How the 2019 Federal Election Will Impact Real Estate | Ep. 5

Welcome back to Simply Real Estate w/ Todd C. Slater. So, we’ve got a lot to talk about this week. Most importantly we’re going to be focusing on what’s going on in the election and some promises they’re making for real estate. But before we go down that road, let’s talk about what the fall market’s doing.

News Of The Week

It is turning out to be a great fall market. Seems like interest rates are going to stay where they are. We know that the US FED has continued to reduce interest rates. Bank of Canada isn’t budging, but the good thing is that a lot of the mortgage companies are starting to do discounts, pretty significantly. In fact, the majority of all mortgages right now are below 3% interest. So, if you’re on the fence, maybe it’s a good time for you to start looking at buying.
But let’s talk about the feature this week and what is happening in the world of politics. We want to talk about the election and some of the promises that are being made by some of the parties.

The 2019 Federal Election

So, let’s take a look at the political campaigns for some of the main parties and how they could affect real estate.

 

If we look at the conservative party, some of the things that they are now making commitments to may give people some pause. A lot of the economists right now are saying that if we change amortization, the length of the time that you have to pay off your mortgage, from 25 to 30 years (and this is one of the conservative party commitments) that it’s going to create a problem. They think that we’re going to have a huge uptick in real state, and all of a sudden, prices are going to go crazy.

The other thing, if you’ve tuned in to Simply Real Estate at News Talk 1010 or here at the Simple Investor, the one thing we’ve always talked about is the stress test.

Is it a good thing? Should there be different rules? Well right now, the Conservative Party is saying that the people that have already had mortgages should not have to go through a stress test if they decide to leave the lender that they’re currently with. And we agree with that wholeheartedly. In fact, we think a stress test is there for the right reason but not for the right people. So, this is one of the things we think the Progressive Conservative Party should have a bit of a leg up on some of the commitments.

Now, the Liberals have started their campaign in September with having CMHC as your partner if they give you 5% or 10% of the down payment for a property. So, in other words when they introduced it, they wanted to be able to allow people with an income up to $120,000 to be eligible for a proper down payment. Now, here’s the catch though. Do you really truly want the government as your partner. You know what, the majority of people are saying no because right now, here we are in October, they’re not having a lot of takers for this program.

Now, let’s talk about the NDP because the NDP right now are getting very vocal they’re saying that they’re going to increase the benefits and increase all sorts of things.

But most importantly, they’re saying they’re going to increase affordable housing by tune of 500,000 units in the next ten years. First and foremost, if they did get elected, they’re not going to be in power probably that long. We have to take a look at a commitment. When parties make a commitment, can they actually fulfill it? It’s great somebody wants to turn around do 500,000 units. Do you know how hard it is to build 500,000 units in the next 10 years? Well that’s not even going to put a dent into what’s going to be really required. We have to start talking about what some of these parties are committing to.

Now, you know we don’t want to start saying one party’s better than the other, but we have to be realistic about where our real problem lies. First and foremost, in real estate it’s always supply and demand. If you have very little supply, demand goes up. What happens? Prices push up. Now if we’re turning around and we’re limiting people to a certain price range, guess what happens to that price range. It goes up all by itself because it’s the only one people can afford.

There’s no such thing as controlling real estate prices. You’ve got to leave it to the open market. The government’s done everything they possibly could by the introduction of the stress test in 2018, introduction of foreign buyer tax in Ontario in 2017, in fact right now one of the parties is also saying that they’re going to put a foreign buyer tax right across Canada. Now, one of the things that we have to remember is that we’ve got some struggling economies. Ontario is a great province and it’s doing well. BC has done well but we’ve got some other provinces that are struggling financially. They do need people to immigrate. They do need people to spend money, and they do need to have more infrastructure put in.

How do we do that? Well, we’ve got to allow new buyers and new immigrants in. It’s not going to change if we ask for a foreign buyer tax when people are trying to immigrate to Canada. It’s not going to help anybody. We understand to keep an overheated market in control they had to do some of these measures. But we believe if we’re going to continue to have a balanced real estate economy, we’ve got to watch interest rates, make sure that you’re not over buying, and most importantly we’ve got to allow more development. This is the number one thing that we’re going to need. No matter what people do to control pricing, we still need more places to live, and we believe that’s got to be one of the main things that some party has got to step up and actually deliver.

That’s kind of our rant this week for the political avenue. We know that a lot of people don’t necessarily agree with everybody’s opinion but looking at the big picture the most important thing is ownership. That’s one of the things that we’re going to always encourage you to have for yourself and your family, a place to live and grow up, and of course if you’re able to, you should buy investment real estate.

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!

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