Monday Morning Quarterback: The Ontario Foreign Buyer’s Tax Is Coming

Maybe I’m late to the party on this one, but then again, perhaps it’s better to discuss now, then after the very first mention when it all seemed like conjecture.

Last week, rumours started to circulate about the potential for a Vancouver-style “foreign buyer’s tax” here in Toronto, or throughout Ontario.

And while I did write a blog post in August of 2016 about why this would not happen, I am now 100% certain that’s coming.

Let me explain why the tax is coming, and why it has less to do with housing prices, and everything to do with politics…

PlanetEarth

There’s that old adage, that there are two things you do not discuss in public: money and politics.

We talk about money on TRB all the time.

And simply because of why I believe the Ontario foreign buyer’s tax is coming, I have no choice but to delve into my own political beliefs.

Having read my opinions on TRB for a day, a week, a month, or coming up to ten years, you may think you know where I stand politically.  So rather than leave it to guesswork, let me come right out and say it: I am a social liberal, and a fiscal conservative.

I was a fan of a lot of Stephen Harper’s policies, but not his social ones.

Mandatory minimum prison sentences?  No thank you.

If a 17-year-old wants to smoke a 5-piece with his girlfriend on a Saturday night, I don’t think he should “automatically” get sentenced to two years in prison, if he gets “caught.”

But having said that, Justin Trudeau’s fiscal policies are reckless, wasteful, and unfair for those Canadians that actually work hard and pay taxes.  I’m not sure what/who I’m less a fan of: Justin Trudeau’s fiscal policies, or Stephen Harper’s social policies.

There is no “perfect” politician.

I believe Stephen Harper felt he was morally superior to everybody in Canada, and that he knew what was best for each and every one of us.  He truly was a “party of one.”

But I think Justin Trudeau is of below-average intelligence, and his agenda, really and truly, is to be remembered as the “most popular” Prime Minister of all time, no matter what he does to our country.  If you want to challenge me on his intelligence, only do so after watching this:

So what am I getting at here?

Why the preamble about my political views?

Because I want to put my views in context, when I tell you the following:

A foreign-buyer’s tax on the purchase of real estate will be instituted in Toronto, and possibly Ontario, and it is 98% a political move.

Yes, the tax will bring some relief to the housing market, but the origin of the tax will have little, if anything, to do with real estate.

The origin, as is with much political legislation these days, has to do with re-election.

Specifically, the re-election of Kathleen Wynne  as Ontario Premier in 2018.

I am not a fan of Premier Kathleen Wynne, nor was I a fan of her predecessor, Dalton McGuinty.  I am not a fan of the provincial Liberal party, their policies, or their actions.  Again, I say this so you may evaluate my hypothesis that the foreign buyer’s tax is a political move, namely, that you may have to “take it with a grain of salt.”

In October of 2016, Kathleen Wynne’s approval rating dropped to 14%.

Within that same poll, subtracting the 9% who “have no opinion,” we learned that a whopping 77% of people disapprove of the job that she is doing.

Politicians rarely roll over and die.

It’s the one quality that I admire about politicians: they never give up.

So armed with that 14% approval number, Ms. Wynne had roughly 20 months between that October, 2016 poll, and the June, 2018 Ontario provincial election, to turn things around.

She started in January of 2017 by vetoing Mayor John Tory’s plan for road tolls, about which noted Globe & Mail columnist, Marcus Gee, wrote, “Wynne’s Veto of Toronto Road Toll Plan Is An Act of Political Cowardice.”

Here’s an excerpt:

This was an act of pure political cowardice. Ms. Wynne knows the city desperately needs better public transit. She knows governments need to find a way to pay for it. She knows what it took for Mr. Tory to propose something as visible as tolls, sure to rile up suburban car commuters.

Yet, to try to save herself, she has overruled the mayor and crushed what was the signature initiative of his first term, the bravest political step by any mayor since the birth of the modern city in 1998. Pathetically unpopular, battling a tax revolt over electricity rates, facing obliteration at the polls next year and under attack from opposition parties threatening to make tolls a big election issue, she ran for the hills. Mr. Tory, and the city he governs, is the victim.

