The housing market has been growing more challenging for quite some time. Now, with record immigration numbers and a growing population, the demand for real estate is unprecedented. Unfortunately, supply is not keeping up, and the situation is quickly reaching crisis levels all across the province.
In cities like Guelph, the housing shortage is felt even more acutely because of a large student population that is always in search of accommodations. Whether searching for a house to rent or a house to buy, newcomers are often scrambling to find something, often on short notice.
Over the last few years, governments at all levels have finally started to take this situation seriously and are working on policies to ensure the availability of affordable housing. Will any of these initiatives work? Let’s take a look at some of these ideas and see how feasible they might be.
How Did We Get Here?
Part of the affordability crisis is supply and demand. Like any commodity, values go up when demand outstrips supply. When demand starts to dwindle, prices should go down again. Unlike other commodities, however, the real estate market is not that simple.
Another factor is the amount of regulation and red tape involved with the construction of new homes, which can also lead to higher prices. Though Canada is known for its regulation, we are not the only ones facing a housing shortage. Many cities in countries like Japan, New Zealand, Australia, and parts of the US are also struggling to keep pace with the demand. Add inflation to high interest rates, and what we have is a situation that has become utterly unsustainable, where many first-time buyers find themselves pushed out of the market.
Are you seeking to buy a house in a challenging market? Here are some resources that will help:
- The Ultimate Guide for First-Time Buyers in Guelph
- Real Estate 101 for First-Time Buyers
- Can You Buy a House With a Poor Credit Score?
Our Government in Action
Without affordable housing, it will become more difficult to attract new investment to Canada. As a result, our economy could suffer, which finally has the attention of the federal government. While some experts believe any intervention is too little, too late at this point, some help is ostensibly on the way.
For starters, there are several programs in place to help first-time buyers with their down payment and closing costs. The federal government also hopes to increase supply through the two-year foreign buyer ban that kicked off on January 1, 2023. Well intended as this bill may be, it’s unlikely to have a major impact on housing availability since foreign buyers make up a small percentage of Canadian homeowners to begin with.
The federal government has also enacted several plans to make housing more affordable for first-time buyers. The First-Time Home Buyer Incentive was launched in 2019 to provide up to 5% of the down payment for all qualifying purchases of a resale home and up to 10% for a newly constructed property.
In 2023, the First Home Savings Account was introduced, allowing young buyers the chance to save up to $40,000 for their first house. Though this incentive may be too late to be of great help for those searching for a home today, it could make breaking into the market more achievable for those who plan to buy a few years down the road.
Getting ready to buy your first house? Become an informed first-time buyer by watching our free workshop here.
Provincial Housing Initiatives
Ontario families don’t just need more housing. They need affordable housing in the right places, where they have access to employment opportunities and education for their children. Building more luxurious estates on massive lots doesn’t help middle-class and lower-income earners trying to provide for their families. That’s why the Ontario government also has a few plans in the works to address the housing issue:
- More Houses Built Faster: A provincial policy that seeks to build 1.5 million houses in Ontario by 2031.
- More Homes, More Choice: Ontario’s Housing Supply Action Plan aims to remove much of the red tape builders face when developing new homes for both buyers and tenants.
- Community Housing Renewal Strategy: This initiative focuses on providing affordable housing for low-income households by sustaining, repairing, and growing the community system.
Adding to the supply and removing red tape would go a long way to helping more people find suitable housing. As to whether it’s enough for the growing population or the right kind of housing, we will have to wait and see. That said, we are hopeful that these initiatives will at least move us in the right direction.
Rising interest rates can make financing your purchase complicated. The posts below will help you understand your options:
- Is it Better to Pay Off Your Mortgage or Invest Your Money Elsewhere?
- How to Choose the Right Mortgage Broker
- Straight Talk About Second Mortgages and Refinancing
Guelph Steps up to the Plate
Though federal and provincial initiatives are critical to combat the housing shortage we are facing, cooperation from municipalities is also essential. Fortunately for Guelph residents and newcomers, our city is stepping up to the plate with several assertive measures of its own.
- Affordable Housing Strategy: This plan is designed to complement the Ten-Year Housing and Homelessness Plan by focusing on affordable private rental and ownership housing.
- Ten-Year Housing and Homelessness Plan: The primary objective is to expand rental support programs by securing funding from upper levels of government while supporting residents with disabilities, mental health issues, and addictions.
- City Housing Advisors: The city has hired new staff members to support the approval of about 2,000 housing units per year until 2031.
Even the University of Guelph has gotten involved with a commitment to help students find affordable housing on campus and within the city. Student Housing Services and the Real Estate Division will begin by conducting research and using the information gathered to help develop a plan that will meet the needs of students now and in the future.
Alone, it is unlikely that any one of these initiatives will have a significant impact. However, the combined strength of federal, provincial, and municipal programs may offer hope for those searching for an ideal home in the city of their choice.
Do you want more resources or information on finding your next home in Guelph or the Tri-Cities? We are happy to help. Reach out to 519-826-7109 or email info@gowylde.ca for more information or to start your search today.
