: Ontario Real Estate Association - Submission

Expert Committee to Consider Financial Advisory
and Financial Planning Policy Alternatives
c/o Frost Building North, Room 458
4th Floor, 95 Grosvenor Street
Toronto, Ontario
M7A 1Z1

June 14th, 2016

On behalf of the Ontario Real Estate Association (OREA) and our 64,000 members, I would like to thank the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives for allowing us to provide feedback to the Committee's policy recommendations.

OREA wholeheartedly supports the Committee's 8th recommendation to increase financial literacy amongst youth in Ontario. As professionals who help consumers through one of their largest financial transactions in their lifetimes, REAL TORSĀ® know how important financial literacy is to a strong economy.

Late last year, the Real Estate Council of Ontario (RECO) conducted a survey about consumers' confidence when buying or selling in Ontario. RECO found that young home buyers and sellers are concerned about the financial aspects of real estate. In particular, their concerns surround affordability. RECO's survey found that 84 percent of young people (ages 18 to 34) worry that they won't be able to afford the home they would like to buy. In addition, 60 percent of young people weren't sure if they could afford monthly mortgage payments on the home they buy.

Although young Ontarians are concerned about affordability, the desire to become home owners is strong. A survey by the Canadian Imperial Bank of Commerce (CIBC) found that 64 percent of millennials have a dream of home ownership with almost two-thirds (63 percent) expecting to buy with the next five years. However, 44 percent had not started to save for a down payment.

In fact, a down payment is the most significant concern for young buyers. According to CIBC's survey, 54 percent of millennial buyers said that coming up with the required down payment is the biggest obstacle to owning a home. Owning a home is a significant investment and there are a number of elements that are unfamiliar for young people looking to buy a home. From learning about a down payment to different types of mortgages, there are a number of topics that could be included in financial literacy education in Ontario.

Financial literacy is an important conversation, particularly about real estate, because Ontarians are making the largest investment of their lives, involving hundreds of thousands dollars. As Lucie Tedesco, the Commissioner of the Financial Consumer Agency of Canada (FCAC), notes "being financially literate can make all the difference between a happy homebuyer and a financially stressed homebuyer."

For this reason, Ontario's REAL TORSĀ® fully support the Expert Committee's recommendation to encourage financial literacy education in Ontario.

Financial Literacy in Ontario's Curriculum:

While OREA supports the Expert Committee's financial literacy recommendation, we hope that the Committee will expand their recommendation further to ensure that financial literacy becomes a separate course in the Ontario secondary school curriculum.

It is a topic that is supported by all three political parties in the Legislature. In May 2015, the Legislative Assembly unanimously passed a motion that directed the Ministry of Education to "develop and implement a comprehensive curriculum on financial literacy to teach our youth the necessary money management skills."

Having a dedicated financial literacy course will better educate students on a range of issues, from day-to-day tasks like buying groceries or credit card interest, to larger investments including buying a car or purchasing their first home.

Given OREA's experience in developing real estate education through the OREA Real Estate College, we would welcome the opportunity to help draft curriculum and course material as it pertains the home buying process.

OREA believes that there is an opportunity to better educate our young people about life's important financial decisions. We hope that the Expert Committee will add that "financial literacy and investor education be a dedicated course for Ontario's secondary school curriculum" to your gth recommendation.

If you have any questions, please do not hesitate in contacting Adam Yahn, OREA's Assistant Director of Government Relations at adamy@orea.com.

Sincerely,

Valerie Miles,
Chair OREA Government Relations Committee
Cc: Ray Ferris, President, OREA