Prime Minister Justin Trudeau and his Liberal government unveiled the $480.5 billion federal budget for 2024. Inside the 400-page-plus budget includes more than $52 billion in new spending over five years that courts a wide array of voters heading into next year’s election. While the budgetary blueprint proposes various support payments, tax increases, and finance programs for Indigenous communities, Ottawa is also looking to tackle the housing file with nearly $9 billion in new spending.

It had been widely expected that the prime minister and his team would dedicate a large portion of the federal budget to housing. Heading into the official unveiling, the Trudeau government showcased multiple components of Canada’s Housing Plan to bolster supply, speed up construction, and restore housing affordability.

Days after the Parliamentary Budget Officer projected that the country would need more than three million homes to address the national shortage, what did Trudeau and the Grits offer Canadians?

“Fairness for every generation means making housing affordable for every generation. For generations, one of the foundational promises of Canada’s middle-class dream was that if you found a good job, worked hard, and saved money, you could afford a home. For today’s young adults, this promise is under threat,” the government said.

“The government is taking action to meet this moment and build housing at a pace and scale not seen in generations. We did it when soldiers returned home from the Second World War, and we can build homes like that again. And we can make sure that Canadians at every age can find an affordable home.”

But how will this be done? Let’s look at what the 2024 federal government officially proposes for the housing sector.

Property Transformations

A vital component of the plan is converting various properties into homes. For instance, the government plans to spend $1.1 billion over ten years to convert 50 per cent of federal offices into homes. Ottawa also intends to construct houses on Canada Post land, explaining that the roughly 1,700 Canada Post offices nationwide can be used to build new homes while keeping the postal service intact. Additionally, Trudeau wants to assess redeveloping buildings and properties on national defence lands for civilian and military use.

Apartment Construction Loans

This year’s federal budget suggests providing an extra $15 billion to the Apartment Construction Loan program. The 2017 program was initially designed to build at least 30,000 new rental apartments throughout major urban centres, rural areas, and small communities. The additional funds could inject approximately 131,000 new apartments into the Canadian real estate market within the next eight years.

30-Year Amortization Period

For months, industry leaders, market watchers, and economists have called for increasing the maximum amortization period to 30 years. Canadians might have heeded these suggestions, proposing to adjust mortgage insurance regulations to allow for 30-year mortgage amortization for first-time homebuyers purchasing newly built homes. It would go into effect on August 1, 2024.

Financing Options for Secondary Suites

The budget revealed the Canada Secondary Suite Program, which will be managed by the Canada Mortgage and Housing Corporation (CMHC). The housing measure offers homeowners up to $40,000 in low-interest loans to enable the creation of a secondary suite in their homes.

Underused Public Lands

According to the latest national housing strategy, the federal government will lease underused public lands to developers at reduced costs to build affordable housing. Officials say that the land set aside for development is presently underused and could consist of schools with low enrollment, abandoned industrial parks, and places where government entities became defunct.

Home Buyers’ Plan RRSP Withdrawal Limit

For many Canadians, putting together a down payment for a home can be challenging. In recent years, first-time homebuyers were permitted to tap into their Register Retirement Savings Plan (RRSP) to purchase or build a qualifying home. The tax-free withdrawal limit was $35,000 for individuals and $70,000 for couples. The budget boosts the withdrawal limit to $60,000 for individuals and $120,000 for couples.

Halal Mortgages

According to the federal budget, Ottawa will consider expanding access to “alternative financing products,” including Halal mortgages. Islam believes charging interest and making gains is unjust as they are a form of usury. While some financial institutions provide mortgages that comply with Islamic law, none of the country’s five big banks offer them. Experts purport that these lending instruments might not be interest-free but would possess conventional fees that replace the interest.

Addressing the Labour Shortage

Canada’s housing market is facing a labour shortage, which has resulted in higher costs and delayed completions over the last couple of years. Budget 2024 allocates $50 million to accelerate The Foreign Credential Recognition program, which supports skilled trades workers in participating in the Canadian workforce without further delays. In addition, the budget offers $100 million for training in the skilled trades, apprenticeship opportunities, and promoting recruitment of future skilled trades workers.

Mixed Reactions on the 2024 Federal Budget

The budget framework’s housing measures ignited mixed reactions.

Some financial experts asserted that expanding RRSP withdrawals and increasing amortizations to 30 years may bolster competition in the short term, potentially exacerbating affordability problems.

“Allowing first-time buyers to make larger RRSP withdrawals for down payments, or secure 30-year amortizations when they buy new construction, will increase buying power and bring more people to the market at a time when there’s already a shortage of properties to bid on,” said Clay Jarvis, a NerdWallet personal finance author. “Competition may not increase by much, but we don’t need it to increase at all.”

Jason Mercer, the chief market analyst at the Toronto Regional Real Estate Board (TRREB), noted that the housing strategy could stimulate demand when shortages are prevalent.

“We have a housing supply deficit that’s built up over the last decade, but even more so now, we’re going to continue to see demand increase, not only as borrowing costs start to trend lower in the second half of this year, but as the population continues to grow,” Mercer said.

