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By Alessia Proietti and Sheldon Spackman

Central Alberta REALTORS Association

Supply issue: Local real estate industry reacts to federal budget

Apr 8, 2022 | 2:36 PM

Housing is a hot topic from the federal government’s 2022 budget announced Thursday. The Central Alberta REALTORS Association (CARA) says while the strategies are positive, they may not be solving the root cause of the current problem.

“Right now, until we have a few more sellers that are jumping into the current market, there’s nothing in this budget that really helps us out in the short term,” said Larry Westergard, Executive Officer of CARA.

“It is right now a supply side issue. There are just simply not enough properties on the market if you’re a home buyer right now looking to purchase.”

The first chapter of the budget is titled “Making Housing More Affordable” with commitments relating to affordable housing construction, greener homes, tax credits, aid for first time home buyers, curbing foreign investment, and more.

For Westergard, the disconnect between supply and demand is a main factor driving up current housing prices.

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“We’ve got just over two months of supply in the market in Red Deer and regionally. That, coupled with the fact that our inventory on both sides of that spectrum is down 30 per cent year over year,” he said. “It’s definitely a seller’s market right now.”

The federal government also acknowledges the housing shortage in their budget. They say while an estimated 200,000 new housing units are built in Canada each year, Finance Canada and the Canada Mortgage and Housing Corporation (CMHC) estimate the country needs to build at least 3.5 million new homes by 2031 to keep up with population trends.

Westergard says he is excited, however, to see affordable housing initiatives for municipalities in the budget.

A proposal of $4 billion over the next five years will be provided to CMHC to launch a new Housing Accelerator Fund, to help cities meet their needs and realities, with the goal of creating 100,000 new housing units overall.

“Those are some exciting potential programs that I imagine the new home builders are going to really want to take a look at. That will hopefully really help streamline a lot of the processes that they have to go through to get some of the product onto the market and to the consumer,” he said.

Extending the Rapid Housing Initiative for those at risk of homelessness, $1.5 billion over two years to the CMHC is expected to create 6,000 units, with at least one quarter reserved for women-focused housing projects. That same commitment was also made for co-op housing initiatives, or rent based apartment buildings.

Finally, $2.9 billion is proposed for the repair of 17,980 units and construction of 4,300 units for vulnerable populations like shelters and homes for seniors and individuals with disabilities.

Westergard was also pleased to see tax credits for multi-generational homes and first-time buyers.

The Multigenerational Home Renovation Tax Credit offers families up to $7,500 for constructing a secondary suite for a senior or adult with a disability living in a home with multiple generations.

For first-time home buyers, the budget proposes a Tax-Free First Home Savings Account, similar to a Registered Retirement Savings Plan (RRSP), to save up to $40,000. Also proposed is the doubling of the current tax credit to $10,000 and an extension of the current Buyer Incentive, to share borrowing costs with the government.

Overall, Westergard says while the budget has its strengths, the main solution to the unstable housing crisis in the short term may be time.

“A lot of these programs are good from a long term perspective. The consumer just has to be patient short term and understand that this is something that will eventually work its way through as consumer confidence goes up and sellers put those homes on the market,” he said.

CARA represents 550 real estate brokers and agents in the region. The organization shares business tools and information relating to the real estate industry.

READ: Budget 2022: A look at the highlights of the federal Liberal fiscal plan