Thank you.
Good afternoon, everyone. My name is Karen Cox and I'm the president of the Ontario Real Estate Association. With me today is Matthew Thornton, vice-president of communications and public affairs at OREA.
It is a pleasure to be here today to discuss Bill C-97, an act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures.
By way of introduction, OREA is the industry association that represents over 78,000 licensed realtors in communities across Ontario. Our members wake up each and every day looking to help our clients achieve the dream of home ownership because we believe that owning a home is something that should be attainable for families not just here in Ontario, but right across Canada as well.
For generations, Ontario has been a place where if you worked hard, got a good education and played by the rules you could own a home. This is increasingly difficult today.
According to the latest census, for the first time since John A. Macdonald, home ownership rates in Ontario are on the decline. One of the reasons for this decline is a lack of supply, which has driven up the price of housing to the point that families are finding it almost impossible to break into the market.
As a working realtor, I see this frustration on faces of Ontarians every day.
And I know this is not limited to Ontario. Families right across this country are finding it increasingly difficult to break into their local housing market.
Just last week, OREA's CEO, Tim Hudak, attended an announcement by the Ontario minister of housing, the honourable Steve Clark, where the province unveiled its housing supply action plan.
We were pleased that many of the province's initiatives were recommendations that OREA had made during the consultation period, including perhaps the boldest change in the plan, which was to fast-track development of new housing near transit stations. This change will result in smarter, more walkable and affordable communities near Ontario's major transit stations.
But it cannot be left to provincial governments to solve what is a national housing crisis. We need bold action from the federal government to help more middle-class Canadian families achieve the dream of ownership.
The government's budget included some very positive proposals to help more Canadian families afford a home. We were pleased to see the introduction of the first-time home buyers' incentive, the proposed increase to the home buyers' plan withdrawal limit, additional funding through the rental construction financing initiative and the housing supply challenge for municipalities.
These are only the first steps. The budget failed to fix the punishing impact on home buyers from the new mortgage stress test, which has reduced buying power by 20 cents on the dollar. Whether you're a millennial looking to buy your first home or a growing family who has saved and wants to upgrade, the stress test rules have compromised what you're able to finance.
In order to qualify for a mortgage, families must now demonstrate that they can afford interest rates of two percentage points higher than what they negotiate with their lender. These restrictive rules even apply to those who do not need mortgage insurance.
The harm caused by the stress test has been vast. Home sales in Canada in 2018 fell by 11% compared to 2017, and 15% compared to 2016.
The federally imposed stress test is a big part of the reason. Moreover, the rationale for the stress test is badly flawed. It protects against a far-fetched scenario by assuming that interest rates will rise 2% by the time a fixed-rate mortgage is due for renewal, but the homeowner's income won't rise at all.
Any party that wants to offer a serious plan for homeowners needs to start by making the stress test much more balanced.
Ontario realtors believe further action is needed beyond addressing the challenges brought about by the stress test. For example, the NDP is proposing a return to 30-year mortgages for those who have mortgage insurance.
This is a great idea. It means millennials and young families who don't yet have a big down payment will still be able to buy a home and begin building home equity earlier in their life. It also means their monthly or bi-weekly payments will be more manageable so that young parents can devote more of their income to their kids' music lessons and hockey equipment.
Poll after poll shows that housing affordability is a huge issue, and while the steps taken in Bill C-97 are a good first step, much more is needed in order to ensure middle-class families from right across Canada are able to achieve the dream of home ownership.
Thank you, and I would be happy to take any questions.