Housing Highlights From Federal Budget 2019

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The federal budget came out yesterday & there were some minor actions targeted to first time buyers I wanted to highlight.

First off, don’t get excited. The impact in Vancouver is likely going to be limited, but basically the gov’t is increasing the home buyers plan RRSP withdrawn from $25k to $35k, effective immediately. Note that the funds still need to be repaid in the same 15 year window.

The second incentive is from CMHC which will provide 5% of a first time buyer’s down payment on a resale property & 10% on a new build. The buyer still needs at least 5% down, but this will help reduce borrowers mortgages to lower their payments.

The loan is interest free so from that perspective, why not take it. Lower payments, less interest. The funds will be repaid upon the sale of the home, but so far it is unclear how this would work exactly. CMHC might share in the capital gain or loss, receiving a portion of the sale price, but we will wait to see how this will be rolled out exactly.

There are requirements to meet this program, namely:
-household income under $120k
-borrowers must have the min 5% down
-the purchase price cannot exceed 4 times the buyers household income.

Based on this, the effective limit on purchases will be less than $500k so the impact of this is going to be limited in our market.

While the budget does allocate $10billion over 9 years for new rental homes, it does not bring in any tax breaks or reduced red tape to developers, which, in my view is a more productive & efficient way to attack these issues, but, hey, I’m not running the country!

The Age of Entitlement: “Let Them Eat Cake!” —-> “Let Them Have Houses!”

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*Foreword: by no means am I against affordable housing options.  I think it would be fantastic to find a way for families to live close to dt.  The point of this is that there are other options to raise a family than buying a detached home & that tradeoffs have to be made.

 

I fundamentally do not understand what this #donthave1million campaign is trying to achieve. I’m proudly biased when I say this, but Vancouver is the best city in the world. That’s why I moved here. That’s why millions of people are moving here. It’s what happens in great cities & is going to happen more & more unless humans stop reproducing. With that in mind, what exactly is the solution the #donthave1million rant is all about? If everyone deserves to own a detached single family home within the city limits, where are they supposed to go?

This argument of being entitled to own a house with a yard within a bike ride of downtown is naive. It neglects the basic laws of supply & demand, & confuses needs with wants. The price of real estate has risen in Vancouver because it’s a great city & people want to live here, just as they have for generations before, albeit at a rate not quite as rapid as today. Do you know who deserves to live in that lovely west side house, minutes walk from the beach & drive from downtown? Those who can afford to do so, those that have worked hard, saved & have enough money to pay for it. That’s life. That’s the world we live in. If that’s a hard reality to consider, then readjust your priorities & accept that, like all things in life, it’s a question of trade offs.

Want to buy a house for under $600k? Great! You have a ton of options in Metro Vancouver. Don’t want a 30+ minute commute to work? Great! Buy a condo or town home. What’s that? You don’t want to live in a condo or town home? Ok then, rent a house. Oh, I’m sorry, you want to buy a place? Ok then, figure out what’s most important to you & make a decision.

The reality is you don’t need a cool million to own a home with a Vancouver address. You need about $20k. If you feel that owning a house with a yard is your right, then stomach a longer commute to work, or join the millions of families around the world who live in condos. Trade offs – if this is your first time encountering them, then you’ve lived a very privileged life, my friend.

Let me ask you this: when you start arguing that you deserve a house with a yard in the city, where does it end? When is it enough? At what point is the line drawn where it becomes too much? Do you need a house? Do you need 2000 sq ft? Do you need a yard big enough for kids to play hide & seek in, just as you did when growing up? This is a confusion of needs & wants. It’s an argument that exposes a spoiled generation where we all get medals just for showing up.

You don’t need a million to live in Vancouver. You need to quit thinking you deserve something that millions of others would love to have.