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Potential Uptake of the First-Time Home Buyer Incentive
? Evaluating the First-Time Homebuyer Incentive (FTHBI) based on its principle eligibility
criteria, the highest potential uptake of the FTHBI would be in more affordable regions
located outside of the Lower Mainland. In contrast, the lowest uptake would be in the
Lower Mainland and Victoria, accounting for 44 per cent of sales. This suggests that the
FTHBI is expected to have limited impact on provincial home sales.
? Differences in the potential uptake of the FTHBI across the select regions is largely
explained by the allowable maximum house price. As such, the price threshold is the
most limiting in regions with higher house prices, which tend to be concentrated in the
Lower Mainland and Victoria.
? The maximum income threshold is less important to potential uptake because the share
of first-time homebuyers meeting this threshold is relatively comparable across the
What is the First-Time Home Buyer than 65 per cent of first-time homebuyers in
Incentive? each select region would be eligible under
On September 2, 2019 the Canada the FTHBI's maximum income threshold,
Mortgage and Housing Corporation with the lowest share in North Vancouver
launched the First-Time Home Buyer (66 per cent) and the highest in Penticton
Incentive ("FTHBI"), with the aim of helping (86 per cent). Overall, the share of first-time
first-time homebuyers reduce their monthly homebuyers that meet the income criteria is
mortgage payments without increasing their
down payments. We describe the FTHBI in
To be eligible, a first-time homebuyer must
have: 1) a minimum down payment of 5 per
cent from traditional sources such as
savings and RRSPs; 2) a maximum
qualifying annual income of no more than
$120,000; and 3) a loan amount of no more
than 4 times a borrower's qualifying annual
Using these criteria, we examine the relatively comparable across most regions.
potential uptake of the FTHBI in select
regions in B.C., broadly representing the
province's 11 real estate boards.
What share of available homes would fall
What share of households would be within the FTHBI eligibility criteria?
eligible under the $120,000 maximum
income threshold? Using the FTHBI eligibility criteria, we
calculate the maximum house price to be
To be eligible for the FTHBI, first-time $505,2632, assuming a minimum down
homebuyers may have a maximum payment of 5 per cent3 and a maximum
qualifying annual income of no more than qualifying annual income of $120,000.
$120,0001. Using a Census 2016 custom
tabulation from Statistics Canada on Using provincial assessment data on 2018
household annual income by age and home sales, we find that the lowest shares
tenure, we specify first-time homebuyers as of homes that would qualify are in North
renter households between the ages of 25 Vancouver (13 per cent) and the City of
and 39; this represents the prime home Vancouver (20 per cent). These regions
buying age cohort. The data show that more combined made up 13 per cent of provincial
sales in 2018. In contrast, the highest
1 This is subject to qualifying income requirements 3 A potential first-time homebuyer could put down
set out by the mortgage lender and mortgage loan up to a maximum of 14.99 per cent, which would then
insurer. Examples of qualifying annual income put the maximum house price at $565,000. A
include a salary before taxes and investment income. maximum of 14.99 per cent plus 5 per cent equity
2 Calculated as 4 times the maximum qualifying from the Government of Canada would place the
annual income of $120,000 divided by the fraction of borrower just under the 20 per cent threshold to
the borrower's minimum down payment of 5 per qualify for an insured mortgage.
cent (i.e., 1-0.05).
BCREA Market Intelligence September 2019
shares of homes that would qualify are in This suggests that the FTHBI is expected to
Dawson Creek (97 per cent) and Prince have limited impact on provincial home
George (91 per cent), making up a sales.
combined share of 2 per cent of provincial
sales. The potential uptake of the FTHBI is not
particularly reliant on the income criteria
The share differences in these select because the share of first-time homebuyers
regions are reflective of house prices. For exceeding the maximum income threshold
example, the average house price in North are relatively comparable across the
Vancouver ($1,092,969) is more than four regions.
times higher than in Dawson Creek Unsurprisingly, the differences in the
potential uptake of the FTHBI across the
select regions is largely explained by the
allowable maximum house price. As such,
the price threshold is the most limiting in
regions with higher house prices, which
tends to be concentrated in the Lower
Mainland and Victoria.
What does this mean in terms of the
potential uptake of the FTHBI?
The highest potential uptake of the FTHBI
would be in more affordable regions located
outside of the Lower Mainland, which
comprised 20 per cent of provincial sales in
2018. In contrast, the regions with the
lowest potential uptake would be in the
Lower Mainland4 and Victoria, which
comprised 44 per cent of provincial sales5.
4 Lower Mainland includes Burnaby, Coquitlam, 5 The shares quoted here do not add up to 100 per
Langley, New Westminster, North Vancouver, cent because we only include select regions in B.C.
Richmond, Surrey and Vancouver City.
What are the best programs for first time home buyers? the state has launched a new program of forgivable loans for first-time home buyers. The program, Forgivable Equity Builder Loan, allows qualified, first-time buyers to borrow up to 10% of a homeâ€™s purchase price, and have the debt forgiven if the buyer ...
Title: BCREA Market Intelligence Report: First-Time Home Buyer Incentive
Subject: BCREA Market Intelligence Report: First-Time Home Buyer Incentive
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