First-Time Home Buyer INCENTIVE PROGRAM

CANADA MORTGAGE AND HOUSING CORPORATION’S (CMHC) First-Time Home Buyer INCENTIVE PROGRAM

JENNIFER HUNT VICE PRESIDENT RESEARCH AND EVENTS, REIN JENNIFER HUNT

Vice President Research and Events, REIN

MARK MORENO PASCUAL

Research Analyst, REIN CANADA MORTGAGE AND HOUSING CORPORATION’S (CMHC) FIRST-TIME HOME BUYER INCENTIVE PROGRAM

Important Disclaimer: This report, or any seminars or updates given in relation thereto, is sold, or otherwise provided, on the understanding that The Real Estate Investment Network Ltd., and its researchers are neither responsible for any results or results of any actions taken in reliance upon any information contained in this report or conveyed by way of the said seminars, nor for any errors contained therein or presented thereat or omissions in relation thereto. It is further understood that the said authors and instructors do not purport to render legal, accounting, tax, investment, financial planning or other professional advice. The said authors and instructors hereby disclaim all and any liability to any person, whether a purchaser of this report, a student of the said seminars, or otherwise, arising in respect of this report, or the said seminars, and of the consequences of anything done or purported to be done by any such person in reliance, whether in whole or part, upon the whole or any part of the contents of this report or the said seminars. If legal, accounting, tax, investment, financial planning or other professional advice or assistance is required, the services of a competent professional person should be sought. The following content has been researched and published in good faith without warranty or liability for any erroneous, incomplete or misleading information. All rights reserved. No part of this report may be reproduced, or stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. FIRST-TIME HOME BUYER INCENTIVE PROGRAM CANADA MORTGAGE AND HOUSING CORPORATION’S (CMHC) FIRST-TIME HOME BUYER INCENTIVE PROGRAM

TABLE OF CONTENTS

Abstract 02

Definition of CMHC’s First-time Home Buyer’s Incentive Program 03

Unpacking the Definition 04

What is a Shared Equity Mortgage? 04

Who Will Benefit From the Program? 04

Other Housing Loan Programs 06

The British Columbia (B.C.) HOME Partnership Program 06

Global Perspective: London, England’s Help to Buy Program 07

Potential Impacts Investors Should Consider 08

Affordability Issues 09

Increase in Home Sales 12

The Stress Test 12

Lower Purchasing Power 12

What to Look for Going Forward 13

Sources Used in this Paper 14

1 ABSTRACT

PURPOSE: The purpose of this white paper is to provide an overview of the CMHC’s First-Time Home Buyer Incentive (FTHBI) program– touching on who will benefit the most out of it, its possible consequences to the real estate market, and investigating exactly how investors can maximize this opportunity while mitigating risk associated to the program.

CONTEX T: Affordable housing is a pressing concern in Canada today. As one component of a multi- pronged response to the housing problem, the federal government announced earlier this year an incentive program designed to help first-time home buyers purchase their own home. Under the direction of the CMHC, the FTHBI program was announced as part of the March 2018 federal government budget. Experts praised the program, hailing it as a welcome effort by the federal government to address emerging problems in Canada’s housing market. However, concerns were also raised regarding possible consequences this type of state intervention can cause in an already overheated housing market. With an aim to objectively assess the program’s merits and its possible impacts, this paper examines the mechanics of the FTHBI program, as well as similar programs implemented in the past in other jurisdictions and countries, to determine what lessons can be learned and how investors can adjust moving forward.

FINDINGS: The FTHBI program is a mixed bag of opportunities and challenges from the point of view of real estate investors and home buyers. The program will provide much needed support to first-time buyers by providing an interest-free loan. However, the program also has the potential to inadvertently create artificial demand in certain supply-constrained markets which could drive housing prices further upward. In this context, housing affordability becomes a central issue of concern. Equally important is whether or not the program will be well enough received by first-time buyers for it to actually make a difference in the market. Nonetheless, the program offers some good news both for Canadians seeking to purchase a new home for the first time as well as for investors. Note: investment properties are not eligible for the program – the owner cannot rent out the property.

