Speaking before the Standing Committee on Finance on Tuesday during pre-budget consultations for Budget 2025, Butler called on the government to tackle the deepening housing affordability crisis, emphasizing the significant barriers facing prospective homeowners.
He pointed to the widening gap between Canadians who already own homes and those for whom homeownership may remain out of reach due to soaring property prices and sluggish wage growth.
“Homeownership is no longer a reasonable middle-class expectation for young people,” Butler said, emphasizing that many young Canadians are entirely dependent on family co-signers or financial gifts to buy property.
He described the situation as “a tragedy,” explaining that the days of middle-income earners easily accessing the housing market have vanished, perhaps with the exception of those in rural communities in the Prairies and Atlantic Canada.
“Without cosigners, without significant gifts of down payment in major centres across Canada, there are no opportunities for people of a moderate income,” he told the committee.
As of September, the national average home price was $674,400, up 2.3% year-over-year increase but a roughly 38% increase from give years ago. In Ontario and British Columbia, the average home price is even higher, surpassing $1 million in Toronto and Vancouver.
Butler calls into question government’s new mortgage reforms
Butler also raised concerns over the government’s recently announced mortgage reforms, particularly the expanded Canada Mortgage and Housing Corporation (CMHC) program.
He questioned the rationale behind increasing the insured mortgage cap to $1.5 million, calling it an excessive amount, especially when compared to the U.S., where a similar program under the Federal Housing Administration has a cap of around $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 the price of houses in Canada and, certainly in Ontario, is just incredibly high. And measures that support a $1.5 million starter home have reasonably got to be called into question,” he said.
When asked by MP Pat Kelly if the increase to the insured mortgage cap to $1.5 million would help young Canadians with housing affordability, Butler pointed out that the upper limit of the program require a household income of $352,000 “There is no reasonable hope that this encompasses the average range of income.”
Growing concern over housing supply
In his testimony, Butler also raised significant concerns about Canada’s housing supply over the next several years. He warned that the country is facing a potential “freefall” in housing construction, particularly in high-demand areas like Ontario and British Columbia.
Butler pointed out that rising construction costs and slowing new home sales, driven by affordability challenges, are contributing to this downturn. Developers are increasingly scaling back or cancelling projects because they’re 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 constructed in the GTA (Greater Toronto Area) will be 1,500,” Butler said. “That’s the direction we’re headed.”
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$1.5 million insured mortgage cap housing affordability housing supply crisis insured mortgage limit real estate market ron butler Standing Committee on Finance
Last modified: October 22, 2024
