Oh what a wonderful “first blog” now that I’m back up and running!
Some of you may have heard enough about this already, but what the B.C. government is doing right now can be considered a litmus test for the rest of the country, Toronto in particular!
And perhaps another point of discussion: if investors pull out of Vancouver, will they come to Toronto?
Yet another reason why our market will continue to rise…
I haven’t been to Vancouver since 1998.
And it wasn’t even Vancouver, per se. It was the Vancouver airport.
There was a massive storm brewing on the west coast, and flying out of Salt Lake City, Utah, usually had us heading to Denver. But on this day, we were sent west to Vancouver, where we were to catch a flight directly to Toronto.
Once we arrived in Vancouver, we were told there were only two seats on the plane for the four of us – my mom, my dad, my brother, and myself.
My Dad told us that my mother would be heading home with either my brother or myself.
And we would flip a coin to see who would accompany her.
Even though I would be getting off the plane in Toronto and going right back to McMaster University, I still didn’t want to be the one left behind in the airport for a night. My Dad’s idea that “we’ll check out a Canucks game” didn’t sell me.
Evidently, I won the coin flip.
My brother was crushed.
We didn’t speak, or make eye contact, for the next hour.
Ten minutes before the flight, two seats became available, and all was made well in the Fleming family again.
That is my only experience with the city of Vancouver.
I wish I could tell you all about my travels through the city and the surrounding area, trips up and down the coast, and forays into the real estate market.
But I can’t.
I only know what I read.
And for most of us here in Toronto, trying to make sense of the insanely-hot 2016 Toronto real estate market, we look at Vancouver and say, “At least we don’t have it that bad.”
The average home price in Toronto in June of 2016 was $746,546, and that made us all cringe.
But the average home price in Vancouver in June of 2016 was $1,026,207 – a 37% premium over Toronto.
The house prices in Vancouver are so high, and are increasing so rapidly, that people have been using the words “epidemic” and “crisis” to describe the market.
We’ve talked on Toronto Realty Blog before about whether or not the Canadian government should restrict foreign ownership, and if so, how to do so.
And last month, we talked about a potential “vacancy tax” on Vancouver properties.
Well, all the speculation has come to an end.
The B.C. government dropped an absolute bombshell on Monday when they announced that foreign buyers would now pay a whopping 15% transfer tax on properties over $2,000,000.
The article first broke in the Globe & Mail, HERE, and was on the front page of Tuesday’s paper edition.
As the story explains, the B.C. government tracked all the properties registered between June 10th and June 29th.
A whopping 14% of the properties registered in Richmond during that time period were purchased by foreign buyers.
Fourteen percent.
That’s more than the estimates that CMHC feed us, and it’s in line with the doomsday predictions that market bears provide.
Metro Vancouver is “only” 5%, but five percent is still a pretty large chunk, especially when you consider that many foreign-bought properties aren’t registered as such, because they’re bought through companies, or relatives of the buyers who are either Canadian citizens, or permanent residents.
As for the more important number – that fifteen percent tax that’s going to apply to properties over $2,000,000, I think that’s in a word, insane.
Nobody in their right mind is going to pay a 15% tax on real estate.
Our 13% HST is so ingrained in our minds that we cease to complain when a $20 purchase costs $22.60. We’re completely used to it.
Buying a car, on the other hand, is about the only time when we really complain. HST? On a purchase that big? That’s tough to swallow.
We have never had taxes this large on the purchase of real estate.
HST on new homes is always “included in” the sale price, whether the developer throws that back on the buyer, or whether the developer eats the cost – the buyer almost never feels it.
But the idea of a buyer of a $2,000,000 house in Vancouver forking over $300,000 is insane.
And in theory, it will never happen.
In theory, what the government of B.C. just did today is utterly and completely killing the foreign demand for real estate.
In theory, of course.
Because that’s all we have to go on at this point.
Do you really believe that a would-be buyer of a $4,000,000 property is going to pay a $600,000 fee to buy that property?
Not a chance.
So then what would they do, if they still wanted to buy?
They’d find a way around it.
That’s what savvy investors and multi-millionaires have been doing since the dawn of man.
Sooner or later, however it happens, these investors will find a way around it.
And if they don’t, then the market for real estate in Vancouver drops in value.
In theory.