ORIGINALITY/VALUE: This brief review of the FTHBI program provides sufficient grounding in order for investors to re-calibrate their portfolio (if necessary) in lieu of a state housing loan that may have far-reaching effects on real estate prices and affordability. REIN recommends this paper is read in conjunction with REIN’s Millennial Report given this program is intended to bring 100,000 millennials into the real estate market.

PAPER TYPE: White Paper.

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DEFINITION OF THE CMHC FIRST-TIME HOME BUYER’S INCENTIVE PROGRAM

The FTHBI program is essentially an interest-free loan from the federal government aimed at making house purchases more accessible for 100,000 first-time home buyers. The program allows eligible participants to obtain a loan covering a portion of their home purchase in exchange for sharing future equity of the property with the federal government. Moreover, the program allows participants to reduce the monthly carrying costs associated with traditional mortgages.

The FTHBI program will begin receiving applications starting September 2, 2019 with a first closing date of November 1, 2019.

The program will be financed by the federal government, via the CMHC Shared Equity Mortgage Fund, to a total program amount of $1.25 billion over the next three years.

Interested applicants must meet the following criteria:

• “you need to have the minimum down payment to be eligible

• your maximum qualifying income is no more than $120,000

• your total borrowing is limited to four times the qualifying income.”

• Maximum home price should not go beyond $505,000

Once qualified, the program offers the following incentives based on property type:

Table 1. Incentive by Property Type (from the CMHC website)

PROPERTY TYPE INCENTIVE (per cent)

New construction home 5 or 10

Existing home 5

New or re-sale mobile/manufactured home* 5

* Mobile/manufactured homes can be on leased lands.

Successful applicants can pay the loan back at any time without incurring fees or penalties. However, the loan must be repaid to the federal government after 25 years or if the house is sold, whichever comes first. Furthermore, the amount of repayment will vary depending on the property’s value at the time of sale. Because this is a shared equity mortgage, the purchaser must pay back the government investment, based on the sale price or value of the property. That is: the percentage (5 or 10 per cent) is determined and paid out based on the value of the property at the time of sale.

For example, an eligible home buyer secures a five per cent loan to cover a portion of a $200,000 re-sale home purchase, which is $10,000. Should the property’s value increase to $300,000 at the time of sale or after 25 years, the five per cent payback will be based on the property’s current market value resulting in a payback amount of $15,000. The same mechanics work if the home value decreases at the time of repayment. In other words, the federal government commits to

3 sharing either downside or upside costs of property value changes.

Qualified home buyers can also withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) which is $10,000 higher than in previous years. Additionally, qualified couples purchasing a home together can withdraw up to $70,000. Higher RRSP withdrawal limits can help first-time buyers as it provides additional source for down payments.

UNPACKING THE DEFINITION

The primary goal of the FTHBI program is to make housing more accessible for first-time buyers. The program comes at a much-needed moment as housing affordability continues to dampen sales at all price points. Monthly home sales across Canada are at a generally slow pace as of June 2019, and while slightly increasing this summer, are still far below the record highs achieved between 2015 to 2017, despite moving closer to the 10-year average.

WHAT IS A SHARED EQUITY MORTGAGE?

The FTHBI program is not the first assisted housing program of its kind implemented by the federal government. In fact, the government has implemented a wide variety of assisted housing schemes in the past that directly tried to address affordability issues by encouraging home ownership through a combination of preferential loans, grants, and tax concessions. But what makes the FTHBI distinct from its predecessors is its use of the shared equity mortgage arrangement. What exactly is this type of mortgage?

A shared equity mortgage is a loan arrangement wherein the borrower agrees to share ownership of a certain property with the lender. Once the property is sold, equity is divided to both parties according to their respective financial contributions. If property values depreciate, both parties also share the losses.

The FTHBI is the first of its kind in Canada in terms of implementing a shared equity mortgage plan at a nationwide scale. There have been previous shared equity mortgage programs implemented at the provincial level – one of which will be discussed in the next section of the paper.

The government stepping in to share a portion of the buyer’s costs in purchasing a home provides partial relief from increased housing prices. This type of deal hopes to allow more home buyers to enter the property ladder by granting them access to properties with values that are otherwise beyond their means. While the federal government stands to gain from a shared equity mortgage it also puts itself at risk of losing money should property values depreciate over time.

