Mortgage 101 – The Need for New Homes

Todd Veinotte and Clinton Wilkins discuss the mortgage industry and its challenges. They explore the potential impact of political promises to reduce GST on new homes under $1.3 million.

Todd Veinotte
All right, welcome to Mortgage 101. Your guide to home ownership with me, Todd Veinotte and the one and only, Clinton Wilkins, the mortgage guru. What’s it like to be a guru?

Clinton Wilkins
A guru is just someone who can’t do anything else, they’re just doing one thing so well that that is just their entire life. And I say to people, like, when I talk about a mortgage lender, there are jobs out there, there are careers… and then there’s lifestyles. This is a lifestyle.

Todd Veinotte
And you’ve expanded your business, correct?

Expansion and Management in New Brunswick

Clinton Wilkins
We’re always doing something. We’re taking over more of the management side of things. In New Brunswick, that was where the franchise started two years ago, is we’re taking over more and more of the management there. We’re moving our office, which is super exciting. We just bought a building. It’s a historic property, I think 140-148 years old, in the mountains, we’re super excited about moving our team.

Todd Veinotte
When you expand, you could easily become complacent and be happy with what you’ve achieved, and you run a good business, and you’ve got all this going on here now. So you could easily just say, I got a good thing going here. Now. Why add the stress? Have you asked yourself that question?

Clinton Wilkins
I do sometimes, I’m like, the easiest part of my day is doing mortgage transactions, and I think sometimes clients are surprised when they come in and they can see me. I see new clients all the time – I see existing clients too. I mean, where I have about 20,000 clients, so I’m seeing people all the time, but I think they’re surprised. They just assume that they’re gonna see somebody else on my team, sure, but I’m in the trenches. And I’m a deal junkie. I love doing mortgages. I’m like a dog with a bone, and I would say it’s a little bit challenging right now. Spring is always very, very busy, Todd. We’re in the thick of things right now, but I just feel like the mental health with clients is not great. I think there’s a lot of uncertainty out there. I think a lot of it has to do with what’s going on in the news. I think what’s going on south of the border, tariffs on, tariffs off. We have a federal election that’s right around the corner. I think it’s just the uncertainty. It’s tough for people. I think there’s a bunch of pent-up demand in the marketplace from last year. I think when the rates were high, people thought they may have held off on a refinance. We held off maybe buying a new home, but it’s all coming to a head.

Todd Veinotte
I want to ask you a question, Clinton. This is in the news, and we know we’re in a federal election campaign, and there are promises or there are commitments, but I think from both political leaders, Pierre Poilievre and Mark Carney. But if I’m wrong, it’s one at least that wants to take the GST off new builds for less than 1.3 million bucks, or something like that. How do the logistics of that work?

Challenges and Client Mental Health

Clinton Wilkins
If this does come into play, and the consumer is receiving the benefit, the purchase price of a new construction home will be reduced. So you can buy a new home, really, for less money. Because when you buy a new home right now, that includes the HST, and the builder does the HST offsets from the goods that they paid, and then they remit whatever else is owed back.

Todd Veinotte
You’re saving the money on the material. Is that? What’s going on?

Clinton Wilkins
Saving the money on the material, on the labor, on the entire purchase price. So the purchase prices include HST.

Todd Veinotte
I see, because if I buy an existing structure, there’s no HST, or GST, or whatever the hell we’re going to call okay, there’s no tax. So as long as it’s a residential home, there’s no tax on a resale problem. So if I’m a contractor, and I’m building new homes, and I’m remitting my GST, and I’m paying my GST or remitting that to the government. How does it work from the builder’s side?

Clinton Wilkins
Well, the builder right now, they would be remitting all the HST that they would be collecting, less out, whatever offsets if they have receipts and they paid HST out on that job, that’s going to be offset on the amount that they collected. That’s going to be a great question for the guest that we have coming up. We have a local real estate professional coming here on our show, and we’ll do an intro to him on our next segment, but he’d be great to talk about, how does the HST work, and how does it work with new construction? Obviously, for me, I’m looking at the purchase price. And on a new construction, the purchase price includes that HST piece, but he’ll likely be able to talk about the logistics of how it works on the builder side.

Todd Veinotte
I’m just curious how that gets taken out of the formula.

Clinton Wilkins
So I assume what will happen is, if the HST is reduced, then the purchase price will not include HST, and that’ll be the savings that will be turned over to the consumer.

Todd Veinotte
Yeah. Do you think that’ll incentivize because look, if you’re going to buy a new home for $1,000,000 or whatever it is, and you’re going to potentially save $40,000 or $50,000 on the purchase price.