It’s just a series of “if” statements, really.
If the government implements this new tax successfully.
And if the purchase and sale of real estate comes with a new form, or new responsibility on behalf of the real estate agents, lawyers, and mortgage brokers.
And if the properties are registered properly.
And if the government monitors the registration.
And if the government investigates and audits all transactions to look for loopholes.
Well, then, if all that happens, then all the foreign investors will disappear.
And as we know, if you take away a massive chunk of demand, and supply remains the same, then the price of that good or service in the marketplace will drop.
Part of me thinks that this isn’t really meant to be a “tax” but rather a massive red flag, raised really, really high, so that everybody overseas can see it.
“See this red flag? It means ‘don’t buy real estate here.’ Go somewhere else, because you’d have to pay a massive tax that you’re not actually going to pay.”
Part of me thinks that the B.C. government didn’t enact this “tax” as a measure to collect revenue, but actually as a tool to drive away all foreign demand.
Effectively, the government has banned foreign investment, without banning it.
Unless you think somebody is still going to buy a $4,000,000 house and pay a $600,000 fee, but I can’t imagine any of you think that’s going to happen.
Even once.
Vancouver has been used as a massive safety deposit box for foreign money for a long time. It was easy, safe, and they made a ton of money when really they just wanted to get their money out of their own country, political climate, and banking industry, and probably would have taken a net zero.
But with this new “tax,” the party is going to move on.
And while it is incredibly naive to think that all the demand is going to come to Toronto, some of it undoubtedly will.
Areas near Vancouver like Kelowna that fall outside the “Metro Vancouver” net where the 15% tax will apply might see a massive surge in demand, but so too could San Francisco, or New York, or Paris, or London, or anywhere else in the world.
A lot of the doomsdayers are already predicting massive price increases in Toronto. Although with a 16.8% appreciation in the average home price as of this past June, what would a “massive price increase” look like?
The irony is, it might behoove the Ontario or Toronto government to start looking into this.
Governments, in my opinion, are far more reactive than proactive.
What we saw today from the B.C. government was an incredibly reactive move, that came far too late, and was an extreme measure.
Perhaps Toronto’s government should spend fifteen minutes at their Monday Meeting next week to discuss what could happen in Toronto, if we saw a surge in demand.
Of course, anything at the government level has to consist of a “committee” to do a “study” to release “findings,” by ten people for six months who get paid $4,000,000 at the taxpayers’ expense. But I’ll save those particular views for another time…
Rest assured, what’s going to happen in Vancouver in the coming months is going to be a litmus test for the rest of the country.
There’s no doubt that the B.C. government, along with CMHC and the Finance Department, and the governments of Toronto and Ontario (if they have any sense at all) will be monitoring this with great interest.
I’d be remiss if I didn’t reiterate, just one last time, how shocked I am at this announcement.
The idea of the “vacancy tax” was proposed last month, and it was a novel concept, and something few people thought would actually be implemented.
But a straight 15% tax on ALL foreign buyers? That’s addressing the elephant in the room.
No “vacant property” talk anymore – now we’re talking about FOREIGNERS.
Foreigners.
When did that become a bad word?
It comes with a negative connotation.
And yet the B.C. government today targeted “foreign buyers.”
I’m just shocked.
I didn’t think they had it in them.
Few governments do. At least, north of the 49th parallel…
Make no mistake – after all the changes the CMHC implemented over the last eight years in efforts to “cool the housing market,” the B.C. government finally realized that none of it was working. No CMHC policy was going to be big enough to have an effect.
And thus a 15% tax.
I never thought I’d see the day…
Appraiser
at 7:16 am
For the record, the punitive and ill advised new tax is not limited to properties of $2M or more, it applies to all transactions.