WHO WILL BENEFIT FROM THE PROGRAM?

The FTHBI program is specifically designed to accommodate first-time home buyers limited to households with a maximum combined income of $120,000. Note that the maximum income requirement pertains to households, NOT individual income. While secondary to the program’s actual target cohort, this combined household income requirement could be favourable for single income households.

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Around 620,000 home buyers move into newly purchased homes every year. Out of this figure, 45 per cent (280,000) are first-time buyers. Half of first-time home buyers in Canada are millennials ranging from 18 to 34 years old, according to REIN’s Millennial Report, which means approximately 140,000 millennials purchase real estate for the first time each year in Canada. As per Statistics Canada calculations, the millennial cohort’s median after-tax income reached $44,093 in 2016 which is roughly 33 per cent higher compared to Gen X median incomes. Despite higher income rates, millennials are also the most indebted generation in Canada, largely due to their inclination to pursue higher education. Approximately three-quarters of millennials pursue degrees after high school while almost a quarter incurred student debt in 2016.

The FTHBI program addresses the millennial debt problem by lowering the monthly mortgage payment. Table 2 below illustrates how eligible applicants can actually save $123 in monthly payments and up to $1,476 per annum in mortgage costs by enrolling in the FTHBI program. Possible savings could go even higher up to $286 per month according to CMHC.

Table 2. Buying a Home With or Without the FTHBI (from Global News)

Without FTHBI With FTHBI

Buyer’s income $100,000 $100,000

Home price $421,053 $421,053

Down payment (5%) $21,053 $21,053

FTHBI (5%) $0 $21,053

Insured mortgage $400,000 $378,948

Mortgage insurance premium $16,000 $11,748*

Monthly mortgage payment (3.3% rate) $2,033 $1,910

Difference in monthly payment -$123

Difference in yearly mortgage costs -$1,476

The possible monthly and yearly savings illustrated in Table 2 makes for an interesting case for low and middle-income households. By addressing the indebtedness of, among others, but particularly younger Canadians upfront, as well as providing higher RRSP withdrawals, the FTHBI program can become a highly attractive prospect for anyone, but especially Canada’s largest demographic cohort – millennials, struggling to purchase affordable housing.

5 OTHER HOUSING LOAN PROGRAMS

A brief overview of previous housing loan schemes allows us to extract lessons learned and apply it to REIN’s existing knowledge of the FTHBI program. While conditions and specific details vary from one program to another, the outlying concern is whether these loan schemes sufficiently addressed housing affordability. Unpacking why and how these programs failed or are hitting below forecast targets provides helpful insights on what works and what doesn’t.

THE B.C. HOME PARTNERSHIP

The B.C. House Ownership Mortgage Equity (HOME) Partnership was a shared equity mortgage program similar to the FTHBI in many ways, but only accessible to residents of B.C. Like the FTBHI, the HOME loan package also targeted first-time home buyers by providing up to $37,500 or five per cent of the property purchase price (maximum home price was $750,000). The program also ran on a 25-year term. For the first five years, buyers could enjoy an interest-free loan, but on the sixth year, interest began to accrue, amortized over the remaining 20 years.

The purchased property was required to be the buyer’s residence for six months of the year. Buyers would have to pay the full amount should they fail to comply with this requirement. Other loan conditions required full payback before 25 years include default on the first mortgage or transfer/ sale of home ownership.

The B.C. government envisioned the HOME Partnership program would make housing more accessible for first-time buyers. While it did help a number of buyers get into the market by directly providing loans, the program made no significant impact in lowering housing prices. Instead, the pumping of a government subsidy into the real estate market resulted in a slight but statistically significant increase in condo purchase prices. Chief Economist Cameron Muir argued in a 2018 article that the HOME program made no significant effect on the market simply because there were not enough interested applicants to make any palpable impact. Interestingly, the fact that the program had a very poor uptake also meant that any fear of inflationary effects caused by the subsidy were actually unfounded.