This was an act of pure arrogance, too. These, after all, are Toronto’s highways. The provincial government downloaded them to the city. Toronto owns them. Toronto pays to fix them. Yet now, thanks to Ms. Wynne, Toronto cannot toll them. It cannot charge a fee for the use of its own asset, even if the money would help maintain that asset.

In February, 2017, Ms. Wynne again tried to buy back some favour with the voting public, by “slashing” hydro rates by 25%.

Define “slash” though.

25%?  Sure, maybe that’s a “slash.”

But since this plan really just amortizes the entire cost of hydro across a longer time period, she’s not really giving people anything back.

In essence, she’s charging people more in the long run.

But as we’ve learned by watching President Trump (I still can’t get over those two words together…), much of the general public today are to naive, uninformed, lazy, uninterested, or incapable of doing anything but taking everything at face value.  President Trump can say anything he wants – the sky isn’t blue, he was born on the moon, former President Obabma wire-tapped his phones, and roughly 50% of the United States’ population will simply take it as given.

So when it comes to Ms. Wynne’s hydro “relief,” a lot of people Ontarians simply read the headlines, and thought, “that’s great, a 25% cut,” while many of us saw it for what it really was: more political maneuvering.

Then to rub salt into the wound, she went on to use taxpayer money to run self-congratulatory ads on TV.

It must be nice eh?

You get to make a poor decision, tell people it’s a good one, and then use their own money to advertise, yet again, how great a decision it was.

And now, this brings me to the Ontario Foreign Buyer’s Tax, or “OFBT” which I’m sure it’ll be called by the Ontario Liberals, once they jazz up a shiny OFBT logo, probably in in the colour of money and sunshine together.

In order for Ms. Wynne to regain the public’s favour (I know the word “trust” usually follows “regain” but I can’t imagine people actually trusting her), she can’t rely solely on road tolls and hydro bills.

She has to do something monumental.

She has to do something that affects everybody.

And the one thing all people have in common: they live somewhere.

That’s why real estate is the story that just won’t die.  Everybody lives somewhere, and real estate as a topic, conversation, or crisis, affects everybody.

The Toronto market is in a state of hyper-appreciation, the likes of which we have never seen before.

Every single day, in every newspaper, we’re seeing 2-3 ads about the real estate market.

People have never been more discouraged, and it’s not just here in Toronto.

Take a look at the average detached home prices in the month of January, throughout Ontario:

AverageDetached2017

So while this might be the Toronto Realty Blog, and while most of you reading this do, in fact, live in Toronto, consider that home prices throughout the entire province are skyrocketing.

As I’ve mentioned many times before, sarcastically, in times of crisis, the most uninformed, naive part of society always shouts, “The government needs to do something!”

Ah yes!  The government!  The cause of, and solution to, all of life’s problems.

But this couldn’t not be more perfect timing for Ms. Wynne and her 14% approval rating!

She needs to do something drastic, but something drastic that everybody can relate to!

There’s a reason that the incumbent always has an advantage, in virtually every political election.  They get more attention, they have a stronger voice, and being in office – they have the ability to enact change, which any opposition politician, does not.

So imagine the impact of Premier Kathleen Wynne standing in front of a podium and making the following announcement:

As a proud Ontarian, it pains me to see hard-working citizens of our wonderful province suffering day-in, day-out, with rising home prices.

For far too long, real estate has been an investment-vehicle rather than a place of residence, a misfortune that has changed the lives of so many working-class families, struggling to make ends meet, and to find a place to call “home.”

That’s what houses should be: “homes.”

Not places to park foreign capital.

Not structures to leave empty, on tree-lined streets, where the laughter of neighbourhood children used to ring out with an echo.

And while no government before mine, and certainly no government who would seek to take office in 2018, would ever consider such a measure, I am pleased to stand here before you today and introduce the Ontario Foreign Buyer’s Tax….

(cue somebody pulling a red tarp off a giant white billboard, with the OFBT logo)

which will ensure that if anybody who does not reside in Ontario, pay taxes in Ontario, and want to LIVE in the home they are purchasing, seeks to own real estate in our fair province, then then will pay for the privilege of doing so.

The OFBT will not only raise tax dollars that we will redistribute through the community, for much-needed parks, community centres, sports facilities for children, and long-overdue improvements to our public schools, but it may also result in a lower cost of the average home price in Ontario, so that hard-working families may soon be able to regain the Canadian Dream!

