Hello, everyone with real estate investments in Hamilton, Ontario!
By now, you must have heard that the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, presented the 2022 federal budget on April 7th and described it as “a plan that will help build a Canada where nobody gets left behind”.
This is the second federal budget since April 2021.
You will recall that ‘in the year of the pandemic,’ Canada experienced the worst recession since the 1930s; the Canadian economy contracted by 17%, and about 3 million Canadians lost their jobs.
Today, our economy has recovered. With 112% of lost jobs recovered, unemployment rate down to 5.5%, and GDP 1.2% above pandemic levels, we could even say that the economy is booming!
However, one thing remains a fundamental problem – Housing: Canada STILL does not have enough homes.
And that’s why this Federal Budget is so important because it promises to solve this problem by doubling the number of new-build homes over the next 10 years, therefore making every Canadian a homeowner in the neighbourhood where they want to live.
How will they achieve this? The plan is all laid out in the 300+ paged document, but I’ll summarise it for you.
The 2022 Federal Budget proposes to:
- Provide $4 billion over five years, starting in 2022-23, to launch a new Housing Accelerator Fund to speed up housing development.
- Provide $1.5 billion over two years, starting in 2022-23, to create at least 6,000 new affordable housing units.
- Introduce a Home Renovation Tax Credit, which would provide up to $7,500 in support for constructing a secondary suite starting in 2023.
- Introduce the Tax-Free First Home Savings Account that would give prospective first-time home buyers the ability to save up to $40,000, and make tax-deductible contributions and non-taxable withdrawals to purchase a first home—including investment income.
- Double the First-Time Home Buyers’ Tax Credit amount to $10,000, providing up to $1,500 in direct support to home buyers, applying to homes purchased on or after January 1, 2022.
- Double the qualifying expense limit of the Home Accessibility Tax Credit to $20,000 for the 2022 and subsequent tax years. This will mean a tax credit of up to $3,000.
- Ensure profits from flipping properties are taxed fully and fairly.
You can read more about what the Federal Budget proposes for our Climate, jobs, economic growth and innovation, etc. at the link above.
Will The 2022 Federal Budget Improve Housing Affordability Or Make It Worse?
From a real estate investor standpoint, the plan outlined in the budget seems reasonable. It simply means we could expect the real estate market to cool down substantially.
However, in terms of demand and supply, the major drivers of our real estate market and housing affordability, with the 6,000 new affordable housing units proposed vs. the 432,000 new immigrants target this year, demand still trumps supply by at least 72 to 1!
In January 2022 alone, Canada welcomed 35,260 new permanent residents according to new IRCC data.
That’s already 5 times more than the proposed efforts to improve housing affordability and simplify the path to homeownership for first-time homebuyers.
From my perspective, I think more drastic measures need to be taken if we want to put a dent in those figures. But as the saying goes, Perfection doesn’t happen right away; we all have to start from somewhere.
On the bright side, the new federal budget reassures everyday hardworking Canadians looking to get into homeownership that all hope is not lost.
Plus, it also provides more opportunities for investors like you and me; opportunities to increase our wealth, expand our portfolios and even save taxes.
Of course, we’ll be diving deep into these potential opportunities at our monthly Real Estate Meet-up THIS SATURDAY, April 23rd AT 8:30 am.
If you haven’t gotten your tickets yet, CLICK HERE TO DO SO NOW!
In more local real estate news, the Realtors Association of Hamilton-Burlington (RAHB) reported that Hamilton had just over 1,500 new listings in March, up 46% month-over-month!
We’ll share more details in our ‘lessons from the streets’ at Saturday’s R.E. Meetup!
Hope to see you there!
Happy Hamilton Investing Everyone!
PS. If you’d like to receive details of upcoming events so you don’t miss a thing, join my email list by filling out the form below.