The Ontario Real Estate Association (OREA) was enthusiastic about seeing the return of 30-year amortization mortgages. However, OREA CEO Tim Hudak believes it should apply to everyone and all home types.

“As families look for a great place to lay down their roots, their budget shouldn’t be contingent on whether they’re purchasing a newly built or pre-owned home. In the middle of a housing affordability crisis, many Ontario families, not just first-time homebuyers, would benefit from the relief of 30-year amortizations on their mortgages,” he stated.

Others purported, including Canadian Home Builders’ Association (CHBA) CEO Kevin Lee, that these federal tools can help diminish the housing supply deficit.

“CHBA and our members are very pleased to see the federal budget measures that will help the sector respond to the government’s goal of doubling housing starts to overcome the housing supply deficit,” he said in a statement. “CHBA has long called for policies to assist those who dream of home ownership but have found it out of reach. Today’s budget will go a long way to help unlock the door to home ownership.”

In the end, Finance Minister Chrystia Freeland believes the federal government will help solve “structural issues that are behind the high cost of essentials” and are “a key focus of Budget 2024.”

In recent years, all three levels of government have attempted to use the tax code and other public policy instruments to help address Canada’s housing affordability challenges. However, while Canadian officials are trying to encourage home-buying and incentivize more supply, industry experts argue that plenty of measures are still in place that stifle supply and will not resolve affordability issues nationwide.

As a result of high levels of taxation in various jurisdictions, households are mobilizing and shifting to more affordable housing markets. For example, based on Statistics Canada data, net interprovincial migration was up in Alberta and Atlantic Canada but down in British Columbia and Ontario.

So, what are some of the tax policies that could be exacerbating these housing issues?

Let’s take a look at some of the programs currently intact:

Duplication

Housing leaders have asserted that one of the many setbacks in the Canadian real estate market is the number of duplicate taxes and regulations. For instance, there is the so-called flipping tax, a federal levy on investors who transform residential properties. The gains are added to the Income Tax Act. The problem? British Columbia recently copied the federal law, except the province expanded the timing application to two years, up from a single year at the federal level.

Experts argue that these duplicative efforts can complicate the situation, requiring more Canadians to leap over the various hurdles.

Property Tax

Across the country, municipalities are raising their property tax rates as inflationary pressures and rising interest rates impact their budgets. In 2024, several major urban centres will have increased their property tax rates to levels unseen in years.

Here is a brief breakdown:

• Halifax, Nova Scotia: +10 per cent
• Montreal, Quebec: +5 per cent
• Toronto, Ontario: +9.5 per cent
• Ottawa, Ontario: +2.5 per cent
• Vancouver, British Columbia: +7.5 per cent

Some homeowners say the significant hike will affect their living standards.

Kirby Burditt, someone who lives in a modest home in Saint John’s, New Brunswick, told CBC News that he will be paying as much as $900 more over the next four years.

“It will make a difference,” he said. “I don’t drink, I don’t smoke, I don’t gamble. I haven’t been away for one night in 14 years. I just don’t have the money. Even when you’re trying to live sensibly, it just costs a fortune.”

Foreigners and Empty Homes

The federal government recently targeted foreign home ownership to show the public that it was doing something. As of Jan. 1, 2023, legislation prohibited non-Canadians from buying Canadian real estate. While it was poised to expire on Jan. 1, 2025, Ottawa confirmed that it would extend the ban to Dec. 31, 2026.

Additionally, another bill focuses on foreign homeownership: The Underused Housing Tax Act. It slaps a one per cent annual tax on residential real estate owned by non-Canadians that is not occupied during a year. Several cities, including Toronto and a dozen or so British Columbian municipalities, have implemented similar measures, but the data show that these have yielded little success.

“Again, if foreigners are the significant culprit to Canada’s housing problems, it’s news to me,” wrote Kim Moody, the founder of Moodys Tax/Moody’s Private Client and former chair of the Canadian Tax Foundation, in the Financial Post.

Carbon Tax

The highly contentious carbon tax is poised to raise household costs. According to a recent report from the Parliamentary Budget Office (PBO), the federal carbon tax will cost the average Canadian household as much as $911 in 2024-2025. The good news is that some homeowners will enjoy some tax relief this year because home heating oil will be exempted from the carbon tax, resulting in savings of as much as $704. However, the bad news is that the carbon tax exemptions will not be applied to other forms of home heating, like natural gas.

The GST

Could more rental supply come to market? This is the objective behind eliminating the GST on new purpose-built rentals. The tax policy, which raises the GST rental rebate from 36 per cent to 100 per cent, is designed to influence the construction of rental housing. Despite being a reversal from 2017, Prime Minister Justin Trudeau says the newest policy is necessary.

“It was the right program at the time,” Trudeau said. “But now, given interest rates where they are, given the challenges that people have in building new apartment buildings, we realize it’s the right time to step up with removing federal GST on purpose-built apartment buildings.”

