attracting 19 percent of respondents. Alberta’s capital city, known for its affordability and growing job market, has become a magnet for those priced out of their current locales. Interestingly, while Edmonton and Red Deer are highlighted for their affordability, Calgary, traditionally seen as an affordable city, did not make Royal LePage’s top 15 list. Calgary’s housing market has remained robust, partly due to its economic prospects and relative affordability during the broader housing market correction.

Alberta’s population growth has been substantial, with Statistics Canada reporting a record influx of 202,324 residents in 2023. This surge includes a significant number of international migrants as well as a national record for interprovincial migration, with Alberta gaining a net of 55,107 people. This population boom underscores Alberta’s growing appeal as a destination for affordable living.

The motivations for moving extend beyond financial considerations. While 57 percent of survey respondents cited lower living costs as a key factor, lifestyle changes also play a crucial role. Many Canadians are seeking a life closer to nature and away from the hustle and bustle of big cities. Approximately 41 percent expressed a desire for proximity to nature, and 40 percent wanted a more relaxed pace of life.

Montreal residents, in particular, showed a tendency to stay within their province when searching for affordable housing. Quebec City, Sherbrooke, and Trois-Rivières were the top choices for those looking to relocate within Quebec. The province’s real estate market offers great value, especially for bilingual homebuyers seeking their first property or an investment opportunity.

Despite these trends, not everyone is eager to move. A significant portion of residents in relatively unaffordable markets, such as Greater Vancouver, prefer to stay put. About 46 percent of Vancouverites indicated they would not consider moving, compared to 40 percent of Montrealers and 37 percent of Torontonians. The allure of lifestyle, access to nature, and outdoor activities in Vancouver remains strong, even amidst high housing costs.

As Canadians navigate these shifting housing dynamics, it raises critical questions about the future of urban living and affordability. Will more people be willing to uproot their lives for the promise of cheaper housing, or will the draw of established communities and local amenities keep them anchored despite rising costs? And how will these migratory trends reshape the social and economic fabric of cities across Canada? The evolving landscape of affordable housing continues to challenge and redefine what it means to find a place to call home.

Bank of Canada Interest Rate Cut Could Be ‘Tailwind’ for GTA Real Estate

The Greater Toronto Area (GTA) real estate market might soon receive a significant boost if the Bank of Canada decides to cut interest rates. Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board (TRREB), highlighted that many prospective homebuyers are currently on the sidelines, eagerly waiting for lower borrowing costs to make homeownership more affordable.

In April, GTA housing sales experienced a 5% decline compared to the same month last year, while new listings surged by 47% during the same period. This increase in listings suggests a readiness among sellers, potentially setting the stage for a surge in buyer activity if the conditions become favorable. Mercer emphasized that the market is primed for more buyers to enter, especially if there is a tangible reduction in mortgage rates.

Inflation, which fell to 2.7% in April, plays a crucial role in this scenario. The Bank of Canada’s next potential rate cut is scheduled for June 5. Many potential buyers are waiting for confirmation that borrowing costs will decrease, making it easier for them to meet their affordability thresholds. TRREB has forecasted an uptick in sales in the latter half of 2024, contingent on such economic shifts.

James Orlando, a senior economist at TD Economics, provided additional insights, suggesting that a rate cut in July is more likely than one in June. He noted that although lower inflation increases the probability of a cut in June, the Bank of Canada might use the June meeting to prepare the market for a rate cut in July. This cautious approach aims to avoid financial market volatility, which could arise from unexpected changes in monetary policy.

Orlando predicted that the first rate cut would lower the central bank’s key rate from 5% to 4.75%. The steady decline in inflation toward the Bank of Canada’s target of 2% supports this potential reduction. The recent inflation report has bolstered confidence that inflation is under control, further encouraging the likelihood of a rate cut.

The impact of a decreased interest rate on the GTA real estate market is anticipated to be substantial. So far in 2024, both sales and prices have been trending below expectations for the spring buying season, largely due to affordability issues. However, Orlando posited that if the Bank of Canada starts cutting rates at a swift pace in the second half of 2024 and into 2025, it could provide a much-needed tailwind for the real estate market. Lower interest rates would reduce mortgage costs, thereby enhancing affordability and potentially triggering increased buying activity.

As the GTA housing market navigates these potential changes, the key question remains: how will these anticipated rate cuts shape the future of homeownership in the region? Will they provide the necessary relief to prospective buyers, or will other factors continue to hinder market growth? The interplay between economic policy and the housing market will be crucial in determining the trajectory of real estate in the GTA. What are the broader implications of these potential rate cuts for the Canadian economy, and how will they influence the dreams of many Canadians looking to purchase their first home?