Figure 1. The B.C. HOME Partnership explained on a $600,000 sample home purchase price (from the B.C. HOME website)

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The program became operational on January 2017 but was shortly cancelled on March 2018 due to a low participation rate. When it was first introduced, the program was expected to provide 42,000 loans within a three-year period. The January 2018 data indicated that the program was way off the mark with only 3,000 loans approved in its first year which was 78 per cent below B.C.’s forecast.

The underwhelming response to the program was largely because it targeted the wrong people, according to University of British Columbia Professor Nathanael Lauster. Lauster stated “these are people who…already have a high enough income, so they can apply for these mortgages and get them…that’s a very privileged set of people already in terms of…who … [is] in the housing market to be focusing your attention on.” Lauster pointed out how the government should have instead focused on “better rental protections, more investment in co-operative housing schemes and social housing instead of first-time buyers.”

GLOBAL PERSPECTIVE: LONDON, ENGLAND’S HELP TO BUY PROGRAM Another similar housing loan program, this time outside of Canada, is the Help to Buy strategy implemented in the United Kingdom. This program targets both first-time buyers and other homeowners seeking to find new homes by offering up to a 40 per cent equity loan. London’s Help to Buy plan in a nutshell:

• Offers up to 40 per cent of purchase price in the form of an equity loan for eligible applicants

• Requires buyers to shoulder a five per cent deposit

• Program is available both for first-time buyers and for those seeking to move to a new residence

• Loan is exclusive for new build purchases up to £600,000

This scheme, first implemented in 2013, was intended for cash-strapped individuals looking to buy a new home. However, six years after its implementation, official government data reveals the average income of residents benefitting from the Help to Buy arrangement stood at £50,000. Data further indicates the average household income of beneficiaries in London was even higher at £72,000. Compared to the average household income of beneficiaries when the program started, the current households benefitting from the program have £10,000 more or 35 per cent higher average wages compared to its beneficiaries when it began. Even considering wage increase adjustments which only rose to six per cent within the same period, the facts suggest the program is only benefitting higher income households – the same households that might have entered the market even without government assistance.

7 Figure 2. Figure 2. London’s Help to Buy Scheme Explained (from www.helptobuy.gov.uk)

Unlike B.C.’s HOME program, London’s flagship loan plan influenced the housing market in a significant way. Since its inception, the Help to Buy scheme has helped more than 195,000 beneficiaries, 80 per cent of which were first-time buyers, and amounted to more than £10 billion in loans. However, the program also influenced market prices upward.

“Since early 2016 the growth in new-build prices has outpaced price growth for existing resold property, strongly suggesting that equity loans have enabled developers to set prices at higher levels than otherwise,” according to the British think tank Resolution Foundation. Mark Dyason of Thistle Finance notes “property developers have done exceptionally well out of Help to Buy but at some point the drug supply will stop and they will have to go cold turkey.” Unfortunately for them, the British government announced that it will stop Help to Buy operations for first-time buyers in 2021.

Part of the reason the Help to Buy program works even in overperforming cities like London is because it adjusts the allowable equity loan depending on the neighbourhood. For instance, areas outside of London are only allowed a 20 per cent equity loan whereas the loan limit within London is double or 40 per cent the home price. Since this adjustment in loan limits was implemented in 2016, around 10,800 buyers from London have used the assistance.

POTENTIAL IMPACTS INVESTORS SHOULD CONSIDER

The introduction of the FTHBI program presents both opportunities and challenges investors should be aware of in the coming months as loan approvals begin to roll out. For instance, given the deal is a shared equity arrangement, buyers might think about the future value of their prospective homes over time. The higher the values appreciate, the higher the amount borrowers would have to repay and vice versa. With these types of questions and insights in mind, it should be easier for investors to navigate an increasingly complicated real estate market.

8 FIRST-TIME HOME BUYER INCENTIVE PROGRAM

AFFORDABILITY ISSUES

The key criticism hounding the FTHBI program is its impact on affordability. Some experts have expressed concerns the program does little to help buyers in cities where housing prices are much higher than the maximum mortgage limit, which is $505,000. For instance, Mortgage Professionals Canada argues that the FTHBI’s mortgage limit is problematic as it will render the whole package “useless in Toronto and Vancouver, where even entry-level homes cost far more.”

