In the realm of real estate, the cities of Toronto and Vancouver have long stood…
The housing affordability crisis in Canada has made homeownership an unattainable dream for many Canadians. While industry experts recognize the need for short-term solutions to ease the burden, the head of the country’s housing agency takes a different stance.
The Supply Shortage Dilemma
Addressing the housing affordability crisis in Canada requires a substantial increase in the housing supply. According to the Canada Mortgage and Housing Corporation (CMHC), the country needs to add 3.5 million housing units by 2030 to restore affordability. However, this solution would take years to implement, leaving many struggling homeowners in need of immediate relief.
Calls for Short-Term Relief Measures
Jasmine Toor, the director of public affairs for Mortgage Professionals Canada (MPC), highlights the urgent need for short-term measures to support families and individuals trying to purchase their first homes. She proposes extending amortization periods from 25 to 30 years for borrowers with insured mortgages, providing a much-needed break for aspiring homeowners. Toor also suggests raising the current home price cap of $1 million for insured mortgages to $1.25 million, reducing barriers to entry for younger Canadians.
CMHC’s CEO Disagrees
In contrast, CMHC president and CEO Romy Bowers disagrees with Toor’s proposals. She argues that extending amortization periods merely makes credit more accessible, leading to higher long-term costs for homeowners. Bowers emphasizes that such quick fixes may not address the underlying supply constraint issue in the long run.
Focus on Increasing Housing Supply
Instead of short-term solutions, Bowers believes the focus should be on increasing the housing supply across various price points. Balancing the high and low ends of the market could alleviate affordability challenges more effectively in the long term.
Potential Solutions to Ease Short-Term Affordability Challenges
Toor recognizes the importance of increasing the supply but contends that more immediate solutions are needed to ease the current affordability crisis. Beyond extending amortization periods and keeping house price limits in line with major cities, she suggests eliminating stress tests on mortgage transfers, switches, and renewals. Toor also proposes establishing a permanent national housing roundtable to share best practices across jurisdictions, fostering collaboration in tackling the crisis.
Advocating for a 50-Year Amortization
Some experts, like Dustan Woodhouse, president of Mortgage Architects, advocate for even more extended amortization periods. Woodhouse proposes a maximum amortization period of up to 50 years for existing borrowers facing higher monthly payments. This approach aims to alleviate financial tension for current mortgage holders, preventing them from losing ownership of their homes.
Balancing Short-Term Relief with Long-Term Solutions
The housing affordability crisis demands a delicate balance between short-term relief and long-term solutions. While immediate measures can provide much-needed assistance to struggling homeowners, a focus on increasing the housing supply remains crucial to achieving lasting affordability. As the debate continues, finding a comprehensive approach that combines both short-term and long-term strategies will be essential in addressing Canada’s housing affordability crisis.
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