Affordability and Inventory Issues

Clinton Wilkins
I mean, that could move the needle a little bit, but people are amortizing these mortgages over 25 and 30 years. Doesn’t matter if you’re a first time home buyer or not. Can finance up to 30-year amortization, even for a high ratio mortgage. So you’d put 5% down on the first 510% down on the amount above 500 000, and for any consumer, first-time home buyer or not, you can do a 30-year amortization on new construction property. So will it move the needle? I mean, any type of savings is going to be savings. And I mean, that’s good. People will maybe more people may qualify, and it will reduce people’s costs. But I don’t know how many. There’s not enough new home construction happening here. I think in Halifax, that’s the problem. I think in other markets, they’re building more, but we need more inventory.

Todd Veinotte
That’s what that’s a key to all of this, is it not?

Clinton Wilkins
We need more inventory. We need a lot more construction and and it’s all levels. We need apartments, we need condos, we need townhomes, we need single-family homes. We’ve been talking about this for years now, and the thing is, the population in Halifax, eventually, it’s gonna double. But we are just not building enough new homes to keep up with the demand. And that’s really what’s happened here.

Todd Veinotte
Affordability, though, is a big issue because if you’re gonna, if you’re gonna double the population, you need to have people who can afford these houses.

Clinton Wilkins
Yeah, of course. Right now, the average house price in Halifax is around the $600 000? You need about $125 000 in household income to make.

Todd Veinotte
So if you have two people working, making a collective income of $80,000, or 90 or even $100,000 for a household, that might be a stretch. For a new consumer, that is a stretch. And I would dare say that there would be a lot of people in Halifax who would be in that price range.

Clinton Wilkins
So you may need to buy a resale home. But I think in a general household that has two incomes, you can typically afford something in Halifax, and it may not be on the peninsula, but maybe you need to buy something on the outskirts, but there are properties within HRM that would be affordable. And we’ve talked about this before, I think that ever since the properties were increasing in value, it pushes more of the buyers, maybe at that lower price point, into more rural areas. But the challenge is, then there are other costs, like maybe you were having one car, but now you need two for your household. And you have to take into account those other transportation costs. But there are pros and cons. I think the people, the way that people worked, have has also also changed. What I mean like, a lot of people are working at home now, at least part of the time. You’re not, I’m not, but there are a lot of people who have changed the way that they’re working. Well, during the pandemic, I worked from home. You did, we did the show remotely and everything. But, obviously things have changed, but a lot of people just haven’t gone back to the office.

Todd Veinotte
Okay, so you mentioned people’s state of mind, and why not? Why wouldn’t people feel that way? When you look at what’s happening, and the show is in road politics, we don’t want to get into the weeds of politics, but what’s happening with Donald Trump? There’s a lot of uncertainty and unpredictability and tariffs and what’s going to happen, and it’s no wonder that people are stressed, right?

Builder Contracts and Consumer Protection

Clinton Wilkins
I think if you could even ask me today, and I’m pretty up on things, what’s going on in the US and what’s going on with yours, I couldn’t give you a good, clear, straight answer, because it’s changed so much. I know the situation is not good. But have we started feeling some of the trickle effects? And I think we have to think the costs certainly have changed. But the one interesting thing is, Canadians are very resilient. This whole buy local, buy Canadian campaign has changed the game, I think it’s going to take years for our different supply chains, but we’re even talking about going to vacations, not going to the US, for example, that’s money that we’re not going to spend in the US. We may spend somewhere else. And I mean, not everyone’s going to subscribe to that same kind of policy, but there’s going to be long cultural changes that are going to be here from what’s going on right now.

Todd Veinotte
When you talk about reciprocal tariffs, there’d be certain types of products that would come from the United States, which are going to cost more now because of reciprocal tariffs. So that will be a factor in home-building cost, I would say.

Clinton Wilkins
That’s a big concern, I think, for builders. But I think it’s a big concern for consumers as well. If you enter into a purchase agreement to buy a new construction property, oftentimes builders are also putting in some clauses around the cost of materials and things like this, where they can legally increase the price if their cost goes up. We saw this over the pandemic. Some builders were maybe a little bit unsavory, who didn’t fulfill their contracts. Either they couldn’t fulfill them because they couldn’t afford to do it because of the cost material in the cost of labor, or they just thought to themselves, hey, I sold this house for 400,000 and now I can sell this house for 700,000. I’m gonna back out of this contract and sell this to somebody.

Todd Veinotte
Just unbelievable. But hey, listen, we will get through it. I know the platitudes, but we will get through this.

Clinton Wilkins
There are highs and lows in everything that we do and in life, but I will bring it back that this feels like March 2020, we’re five years later in April, and it feels like those early days of the pandemic just due to the uncertainty, right? And we’ve got a great guest coming up. We’re gonna get here about the state of the nation in Halifax real estate, and I’m sure we’re gonna have a lot of questions for our guest..

Todd Veinotte
Mortgage 101. We’ll be back.