The Canadian housing market is experiencing significant shifts in 2024, driven largely by federal housing policies designed to improve affordability, curb demand, and address housing shortages. For home buyers, these changes bring both opportunities and challenges. In this blog, we explore the key policies shaping the real estate landscape and their impact on prospective home buyers in Canada.
1. Impact of the Federal Foreign Buyer Ban Extension
What Is the Foreign Buyer Ban?
The Canadian government extended the Foreign Buyer Ban into 2024, restricting non-Canadians from purchasing residential properties for investment or occupancy purposes. Initially introduced in 2023 to cool the overheated market, this ban is aimed at freeing up housing for local buyers.
How Does It Impact Home Buyers?
- Reduced Competition: With fewer international investors competing for residential properties, Canadian home buyers may find more opportunities to secure a home.
- Moderated Home Prices: Experts suggest the foreign buyer ban has contributed to a slight stabilization of housing prices in major urban centers like Toronto and Vancouver.
- Impact on Luxury Housing: While entry-level housing sees minimal effect, luxury markets in urban centers experience reduced demand.
2. First-Time Home Buyer Incentive (FTHBI) Changes
What Is the FTHBI?
In 2024, updates to the program include increased thresholds for eligible income and property value.
Key Updates for 2024:
- Increased Eligibility: The maximum qualifying income has been raised to $150,000 (previously $120,000), helping middle-income Canadians access this incentive.
- Higher Home Value Limit: Buyers can now qualify for homes valued up to $750,000 in select cities like Montreal, Vancouver, and Toronto.
Benefits for Home Buyers:
- Reduced Down Payments: Buyers can access government assistance to reduce upfront costs.
- Affordable Entry into Homeownership: The updated thresholds allow buyers to consider properties in more competitive markets.
3. The Housing Accelerator Fund (HAF): Addressing Supply Shortages
What Is the Housing Accelerator Fund?
To combat housing shortages, the federal government has introduced the Housing Accelerator Fund. This initiative provides funding to municipalities to fast-track the construction of affordable housing and streamline building approvals.
Impact on Home Buyers:
- Increased Housing Supply: Over the next two years, the fund is expected to add over 100,000 new homes nationwide.
- Affordable Housing Options: The program prioritizes affordable housing, giving first-time buyers and low-income families greater opportunities.
- Shorter Wait Times: Faster approval processes mean quicker availability of new housing projects.
4. New Policies on Mortgage Stress Test
What Is the Mortgage Stress Test?
The Mortgage Stress Test ensures home buyers can afford their mortgage even if interest rates rise. In 2024, some adjustments are being discussed to make the test more accommodating amid high interest rates.
Impact on Home Buyers:
- Increased Buying Power: Proposed changes could allow more flexibility for buyers to qualify for mortgages.
- Impact on Interest Rate Affordability: Buyers still need to plan for rate increases, but less stringent stress testing could open doors to more affordable properties.
5. Affordable Housing and Rental Incentives
The federal government has also prioritized policies that support affordable housing initiatives and rental supply growth:
- Affordable Housing Projects: Increased funding for nonprofit and cooperative housing projects.
- Incentives for Rental Construction: Tax credits and subsidies encourage developers to build more rental properties, addressing the housing crisis in cities.
Benefits for Buyers and Renters:
- Access to Affordable Units: Buyers struggling to enter the market can find affordable rental options while saving for a down payment.
- Reduced Competition in Home Buying: A stronger rental market could ease pressure on the resale housing sector.
What Do These Policies Mean for Home Buyers in 2024?
The Canadian government’s federal housing policies for 2024 aim to tackle affordability, increase housing supply, and provide financial relief to first-time buyers. While policies like the Foreign Buyer Ban reduce competition, incentives like the First-Time Home Buyer Program make homeownership more attainable for middle-income Canadians.
However, buyers should remain mindful of mortgage stress tests and interest rate changes as they plan for homeownership. Staying informed and working with a real estate professional will help navigate these evolving market conditions.