How the hell do you not vote for that woman?

That’s a speech that the Conservative, NDP, and Green party leaders will not be able to make.

And it’s coming, mark my words.

I suppose it should also be noted that no politician, in any country, in any time or place, has seen a source of tax dollars that they did not like.

And when it comes to the “tax and spend Liberals,” you couldn’t honestly argue that they aren’t drooling over the idea of another, newer source of tax revenue.

So Premier Kathleen Wynne and the Ontario Liberals, by instituting a foreign buyer’s tax, get two huge victories, and I’m not sure which is bigger:

1) They regain favour with the voting public.
2) They add a new revenue tool.

Which is a by-product of which?

Now many of you probably read the above – my sarcastic version of what Ms. Wynne would read in front of the podium, the day she institutes the foreign buyer’s tax, and thought, “What’s wrong with this?  It makes sense, does it not?”

I’m not saying it doesn’t.

I’m not saying that I’m against a foreign buyer’s tax, which is a whole other topic.  And for the record, I would be fine with the tax.

But what I am saying is that I think the foreign buyer’s tax will be borne of politicking, rather than necessity.

And I’m also saying that despite her 14% approval rating last year, I do believe that Ms. Wynne will be re-elected as Ontario Premier in June of 2018, after more moves like this one.

On Wednesday, I want to look back at my post from August of 2016, and the “Six Reasons” I gave why Toronto would not institute a foreign buyer’s tax, and systematically tear down each one.  Yes, there’s nothing quite as humbling as tearing apart your own work.

I think you’ll be interested to see how those six points are no longer relevant, or accurate, based on massive changes in our market place.

(TO BE CONTINUED…)

45 Comments

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  1. Ralph Cramdown says:

    I’m changing my call. There will be a few more months of pain, at least, before Ontario implements a foreign buyer tax.

    Sad sack Charlie, Ontario’s Finance Minister, writes a letter to Ottawa, a mere five days before the budget, asking for increased capital gains taxes to cool the housing market. And releases it to the press.

    This is not the sign of a man of action. This is somebody staring at a wobbly Jenga tower, with all the other players staring at him expectantly, and boldly declaring “I’ll Pass!”

    Cue the sad Sousaphone.

  2. tom Burns says:

    Then I think its gg for the market. This is all propped up by the government anyway (through the CMHC) so if the government really decides to pull the plug then its over. It may take multiple taxes, disincentives and a withdrawal of federal credit but in the end the government is already sets the available credit in the market and you can’t fight the fed.

  3. Kramer says:

    I am very interested in the specifics of such a tax in Ontario, i.e. specifically who it applies to, and if there will be a date set far in the future for implementation vs. a 3-week heads up that Vancouver gave, which screwed a lot of buyers and sellers over.

    There better be some VERY significant and obvious statistics behind the move though – otherwise it could have no impact other than sending a “screw you” to foreign capital vibe… when the city needs the right kind of foreign capital to continue growing and creating jobs.

  4. Alexander says:

    I would never imagine I would say this, but I am starting to miss Harper government as well.
    IMHO Foreign Buyer’s Tax is peanuts, what is more worrisome ( A LOT ! ) is combination of potential of increase in capital gains inclusion rate from Trudeau Inc., foreigner’s buyers tax from Kathleen Wynne & Co. and some proposed rental control legislation from NDP MPP. It seems not only Americans would like to move to another country after this package.

    1. Ralph Cramdown says:

      Focus on the big picture: Health care, social transfers, education and transportation are the biggest items in the combined budgets of government. Harper reduced the GROWTH of health care transfers to the provinces, and Trudeau just put the boots to them, too. But this stuff is going to have to be paid for somehow, or not provided by government. Immigration, the birth rate and population demographics are what they are — immigration is the only one we really have any control over, realistically.

      These are the facts. Focusing on the outs squabbling with the ins about a $billion here and a $billion there won’t change them. Given the trends, I’d rather not be in the least mobile, least liquid asset class…

      1. Alexander says:

        The big picture is people in Ontario are taxed at 53 % rate already . Government accountability I would say is more pressing than extra tax grabbing from their side. Gas power station here and windmill power station there, extra dollar for teachers here and extra dollar for public sector there does not make a difference. But a few BILLIONS does.