On the other hand, the federal government cites data that 23 per cent of property listings in Toronto are actually below the $500,000 mark while the rate is 10 per cent in Vancouver. Despite CMHC’s assurance that the deal will work even in high-priced markets such as Toronto and Vancouver, the majority of Canada’s young adults reside in urban centres where housing supply is severely limited and home prices are skyrocketing. This becomes a problematic situation when the FTHBI mortgage limit is no more than $505,000. The benchmark apartment price in Vancouver costs $653,200 as of July 2019. Toronto’s benchmark apartment price was at $574,000 – neither of which meet the FTHBI’s mortgage limit.

But taking a deeper look on both Vancouver and Toronto neighbourhoods present a different picture. In Figure 3, it can be seen that home prices vary within Toronto with a great deal of neighbourhoods in both eastern and western parts reporting benchmark apartment prices below the $505,000 FTHBI purchase price limit.

Figure 3. Toronto neighbourhoods that will benefit from the FTHBI

9 Table 3. Benchmark apartment prices in Toronto (lowest to highest)

Benchmark Prices Neighbourhood (July 2019) W09 Willowridge – Martingrove – Richview $338,500 W05 Black Creek, York University Heights $374,100 W10 Rexdale – Kipling, West Humber-Claireville $380,900 E03 East York, Danforth Village $400,500 W04 Yorkdale – Glen Park, Weston $409,500 E10 West Hill, Centennial Scarborough $431,700 C11 Leaside, Thorncliffe Park, Flemingdon Park $463,300 E07 Milliken, Agincourt North $467,000 E11 Malvern, Rouge $478,000 E04 Dorset Park, Kennedy Park $478,900 E05 Steeles, L’Amoreaux, Tam O’Shanter-Sullivan $480,000 W06 Mimico, Alderwood $486,200 E08 Scarborough Village, Guildwood $490,700 W08 Islington – City Centre West, Eringate – Centennial – West Deane $498,500 E09 Morningside, Woburn, Bendale $504,400 W03 Rockliffe-Smythe, Keelesdale-Elington West $517,4 0 0 C13 Parkwood, Don Mills, Victoria Village $532,400 C15 Hillcrest Village, Bayview Village $550,400 C04 Bedford Park-Nortown, Lawrence Park, Forest Hill North $558,600 E06 Birchcliff $599,500 W01 Roncesvalles, Parkdale, High Park-Swansea $619,000 C07 Willowdale West, Lansing-Westgate $622,200 C08 Regent Park, St. James Town, Corktown $626,500 W07 Stonegate-Queensway $648,400 W02 High Park North, Junction, Runnymede $649,800 C01 Downtown, Entertainment District, CityPlace, Liberty Village $651,000 C06 Bathurst Manor, Clanton Park $685,800 C14 Newtonbrooke East, Willowdale East $688,800 C10 Mount Pleasant East $724,300 C09 Rosedale, Moore Park $733,800 E02 The Beaches, Upper Beaches $776,700 C02 Yorkville, Annex, Summerhill $796,600 E01 Leslieville, Riverside, Little India $805,800 C12 York Mills, Bridle Path, Hoggs Hollow $878,200 C03 Forest Hill, Oakwood Village $898,500

10 FIRST-TIME HOME BUYER INCENTIVE PROGRAM

Figure 4 on the other hand shows a picture of neighbourhoods within Vancouver that will benefit the most from FTHBI. This means that even within high-priced housing markets such as in Vancouver and Toronto, there are still neighbourhoods that can benefit from the FTHBI.

Figure 4. Metro Vancouver neighbourhoods that will benefit from the FTHBI

Table 4. Benchmark apartment prices in Vancouver (lowest to highest) Benchmark Prices Neighbourhood (July 2019) 01 Maple Ridge 3 47, 8 0 0 02 North Delta 375,400 03 Langley $410,200 04 Surrey (excluding South Surrey) $418,466 05 Port Coquitlam $446,000 06 Pitt Meadows $488,700 07 White Rock & South Surrey $492,900 08 New Westminster $515,200 09 Coquitlam $516,400 10 Vancouver East $550,600 11 North Vancouver $554,600 12 Richmond $622,500 13 Port Moody $628,700 14 Burnaby $661,400 15 Vancouver West $752,300 16 West Vancouver $1,085,700

11 CMHC admits that the FTHBI has the potential to inflate home prices, but states prices should only “go up to by a maximum of 0.2 to 0.4 per cent” based on their estimates. “By helping first-time home buyers purchase homes, we will free up rental supply, easing pressure on rents,” CMHC adds.