Francesca
at 7:19 am
My in laws live in vancouver and we travel there often to visit them. We were actually just there for a week this past april. They live right downtown on Granville island and we have the Opportunity while there to pretty much walk and drive most of the city. Let me tell you that we were shocked at how expensive Condos and houses have gotten Lately. We always dream about moving out there but are quickly reigned in when we see how bloody expensive it is even compared to toronto! The biggesest differnce we noted since our last visit in 2013 was how many huge houses in Shaugnessy which is like our forest hill or rosedale were sitting empty or in state of disrepair with some Asian realtor sign on the lawn, often Written only in chinese not in English at all. We noticed areas Where foreigners traditionally dont live or buy in were now being Snatched up constantly. It’s not limited to downtown condos or suburban homes in richmond or Burnaby anymore. Every area of the city now it seems locals are trying to compete with foreigneres who will not think. twice about paying hundreds over asking for land value only. There is def a huge problem there. I think worse than in toronto currently. I think many locals are now happy to see tgis tax implemented to see if it does have any effect on the market as its absolutely true that locals esoecially young people are being priced out by foreign demand. As you said david will be intersteing to see if Kelowna or victoria markets will see a swing of foreign buyer interest now.
West Ender
at 8:45 am
Black. Swan. event.
Appraiser
at 9:26 am
Hy. per. Bole.
Don Juan's Dong
at 2:00 pm
Not really. This is a watershed event for Van, BC, Canada, even North America.
Appraiser
at 3:28 pm
exaggeration, overstatement, magnification, embroidery, embellishment, excess, overkill, rhetoric, purple prose, puffery…
Don Juan's Dong
at 8:12 am
Cuck.
Kyle
at 9:16 am
First, let me say, I like the new look and i’m glad to see that the content (which for me has always been the main draw) is still Great! but david, why is your comment box capitalizing the first letter of every word, like in an MLS description? does it not like Chrome?
Second, i think this new tax is going to backfire. there are a lot of hypotheses that suggest the new tax *may* curb some of the foreign demand, but what hasn’t been asked, is how are vancouver sellers going to react to this tax? i think most homeowners will have a value in their head based on a market where foreigners could buy, if they suspect that this new tax is going to result in them getting less than that number in their head, i think many will simply decide to stay put, which further exacerbates the ‘gridlock’ that caused prices to rise in the first place.
jeff316
at 1:54 pm
The site was in aneed of a refresh and it looks nice but the comments, they’re small and hard to read.
The Donald
at 9:51 am
I thought HST was on top of new Builds, not included in? Not sure why my typing is capitalizing the first letter of each word. new website trick? :/
The Donald
at 9:52 am
Now I look crazy because the published text doesn’t match what I typed. Oh well …
Don Juan's Dong
at 9:56 am
Strongly disagree, 15% is a drop in the bucket for many of these chinese buyers:
1) how long has it been taking for houses over $2mm to appreciate 15% in the van market? a year? half a year? that is how many chinese will look at it.
2) a great deal of purchases in bc by chinese is effectively money laundering out of china, getting around capital controls. losing 15% is a hell of a lot better than losing 100%. these people are rich and dont give a fuck as long as its away from the collapsing lending system that is mainland china.
Appraiser
at 11:17 am
Not all foreigners are Chinese.
Xi Dada
at 12:10 pm
But most that are buying RE in Vancouver are Chinese, Mainland Chinese in particular.
Don Juan's Dong
at 1:58 pm
That’s a non sequitir. The foreigners relevant to the conversation are chinamen.
Appraiser
at 3:25 pm
All foreigners are relevant to the new law. Even racist xenophobes should be able to comprehend that.
Don Juan's Dong
at 3:55 pm
Whiny, name calling SJW charlatan alert!!! Population: you.
So you are saying the primary group of foreigners being targeted is NOT the Chinese? Maybe those wealthy Namibians or Lebanese buying up those $4mm Van homes?
The PC Matrix of butchering definitions and name calling has clearly eroded any notion of actual thought in your brain.
Don Juan's Dong
at 3:56 pm
There’s a word for people like you:
Cuck.
jeff316
at 1:48 pm
Sure, but let’s get real – if the perception was that Vancouver was being inundated with Americans or Brits we’d see only half the level of outrage.
The Donald
at 9:59 am
My personal opinion is that real estate markets should stay free and open to anyone wanting to buy, while addressing the shortage of affordable housing in another way – like building more rental buildings with lower rents to meet the need.
Appraiser
at 11:18 am
Could not agree more.