  5. Joel says:

    Here is an interesting look on the Vancouver market as done by an Australian journalist. I find it interesting to get an outside prospective on the situation. http://www.sbs.com.au/news/dateline/story/chinas-millionaire-migration

    I think that the a foreign buyers tax will come as the majority of Ontarian’s want one. I have seen articles of a property tax system based off of the amount of income declared in Canada vs amount of property tax paid. I think this is a better idea as those who don’t pay income tax will have a higher property tax. Foreign owners and domestic owners with both have an incentive to support the country through paying taxes.

  6. jeff316 says:

    You got it, Toyota.

    I can only imagine that the NDP and Liberals have been sitting on this, hoping to save it for the next provincial election, but that the Liberals feel like they’re going to be gazumped.

    Because the thing about a foreign buyer tax, from a political perspective in this market, is that is absolutely a political no-lose.

    I’m not convinced that foreign buying is really the source of our problem here, but that doesn’t matter. All the scenarios are politically golden.

    Scenario 1: Tax implemented, foreign buying actually was a problem and the tax helps reduce it and cool the market = win

    Scenario 2: Tax implemented, foreign buying is a problem and but continues unabated abated, government makes money taxing non-voters/ non-residents = win

    Scenario 3: Tax implemented, foreign buying, however, isn’t a problem but the implementation of the tax helps address the perception of foreign buying and helps cool the market anyway = win

    Scenario 4: Tax implemented, foreign buying, however, isn’t actually a core problem in this market and the market doesn’t cool = no lose because they tried

    1. Chris says:

      Bingo. Foreigners can’t vote in Canadian elections. And who isn’t in favour of more taxes for someone else!

  7. Libertarian says:

    there’s an article in the Globe today about Scotiabank would prefer a tax on flippers rather than foreign buyers. I wonder whether Wynne and Trudeau would have the guys to implement that one.

    http://www.theglobeandmail.com/report-on-business/top-business-stories/tax-toronto-home-flippers-to-lift-cost-of-speculation-scotiabank/article34343222/

  8. Jeff says:

    It is not actually a new revenue tool, in the classic way, or even how it is in Vancouver.

    Toronto and Ontario both have land transfer taxes. If this foreign buyers tax comes in (Something I actually semi pro on, despite working in International taxation for a big corp) if you think volume is slow today it will get even slower.

    Foreigners buying will slow down to a crawl, and locals will be less likely to buy/sell in the short and medium term until they know what the market is doing. So province will get less tax money since volume will be lower and price average will come down (in theory), but foreign tax up so the money the province collects will be a wash for real estate give or take.

    You also can’t talk about real estate being a free market in this country, it is not. Not when we have the CHMC, first time buyers rebate on LTT, being able to pull out of RRSP’s and seniors getting deductions of property taxes via trillum. We have distorted the market with government rules, this is just another one. Getting rid of CHMC would probably drop entry level condo’s 25K overnight.

    There is something an economist was talking about at work the other day, and that was moving Ontario’s government labour out of Toronto. For example:

    LCBO, you are now in Niagara.
    Public Health – Enjoy Hamilton
    Ministry of environment – Ottawa Seems nice.
    TV Ontario – Barrie needs some help
    Ontario Hydro – Lets rebuild Windsor
    Advanced Skills & Development- Kingston is calling

    ETC ETC ETC

    We have the largest private concentration of jobs in Canada downtown Toronto, second largest concentration of private jobs in Canada near Pearson (sits in Toronto, Mississauga, Vaughn, Brampton), largest city government in Canada in Toronto, largest provincial government in Canada in Toronto. Maybe some of that public service needs to go to secondary cities.

    1. jeff316 says:

      Yeah the provincial government moved a tonne of its jobs out of Toronto ages ago.

      In addition to all the regional or local staff that needs to be in local cities, Agriculture is in Guelph and Stratford, Government services in Thunder Bay, HR in North Bay, Natural resources in Peterborough, Health in Kingston, Finance is in Oshawa, Transportation in St Catharines and a whole bunch of energy jobs in Durham and even the Bruce.

      I think culture and tourism was supposed to move to Niagara Falls but the Conservatives cancelled that one.