Taxes in Canada

It is estimated that the typical Canadian family pays more than 45 per cent of its income on taxes. With housing costs ballooning, from home prices to energy bills, finding tax relief of any kind has turned into a necessity of life for households. While conditions have stabilized in the Canadian real estate market, the polling data suggest that more needs to be done. And the best target could be taxation, whether to facilitate home purchases or housing construction activity.

Recreational property prices expected to rise 6.8% in 2024

A flood of listings hasn’t hit Canada’s recreational property market this spring, and is unlikely to transpire this year, according to findings from RE/MAX Canada’s 2024 Cottage Trends Report. Despite the affordability challenges and higher interest rates that characterized the 2023 real estate market, Canada’s cottage owners are choosing to hold on to their properties in 2024 rather than selling off – a trend that’s likely influenced by the desirable quality of life alongside the prospect of future returns on recreational property ownership. 

Looking ahead, RE/MAX brokers and agents in Canada are anticipating an increase in recreational prices by 6.8 per cent. Meanwhile, the number of sales is expected to rise in the majority of regions analyzed (61.9 per cent), with increases ranging from three per cent upwards of 50 per cent this year. 

A home inspector can encounter a lot of horrors in a day's work. The job entails:

• conducting a visual, non-invasive examination of the condition of a home, most often in connection with the sale of that home
• Inspecting all the accessible major components, which include the roof, exterior, structure, electrical, heating, air conditioning and heat pumps, insulation, plumbing and interior
• preparing and delivering to the client a written report of the findings

These are a home inspector's 10 worst nightmares...

10. Major Defects in New Construction

Water in a crawlspace in a new home, now that's scary. Potentially, this leakage could reoccur in the future if not repaired correctly. This water, as it evaporates, creates ongoing high humidity in the home and it can support mould growth in attics and roof spaces when it condenses.

9. Do It Yourself Structural Modifications

In order to create more storage in the attic, a homeowner has cut engineered roof trusses, without a permit... and without adding any reinforcement. Likely, the roof will sag in time, and possibly collapse during heavy snow or wind loads.

8. Raw Sewage

Every time the toilet flushed, sewage entered the crawlspace through the missing clean-out cap. Nasty for the poor home inspector, never mind the new buyer. Multiple issues for the homeowner: health, sanitation, odour and moisture.

7. Abandoned Buried Oil Tanks

When homeowners converted from oil to natural gas furnaces, they simply left the buried oil tank in the ground. Problem is that some homeowners did not pump the oil out of the tank. These metal tanks eventually corrode and the oil leaks out, contaminating the surrounding soil. We’ve all heard about the $150,000 clean-up bill. Scaryto the pocketbook.

6. Leaky Condo Syndrome

Most Lower Mainlanders have heard this term or have had first-hand experience with their condos leaking. It's cost many people a lot of money. The causes?

• Greater wall wetting from buildings designed without roof overhangs plus exposed decks over living spaces,
• "Tighter" building envelopes in the name of energy efficiency,
• Poorly standardized construction details with poor workmanship,

The scary part is that rainscreen technology, which is mandatory on newly constructed and remediated buildings, has been part of building science since the 1960s, but never adopted into the Canadian National Building Code.

5. Mould

This photo is of ceiling mould in a bedroom closet. There was zero attic insulation above this area, so warm, moist air from the home's interior was condensing on the cooler drywall ceiling, creating the moisture the mould needed. The scary part: children and the elderly are most susceptible to continual exposure and possible long-term health effects. In extreme cases, mould can be toxic.

4. Marijuana Grow-Ops

This photo shows grow-op ventilation ducting into the basement toilet drain. Home inspectors see three types of grow-ops:

• Busted by the police, where full disclosure is available to all parties
• Busted by landlords, with a superficial cover-up, not necessarily disclosed before selling
• Owners have operated and removed the grow-op, doing superficial cover-up and not necessarily disclosing before selling

The physical damage from a grow-up can be substantial and, if not correctly remediated, can have health, structural and moisture-related issues. Obtaining home insurance can be difficult and may include additional costs.

3. Substandard Home Owner or DIY Upgrades

Most people looking at this addition know this is wrong. Where is it going to leak? Home inspectors see additions, basement suites and general renovations with the associated unprofessional and often scary (i.e., dangerous) roofing, structural, electrical, plumbing and heating modifications. In extreme cases, the upgrades need to be partially or totally removed and redone.

2. Rodents

This mouse got stuck between the fan blade and the fan housing. You would think the homeowner would have checked why his fan blades weren't turning. I often see signs of rodents in attics and crawlspaces. It's scary thinking this carcass is decomposing so close to your food. Yuck!! Upon seeing this, some people will have continual nightmares. Is this the only mouse in the house?? Perhaps that's why this home is for sale!

1. Large Animals, Dead or Alive

I won't show you the ghostly picture of the dead cat in a crawlspace. Not a serious matter, but scary and disturbing for the home inspector (me). BTW, the owner had no knowledge of it. Live baby raccoons in a house's attic can be a very serious matter. For one thing, they did some roof damage to the attic. On top of that, they use the attic as their toilet. Significant repairs and clean-up after they move out.

If you need recommendations for a Home Inspector in your area who would be happy to send you some referrals just email me at [email protected]