I’ve had the weekend to digest the “Ontario Fair Housing Plan,” the title of which sounds eerily-similar to the “Ontario Fair Hydro Plan,” and I’ve come to the sad, yet somewhat expected conclusion, that the entire thing is just political rhetoric.
Save for a foreign buyer’s tax that might affect a couple people here and there, and rent controls, the rest of the “plan” is a list of vague, rambling, hollow, and incomplete “points” that don’t specify actual action to be taken, or a timeline, or a plan for implementation.
Mumbo-jumbo. Gobbledygook. Hocus-pocus. Blather.
What else would you expect from Kathleen Wynne?
“You can’t tax your way into a cooler market.”
That’s what I’ve said all along.
From the moment the rumblings started about the government “taking steps to cool the market,” through the speculation about what measures they would take, right up to last week when their 16-point plan was announced, I’ve continued to reiterate that the government simply can’t tax their way to a cooler market.
It’s naive. It’s novice. And it’s insulting to the constituents of the province.
Taking money away from people is not going to help cool the real estate market.
The real estate market, like any market, is about two things: supply and demand.
I know, I know – I’ve said this before a thousand times. And although that’s more of a metaphor, I think over the years, the times I have mentioned supply and demand may now actually add up to a thousand!
In any event, while I didn’t have high hopes for the Liberals’ measures to address the housing market, I did hope that they would do the simplest, easiest, most obvious thing possible and start their “plan” by looking at supply and demand.
Having read through their plan, it’s now clear that they did nothing of the sort.
Friday’s blog, for which I applaud each and every one of you who commented, probably had more meaningful, well-thought-out ideas than every meeting between the Liberal figureheads over the past few months.
Why can’t they see what’s staring them right in the face, and yet we simple folk can?
If you want to cool the market, you need to do one, or both, of the following:
- Decrease Demand
- Increase Supply
It’s not rocket science, and yet watching the Liberals try and figure this out is like watching monkeys try and put blocks into slots.
All the Liberals needed to do, that is, if they really wanted to attempt to cool the market (many think they weren’t interested in seriously implementing policy change, but rather wanted to hold a press conference and make announcements about nothing), is figure out how to decrease demand, or increase supply. That’s it. It’s that simple.
Instead, what we got last week were 16-nonsense-points, some of which had nothing to do with real estate (elevators???), or were vague, or referenced a future call to action.
Let’s start from the beginning here, and I’m working off the “16-Point Plan” which can be found HERE.
1) Foreign Buyer’s Tax
I’ve been saying all along, that if we want to cool the market – in this case, by decreasing demand, then we can do so rather easily by implementing a foreign ownership ban, that masquerades as a tax.
Because as I’ve said with Vancouver – nobody, I don’t care how rich they are, is going to pay a $300,000 fee to purchase a $2,000,000 property.
That tax in Vancouver is essentially a ban.
And while I can see why governments don’t want to enact “bans,” and thus they’ve implemented a tax that nobody is going to pay, I still can’t see why Ontario, or Toronto, didn’t implement the tax as Vancouver did.
Because make no mistake – our tax is not their tax.
Their tax is a 15% tax on foreign buyers.
Our tax is a 15% on foreign buyers, subject to a slew of exemptions and rebates.
Their tax will have a tangible effect, and already has.
Our tax will have virtually no effect.
The government really dropped the ball here, that is, if they wanted to actually decrease demand with this foreign buyer’s tax.
And personally, I was all for the tax, er, ban.
Canada is for Canadians, or at least it should be. I see no reason why hard-working, tax-paying Canadians should be pushed to the back of the line, because people across the world, who’s currency renders ours Monopoly-money, are buying up our real estate like it’s going out of style.
I know there’s a counter-argument to be made here, and one upon a time, I would have made it. Every country strives desperately for foreign investment, and some time ago, as will be the case in the future, Canadians will be starving for foreign investment.
But that time is not now. Not with respect to real estate.
So while I personally would have supported measures similar to that of Australia, I think what the government did last week – telling constituents that they’re bringing in a tax, when the tax will have a fraction of the implied effect, is gutless.
2) Rent Controls
This is, quite possibly, the stupidest thing the Wynne government has ever done.
Thirty years from now, university students will be reading about this policy decision in text books.
I haven’t seen a single economist who thinks this is a good idea, in fact, every economist out there is saying it will have the complete opposite effect as what was intended.
And let’s not forget, that this whole issue came out of a CBC story that was, in my opinion, flawed journalism.
Back in February, Shannon Martin from the CBC wrote a story about how her rent was going up $1,000 per month, and that led to other stories about rents “doubling.”
As several commenters pointed out on Friday’s blog, this wasn’t about rents going up – it was about getting tenants out so that the landlord could sell the unit.
If you’re a landlord in this market, you know that not only do you need to sell your condo with vacant possession (ie. no tenant attached), but you also need the unit vacant for the sale process so you can clean, stage, and have unfettered access.
So through legal means, you can tell the tenant his or her rent is going up “one hundred billion dollars,” and that will cause them to walk away.
There was zero mention of this in the CBC story, nor was it explained in follow-up articles.
All the media was about how “prices for rentals are doubling,” and all the while I pulled my hair out and tried to find somebody to listen.
I must have told 5-6 media members, through interviews that they solicited, how misleading these stories were.
But nobody reported what was really going on.
And I felt like this:
How fitting that a Liberal policy change was based on flawed and misrepresented information.
3) Actions To Protect Tenants
The Liberal government is going to give us a “standardized lease,” which might be worthwhile, except that we already have one.
If you do a lease through MLS, you’re signing the standard OREA “Agreement to Lease,” which is subject to the clauses and conditions that the landlord and tenant agree to.