      That’s not to say you couldn’t move a few more jobs out of Toronto, but provincial government jobs are not particularly concentrated in Toronto. Moving more of them would be good for the workers, but would solve nothing.

  9. Megan says:

    I know this is a Toronto blog, but as someone who has grown up and is still very closely tied to friends and family outside of the city, I don’t think this is an Ontario-wide crisis. Even your list of communities “throughout Ontario” is dominated by Durham, York and Peel Regions.

    I think people outside of Toronto (and outside of Durham, York, Peel) would welcome the foreign buyers because they fear the ever expanding reach of the GTA could swallow up their communities… and because of the wave of anti-immigrant / anti-“foreigner” sentiment that appears to be spreading through people like Kellie Leitch and her Canadian values test.

    Of course, people outside of Toronto may also just be sick of hearing about the housing market.

    I still think we’ll see an increase in the capital gains inclusion rate in Trudeau’s budget this week. I’m not sure if investors keep the tax implications of disposing of their real estate asset in mind, but I could see such an increase also affecting the markets if people are relying more on appreciation vs rental income.

    1. WEB says:

      If the Feds increase the inclusion rate on capital gains, over the long run I will be allocating more if my savings towards my primary residence and less on common stocks. And I would never buy a condo or house as an investment.

      Just wondering how everyone else will react to an increase in the capital gains tax rate.

      David: if they increase the inclusion rate in Capital gains this week, you will with close to 100% certainty get a call from me in the next five years as I’ll want to go from a 25ft lot to a 50ft lot.

      1. Libertarian says:

        Don’t be surprised if Trudeau gets rid of the Principal Residence Exemption for the exact reason you state – people are putting all their savings into their home. A tax-and-spend gov’t needs revenue, where ever they can get it.

        1. WEB says:

          What they need more than revenue is votes. Too many people own their homes, so it won’t happen.

    2. TT says:

      Fair point, but add up the population of those communities and it’s probably 80% of Ontario.

    3. Ralph Cramdown says:

      I agree that David probably overstates your average Ontarian’s infatuation with real estate. He probably doesn’t spend a lot of time with people in Windsor, London, Peterborough, Kingston, Ottawa, North Bay , Sault Ste. Marie or Thunder Bay. Nor, I’m guessing, does he spend a lot of time with the bottom 60% of Torontians.

      Two counterpoints, though:
      – Provincial political strategists have a different way of looking at the map. Our safe seats vs. their safe seats vs. ridings in play. To the extent that much of Toronto votes* reliably Liberal, Queen’s Park’s studied ignorance of us somewhat counterbalances David’s hypertrophied interest. The 905 gets all the love — from both parties.

      – Mortgage brokers are pretty pissy about the various new qualification and insurance rules, and they keep pointing out that it’s hurting them outside major urban areas. Which says to me that they used to write a lot of business for borrowers who were up to their eyeballs in debt, but who don’t qualify anymore. Not a problem of absolute house prices per se, but of very high debt service ratios for some borrowers at the margin (and from the volume of squawking, not just a handful).

      * – usually, lately…

    4. Condodweller says:

      Increasing the inclusion rate for capital gains tax (I have heard 80% thrown around) would only reduce supply as it would increase current investor’s breakeven point which means they would have to hold on to their properties longer.

  10. Boris says:

    Zero chance that evil Orville Redenbacker look alike wins again. Zero.

    1. Chris says:

      Boris, criticize the ideas, not the person.

      While I’m not a fan of Premier Wynne’s policies, insulting her looks, her sexuality, calling her evil, etc., just makes you seem petulant.

      1. Boris says:

        ORVILLE REDENBACHER FOR PRISON!

        She is so ugly, such a disgusting person. Sad!

        1. Chris says:

          Something tells me you don’t often sway people over to your way of thinking.

  11. Jack says:

    This could lead to a long heated discussion about provincial, national and international politics. Thanks but no thanks, there are better places for that. But, all the politics aside, is the foreign buyers tax a good idea or not? Any better suggestions? Or is everything just fine? No bubble here, just move along?

    1. Chris says:

      I would refer you to Professor Josh Gordon’s report for the Ryerson City Building Institute. He endorses a foreign buyers tax, but does say it is not a panacea solution. However, it may change expectations within the market, which can be self reinforcing on the way up.

