I like the beginning of the year. This is an opportunity to take stock, reflect on the months to come and gain some clarity before embarking on a new start. I have a lot of fun establishing what I want to accomplish and determining how I can contribute.
In 2023, the question of access to property concerns me more than ever. For nearly 20 years, my job has been to design and build housing. We have always had a large clientele of first-time buyers and have designed many projects in central Montreal neighborhoods for them.
Unfortunately, in recent years, we have seen that a growing number of young adults are unable to cope with the drastic increase in construction costs and land values, and therefore purchase prices. Moreover, with mortgage rules that have tightened significantly, interest rates that have skyrocketed and the large down payment required, the dream of owning a property seems less and less accessible.
Many people worry about never becoming homeowners. And this concern reflects on their parents who find themselves helpless when it is impossible to help them or who go into debt to do so, thus compromising their retirement.
By letting the homeownership rate drop among young people, we are creating a major generational inequity. By not allowing the less fortunate to own, we are helping to concentrate wealth in the hands of fewer and fewer people.
Also, and this is major, the inability of young households to buy a first property and thus free up a rental apartment amplifies the housing crisis.
Although the issues affecting housing are complex and there is no miracle solution, I remain convinced that supporting access to home ownership makes it possible, in the medium term, to reduce the relative share of income devoted to the dwelling. Let us dream for a moment of a society that would accompany its young people in the accession to property. Couldn’t we eradicate this generational inequity and a major part of the affordability problem?
By allowing them to acquire a first property, we also allow the re-letting of an existing apartment which will always be less expensive than a new construction and which will benefit a new tenant. Similarly, this new tenant will be able to free up more affordable housing and so on. In short, facilitating young people’s access to home ownership creates a major domino effect and helps reduce pressure on the market.
By lending a hand during the down payment and the first years of the mortgage loan (when it is the highest), we allow the buyer to create a wealth.
The aid intended for first-time buyers should therefore be seen as an investment rather than an expense, since once launched, these buyers become autonomous and independent, no longer being victims of the runaway real estate market.
Thus, becoming a homeowner, and therefore paying a mortgage, is a way of securing an asset. Not only does the residence increase in value over the long term, it also becomes a form of forced savings, thanks to the capital repaid each month. We often forget it, but our mortgage payment remains one of the surest means of forcing us to save. Our main residence thus becomes the asset on which we can rely the most to ensure “our old age”.
The federal government recognizes the importance of home ownership with the creation of the TFSA (tax-free savings account for the purchase of a first property). It’s a first step in the right direction to help those who have the ability to set aside up to $40,000 for a down payment. But what about everyone else?
However, it would be easy to index the value of properties to allow owner-occupiers to be entitled to GST and QST rebates. These values have not been adjusted for more than 20 years and no longer reflect the reality of today’s market. It would also be possible to imagine that the first buyers pay all the purchase taxes (transfer duty, QST and GST) only on the resale of their first property. This would be a contribution from cities as well as governments, a contribution at minimal cost to society. These are only examples.
Over the past few months, affordability issues have been on everyone’s lips. The obvious answer to these problems is to build more, because as long as supply remains below demand, there will be upward pressure on prices.
But that won’t be enough. It will require social housing and assistance to build subsidized rental units. And if we don’t want public assistance to become exponential, we will have to allow a greater number of our fellow citizens, particularly our young people, to become masters in their own homes.
During the pandemic, pharmaceutical companies have managed to co-create solutions with governments because urgency demanded it. I am convinced that housing needs call for the same imperative collaboration between the various authorities, financial institutions and private companies.
The stakes are known, the various actors are there, the interest of governments seems clear, the cities wish to accelerate development, the ideas are multiple. It is therefore time to take action. The year 2023 is the perfect time to make all this good will come true!