Thank you, Mr. Chair.
The Canadian Real Estate Association would like to thank the committee for the opportunity to participate in the study on the Canadian real estate market and home ownership.
CREA represents over 120,000 realtors from across the country. As one of Canada's largest single-industry associations, we represent real estate brokers and agents, as well as homebuyers and property owners throughout the country.
Canada's housing market is a key component of Canada's overall economic stability and an important generator of jobs and economic security for the middle class. In 2016, each home sale generated over $52,000 in spinoff spending. This translates to one job for every three real estate transactions. In addition, resale housing transactions, through the multiple listing service, generated more than $28 billion in consumer spinoff spending and created more than 198,000 jobs in 2016.
Most Canadians see their home as a source of pride, satisfaction, and accomplishment, not to mention a safe environment in which to raise their family, create happy memories, and create a sense of community. This is why CREA has been advocating for the indexation and modernization of the homebuyer's plan, a program that allows Canadians to use their RRSP savings to purchase their first home. We were pleased to see that the plan was included in multiple election platforms in 2015, and we will continue to work with the government to ensure it remains a valuable program for all Canadians.
As all real estate is local, it is important to note that the housing markets in and around Toronto and Vancouver have different realities compared with markets elsewhere in Canada, most of which are either well balanced or amply supplied. It is crucial to consider and reflect upon different areas of the country when enacting policy that affects a wide swath of housing markets, including places not targeted directly by the government's recent regulatory measures.
Consumer demand in markets such as Toronto and Vancouver is at an all-time high, and there is a significant shortage in the housing supply. Various factors have caused an imbalance in the supply and demand of homes, which in turn drives up prices significantly. As this is a complex matter, CREA is encouraged that the federal government created a working group comprising federal officials as well as provincial and municipal representatives. The three levels of government will be able to focus on the challenges in each region and recognize the local reality for all markets.
While the provincial governments in Ontario and British Columbia have recently introduced measures to assist first-time homebuyers, the federal government has tightened national mortgage rules, thereby lessening affordability for those seeking to enter the market. If the federal government continues to tighten mortgage rules, will this force provincial governments to implement further programs to assist first-time homebuyers?
CREA and its realtor members urge all levels of government to continue to work together to reach a healthy, competitive, and stable housing market. We are prepared to share analysis of local housing market trends and apply our knowledge and data to help the government policy-makers at all levels better understand how changes to housing-market regulations may affect communities across Canada.
Assistance for first-time homebuyers should be top of mind for all levels of government. First-time homebuyers need support to overcome the obstacle of saving for a down payment in order to reach their home ownership dream. The plan's purchasing power is steadily declining and it has become less valuable due to the increase in home prices.
We recommend that the plan be indexed to inflation to preserve its purchasing power and so that it can continue to help first-time homebuyers attain home ownership. Easing affordability concerns is a key principle of the plan, and Canadians should be able to benefit from this program more than once. Canadians and their families who face sudden life changes, such as job relocation, the death of a spouse, a marital breakdown, or the decision to accommodate an elderly family member, may need support in order to maintain home ownership. Expanding the plan to enable Canadians to use their RRSPs as a zero-interest self-loan is a fiscally responsible way to support families through a difficult period of change.
In the last eight years, the federal government has implemented six rounds of changes to tighten the rules for new government-backed insured mortgages and to contain risks in the housing market. These measures have been implemented, some over a very short time period, and their full impact has yet to be determined.
We recommend that the government take a pause to fully evaluate the cumulative impact of the changes before looking at implementing additional measures.
Thank you for your time. I would be pleased to answer any questions the committee members may have.