Mike
at 4:05 pm
If you allow the market to run free allowing the highest bidder to purchase you drive up real estate prices (hence the action in Vancouver), you can say that you’re going to address affordable housing by building more “rental buildings with lower rents” but how do you do that? The price of land increases requiring developers costs to increase which need to be passed along to consumers. You could tell the developers that they need to build the lower end retail but then you’re cutting their ability to make a profit and as such they lose the incentive to take the risk to build. The government could offer developers credits or low interest capital in order to build the low rent housing but that costs money, money that comes from the taxpayers. So you now need to increase taxes, all taxes to pay the extra costs rather than tax foreign investors who don’t live in the city.
Here’s the kicker, Foreign Investors don’t vote.
So you can either tax the Foreign Investors who don’t vote and reduce demand for your real estate which will lower real estate prices or you can tax everyone and get voted out of a job in the next election. Not a hard choice for a Politician to make.
The Donald
at 5:41 pm
If you allow the market to run free … you drive up real estate prices
Not necessarily.
how do you build more rental buildings with lower rents?
See all those ugly rental buildings out there that are falling apart? Well the men and women who own those are extremely wealthy, an elite group with financing options beyond your wildest dreams. oh and a proclivity for real estate.
Renters are STARVING for affordable housing as we keep hearing. Brand new and efficient units rarely come up at good prices. That’s because landlords, for the most part, have been milking their current holdings.
The first to develop modern rental buildings with condo style amenities will profit generously AND be serving the communities in Toronto. Not to mention, they will scoop up renters “faster than a fat man who sat down too fast” – stupid lyric lol. The demand has been building in our fair city for some time now. Even a break of $100 a month gives relief to thousands out there who are cash-strapped.
You could tell the developers that they need to build the lower end retail
Developers are rich too. They are not “told” to do anything. They make decisions based on mathematics and expert & trusted advisors. I assure you, there is money to be made on rental apartments. It’s a different business model ok. But when markets change The powerful and rich adapt without losing money.
Markets do change, no question. Affordable apartments will strip away buyers from the entry housing market and it will force condo developers to up there game! They’ve been selling crap.
The government could offer developers credits or low interest capital in order to build the low rent housing but that costs money, money that comes from the taxpayers.
If you don’t have the money to make the investment, if you require subsidy … ? No, that’s not the type of developer I’m thinking about. Not that they don’t get breaks and kickbacks. They do. But they don’t need other people’s money. That doesn’t mean they aren’t financing it though. Leverage is everything in RE.
So you now need to increase taxes, all taxes to pay the extra costs rather than tax foreign investors who don’t live in the city.need other people’s money to invest in large projects.
Hogwash.
There are markets within markets within markets. Even if 100% of foreign buyers stopped buying RE it will not solve the issue of: 1. lack of housing 2. Affordability
Must I state the obvious? Foreign buyers aren’t taking housing stock (or land) away from the people who are in need of affordable options! For all intents and purposes, they are buying luxury properties. The luxury market is the first to get hit when the market slows. Let them buy those. I haven’t seen too many $2,000,000 tear downs (although I’m sure some exist!) Let them buy those too.
I drive across this city many times a week, never the same route twice. There is a LOT of room to grow my friend. You want to buy some land? You a developer? Come with me and I’ll show you how to be profitable.
Markets can and do continue to rise. As long as there are people with money willing to pay for them. It stands to reason that as long as supply is controlled we can ride this momma all the way to retirement (and probably the next 10 generations.) Ha!
Here’s the kicker, Foreign Investors don’t vote.
We get richer without giving them the same rights as citizens. Got it!
So you can either tax the Foreign Investors who don’t vote and reduce demand for your real estate which will lower real estate prices or you can tax everyone and get voted out of a job in the next election. Not a hard choice for a Politician to make.
Is that how voting works now? 😉 Go ahead and tax them. I’m all for it.
Mike
at 11:25 pm
I appreciate you dumbing it down for me.
So I’m not a developer but I kind of understand math but since you have a strong handle on it, let me know where I’m getting it wrong.
Builder buys a property for $20mm
Build cost of a 25-story building with 10-units a floor are $60mm (probably a lot less but indulge me)
Total cost of build is $80mm
Now with a condo, if the builder can sell 80% they can get financing. Maybe not at prime but lets say they pay a rate of 5% for their construction loan on total cost (land and build cost are going to get different rates so we’ll call the 5% a blended rate)
Now a bank is happy to lend a builder who has 80% sold to qualified buyers in a condo scheme.