Another problem emerges when the supply side of the housing market is considered, especially for outperforming markets where there is shortage in housing supply. Even if young Canadians are convinced to take part in the FTHBI loan, their increased capacity to purchase would only translate to greater competition in an already scarce market. The federal government addresses these concerns by allocating $300 million towards crowdsourcing insights from local experts on how to address the supply concerns specific to each province. In addition, the Rental Construction Financing (RCF) Initiative has been provided with an additional $10 billion in funding with the goal of supporting the construction of 42,500 new units across the country. Recognizing that resolving the housing supply problem lies in local expertise is indeed a welcome effort on the part of the federal government, but these steps may still fall short in finding the best solution as soon as possible.

INCREASE IN HOME SALES Assuming the program gets momentum and a significant portion of first-time buyers see it as an attractive option, home sales are likely to increase. As the program works by doubling the down payment for new home buyers, it can potentially encourage new supply to meet housing demand. According to estimates from TD Economics, the FTHBI program is set to boost home sales by up to three per cent in 2020. An increase in home sales could potentially imply lesser pressure on markets outside of Ontario and British Columbia. But for outperforming housing markets, this impact would not be felt and may even lead to stricter competition if the supply constraints are not immediately addressed. Unfortunately, even with the increased RCF funding, only $385 million out of the $10 billion addition is expected to be spent in the next five years.

THE STRESS TEST Another factor to consider that may affect how the program will take shape is the stress test. Stress tests are standard screening procedures that aim to establish whether a prospective buyer applying for a loan would be able to handle mortgage payments should interest rates rise. With the stress test largely affecting first-time home buyers, various groups, including the Mortgage Professionals Canada, have long been calling for a reduction in the mortgage rule stress test and an exemption for buyers who “have paid as agreed through their first term and who wish to renew with another lender.” Current stress test rules require buyers to “qualify for a mortgage based on the Bank of Canada’s benchmark rate (currently 5.19%) or 2% higher than the negotiated rate (whichever is larger). The qualifying rate is used as a standard both for insured and uninsured mortgages, and lower rates would mean it is easier for home buyers to qualify. Aside from directly cutting off a chunk of qualified home buyers, restrictive stress tests contribute to slowing sales. Should stress test standards remain intact, discouraged borrowers could exert a negative pull on forecast growth in home sales.

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LOWER PURCHASING POWER

A key concern that may discourage a lot of first-time buyers more than anything else is the FTHBI’s mortgage limit of $505,000. CMHC recently clarified that eligible buyers are only allowed a maximum mortgage of four times their annual income. This is low compared to traditional mortgages suggesting the program actually reduces buying power by up to 9.4 per cent in some cases.

WHAT TO LOOK FOR GOING FORWARD Considering how other similar housing loan programs have failed in their mission to increase accessibility to affordable home ownership, the FTHBI may not fall far from the tree. B.C.’s HOME program made the mistake of offering a similar loan to households that could have entered the property market without assistance. This troubled targeting process resulted in low participation rates and a short-lived program that was cancelled just a year after its inception. The same goes for London’s Help to Buy program, which despite being a well-intentioned policy, catered to higher income households and did not address the affordability issue sufficiently.

Indeed, there is no one-size-fits-all solution to the housing affordability problem in Canada. One program might work in a specific city, but it might not work in other areas. Regardless, it remains to be seen how the FTHBI program will be received by first-time buyers. A low uptake on the program would mean that inflationary pressures associated with the program would not affect the market in a significant way. In other words, should the program lose steam early on, it would not drive house prices upward in any impactful manner that would affect the current real estate market.

