The federal government released its 2022 budget last week, and as expected it included a range of initiatives aimed to address housing affordability. I will dive deeper into 2 of them below:
1. The First Time Home Saving Account (FHSA):
Commencing in 2023, first time home buyers will have the opportunity to contribute up to $40,000 tax free to a new savings account. FHSA contributions are capped at $8,000 each year (tbh this imo is not ideal, it will take until 2028 to contribute the full $40,000). Monies here are tax deductible and money that is withdrawn from the FHSA and put towards the purchase of a home will not be subject to tax and does not need to be repaid – now this part is great, but overall this program will take some time to have any meaningful effect on housing affordability.
2. The Housing Accelerator Fund
This is a $4 billion dollar fund, that will encourage municipalities to “grow housing supply faster than their historical average; increase densification; speed-up approval times; tackle NIMBYism and establish inclusionary zoning bylaws; and encourage public transit-oriented development.” The Feds are estimating that this fund will add upwards of 100,000 new housing units over the next five years. On the flip side, the Federal government has also forecasted the need for 3.5 million new homes by 2031 to satisfy the gap between our countries’ population growth – fueled in large part by the planned levels of immigration – and our existing housing stock. I mean, A for effort here, but the numbers just don’t add up, more needs to be done in terms of housing supply and faster in order to keep up with what our country knows is coming our way in terms of housing need.