The Canadian Real Estate Association is lobbying the federal government to allow parents to borrow from their registered retirement savings accounts (RRSP) to help finance their children’s down payments.
CREA, with more than 100,000 agents, brokers and salespeople, has made a 2018 pre-budget submission proposing changes to the Home Buyers’ Plan (HBP). The Home Buyers’ Plan (HBP) currently allows a first-time buyer to withdraw up to $25,000 from an RRSP account to help purchase or build a home, the CREA wants to expand the program so that parents can withdraw from their RRSPs for their children to help purchase a home. Under the plan both parents would be eligible to take funds from their accounts, the CREA would also like to raise the maximum withdrawal limit to $35,000. The government requires that RRSP withdrawals are paid back within 15 years. Family already plays a big role in financing first-time buyers. A survey by Genworth Canada, a mortgage insurer, found that 22 per cent of first-time buyers received a gift from a family member and 12 per cent received a loan. “As many parents are already ‘loaning’ their savings to their children, a formalized mechanism which allows for the transfer of RRSP savings would help not only increase the available down payment and reduce the amount borrowed, but also limit risk to the lender,” CREA contends. The intent of CREA’s proposals is to provide the opportunity for young Canadians to own a home. CREA is also recommending an expansion of the home buyer’s program beyond first time buyers and to include those who have undergone major life events, such as a divorce or relocation for work. As part of Ontario's Fair Housing Plan and Rental Fairness Act, the provincial government is introducing a new standard lease that will be mandatory for private residential leases signed on or after April 30, 2018, including tenancies in single and semi-detached houses, apartment buildings, rented condominiums and secondary suites (such as basement apartments).A copy of the new standard lease is available by clicking here. It is important to note that this standard lease form does not apply to most social and supportive housing, retirement and nursing homes, mobile home parks and land lease communities, or commercial properties. The government will develop separate standard leases to address these other types of residential tenancies.
Home ownership is a goal for most of us, and millennials appear to be the most optimistic group. According to an RBC poll, two in five millennials said they intend to buy a home in the next two years. But the cost of home ownership and things like regulatory changes can make saving for a downpayment more difficult and, for many, put the dream of home ownership out of reach.Sometimes, however, first-time buyers may not be looking at all their options. A little flexibility and compromise can help make ownership more accessible when considering the following:
Begin with a starter home. Few people spend 50 years in one home these days. Think about your lifestyle for the next five to 10 years and make a decision based on that. Your dream home in your dream neighbourhood may still be yours, just a bit later in your life. Get a renter. Could you afford the home you want if you rented out part of it? Many people create a basement apartment or rent out a second bedroom as a way to offset their mortgage payments. Consider co-ownership. Buying a property with family or friends is a great way to get your foot in the door. Discuss options with your mortgage specialist and be sure to establish a solid contractual agreement that will help avoid or mediate any future disagreements when selling the property, renegotiating terms or buying each other out. Be realistic. Don't expect perfection. Every home has some issues and you may have to compromise or decide what you can and can't live with. What is a permanent feature versus something that's an easy aesthetic fix? Set your priorities, but be realistic and flexible. Be patient. Style your home slowly and resist the temptation to furnish it from top to bottom the day after you move in. Get creative with chic but less expensive, gently used furniture or pieces that may not last a lifetime but will save you money today. Weak supply continues to limit the ability of homebuyers in the Greater Toronto Area with prices soaring.
A new report from the Building Industry and Land Development Association (BILD) shows a 13.2% drop in overall inventory at the end of December compared with a year earlier; there were just 11,397 new homes available to buy. Compared to 2007, there was a 60.3% drop. For single-family homes, the slump was 74.4% compared with 2007, with inventory of just 3,481 new homes available. “Low inventory and escalating prices across the board are behind the highs and lows of the sales numbers we saw in 2017,” said David Wilkes, BILD’s new President and CEO. “Our industry wants to build new homes to increase the housing supply in the GTA, but we need municipalities to work with us to expedite the process by simplifying the development approval process, updating zoning by-laws to align with provincial policies, and servicing developable land with critical infrastructure.” The figures, provided by the Altus Group (BILD’s official data source) shows that there were 44,143 new homes sold in the GTA in 2017, the fourth strongest year since tracking began in 2000. Condos took an 82.5% share of those sales (36,429 units) while 17.5% were single-family homes (7,714). The benchmark price for a new single-family home was $1,225,774, up 23.2% from a year earlier; new condo prices surged 41.3% to $716,772. “While many end user buyers have been looking to the new condominium apartment sector for more affordable homes, some are now starting to be priced out of this segment as well,” said Patricia Arsenault, Altus Group’s Executive Vice President of Research Consulting Service. Condo developers in Toronto are under extreme pressure to deliver more units as demand continues to escalate.
An assessment of the market from Urbanation reveals that 35,074 new condos were sold across the GTA in 2017, rising sharply from the 26,893 sold in 2016. Absorption hit record highs (84% of units launched were sold by year-end) and demand from investors escalated even as prices jumped 33% year-over-year to $876 per sq ft in Q4. Unsold inventory was down to below 8,000 – it hasn’t been that low since 1999 – but completions dropped to a five-year low of 13,513 units in 2017, with only 62% of units that were scheduled for delivery last year reaching occupancy. “While the results for 2017 prove how remarkably strong demand can be for GTA condos, the level of activity underway is putting the industry under tremendous pressure to push the units through the development cycle”, said Shaun Hildebrand, Urbanation’s Senior Vice President. “A more sustainable pace of roughly 26,000 sales is likely in store for 2018.” Urbanation’s calculations show that speculation dropped in 2017 from 4% of units bought and sold within 12 months in 2016, to 2.9% by the end of 2017. |
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