      He also advocates for other taxes, such as the property tax surcharge they put forward in Vancouver. The report is well worth a read if you are interested.

      http://www.ryerson.ca/citybuilding/news/news_internal/News_Release_In_High_Demand/

  12. Ed says:

    I have a question for everyone if I may.
    Which market will be most affected by the introduction of a OFBT? Will it be condos, SFH’s, luxury homes?
    And part two of the question which regions will be most affected? Markham, Mississauga, Toronto or any other you choose to pick?
    Thanks

    1. Kyle says:

      BC’s experience thus far has been that the tax has mainly chilled # of sales and not the average price. And the lost LTT from reduced sales is not offsetting the new revenue from foreign buyers’ tax. This is something neither Ontario nor Toronto can afford. So i am doubtful that this tax will be implemented. That said, i would never under-estimate what a politician will do, when they need votes.

      If this tax gets implemented i see sales and prices for certain pockets dropping…maybe: e.g. some suburbs, pre-con, some areas in North York and those ridiculous Bridle Path mansions, but for broader Toronto i see it spooking sellers more than buyers, which will likely only exacerbate the current supply/demand imbalance. As well i see Developers slowing their pipelines which will lead to less new supply.

      1. Chris says:

        Kyle, Vancouver detached home prices have been falling for the past few months, since the implementation of the tax. Whether that began happening before the tax is up for debate, but if you check the REBGV stats, it’s clear that prices are slipping in this segment of the market.

        Condo and townhouse prices, however, have remained consistent or ticked upwards. This may be impacted by the BC provincial government’s decision to provide down payment loans to first time homebuyers for property of $750,000 or less.

        1. Kyle says:

          Like i said above some pockets or segments will see prices fall others will see prices rise, but on average prices in Vancouver have not moved downward. And like squeezing a balloon in one spot makes it bulge elsewhere, the areas surrounding Vancouver are seeing prices rise.

          1. Chris says:

            What you said above was that BC’s foreign buyers tax has chilled sales volume but not average price. That is incorrect.

            Overall average, median and HPI in Vancouver and greater Vancouver are all down. When broken into segments, detached price is down significantly, townhouse is down less so, and condo is up.

            https://www.zolo.ca/vancouver-real-estate/trends

            We can debate whether or not this was the doing of the foreign buyers tax, but the facts show that prices are declining.

          2. Chris says:

            That graph compares February ’16 to ’17. Foreign buyers tax wasn’t implemented in February ’16. Compare prices today to the peak in the summer for a more accurate view of what changed as the tax was implemented.

          3. Kyle says:

            Real estate is highly seasonal, so what you suggest is actually a way more inaccurate way of looking at things. Feb 2016 there was no tax. Feb 2017 there was a tax. All else is constant.

          4. Chris says:

            Sales volumes would be seasonal. Prices shouldn’t be so seasonal as to drop 12% in some market segments. I suggest you have a look at the zolo data as well as the REBGV’s stats on 6 month change. Or you can wait a couple months for the year over year change to catch up to when the tax was implemented. Your choice.

          5. Kyle says:

            Or we can look at the perfectly valid and controlled comparison of Feb 2016 vs Feb 2017 where the only structural difference is the tax, instead of rejecting it in hopes that the data will will tell the story you want in a couple of months…

            As for first timers taking the 37,500 loan from the BC government, logic would dictate that those people are buying homes far below the $906,700 average. Meaning those people would be lowering the average price, not goosing it.

          6. Chris says:

            Kyle your argument was that the foreign buyers tax has not been met with lower prices. The tax was implemented in late summer. Therefore, if prices rose from Feb 16 to the time the tax was enacted, and then began to decline, we may see an increase in average price from Feb 16 to 17, and a decline from Aug 16 to Feb 17. I would argue, in assessing the initial impact of the tax, it is better to look at what has happened since it was implemented, not just from a year ago.

            People using the loan would be primarily limited to the condo and townhouse segments of the Vancouver market. Detached segment is declining, but it’s highly unlikely people receiving the loan are in this market (too high priced).

          7. Chris says:

            By the way Kyle, the zolo stats page shows prices declining year over year as well (average). It’s only the REBGV HPI that shows it increasing.

