A Toronto-area real estate broker laughed when asked about what a third-term win for the federal Liberal government means for affordability in Canada’s housing sector.
John Pasalis, president of Realosophy Realty, said he thinks the Liberal policies proposed during the election campaign about housing will likely stimulate more demand than is already present.
And it could lead to higher prices in the future, at a time when inventories and listings are the tightest they’ve ever been in major cities across the country, he said.
“I don’t think anything’s making sense in terms of bringing affordability,” Pasalis said in an interview Tuesday. “Our population is growing a lot faster than our ability to build homes and that’s really what's causing this sort of rapid acceleration we’re seeing in prices.”
However, neither the Liberals, Conservatives nor New Democrats were able to bring up many housing policies that will curb current concerns in the market, he said.
“There was a lot of stimulus to get buyers back into the market and the supply-side policies were great, but they’re really long-term policies if they ever do materialize,” he said.
The most interesting policy for Pasalis and other brokers like him is the Liberal pledge to increase the insured mortgage cutoff from $1 million to $1.25 million and index it to inflation.
“I think out of all the policies at the federal level, this is the one that has the potential to really impact both buyer and seller behaviour in the short term,” Pasalis said.
That’s because if you’re a homebuyer, you would likely put pause on your choice to purchase, so you can get additional borrowing capacity, he added.
“On the flip side, if you’re a home-seller and your home is right around that low $1 million price range, maybe you might hold off a little,” Pasalis said. “Because you know once the Liberals introduce these changes, there’s going to be way more people in that new price bracket that will compete for homes.”
Still, structurally speaking, any federal government is likely not one to bring about much meaningful change in the sector to begin with.
“At the end of the day, the federal government has limited levers available to sort of impact any real, short-term changes,” Pasalis said.
“And usually, federal policies are around financing — which is what we’ve been seeing: the supply side or long-term issues. And that’s what all of us are going to keep a watch on.”