In Ottawa, millennials are struggling to buy homes. Although the capital has decided on helping those in need, the Royal Bank of Canada (RBC), says there really isn’t any sort of “magic bullet”. The federal budget release is pending, leaving many on the edges of their seats, for the millennial housing crisis is in full swing.
The pre-election budget is set to be released on March 19th. According to Finance Minister Bill Morneau, the budget is likely to include aid for millennials with respect towards the housing market. Unfortunately, Morneau didn’t provide specific details on how this would actually happen, but rumours regarding the mortgage stress test are on the rise. The option is one that’s been widely debated, as it truly isn’t meant for the current housing market. The option needs a rehash before it is deemed to be beneficial towards real estate according to many.
Many say that stimulating demand, as well as increasing purchasing power, may be good for the housing market. However, RBC warns this may not be the case, but rather, counterproductive. When demand is stimulating, the times must be able to cope with that demand, according to Robert Hogue, senior economist with RBC. Rather than aid millennials, any stimulating of demand may result in price inflation, and affordability issues.
Housing policies have recently been trialed by all three major parties, and it’s been mentioned that these policies may be added to their respective campaign platforms. It should be noted that a common theme among these policies is aid for millennials interested in buying homes.
According to Hogue, this aid may not even be possible. Land developers already have to suffer through the project approval process, therefore making the actual supply of housing much smaller than is needed. Their policies should be focused on making these project approval processes far easier to complete, and in succession allow for housing supply to ascend to an appropriate point.
When discussing increasing the housing supply, Hogue suggests that we take a look at condos, and see how we can merge that technology into new and readily available concepts. “You can increase the density by various forms, alternative forms housing. Condo apartments have been the favourite kind of housing that’s been built over the last 20 years…”. Later on Hogue even mentions that single detached family homes may be nearly perfect for the average millennial and their family.
The CMHC is set to propose a new plan that will provide every Canadian with an affordable home. This will be taking place by 2030, and is expected to be of significant stature. The strategy is reportedly based off a $40 million dollar budget, and is expected to create nearly a hundred thousand housing units. This is expected to be complete by 2028.