Speaking before the Standing Committee on Finance on Tuesday during pre-budget consultations for Budget 2025, Butler called on the Government to tackle the growing housing affordability crisis, highlighting the significant barriers facing future homeowners .
He highlighted the growing gap between Canadians who already own a home and those for whom homeownership may remain out of reach due to soaring housing prices and slow wage growth.
“Homeownership is no longer a reasonable expectation for middle-class youth,” Butler said, noting that many young Canadians are entirely dependent on family co-signers or financial donations to purchase property.
He called the situation a “tragedy,” explaining that the days when middle-income earners had easy access to the housing market are over, perhaps with the exception of those in rural communities on the Prairies and Atlantic Canada.
“Without co-signers, without significant down payment donations in major centers across Canada, there are no opportunities for moderate-income people,” he told the committee.
In September, the national average home price was $674,400, up 2.3% year over year, but about a 38% increase from a few years ago. In Ontario and British Columbia, the average house price is even higher, exceeding $1 million in Toronto and Vancouver.
Butler questions government’s new mortgage reforms
Butler also raised concerns about the government’s recently announced mortgage reforms, particularly the expanded Canada Mortgage and Housing Corporation (CMHC) program.
He questioned the rationale for increasing the insured mortgage loan limit to $1.5 million, calling it an excessive amount, especially compared to the United States, where a similar Federal Housing Administration program has a cap of approximately $766,000 in high-cost areas. Butler pointed out the stark difference, emphasizing that Canada, with fewer high-priced cities like New York or San Francisco, should not require such a high cap.
“My constant refrain is that house prices in Canada and, certainly in Ontario, are just incredibly high. And the measures that support a $1.5 million starter home should reasonably be questioned,” he said.
When asked by MP Pat Kelly whether increasing the insured mortgage limit to $1.5 million would help young Canadians access affordable housing, Butler noted that the upper limit of the program requires a family income of $352,000. “There is no reasonable hope that this will encompass the middle income range.
Growing concerns over housing supply
In his testimony, Butler also expressed serious concerns about Canada’s housing supply in the coming years. He warned the country faces a potential “free fall” in housing construction, particularly in high-demand regions like Ontario and British Columbia.
Butler pointed out that rising construction costs and slowing new home sales, driven by affordability concerns, are contributing to the slowdown. Developers are increasingly scaling back or canceling their projects because they are unable to sell enough pre-sale units to make these developments financially viable.
“We’re going to reach a point in four years where the total number of new units built in the Greater Toronto Area (GTA) will reach 1,500,” Butler said. “That’s the direction we’re going.”
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$1.5 million cap on insured mortgages housing affordability housing supply crisis insured mortgage limit real estate market Ron Butler Standing Committee on Finance
Last modification: October 22, 2024