{"id":1476,"date":"2016-04-05T10:10:39","date_gmt":"2016-04-05T17:10:39","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=1476"},"modified":"2016-04-05T09:54:27","modified_gmt":"2016-04-05T16:54:27","slug":"3-ways-policymakers-could-act-to-cool-bc-ontarios-blistering-housing-markets","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2016\/04\/3-ways-policymakers-could-act-to-cool-bc-ontarios-blistering-housing-markets\/","title":{"rendered":"3 Ways Policymakers Could Act to Cool BC &#038; Ontario\u2019s Blistering Housing Markets"},"content":{"rendered":"<p style=\"text-align: justify;\">Not everyone thinks the recent mortgage rule changes to increase the minimum down payment on homes priced between $500,000 and $1 million are enough to cool the country\u2019s hottest housing markets.<br \/>\nJust look to Vancouver, one of the cities the rule changes targeted and also where an \u201cemergency\u201d community meeting last month attracted hundreds \u201cto discuss the causes of, and solutions to, an out-of-control real estate market in the Lower Mainland.\u201d<br \/>\nWhile a number of observers \u2014 including two BuzzBuzzHome surveyed \u2014 aren\u2019t calling for further action from any level of government, clearly concern exists over housing affordability out west and in Toronto, too.<br \/>\nSo what more could be done to cool these hot housing markets?<\/p>\n<p style=\"text-align: justify;\"><strong>Tweak requirements in the mortgage qualification process<\/strong><br \/>\nBrian DePratto, a TD Economist, says altering exactly how homeowners qualify for mortgages could contribute to cooling overheated real estate markets.<br \/>\n\u201cOne thing that springs immediately to mind are the rules around qualification in general, so for lending, in terms of ratio of mortgage payment to income, that\u2019s something that can be shifted up or down,\u201d he tells BuzzBuzzHome News.<br \/>\nThe total-debt-service ratio, which looks at how much of a mortgage applicant\u2019s total income will go towards housing expenses, is limited at 40%.<br \/>\nDePratto suggests lowering ratios can dampen markets\u2019 performances. \u201cThat would be a potential avenue that would reduce qualification for a number of people,\u201d he explains.<br \/>\nAnother step during the qualification process also presents an opportunity for tightening, he adds.<br \/>\nWhen consumers are qualifying for a mortgage, testing is done to see whether they can afford not just the current posted rate but also potential higher rates in the future, says DePratto. \u201cGovernment could increase what [future rate] someone is tested against,\u201d he suggests.<\/p>\n<p style=\"text-align: justify;\"><strong>Make lending for mortgages more expensive for the big banks<\/strong><br \/>\nRobert McLister, founder of RateSpy.com, a website that helps consumers find and compare mortgage rates, says \u201cthe short answer\u201d to cooling housing markets is \u201cmake housing less affordable.\u201d<br \/>\nOne idea McLister floats is \u201cincreasing lender capital requirements,\u201d a move that the Office of the Superintendent of Financial Institutions announced late last year that it was working on.<br \/>\nHeftier requirements require banks to earmark a higher sum of money for mortgage loans they offer to guard against the impacts of consumer defaults.<br \/>\n\u201cHaving to keep more money in reserve could reduce their appetite to loan out more money to would-be borrowers, which could work to cool the housing market,\u201d according to a CBC article, which says these rules could be implemented by next year.<br \/>\nMcLister notes \u201cthere is always incentive for banks to lend,\u201d but adds, \u201chigher capital requirements simply make it more expensive to lend. Banks react by raising rates and\/or incrementally tightening their underwriting guidelines,\u201d he writes in an email to BuzzBuzzHome News.<br \/>\nThough this method could chill activity and price growth, its impact is \u201ctypically marginal,\u201d says McLister.<\/p>\n<p style=\"text-align: justify;\"><strong>Create a special tax targeting foreign buyers<\/strong><br \/>\nSeveral Vancouver economists recently outlined a BC Housing Affordability Fund that would draw on a 1.5% \u201cproperty surcharge\u201d implemented locally from jurisdiction to jurisdiction within the province.<br \/>\n\u201cThe tax would target owners of vacant properties and those with limited economic or social ties to Canada,\u201d the economists specify in a proposal document. \u201cAll other owners will be exempt.\u201d<br \/>\nA number of exceptions have been proposed to ensure this. For instance, if you declare a home as your primary residence or are a veteran, retired, or disabled resident, you would not have to pay into the fund. Similarly, if households pay federal or provincial income taxes, owners can use the tax payment amount towards fund contributions.<br \/>\nRevenue the fund generates would then be distributed among Canadian tax filers in the areas where it has been established.<br \/>\nThe economists argue such a tax would make the province \u201ca less attractive target for investors who wish to avoid taxation or park cash in residential real estate,\u201d factors some say have driven up prices in both Vancouver and Toronto.<br \/>\n\u201cBased solely on vacancy data, we estimate the surcharge could provide residents with roughly $90 million per year in Vancouver alone,\u201d reads the proposal document.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2016\/04\/3-ways-policymakers-cool-housing-markets.html\" target=\"_blank\">3 Ways Policymakers Could Act to Cool BC &amp; Ontario\u2019s Blistering Housing Markets<\/a> by Josh Sherman | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Not everyone thinks the recent mortgage rule changes to increase the minimum down payment on homes priced between $500,000 and $1 million are enough to cool the country\u2019s hottest housing &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2016\/04\/3-ways-policymakers-could-act-to-cool-bc-ontarios-blistering-housing-markets\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1476","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>3 Ways Policymakers Could Act to Cool BC &amp; Ontario\u2019s Blistering Housing Markets &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2016\/04\/3-ways-policymakers-could-act-to-cool-bc-ontarios-blistering-housing-markets\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"3 Ways Policymakers Could Act to Cool BC &amp; 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