Condo developer can sell the 250 units for an average of $500m a piece(I’m going low here to give you a break), bringing a total completion revenue to $125,000,000 upon closing of the condo development (not going to include the fact that they charge for the heat exchanger (right David) and have management companies that make future revenue for them). All told at completion of the building, perhaps 5-years after the purchase of the land, the developer walks away with $45,000,000 (carrying costs included in build costs).
Great, wonderful day. Lots of developers live in really big houses based on this model.
Then you have the rental model. You have your $20mm for land, $60mm to build and then you have rental income for the next 25-years.
Now the bank doesn’t like the fact that you’ve got to cover initial build costs yourself, you don’t get deposits from renters. Then once they building is built for $80mm you still have the fact that need to keep in financed. So you have 250-units paying and average of $2,300 for the next 25-years for a grand total of $172,500,000 which sounds good but then you realise that you’re earning less than 2.5% PA and you haven’t accommodated for taxes or maintenance. So now you’re earning less than three percent, prime is around three percent, inflation is just under (in a positive environment) under three percent.
I have to ask you Donald, what “expert & trusted advisor” would recommend not to build relatively risk free condo vs. long-term risk rentals based on this math?
The Donald
at 11:30 am
You don’t know where to build honey bunny. More land for me.
Joel
at 10:46 am
Forcing or subsidizing affordable housing is government intervention. That negates this being a free market.
jeff316
at 1:53 pm
Pssssssssst – the market isn’t “free”, and never has been “free”, and never will be “free”. It’s like all the 24-year-old Libertarians showed up on here all of a sudden.
Mr. Late
at 12:54 pm
hello
Mr. Late
at 12:55 pm
I agree … government has a way of making things worse
The Donald
at 4:45 pm
poetic
jeff316
at 1:19 pm
Given that BC politics is dominated by a) forestry, b) mining, c) pipelines, and d) the Liberals and NDP trying to constantly outwit each other, this is all about addressing issue number four. And though, as policy instruments go, it is blunt, this has the potential to be politically savvy. If this dents foreign demand and influences the perception that houses are slightly more affordable, this is a political win. If it fails to slow demand but raises buckets of money off of non-voting, non-resident buyers, this is a political win. The only way this fails is if the government loses its mettle and designs it in such a way that it is easily circumventable. There are risks, but this could prove a masterful manipulation of a critical issue for political gain.
Libertarian
at 2:40 pm
It’ll be interesting to see what the unintended consequences are of the this law. That’s the problem with government intervention – it leads to law after law after law….leading to an eventual bureaucratic mess and everyone forgetting what the point of the initial law was. So much for “the true north, strong and free” and “keep our land glorious and free”.
The Donald
at 4:42 pm
Government only has to look like it’s doing something. I think we should get a statement every year showing us what our taxes paid for. I want an itemized list from the Canadian government to prove to me that the money isn’t being wasted.
Mike
at 11:28 pm
Uhm ya, it’s called the Auditor Generals Report, published online. Well publicized
And then you have the annual budget, tells you where the Government plans on spending your money.
You can read both to see how they compare and then make judgement.
Don Juan's Dong
at 8:11 am
Itemized? Nope. Obfuscated? You bet.
The Donald
at 11:19 am
If it’s not in plain language that regular folks can read, delivered on an annual basis, without them having to “look it up” it’s not what I’m asking for. I’m asking for an actual account of the taxes I paid (not as part of the larger whole – the ACTUAL out of pocket figure and where it went.)
jeff316
at 1:49 pm
I’m sorry, but this is just idiotic.
The Donald
at 11:21 am
Where the gov “plans” to spend my money isn’t the same as what has been spent and the BENEFITS we got for it. It’s about how the information is framed AND delivered. If I have to have a university education to interpret it, it’s not serving the wider public.
Donald
at 9:24 pm
Government should let markets govern themselves. The best cure for high prices is high prices. It will stimulate supply and by nature reduce demand as prices increase.
Should the government intervene in high flying stocks like FB NFLX and TSLA because they are overpriced based on historic averages? Government has never done a good job in setting prices, and most often it does more harm than good.
This is a half baked idea and I hope Ontario is smart enough to let things shake out on their own. Demand to live and invest in our cities is a GOOD thing. If we hit a deep recession whee house prices fall will they also intervene to prop up prices? This is a slippery road.