On the other hand, high participation rates could possibly increase home prices up to 0.2-0.4 per cent as per CMHC estimates. Investors can also find comfort in TD Economics’ forecast that the program could possibly increase home sales by three per cent in 2020 should the program incur enough momentum. Nonetheless, investors are encouraged to keep tabs on any developments surrounding the FTHBI program as it begins operation in September 2019. Either way, the impact of the FTHBI program would most likely be felt in 2020 and beyond as the program rolls out – less so in 2019, with the first close date being November 1, 2019.

The FTHBI’s success could mean increased house prices beyond the average means of Canadian home buyers but also a temporary boost in relatively slow selling markets. The failure of the program wouldn’t hurt investors as much as it would make an almost insignificant splash in the market. However, if the FTHBI fails, it would mean the federal government’s efforts to increase housing accessibility is short-changed and will still leave many markets in the higher end of the home price spectrum – with the housing affordability issue still at large.

A lot of what might happen going forward depends on how the program will fare in its reception to first-time buyers, who are mostly millennials. But one thing investors should note – with or without the FTHBI - millennials are still the main driving force in Canada’s real estate environment today. At the end of the day, fine-tuning one’s investment portfolio to suit the millennial cohort’s needs and preferences is a direction worth considering.

13 SOURCES USED IN THIS PAPER https://pierrecarapetian.com/first-time-buyer-incentives-2019/ https://mortgageproscan.ca/docs/default-source/default-document-library/a-profile-of-home-buying-in-canada. pdf?sfvrsn=e54ef47e_0 https://policyoptions.irpp.org/magazines/may-2019/ottawas-first-time-home-buyer-incentive-is-flawed/ https://economics.td.com/fed-budget-housing-stimulus https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-ottawas-first-time-home-buyer- incentive-who-wins-and-who-loses/ https://mortgageproscan.ca/docs/default-source/membership/annual-state-of-res-mtge-mkt-2018.pdf https://www.homesandproperty.co.uk/property-news/help-to-buy-2019-government-loans-to-newbuild-buyers-more-than- 10-billion-in-six-years-a128266.html https://www.zoocasa.com/blog/first-time-home-buyer-incentive-vancouver/ https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive https://www.bnnbloomberg.ca/bank-of-canada-lowers-qualifying-rate-used-in-mortgage-stress-tests-1.1289707 https://www.rebgv.org/content/dam/rebgv_org_content/pdfs/monthly-stats-packages/REBGV-Stats-Pkg-July-2019.pdf http://www.trebhome.com/files/market-stats/home-price-index/TREB_MLS_HPI_Public_Tables_0719.pdf http://www.trebhome.com/index.php/market-news/mls-home-price-index https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive https://creastats.crea.ca/natl/index.html https://www.thecanadianencyclopedia.ca/en/article/housing-and-housing-policy https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2019/making-housing-more-affordable-first-time-homebuyer-incentive https://mortgageproscan.ca/docs/default-source/default-document-library/a-profile-of-home-buying-in-canada. pdf?sfvrsn=e54ef47e_0 https://www.cbc.ca/news/canada/british-columbia/home-partnership-program-cancelled-1.4565304 https://www.bchousing.org/housing-assistance/home-partnership https://www.cbc.ca/news/canada/british-columbia/b-c-s-dud-homebuyer-loan-program-further-inflated-condo-prices- professor-says-1.4566885 https://www.cbc.ca/news/canada/british-columbia/first-time-homebuyer-loans-b-c-1.4534426 https://www.ratespy.com/first-time-home-buyer-incentive-03208628 https://www.cbc.ca/news/canada/british-columbia/1st-time-homebuyers-loan-only-serves-the-privileged-ubc-professor- says-1.3903575 https://www.helptobuy.gov.uk/equity-loan/london-help-to-buy/

14 FIRST-TIME HOME BUYER INCENTIVE PROGRAM https://www.independent.co.uk/news/uk/politics/help-to-buy-housing-scheme-government-benefits-high-earners- property-prices-labour-a8372961.html https://www.ft.com/content/4aa83916-db8e-11e8-8f50-cbae5495d92b https://www.homesandproperty.co.uk/property-news/help-to-buy-2019-government-loans-to-newbuild-buyers-more-than- 10-billion-in-six-years-a128266.html

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