Welcome back to Simply Real Estate w/ Todd C. Slater. We’re going to be talking about the election today. What’s going to happen now that we’ve got a minority Liberal government? How are future changes going to impact Real Estate, and will they be able to keep their commitments?
As you remember, before the election we were a little bit concerned about some of the promises that have been made by the candidates. Well, how did they all fare with their promises? Let’s break it down. We’ll talk about the Liberals first. Of course, winning a minority government. They did start off with a majority, but now they’ve got a little less power than what they had before. Some of the commitments that they were making in the real estate world were a little bit questionable:
First and foremost, the biggest topic of the election was the social housing, and what we were looking at, of course, is low-income rental properties. This was a big part that people wanted to hop on the soapbox for real estate. The Liberals were looking at adding 100,000 to 150,000 units over the next ten years. The NDP were saying that they’re going to give 500,000 units over the next ten years. And the Conservatives really didn’t throw much into the mix but we’ll get back to them in a minute.
Let’s talk about the reality of whether it’s even possible to have that much construction happen by a government that could pull that off in ten years. Well, we’re just going to dismiss the idea of 500,000 units. Not possible. We reached out during our radio show at Simply Real Estate and the experts that we had on just sat there and shook their heads. There is no way these numbers could ever happen.
In fact, Mike Czestochowski, the executive vice president of CBRE the biggest commercial real estate company in the world, said we would have to stop construction completely in the GTA and put everything in to meet that low-income housing number. So, is that realistic? No, not at all. This is one of those things that when we look at campaign promises now that the campaign is over with, what is truly going to happen?
Now, let us flip back over to the Conservatives. So, Andrew Scheer had said why don’t we take a 25-year amortization and bump it up to 30? Now, this has happened in the past under the Harper government. In fact, we had up to a 40-year amortization at one point. Now, what does this do? Well, of course, it lowers your monthly payment because you’re spreading it out over 30 years, not 25. Does it make it more affordable?
It does, but a lot of industry experts agree that this might not necessarily work out as expected. Phil Soper, CEO and president of Royal LePage, added that if this happened, we might heat up the market which means prices are going to go up, and really any savings that we were going to have with that new amortization was going to go to waste. So, does increasing amortization make a lot of sense? No, perhaps not, a lot of industry experts were a little bit concerned about the idea.
So, what is the final answer?
Well, we did hear from a few candidates that talked about adjusting the stress test. This is the one, of course, that was implemented by the Liberal government in January 2018 and really slowed down the market. Now after 18 months, we started to see a recovery to the market. People started to accept the stress test, but here’s the thing. Why don’t we get rid of the stress test for several provinces? The three that worry us the most of course are Alberta, Saskatchewan, and Manitoba.
These are the ones that are suffering, right now. We all know that unemployment is going up very high in those areas. People are struggling. They’re having a tough time paying their bills. Now, we’re not trying to create a building or selling boom in those marketplaces, but the people that can actually afford to buy some of the properties that are in distress right now still have to go through a stress test. So, in other words, people can’t even buy the properties when they can afford it to get them out of the situation that they’re in. This is bad policy. Painting all the markets with one brush just doesn’t make any sense.
The one thing that we do hope does happen is that the Conservative Party had suggested that if you’ve already been in a mortgage and paid it properly for the last five years, then when you come up for renewal, you can move lenders without having to go through the stress test, again. All parties should definitely agree with this one. If you’ve actually been solid with your payments, you’ve done everything you needed to do. Have you not proven yourself? You should be able to go to the monopolies and go “Hey listen, who wants my business? Let’s get competitive with these rates” but unfortunately when we take a look at what the government currently has in place, you can’t do that.
So even if you’ve been paying a mortgage the last ten years, and let’s say you want to change lenders. You have to go through a stress test, again. This is nonsensical. Every industry expert agrees that this should be removed. Benjamin Tal, the deputy chief economist at CIBC, was on Simply Real Estate last week and said this is the one thing they need to adjust. So, we’re hoping that the new government actually decides to implement this policy.
But here is the biggest problem that we still have: inventory. Now, we didn’t hear one candidate truly make any good ideas come through in their campaign about how they’re going to correct inventory. Tim Hudak, CEO of the Ontario Real Estate Association, continues to say we need more properties to be built. You want to bring house prices down? The only way we can do that is with inventory. We have a shortage and everybody in Toronto that’s trying to rent realizes that there’s nothing to rent.
So, how are we going to take care of this? Well, most importantly, adding inventory. That should really be the mandate for this new government for the next four years. Most of this happens at a municipal level or possibly provincial, so let’s talk with the other people that are involved. Let’s get rid of the red tape. Let’s get the builders going and we’ll be able to ease the inventory problem. We’ll be able to get prices to stabilize, and if you don’t own a house right now, you’ll have an opportunity to buy something that’s probably a little bit more affordable.
We need to keep the pressure on all the governing bodies to make this happen, and if they don’t do it in the next four years you get to pick the next candidate who may not be telling us the truth again! So, it’s going to be kind of interesting.
News Of The Week
Now, let’s just touch up on the market. We’re doing pretty well, and the numbers are slowly easing up. One of the things that people are talking about is the fact that interest rates continue to stay stable. The banks are giving some decent discounts. We’ll wait and see what happens by the end of the year with the Bank of Canada. They may not move prime, but we know the US FED is trying to stay real competitive and they keep dropping their interest rates.
So, right now we’re in a pretty stable market place so if you’re thinking of buying your first home or for that matter, a move-up home, now is probably a good time. The prices are right there and you have some time to negotiate. We don’t think you’re going to get overrun by multiple offers in some market places, and quite frankly you can’t beat homeownership.
New Time and Date For Radio Show
Now as a quick reminder, you can catch Todd: new time, new date for Simply Real Estate on Newstalk 1010 is Sunday at noon. That’s right we changed over. We were on Saturday for a very long time. Now we’re starting on Sunday at 12 PM make sure you tune in. And as always, if you miss the show you can always go to Newstalk 1010 and catch any of our previous shows. So once again, Sunday at noon, really great timeslot. We’re really excited about moving over.
As always, if you have any questions or are unsure about anything we covered this week, you can book a phone meeting or in-person meeting with Todd below, and he would be glad to help you out.
Also, be sure to subscribe to our youtube channel to be notified when the next episode is released because you’re definitely going to want to tune in for that one.
Other than that, we hope you have a great rest of the week, and we can’t wait to see you next episode!