Economists and pundits have thoroughly panned Premier Christy Clark’s announcement last week that the provincial government is going to provide an interest-free (for five years) housing downpayment loan to first-time homebuyers in 2017.
Now, there are a lot of catches. It has to be a first home, you have to be a citizen, you can’t be flipping it or renting it out, and you will have to repay it eventually. And, of course, the home has to come under $750,000.
So, it’s pretty much a downpayment for a condo in the Lower Mainland, or maybe, just maybe, a townhouse over the bridge.
Critics say this will merely leave younger home buyers in a big mess five years down the line. People will go into more debt than they can handle in the hopes that the market keeps climbing at the rate it currently has. The CMHC just finished raising the amount required for down payments and tightened mortgage rules in an effort to keep people from going into more debt than they can afford. So Clark’s offer pretty much does the exact opposite.
But let’s face it. No matter that it’s a gamble, or that it will only get people into condos in the Lower Mainland, many will leap at the chance.
And who can blame them? Frankly, no one else is doing anything for them in regards to housing.
Rental vacancies are at an all-time low, and getting a piece of the housing market under any conditions seems like an offer many young people will view as a huge gift.
Now, experts have said that there’s probably about 700 condos under $750,000 in the Vancouver area for sale. That’s not very many if there’s a rush. And recent sales for condos in Burnaby have been pretty darn good.
As for the politics of it, most new buyers – even if they see this as a crass political move by Clark – won’t care.
And as a crass political move, it’s a pretty smart one. NDP leader John Horgan is stuck between a rock and a hard place. If he says his government will repeal it, he looks like the Grinch. If he says it’s a good idea, he looks like a Liberal.
If it turns into a huge debt trap for people and a bubble bursts in the housing market, Clark will be in trouble. But that would be a long time after the May 2017 election.