            If you don’t like zolo, you could try this update instead, focusing on detached homes. There are other updates for condos and townhouses as well.

            http://vancitycondoguide.com/the-detached-shakedown/

          8. Kyle says:

            The HPI is the benchmark price and is reflective of changes in property values in the market, the zolo and Steve Saretzky data are plain averages of all sales and are more reflective of change in mix of properties sold. It even describes this on the Zolo site:

            “The change in average home price is affected by two factors:

            The proportions of home types sold has changed. This means that the mix of homes sold has shifted from a majority of higher-priced homes to a majority of lower-priced homes, or vice versa…”

            I know you will prefer to go with the Zolo and Steve Saretsky data because that is the illogical thing to do and such is your nature. Anyhow, the point of my comment, before you hijacked it in a pedantic search for alternate data, was that the foreign buyer tax did little to bring prices down (HPI shows up, even for detached – which is again reflective of changes in property values, and average is down only slightly which is more due to a change of the mix of properties). With a benchmark price of 907K, one can hardly say that the foreign buyer tax has restored affordability. But it has eroded tax revenue and had other unintended consequences, like goosing the surrounding areas.

          9. Chris says:

            “BC’s experience thus far has been that the tax has mainly chilled # of sales and not the average price.”

            Notice you said average price. So I provided you data on average price and how it has declined. Then when it didn’t fit your narrative, you changed it to HPI.

            Additionally, on zolo you can clearly compare homes of a similar size, and how the average price has changed. Notice the table where it lists 1 bedroom, 2 bedroom, etc.? That helps minimize the difference in changing composition of home sales.

            But sure, I’m the illogical one. At least you’re not LOL-ing anymore. Glad you took my advice on that one.

  13. Steve says:

    Great article once again .

    I don’t disagree with what you’re saying and the issue is timing. I would believe that implementing a foreign buyer tax in Ontario before the court case in Vancouver is settled is not possible.

  14. Ralph Cramdown says:

    Compare and contrast with the completely apolitical former leader of the provincial Progressive Conservative party, now OREA CEO, whose line is that foreign buyers make up a tiny percentage of the market, they’re only buying million dollar homes because they need a place to crash while attending school, it doesn’t really affect the market anyway, we don’t have all the facts, AND FOR GOD’S SAKE DON’T BRING IN A FOREIGN BUYER TAX, or if we do, it should be after a year or five of careful study.

    1. McBloggert says:

      I would hardly call Tim Hudak apolitical – he represents the real estate industry! So naturally he is going to put out opinions which align with the best interest of his organization – which is benefited from sales and high prices – with no discrimination over where that money comes from. You will not see OREA advocating for any measures which would bring sales and/or prices down – it is not in their best interest.

      I say tax foreign buyers – if it doesn’t have the desired impact – roll it back. However, I don’t see any harm in instituting it now based on qualitative data and I am sure there is enough hard info to go forward with say a 2 year pilot. If prices are up 25% year over year – you can’t really just sit on this and study it for a couple years….

      1. RPG says:

        Your idea is to implement a tax and then expect the government to roll it back?

        Taxes are almost never repealed.

        It’s this naive thinking that allows the public to constantly be bamboozled by politicians.

        1. McBloggert says:

          No, my idea is not to implement a tax then roll it back. My observation is that one could implement this tax which has little to no downside to anyone who is not directly profiting from RE.

          If there was some unforeseen catastrophe as a result of this tax being implemented – i.e., it further reduces supply and sales, but not price, thus resulting in less LTT for Toronto – thus leading to a bankrupt Toronto, which relies on the LTT to make their budget work (which is a massive issue – because it is not sustainable) – then you could repel, modify etc. Especially if introduced as a trial or pilot.

          Do government’s walk back taxes? Not usually – who wants to give up a revenue stream – but if the consequences were dire, then they absolutely would and it if introduced as a pilot you already have the political cover to repeal it.

    2. jeff316 says:

      Bingo. When a group/organization tells the government they shouldn’t do something unless after a careful, long study, it’s pretty much their admission of last gasp of opposition so that when the idea is implemented they can go back and say they weren’t completely opposed (if its successful) or so they can point fingers to say “see, you did this rashly” (if it fails.) Whenever government hears the “not without study” line, they know it’s time to move.

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