this post was submitted on 30 Sep 2024
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Canada's housing affordability crisis may persist for years despite rate cuts (www.reuters.com)
submitted 1 month ago by girlfreddy@lemmy.ca to c/canada@lemmy.ca
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Buying a house may remain out of reach for many Canadians for the foreseeable future, with mortgage costs unlikely to fall enough to offset lofty home prices and weak spending power, economists and real estate agents say. 0 Even with expectations that Bank of Canada will keep cutting rates in the coming months, the issue of home affordability - which has strangled Prime Minister Justin Trudeau's poll numbers - is unlikely to fade before the next election.

The mandate for the Liberal minority government ends at the end of October 2025, but an election could come well before then, with the Conservative opposition spoiling to end Trudeau's nine-year run at the top.

"You won't get back to an affordable range for housing on a sustained basis for a decade," Tony Stillo, director at forecasting and analysis group Oxford Economics, said last week at a conference.

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[–] sbv@sh.itjust.works 12 points 1 month ago (1 children)

Earlier this month the government changed one of its rules on mortgage payments, allowing first-time buyers or people purchasing a newly-built home to take loans with 30-year amortizations, instead of 25 years.

Although the move is intended to lower monthly payments and make home ownership affordable to more people, critics say it may have opposite effect by boosting demand and raising prices.

It's hard to see how this won't increase prices and costs for buyers. It clearly benefits lenders, but everyone else will pay more.

[–] avidamoeba@lemmy.ca 5 points 1 month ago

I think the thinking is that first time homebuyers aren't the whole market and perhaps are a minority. They might still be enough to bid the median prices up. If we're in a market that has completely inelastic demand and people will pay any price they can afford, while supply is constrained, then it's not really a functioning market for the purposes of regulating supply and demand. If that's the case, we should stop treating it as a functioning market and intervene heavily. Unless it benefits enough people the way it is. 😌