This morning around 11:00 am my phone just started blowing up. And it didn't stop. What the hell could be so important I wondered? Was Publishers CLearing House trying to get a hold of me to let me know I won 100 Million dollars? Sadly, that was not the case.
Of course as most of us should know by now, Canadian Finance Minister Chrystia Freeland made an announcement in regards to mortgages. Yep, 30 year amortizations are now a thing for first time home buyers on a new build. Congrats to the 5.5 people that now qualify in the country of Canada.
As we all know, this announcement is nothing more than hot garbage, and will do nothing to build more homes, solve the affordability crisis, hep Canadians get into homes - or really anything at all. Of course, there was also the first time home buyer increase from the RRSP. So rather than fix the runaway housing dumpster fire - we announced that you could now spend more of your own money to buy overpriced housing. Good. Solid. Just what I expect from this government. No solutions, just allowing longer amortizations so the average person can spend more of their hard earned income on interest. And of course, we cow-towed to a niche group of rich property developers and home builders. Banks win by getting more interest, rich property developers and builder win - Average Canadian takes it up the ass.
But, and there is a huge but here ( and I don't mean butt as in where the average Canadian is getting screwed ), but if you sit back and take a wide look at what happened today - it all makes perfect sense.
In the interest of full disclosure, I am so old I remember the days of 40 years amortizations, 0 down payment - on rentals no less. Now, it was said we had to get rid of those programs because Canadians would accumulate too much debt. News flash - Canadian accumulated debt anyways, even though those programs disappeared 16 years ago. None the less, there has been a lot of opposition to bringing back the extended amortizations - and also a lot of opposition to NOT bringing back the extended amortizations. Now, when they roll out a program like today's announcement, you need to think of it like a trial balloon of sorts. I am 100% confident they will increase who qualifies for this extended amortization. It will probably roll out to all first time homebuyers within months. And by months, I mean within months of the next election being called - because lets face it, program announcements like this are designed solely to try and buy votes. However, you have to start small. If the government announcement a big rollout today - they would be ridiculed by every financial person in the country for increasing timelines, increasing mortgage interest costs, etc. etc. However, if they roll out the program like today - to a very small segment of the population - and everyone claims they want it for themselves, then the government expands the program as that is what " the people " want. If it is a success - the government takes the credit, and if it is a failure - the government was just giving people what they asked for. It is a win in for a government coming up for re-election. And, the best part is that it costs nothing to implement - at least for the government of today.
Personally, I would like to see someone get a clue and get serious on the housing issue. I would love to see a government tackle the actual fucking problem, rather than come out with half baked solutions to the problem. Stamp out fraud, control immigration, speed up building permits, reduce red tape and permit costs - you know - actual solutions that would help Canadians. Of course, if they bring down prices and make houses affordable for younger Canadians - they will alienate the baby boomers who own all of the real estate. You know, Aunt Marge who bought her house in 1982 for $12.65. The problem is that Aunt Marge actually goes to the polling booth and votes - younger Canadians don't.
Until such a time that young people go out and made their voice known, politicians will continue to come out with half baked programs like today to attempt to look like they are helping young Canadians all the while ensuring that their baby boom vote block is secured by not actually doing anything to bring house prices down.
If this is the type of solutions we can expect more of over the coming days leading up to Budget 2024, I am really scared for the future of younger Canadians. Today was nothing more than helping a political party. As I said before, I am old enough to remember 40 year amortizations, but I am also old enough to remember a time when housing wasn't an issue that was used as a political tool. Housing was a place to call home, a roof over your head. It was where you left each day to go out into the world and try and make your lot in life better - and it was where you returned home to every night to be with the ones you loved. Somehow in the last 10 or so years, housing became a token to be traded, an item to be coveted, and a political bargaining chip. Damn I miss the old days....