Mike
at 11:36 pm
Hate to point out the fact the the general populous can get by without owning FB, NFLX and TSLA not integral to their well being. They do need places to live, ideally close to where they work.
You don’t mention government intervention in the price of petroleum extraction, green energy, electricity, wheat or even milk. You see, solar and wind is too expensive to invest into without government fixing the price. Oil is too cheap in the Middle East, even with shipping, to comptete with strait up exploration and production in North America that’s why they have the developmental tax credits (yes companies like Suncore who have massive balance sheets get subsided by the government) and you know why you can buy bread and milk here in Canada? The government guarantees a price so that you’re guaranteed a supply. People of Russia hit by a wheat blight, doesn’t matter, you’re still paying the same for your loaf of bread.
Wut
at 9:02 am
Did you really just say the only reason we can buy bread and milk in Canada is because of government intervention? That may be the dumbest thing I hear for at least the next week.
Mike
at 9:09 am
@ wut
Don’t believe I said it was the only reason we can buy bread or milk but it is the reason that our wheat isn’t shipped off to China or India because they’re willing to pay a higher price than what we as Canadian consumers currently enjoy.
Don Juan's Dong
at 9:39 am
Mike, you have no idea what you are talking about. PLease do yourself a favour and shut the hole in your face.
Wut
at 2:06 pm
“you know why you can buy bread and milk here in Canada? The government guarantees a price so that you’re guaranteed a supply.”
Seems fairly unambiguous to me. Anyways, you really need to read up on supply side management, you have no idea what you’re talking about.
Jeff hortel
at 6:34 am
Surely you realise that a free market requires the complete closure of the CMHC which is nothing but a massive government market intervention in the cost of capital and leverage. I assume you are also in favor of this? To be otherwise would be hypocritical.
Formerly Frosty
at 2:24 pm
Good point, JH. There’s also the untaxed capital gains for the principal residence. What would the “free market” be like if everyone had to pay taxes on the increased value of their homes upon sale?
Don Juan's Dong
at 3:23 pm
What would the free market like if there were NO taxes. After all, taxation is theft.
A
at 7:54 am
As an American who owns property in Toronto, we are now 50/50 on selling and leaving Canada. It’s a great disappointment that a country that touts itself with such “open arms” to immigrants and foreigners, would promote such ludicrous policies to stop capital investment that is helping your current residents cash out of their crap holes they paid 300k for in Vancouver for 1.5 mil. Typical liberal thinking. Typical hypocrisy. Trust me, this tax has just started a snowball effect of a government tinkering in a capital market which it has no experience in whatsoever. But this type of populism wins a reelection. Last I checked, not every American is entitled to live in Manhattan nor could they afford it. Nor does Manhattan, or any other major US city tax a foreign buyer. You open minded liberal Canadians are xenophobes hiding behind a mask, that simply love to tax. When that Vancouver market turns, and this is the beginning of the turn, the greedy liberal government that was counting its millions will see this pool of money dry, while harming its own residents with a real estate downturn. Hopefully Ontario has more brains than this and follows suit of its neighbor NYC embracing all capital investment. And this is not a tax on 2mil plus properties, it’s all properties. Kiss your American buyers goodbye (maybe you don’t like them anyway). No American would ever pay such a crazy tax. I thought the 3% we paid in Toronto was high. This is just liberals destroying the economy.
Don Juan's Dong
at 9:00 am
That’s on point.
However, IF Ontario doesn;t adopt this policy it has NOTHING to do with cooler heads prevailing, and instead the greater evil machinations of politics indicating that it isn’t “politically prudent”. Policymakers in Ontario are as bad as they get in the country. Tough company though with Notley et al.
Kyle
at 9:28 am
Well said A or eh!
Some people want all the benefits of living in one of Canada’s 2 Global cities: Job opportunities, vibrancy, culture, amenities, selection, etc…but they want to pay regina prices for it.
jeff
at 9:40 am
Its prioritization of needs.
the biggest issue is with all the job growth now being concentrated in a few cities (most of it being GTA/GVR) locals need to afford where they work, this is getting harder and harder for most.
