Once a year, REALTORS® from across the country converge on Ottawa to meet their MPs on homeownership matters. This year was another well run and organized event by the Canadian Real Estate Association (CREA) which ran from May 11 to May 13.
Participants gained valuable insight into parliamentary discourse that is not always reflected in media coverage, as well as issues that are front and centre on Parliament Hill that may shape strategies in next year’s federal election.
What does this all mean for Canadians and their hopes and dreams when it comes to buying and selling a home?
For one, the Home Buyers’ Plan (HBP) was highlighted in an infographic piece which showed that 2.6-million Canadians have used the plan since it was introduced in 1992. In 2012 alone, there was $2.5 billion generated in economic spin-off spending and over 20,200 jobs were also created as a result of HBP transactions.
Federal MPs were asked by the REALTORS® to index the HBP to the Consumer Price Index in $2,500 increments in order to ensure that the plan does not lose its purchasing power. Seventy-six per cent of Canadians support, or somewhat support, indexing the HBP.
Currently, an individual can use up to $25,000 of their RRSP funds to purchase a home. They must pay back the funds removed within 15 years.
It was pointed out by REALTORS® that using the HBP to top up a down payment can save consumers money on mortgage insurance fees. In turn, allows first-time home buyers to build up home equity sooner by taking advantage of the plan.
Another issue raised was opening the door wider to access the HBP. Presently, it is limited to first-time buyers, those who have not owned a home for five years and Canadians with disabilities. The proposal is to allow Canadians to use HBP funds to purchase a home if they have to relocate for a job, suffer the loss of a spouse, are in a marital breakdown or need to accommodate and look after an elderly family member.
Part of the rationale behind the proposal for a job change is to facilitate greater labour mobility and not to make the price of housing a barrier to job relocation.
Unlike costly tax credits, extension of the HBP amounts to a zero-interest self-loan. An extension essentially allows Canadians to borrow from their own savings rather than depend on government programs.
A good example of the discussions was a meeting with Elmwood-Transcona MP Lawrence Toet. While he did not dismiss this proposal, and was actually quite supportive of extending the HBP to accommodate an elderly family member, he expressed some reservations about some of the other life-change circumstances. He questioned, for example, whether you would let someone use their HBP for a job relocation if the price of the home in the new location was very comparable to the one being sold in the old location.
Maybe it should be about comparing similar homes to similar homes. Market valuations will determine how much greater the price will be in order to acquire the same home.
If you are going to a higher priced housing market, then there has to be a minimum threshold, e.g., $50,000 to trigger your application under an expanded HBP criteria.
The point was also raised about putting more parameters on marital breakdown based on income as a qualifier to enable eligibility to access the HBP.
The discussion with Toet illustrated how a proposal may well gain government support when practical solutions can be put forth and solidified in the review process.
Given the payback requirements, the home buyer should be able to demonstrate that there is a legitimate reason to access the HPB. The government should then at least be open to review how the HBP could then be reasonably applied.
Putting consumers first was a final issue covered in the meetings with MPs. It is essential to team up with the federal government to educate and provide relevant information to consumers about purchasing a home. One information resource now available is the Homebuyers’ Road Map. Consumers deserve to be provided with the knowledge, skills and confidence to make sound decisions when making one of life’s biggest financial commitments — purchasing a home.
The road map was created jointly with the Financial Consumer Agency of Canada and CREA. So far, 39,000 road maps have been distributed since November 2012. In a survey, seven-in-10 respondents aged 18 to 29 said there was a major need for this information.
Toet said he would gladly make the road map brochures available in his constituency office. The MP said he often sees new Canadians dropping in to his office and wondering what federal programs and information are available to help them out. The HBP is outlined in the brochure as is the federal government’s First Time Home Buyers’ Tax Credit.
“The more we can do to educate Canadians about what is available to them to help them buy a home or on other important federal government services and programs the better,” said Toet. “I am pleased to see REALTORS® getting more involved to help consumers make more informed decisions about the financial details of buying a home.”
REALTOR® advocacy for homeownership does not stop after the meetings with MPs in Ottawa — it is ongoing and involves all levels of government and other partners to further efforts to promote homeownership and the quality of life that accompanies owning a home a priority.