The Canada Mortgage Housing Corporation (CMHC) needs to play a more active and intimate role in cooling down the accelerating demand in the country’s housing markets, according to a prominent economist.
Gluskin Sheff + Associates Inc. chief economist and strategist David Rosenberg said that CMHC is perfectly positioned to intervene in a national environment of “extremely cheap” credit.
“So the question is, why don’t you use CMHC as the lever in terms of constraining credit? Especially at the mid- to high-end part of the market, in terms of downpayment requirements, in terms of credit stringency? To me, that would be the natural answer for the rest of the country [outside of Vancouver],” Rosenberg told BNN
Rosenberg noted that this the newly introduced 15 per cent foreign buyer’s tax on Vancouver homes will not discourage wealthy overseas nationals in the slightest.
“When you think about it, home prices in Vancouver are up 30 per cent in the past year and that didn’t really deter any buyers from Asia from coming into the market place,” the economist said.
“Maybe it will have some marginal effect in terms of housing demand and prices, but you have to ask yourself the question, what does 15 per cent do that 30 per cent in the past year didn’t do?” he added.
And while mutterings of imposing a similar tax in Toronto have emerged over the past few days, Rosenberg does not believe that such a levy would come to pass in Canada’s second hottest residential real estate market.
“That’s not all foreign money coming [into Toronto’s housing market] – a lot of it is local,” Rosenberg concluded.
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