Toronto real estate agent calls federal incentives for first-time homebuyers ‘a baby step’
Real estate agents and first-time homebuyers in Toronto say the incentives presented in the federal budget on Tuesday may not help level the playing field in the housing market.
First-time homebuyers Jade Mendoza and Michael Duchiaume have been looking for a one-bedroom condominium in Toronto for about six months. They are looking to put down between five and 20 per cent of the cost.
“The problem is it’s very expensive to find a one-bedroom downtown right now,” Mendoza said.
The pair hoped the federal budget would include some program changes that would have helped them purchase their first home.
“I was expecting different changes. For example, I was expecting maybe the 30-year amortization increase. I think that would have made a really big difference,” Mendoza said.
Finance Minister Bill Morneau tabled the federal budget in the House of Commons on Tuesday afternoon. He then announced that buyers with a minimum down payment for a mortgage will be able to finance 10 per cent on a new home or five per cent on an existing home through a shared equity mortgage with the Canadian Mortgage and Housing Corporation (CMHC).
The incentive would only be available to households with incomes under $120,000.
New buyers will also be able to withdraw $10,000 more from their retirement savings plans to fund the purchase under the new Liberal plan.
Morneau said the new measures could result in about 40,000 new homebuyers in Canada a year.
A lot of real estate agents working in Toronto say that the increase to the retirement savings plans contribution limit and the CMHC interest free loans are good, but it is not enough as it does not affect the sky-rocketing housing prices in the city.
“What would really make an impactful change is to ease the mortgage stress test and increase the amortization to 30 years,” said Lisa Bednarski, a representative of Brel Union Realty. “It (the Liberal’s plan) is great for areas outside Toronto.”
Some real estate agents are encouraged by the change, calling it a “baby step in the right direction.”
“It’s been acknowledged that a change is needed and it’s great to see some motion going forward,” said mortgage agent Jeff Kioussis
According to the Toronto Real Estate Board, the average price of a detached home in Toronto last month was almost $1.3 million. The price for a townhouse was an average of $765,000 and a condominium was just over $612,000.
“You kind of have to choose between your budget being flexible or your location being flexible,” Duchiaume said.
At the same time, Duchiaume says that any change is positive considering the challenges to homebuyers.
“It’s very hard for millennials and young couples to purchase their home.”
With files from the Canadian Press