REALTOR® POSITION
REALTORS® recommend indexing the Home Buyers’ Plan (HBP) RRSP withdrawal limit to ensure that it never loses its buying power. REALTORS® also recommend extending the HBP to all homebuyers for two years as a temporary stimulus measure.

THE ISSUE
The Home Buyers’ Plan (HBP) has made homeownership a more affordable reality for over two million Canadians since its introduction in 1992.

The RRSP withdrawal limits under the HBP need to keep pace with inflation if the Plan is to maintain its value. This was recognized in Budget 2009, which restored much of the HBP’s purchasing power by raising the withdrawal limit from $20,000 to $25,000.

The HBP provides a gateway to financial security for Canadian families. A study by People Patterns Consulting found average household net worth to be $11,000 for those who rent compared to $375,000 for homeowners with mortgages and $764,000 for mortgage-free homeowners.

The HBP also helps accelerate the economy, benefiting industries and workers from coast-to-coast-to-coast.

According to research by Altus Group, between 2006 and 2008, each MLS® home sale and purchase generated an average of $46,400 in ancillary spending. This adds up to over $22.3 billion per year. During that same two year period, Altus Group estimates that 202,750 jobs were generated annually by MLS® home sales and purchases.

Another Altus Group report determined that every 10,000 new single-family housing starts provide 19,300 jobs and boost economic production by approximately $3.3 billion.

Further stimulus measures are needed to sustain the housing market recovery. While the housing market has rebounded from the lowest level in a decade reached last January, private sector economists believe that Canada’s recovery and job growth will be both slow and weak. Lackluster economic and labour market conditions may jeopardize the sustainability of the housing market recovery.

Extending the HBP temporarily to everyone will accelerate economic growth. When the Plan was first introduced, it was open to all homebuyers and helped combat the 1992 recession.

Homeownership brings fundamental benefits to society, including increased household wealth, maximum control for families over their living environment, stable neighbourhoods and stronger communities. It also helps Canadian families enhance their financial security by allowing them to save concurrently for retirement and a home, eliminating the need to choose one over the other, or greatly dilute both goals.

Low interest rates and flexible mortgage insurance do not provide all the necessary support for financially sound home ownership. By facilitating borrowing, they also create the potential for higher levels of debt and higher mortgage insurance premiums. In contrast, the HBP serves as a repayable zero-interest loan, which can reduce or eliminate the need for costly mortgage insurance premiums and reduce the amount of interest paid to lenders.