Will Our Kids Be Able To Buy? Supporting Affordable Home Ownership Evergreen Brickworks November 7th 2016 Steve Pomeroy Focus Consulting Inc. & Carleton University Centre for Urban Research and Education (CURE), Ottawa Focus Consulting inc. CURE (C) 2015

Outline Identifying perceptions on affordability Some context Recent examples to assist access to H/O Potential for scaling up Focus Consulting Inc. 2016

Ownership Rate Focus Consulting Inc. 2016

Ownership Rate Focus Consulting Inc. 2016

Ownership Rate Focus Consulting Inc. 2016

Ownership Rate Focus Consulting Inc. 2016

Mortgage trend is a key factor Focus Consulting Inc. 2016

Increasing Purchase Capacity Focus Consulting Inc. 2016

Increasing Purchase Capacity Focus Consulting Inc. 2016

Increasing Purchase Capacity Focus Consulting Inc. 2016

Prices Reflect Capacity to Pay Focus Consulting Inc. 2016

Prices Reflect Capacity to Pay Focus Consulting Inc. 2016

Access vs. carrying costs Need to consider increasing down payment challenge Focus Consulting Inc. 2016

Importance of fundamentals Last decade vs. future Mortgage rates Employment and income growth Household Growth & Migration (more regional) Policy measures Extending then reducing max amortization Macro-Prudential policy revisions Focus Consulting Inc. 2016

Income and capacity to buy across cities Focus Consulting Inc. 2016

Income and capacity to buy across cities * Max potential – pre stress test Oct 2016 Focus Consulting Inc. 2016

Income and capacity to buy across cities Focus Consulting Inc. 2016

Implications for future Past trends, data differ from perception of access/affordability Fundamentals and factors now changing (reversing?) Affordability varies across country Compounding effect of recent unfavourable policy changes – including Oct 2016 stress test Focus Consulting Inc. 2016

Implications for future Potentially access/affordability may be more constrained Implications for access to ownership Concurrent implications for rental sector (residual demand and rent pressure) Focus Consulting Inc. 2016

Recent initiatives to increase access for buyers at margin of affordability For details see Lampert and Pomeroy (2015, ) Assessment of Alternative Measures to Promote Access to Homeownership, CHBA Focus Consulting Inc. 2016

Research into H/O assistance Examined current experience and array of approaches Type of mechanisms Proponent/sponsor Target group, Cost per hh supported Scale of initiative Focus Consulting Inc. 2016

Typology of mechanisms Tax Credits and Refunds (of taxes) Grants (down payment) Loans (to augment/increase DP) Discounted prices with windfall recapture (SAM etc) “Innovative” mortgage arrangements Focus Consulting Inc. 2016

Tax Credits and Refunds First-Time Home Buyers’ Tax Credit – Canada First-Time Home Buyers’ Tax Credit – Saskatchewan First-Time Home Buyers’ Program – B.C. Land Transfer Tax Refund – Ontario (and Toronto) Home Ownership Program – Montreal Focus Consulting Inc. 2016

Grants First-Time Home Buyers’ Bonus – B.C. The HOME Program – Alberta Owen Hart Home Owners’ Program – Calgary Affordable Home Ownership Program – Saskatchewan Innovative Residential – Saskatoon Down Payment Assistance Program – Nunavut Focus Consulting Inc. 2016

Down Payment (or Equity Loans) PEAK Home Ownership Program – Calgary Equity Building Program – Saskatoon HeadStart on a Home – Saskatchewan Down Payment Loans – Ontario municipalities Family Access Program – Ville de Quebec Home Ownership Program – New Brunswick Down payment Assistance Program – Newfoundland and Labrador PATH (Providing Assistance to Territorial Homeownership – N.W.T. Down Payment Assistance Program – Yukon Focus Consulting Inc. 2016

Innovative Mortgage Arrangements Springboard Program – Vancouver Attainable Homes – Calgary INHOUSE – Calgary Options for Homes and Home Ownership Alternatives – Toronto (and Other Canadian centres) Trillium Housing – Ontario Accès Condos – Montreal Focus Consulting Inc. 2016

Characteristics of current programs Generally modest in scale/scope Most locally developed/implemented Small-modest level of assistance Seek to narrowly target to avoid influencing price inflation, targeting those otherwise unable to buy Most have assisted fewer than 500 buyers Focus Consulting Inc. 2016

Getting to scale In face of constrained access, is there a need to expand and scale up current initiatives? What are scalable options? Can H/O access be increased with no/minimal cost to government E.g. targeted reintroduction of 30 year amortization for eligible 1st buyers? Potential of SAM models as more sustainable than outright grants (recycle limited public $) Focus Consulting Inc. 2016

Thank you! Additional background reports available at www.focus-consult.com