Justin Trudeau announced his Liberal Party would expand the First-Time Home Buyer Incentive if elected—as well as implement a non-resident speculation tax nationwide—but it begs the question, why now?
“I don’t know that anyone will object to it, but with that in mind, and with an election on the horizon, I wouldn’t be surprised if it was a card they were saving for late in the election campaign,” said Mark Cohen, managing partner of The Condo Store Marketing Systems in Toronto, which, along with Vancouver and Victoria, is where the FTHBI will be expanded to.
“It’s a bit of a hostage situation because this is only going to happen if the Liberals are re-elected. In other words, ‘If you don’t vote for us, there’s nothing to help you.’”
The previous FTHBI capped household income at $120,000, which put maximum mortgage value at $480,000, but under the new proposal that number would rise to $789,000 in the GTA, Vancouver and Victoria, where Trudeau made the announcement.
“One thing I hear from a lot of young people here in Victoria is that they can’t even imagine buying a home right now. Owning a house should be a realistic life goal,” said the Prime Minister, who also announced a 1% Canada-wide speculation tax on non-residents if re-elected.
Cohen can attest to the influence foreign money is having on domestic real estate prices, and while he believes Trudeau’s policy announcement is cynical, he’s still glad the prime minister has something to offer.
“The majority of units closing these days are closing in cash, which means a lot of outside money is coming into the city,” he said. “For people who have been living here a long time, they’re not transporting money into Toronto. By acknowledging Toronto needs help, it’s going to give a good boost to all the incumbents who have found themselves in uncomfortable situations.
“You can’t buy very much for half-a-million dollars in the GTA, never mind in Toronto proper, so this is a good thing because there’s acknowledgement that Toronto needs some kind of initiative to help from an affordability standpoint.”
At The Condo Store, Cohen has witnessed too many would-be first-time buyers leave disappointed and grow disillusioned about their homeownership prospects in the city they grew up in.
“But there are also the ones we don’t see because they’ve already given up and ruled themselves out,” he said.