People now have less and less options to find other cities in this country to actually live, rural Canada is being hallowed out, east coast has no economy, the commodity based Alberta/Sask provinces are shrinking. The service industry (finance/tech/health/law/accounting/consulting/etc) where high paying jobs are all seem to be in 3/4 cities in this country – and one of those cities you need to speak French.
It’s not about being opened/closed as a society, its changing the system for the new realty of where and how people work.
Kyle
at 10:11 am
agreed. 25% of all the jobs in Canada are in Van or TO. The reality is Jobs = house prices, full stop. When the government tries to reduce prices, one of two things will happen: they will either succeed in lowering house prices, but they will also lower jobs. Or they will fail in lowering house prices, and people will be stuck with new laws that don’t achieve any of the intended outcomes.
However in my view it is peoples’ perceptions that need to change, rather than the system. If people can’t can’t compete in an open society, then they should find a closed society where they can. It makes more sense for those who want regina prices to move to Regina than it does to turn Vancouver into regina.
Izzy Bedibida
at 12:14 pm
I agree. Housing is more than just an investment and a place to park money. People have to live somewhere and have to be able to get to those jobs. Unfortunately current job growth and wages are no where near being able to support current house prices in and around the GTA. If all ones income goes into mortgage payments, there is nothing left to spend on the economy as a whole. Case in point. Several friends are on the verge of divorce over this…. They don’t have to “luxury” to spend on a $6 domestic pint at the local pub, or a nice steak to BBQ at home.These are solid income earners with good money skills. In all this rhetoric none of the above issues are being addressed by anyone
jeff316
at 1:50 pm
Thank you. A post that doesn’t stoop to insults, buzzwords, and xenophobia, and shows a healthy dose of nuance as well as an understanding of what is going on outside of our major centres. Well said.
David Fleming
at 10:58 am
@ A
I agree with 100.00% of what you wrote.
I called this tax extreme, and an overreaction, not to mention reactive and not proactive.
I appreciate your insight.
Wut
at 9:07 am
“HST on new homes is always “included in” the sale price, whether the developer throws that back on the buyer, or whether the developer eats the cost – the buyer almost never feels it.”
Totally incorrect, the buyer does feel it and it along with increased development costs and land value is driving the price of new homes. When you close your new house you see exactly how much of that is HST, sent to the most wasteful government we’ve had in Ontario history. Just wait and see what happens when land values start to decline, this is a disaster just waiting to happen.
Btw the new design is really good, often “new” means worse from a UX point of view but this is better.
The Donald
at 11:36 am
“Vancouver realtor probed for ‘how-to’ email on avoiding new property transfer tax”
http://www.cbc.ca/news/canada/british-columbia/real-estate-council-investigation-realtor-1.3697962
A
at 2:21 pm
Additionally, here is a great example: Measured by median income, Manhattan and (especially) Brooklyn are much poorer than you think. Manhattan’s median annual household income is $66,739, while Brooklyn’s is a mere $44,850. Its less fashionable neighbor, Queens, outearns Brooklyn at $54,373 per year.Jan 9, 2014
The average apartment price in Manhattan hit a record $1.95 million in the fourth quarter, as high-end real estate continued to defy volatile stock markets and slowing growth overseas. Real estate sales grew 9 percent in the quarter compared to the same quarter last year, according to real estate firm Douglas Elliman.Jan 5, 2016
Do the math. No one, and I say no one, has ever brought up the nonsense of punishing foreigners with insane taxation on a purchase. Even with the horrendous liberal governance of NY, they want capital inflows. My only hope is that Toronto tries to model itself after New York for capital investment. Hopefully with all your TSX folks in Toronto, someone talks sense into Ontario’s finance minister. Someone that has experience in capital markets needs to take the reigns and understand that these markets will correct themselves if need be. Additionally, someone needs to understand that Toronto may be getting expensive for people working in city, but with your weak dollar, the core area is still relatively affordable as compared to other major cities of the world. Look at the New York city example above. How does anyone afford to live there? Yet this has gone on for decades.
Kyle
at 9:19 am
http://business.financialpost.com/fp-comment/barry-appleton-b-c-just-violated-nafta-with-its-foreign-property-tax-and-we-could-all-pay-for-it
…Oops
TJ
at 7:26 am
Am i misunderstand the article or isn’t the foreign tax applicable to houses under AND over $2,000,000 price? The article states that it only applies to houses over $2,000,000.