Evidence of meeting #211 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was students.
A recording is available from Parliament.
11:45 a.m.
Liberal
Kim Rudd Liberal Northumberland—Peterborough South, ON
Thank you very much.
Do I have time for one quick question? I don't?
11:45 a.m.
Liberal
11:45 a.m.
Liberal
11:45 a.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Thank you, Mr. Chair.
I'm going to make this quick because I actually have to go to another committee to present as well.
I want to talk real estate. Can you tell me in your opinion what has been the impact of the B-20 stress test on real estate markets across Canada?
11:50 a.m.
Chief Executive Officer, Canadian Real Estate Association
Well, there's no question that it is the most significant regulatory measure that has had an impact on the market. When you look at late 2017 and early 2018, there was a drop-off. If I take Ontario as an example, it was the Ontario fair housing plan and then the introduction of B-20 sometime later that had a significant impact and downturn in the market there. When you look at Vancouver, we saw a similar impact from provincial foreign buyer taxes, vacancy taxes and B-20. In that market, sales are down 44% since B-20, versus a 10-year average.
In those markets, it's had a very significant impact. In other markets such as Calgary, which is a market where there was already economic trouble because of the energy industry, it's had a sort of compounding effect on the markets there. Those are down as well.
11:50 a.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
May I ask you then what the impact has been on young people and first-time homebuyers? You had an opinion column, I think, that you wrote for the Globe and Mail, where you said that 85% of millennials and new Canadians wanted to own a home—not necessarily a house, but just a home. Six in 10 feel passionately about it. What has been the impact on them?
11:50 a.m.
Chief Executive Officer, Canadian Real Estate Association
The impact has been that significant numbers of them have been frozen out of the market because of the requirement to have a higher down payment. When I talk about the housing spectrum in my remarks, really what I'm saying is that the impact of keeping people out of the market has repercussions for everybody on that spectrum.
In Ottawa, for example, there are 12,000 people on the waiting list for social housing, and the average time to get into social housing is over five years. If you're a family, it's close to 10 years.
When someone purchases a home, they're not just moving out of their parents' basement. They're moving out of a rental apartment. They're freeing up a rental apartment for somebody who's in social housing. That in turn frees up a place in social housing for somebody who's on the waiting list. That's sort of a simplification, but the fact is that's the way it works in housing. It's a continuum.
What we've found is that through a variety of policy measures the market has been impacted. In some places it's severe. We're also saying that we recognize the concern from policy-makers with household debt. It's really a fine knife-edge in balancing the concerns of the housing market with the financial system. That's why you hear the Governor of the Bank of Canada expressing concern around household debt.
11:50 a.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Let's talk about the Bank of Canada. They put out a report where they said the direct impact of B-20, not including the indirect impact, was that 10,000 people were kept out of the market. They also said that it would take the average family, the average prospective homeowner, an extra six and a half years to get that down payment together to purchase a home.
Do you think it will have an impact on real estate markets if B-20 in its present form is continued and there are more rate hikes in the next six years?
11:50 a.m.
Chief Executive Officer, Canadian Real Estate Association
Yes. Nobody can predict rate hikes, but one of the things we asked for early on—and I think it was expressed in the article you mentioned—was that there should be a cap on the B-20 because if interest rates rise, at a certain point the market regulates itself. If interest rates are at 5% and you have to qualify for an additional 2%, now you're at 7%. You really don't need to go beyond that because the market regulates itself.
11:50 a.m.
Conservative
11:50 a.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Different organizations have estimated a different impact for shared equity mortgages. I took the average price of a home in Canada, $472,000, which paints an inelegant picture. The government set aside $1.25 billion for these shared equity mortgages, and if I just assume no new homes, just the current existing product at 5%, I only arrive at about 52,000 people that this could help, but the government is claiming it's 100,000.
You've said you think it could help 100,000 people. It just so happens that 100,000 is the number that was used by Mortgage Professionals Canada and other organizations on what they estimated was the impact of B-20. Could you explain how these numbers are working out? You mentioned 100,000 for shared equity mortgages, but the math just doesn't make sense.
11:55 a.m.
Chief Executive Officer, Canadian Real Estate Association
I don't have a lot of science to support the 100,000. I was really quoting what CMHC was saying.
11:55 a.m.
Conservative
11:55 a.m.
Chief Executive Officer, Canadian Real Estate Association
My main message out of that was that we're really anxious to get more information about this program because we do believe that it will help first-time homebuyers to enter the market. There are a lot of questions around that, including whether you can purchase your equity back and what happens when you sell.
There are a lot of questions that are coming from my members. We'd like to learn more about that. As we learn more about it, we'll be able to crunch some of those numbers ourselves and figure out where we think that could help. Certainly, if it were in existence today.... Based on the experience in other countries such as the U.K. and Australia, it has been successful. It has helped people enter the market.
11:55 a.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Thank you, Mr. Chair.
The Bank of England's report on shared equity mortgages said that their system allowed shared equities of up to 60%. They said it made people buy larger homes and acquire more debt, which is probably why the government has limited it. D
o you think that equity mortgages, with what you know about the program right now, will offset the impact of the B-20 stress test?
11:55 a.m.
Chief Executive Officer, Canadian Real Estate Association
I think it does. I think it helps because you are—
11:55 a.m.
Chief Executive Officer, Canadian Real Estate Association
It's apples and oranges, but it will help more first-time homebuyers. The details of the program and how much you can put down are still not clear to us.
May 9th, 2019 / 11:55 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you, Mr. Chair.
First, Mr. Mohammed, I want to thank you for your testimony. It allows us to put a face to the asylum seekers who will be dealing with the potential effects of the bill we have before us.
Regarding your story and the difficult situation you experienced, I would like to ask you the following question.
Do you think Canada would have sent you back to the United States if Bill C-97 had been in effect when you came to Canada to request asylum?
11:55 a.m.
Refugee Claimant, As an Individual
Yes. I think it would have denied my coming here from the United States.
This will put a lot of people in danger. A lot of people are also coming here because they don't want to be sent back home. They are facing a lot of challenges and difficulties. People like me will be in bad situations if Canada passes this law. It will not help at all. I have seen a lot of people who want to come here who are dying every day trying to make it to a different country to make a better life for themselves because of war, torture, death and imprisonment.
