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Canada’s realtors told Prime Minister Stephen Harper that the country’s housing market is essentially balanced, as they kicked off a lobbying effort in Ottawa that saw them make appointments with more than 160 MPs.
About 300 realtors descended on the nation’s capital in recent days for a political action campaign that the Canadian Real Estate Association has carried out annually for almost 30 years.
CREA represents more than 100,000 agents in Canada. It had the 300-odd realtors who participated this year fan out and give politicians their take on the housing market, as well as press for changes to the Home Buyers’ Plan.
The meeting with Mr. Harper was late last week, CREA president Beth Crosbie tells me (she said realtors also spent time with NDP leader Thomas Mulcair, Liberal leader Justin Trudeau, and more than ten cabinet ministers).
The message that the realtors wanted the prime minister to hear was “that the market is quite balanced,” Ms. Crosbie says. “When we’re giving out statistics, they’re often weighted in terms of some of the bigger areas, like Vancouver or Toronto, but markets are very much local and while there are some areas perhaps that aren’t balanced, overall it’s very much a balance.”
Many prominent members of the real estate industry have accused the Conservatives (namely former Finance Minister Jim Flaherty) of going too far in their efforts to cool the housing market. The government has made a number of changes to the rules governing the mortgage insurance market in an effort to stem the growth of consumer debt levels, house prices, and the exposure of taxpayers to the housing market. Notably, Mr. Flaherty imposed new rules in July 2012 that caused a steep decline in home sales. Economists have generally applauded Mr. Flaherty’s rule changes, which came amid fears that a housing bubble could form.
While the meeting with Mr. Harper was at the tail end of last week, the realtors’ “political action committee days” didn’t officially kick off until this past Sunday. Ms. Crosbie says a bursary helps pay for the realtors to go to Ottawa, where they receive some training before meeting with an MP. “The idea is that the realtor lives in the district of the MP, so that the MPs are speaking to their own constituents and understanding how the market is working in their area and the importance of the issues,” she says.
Each year CREA picks two or three issues that it wants to discuss with the politicians. For the last couple of years one of the main ones has been the Home Buyers’ Plan (which Ms. Crosbie says she did not discuss with Mr. Harper directly).
The Home Buyers’ Plan has been around since 1992 (CREA was one of the organizations that first advocated for its creation) and allows first-time homebuyers to withdraw money from an RRSP to buy a home. The limit was $20,000 until 2009, when it was bumped up to $25,000. The amount that’s withdrawn generally needs to be paid back into the RRSP within 15 years to maintain the tax advantage.
The realtors’ main request is that the plan be indexed to inflation, which essentially means bumped up again.
“Already we see that the value is diminishing steadily,” Ms. Crosbie says. “So the ask, or the suggested solution to the government, would be that we index it. And the idea is that in 2016 they would bump it up by $2,500 and then again in 2020.”
But the Home Buyers’ Plan is controversial, and there have been calls for it to be scrapped altogether.
For their part, the realtors argue that it “helps consumers save on mortgage insurance fees and allows them to build home equity sooner.”
CREA is also asking that the Home Buyers’ Plan be made available to people who are relocating for a job, divorcing, or are going to have an elderly family member live with them.
To make their case, the realtors have been pointing to the number of jobs and economic spin offs that stem from home sales.
The government has been walking a tightrope in recent years between ensuring that the housing market continues to fuel economic growth, and preventing it from overheating to the degree that it could cause a major downturn in the future.