Those clauses and conditions must be variable. They form part of the negotiation, just like the price, deposit, and closing date.
Who is going to create this standardized lease? Who is going to enforce it? How is it going to be implemented? And what if a landlord doesn’t like it?
As it stands now, the “standard” OREA “Agreement of Purchase & Sale” doesn’t stop somebody from taking a ballpoint pen and striking out some of the “pre-printed text.”
What the hell do they mean with this standardized lease?
4) Leverage The Value Of Surplus Provincial Lands
But how long will it take to implement?
This will undoubtedly go through studies, committees, panels, reviews, and eventually fizzle out like most other proposals.
5% of the units will be “affordable ownership,” they say. What does that mean? Tax-payers subsidize the ownership of a handful of units for people who essentially win the lottery?
5) Vacant Land Tax
This is how the point reads: “Introducing legislation that would, if passed, empower the City of Toronto, and potentially other interested municipalities…”
So the Liberals are taking credit for allowing Toronto City Council to potentially vote on something like this, at some point, maybe.
6) Property Tax For New Multi-Unit Residential
This is a joke, right?
The Liberals think that point #6 still applies, despite point #2.
The point reads: “This will encourage developers to build more new purpose-built rental housing…”
But you completely discouraged them from building rentals when you brought in rent control!
7) Rebating a Portion Of Development Charges
$125 Million over 5 years.
Isn’t the GDP of Ontario about $800 Billion per year?
Who cares about $125M, especially when it’s “in those communities that are most in need of new purpose-built rental housing,” which essentially means they have no idea where they’re going to implement this yet.
Once upon a time, $125 Million over 5-years was significant.
Now it’s what Kyle Lowry is going to sign for this off-season…
Oh, and by the way – that $125 Million is being rebated to developers. So the Liberals will have to replace it with…….more taxes on us?
8) This BS:
“Providing municipalities with the flexibility to use property tax tools to help unlock development opportunities….”
This is such politicking!
This doesn’t even MEAN anything!
It’s just words, strung together, sounding important!
Remember what I said about crazy pills???
9) Housing Supply Team
This makes me want to puke:
“Creating a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.”
Great. So they’re creating another wing of government, that will create more new and useless jobs, that taxpayers will foot the bill for.
And more nonsense/meaningless rhetoric: “…identify barriers to specific housing development projects….find solutions.”
It’s like in Grade One, when the teacher says, “Break into groups, and discuss.”
Except this isn’t Grade One – this is the adult world, and the Liberals want to create a wing of government, to……….break into groups, and discuss.
10) Paper Flipping
Once again, the point doesn’t lay out any action, but rather implies that maybe, at some point, something will happen:
“The province will work to understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market such as paper flipping.”
What is this crap?
“Work to understand,” they say.
How many panels, committees, groups, and boards will be created to address this topic?
They want to end, double-ending?
The public doesn’t like it?
Well neither do I, and neither do most agents.
But the truth is, folks, if Realtor Bob wants to double-end his listing, and he can’t represent buyer and seller, he can always find some rookie in his office to submit the offer for his buyer, and pay a referral fee.
Agents will find a way around this, just as foreign buyers will find a way around the tax.
Sorry – but don’t shoot the messenger.
That aside, I do like the idea of a complete overhaul of the system that governs us. REBBA 2002 was written in, well as you might guess, 2002.
I have no idea why this legislation is so out of date.
But wait…..wasn’t the Condominium Act written in 1998?
12 Housing Advisory Group
Great. More government.
13) Educating Consumers
These 16-points get worse and worse as we move to the bottom.
It’s just hollow, mindless drivel at this point.
14) Partnering With C.R.A.
I suppose if we all pay more tax, then somehow, magically, we’ll be able to afford real estate?
15) Some BS About Elevators?
Come on, Liberals!
You’re not even trying anymore!
You’re so desperate to flush out your 16-point plans that you put something in here about elevator repair!
16) Growth Plan
When I see words like “understanding” and phrases like “working with,” it just shows me, once again, that they’re not actually outlining any specific proposals, but rather are going to give us a long paragraph that we get tired of reading halfway through, and simply give up, and assume they’re doing……something.
Although the last part of this paragraph does specify that “nothing” will happen to the Green Belt, which, of course, is one of the most frequently-suggested solutions to our housing woes.
And here I thought I might come off as being cynical for a change…
Look, I don’t want to turn this into a political debate, but at the same time you can all infer that I’m not a Liberal supporter.
Kathleen Wynne has set this province so far back with her actions over the last four years, and now she’s standing up in front of a podium, promising things she can’t deliver, with “policies” that have no teeth, and essentially taking credit for future successes at the municipal and provincial levels.
If the government wants to cool the market, they have to do one of the following:
- Decrease Demand
- Increase Supply
Aside from a foreign buyer’s tax that might take a handful of buyers out of the market, these policies do nothing to decrease demand, or increase supply.
And the only one of the 16-points that has any teeth – the rent controls, will ultimately lead to lower supply in the long term.
This is 16-points of bullshit, in my opinion.
The irony is – I haven’t found a real estate agent out there who thinks this “16 point plan” will have an effect on the market. Nor do I have one single buyer who wants to change his or her plans.
Sure, sellers are asking, “What impact will this have?”
But the early results out there – from opinion pieces in the media, suggest that most people don’t think this 16-point plan does anything to address the “crisis” we’re in, let alone take steps to “cool the market.”
This will cease to be a story in two weeks.
I’m sick about this. It makes me want to bury my head in the sand.
How did we get here?
Who voted for this woman?
And what else will she do in the next 13 months to try and win favour with the voting public?
I shudder to think…