Problems, Solutions, & The Problem With Those Solutions


12 minute read

April 16, 2021

Let’s play a game, shall we?

These usually go over well.

I’m going to give you five scenarios and I want you to tell me which is something you would define as a “problem.”


Scenario #1:

A property in North Toronto is listed for $1,099,900 and is likely “worth” about $1,400,000 in this hyper market.

My colleague has the listing.  He tells me, “My seller would jump at a bully offer of $1,450,000.  Bring it, David.  I’ll get it done.”

My clients aren’t interested because of the lack of ‘real’ parking, and they pass.  But low and behold, another buyer submits a bully offer on the property.

How much is that offer for?


My colleague is literally laughing, the price is so outrageous.

The buyers are overseas.  They need a 120-day closing so they can have their money in a Canadian bank account long enough to satisfy whatever rules are in place.  They are likely buying in cash, but who knows, they might take a small mortgage because money is cheap.

Scenario #2:

My clients are a 24-year-old couple looking to buy a 1-bed, 1-bath condo in the downtown core.

Are they too young to be buying?  Does anybody “deserve” to be able to buy at this age?  Are we entitled to have ANY opinion on this, whatsoever?

They have a 20% down payment on a $600,000 purchase.

At 2.29% for a 25-year amortization, on a 5-year fixed-rate mortgage, they would carry this for $2,100.36 per month.

They qualified based on a “stress-tested” rate of 4.79%, and just slid through, being able to make those payments of $2,734.60.

If the stress-test qualification goes up to 5.75%, they would not be able to make the payments of $2,860.41.

Even though we are, potentially, light-years away from a 4.79% rate, let alone a 4.25% rate, they aren’t permitted to buy in this market.

Scenario #3:

An Ottawa couple bid $400,000 over the asking price of a house and lost to a higher bid.

This is from a CTV news story which you can read HERE.

Some exceptional mathematical deduction went into this quote:

Fewer homes are for sale and more people are wanting to buy.

The would-be buyer said: “This was probably one of our dream homes on our list.  We’ve been looking and looking for over a year and we bid over $400,000 over the asking price.”

Scenario #4:

Two young ladies are cubicle-mates at ABC Corporation where they work in cost procurement.

Both ladies are currently in the market for their first condo.

They make the same salary and ultimately obtain the exact same bonus.

One of the ladies has saved her money since she was 15-years-old; every single penny, from every single job.  Folding t-shirts for minimum wage at The Gap, serving assholes drinks on the golf course as a “cart girl,” and knocking on doors as a rep for College Pro Painters every summer during university.  She is frugal, doesn’t spend her money on material goods, and brings her lunch to work every single day.  She knows the value of a dollar and how hard it is to keep a dollar, let alone make one.

The other young lady comes from a very well-off family and is part of a yacht club, a golf club, and one of those “family, athletic, recreational, and social clubs” as well.  The car that she drives to work every day costs more than she makes in a year.  Pre-pandemic, she was out four nights per week, taking in all of Toronto’s best restaurants, bars, and nightlife, most of which she shared on her Instagram account, all of which garnered serious “likes.”  Her parents are going to give her half of the cost of the condo for a down-payment so they can help lower her monthly payments.

Scenario #5:

A house is listed for sale in the west end of Toronto.

In one week, there are 97 viewings.

On offer night, 14 people submit offers.

Only one buyer is able to purchase the home.

I’m sure there’s a scenario #6, a scenario #7, and even a scenario #19 for the purposes of our game, but in the interest of time, I think we’ll just let sleeping dogs lay.

Which of these five scenarios would you see as a “problem?”

Feel free to scroll down and comment now, since I’m about to give you my two cents, for what it’s worth.

Scenario #1 is a toughie.  This is a real story, one that took place last week.

We all know that Canadian real estate has been used as a safety deposit box for foreign investors for quite some time, but once in a while, a transaction is right there, in your face, and you just know what’s happening.

So is this a problem?

It’s not a problem for the seller who got $200,000+ over what any other rational human in Toronto would have paid.

It’s not a problem for the buyer and seller agents, who both filled out the requisite paperwork for FINTRAC purposes.

But is it a problem for you?

Is this a problem that “somebody should do something about,” as the discussion in the media goes?

Much has been made of “banning foreign ownership,” but that’s all well and good in hot markets, during hot times.  But when a property owner in cooler times, in a cooler location, isn’t permitted to sell to a foreign buyer in the future, I’m sure there will be some dissent about these regulations.

Taxing foreign buyers is a joke, really.  I have no evidence to support this claim, but I highly doubt that the government is able to accurately track the true origin of funds for people who don’t want the origin to be found.

So are we xenophobes?  Or do we feel that those who live here, work here, generate income here, and pay taxes here should have a better “chance” at buying real estate than those who don’t?

Scenario #2 is problematic for me, at least.

If the government wants to “cool the housing market,” the low-hanging fruit here is to take the least-qualified buyers out of the market by raising the stress-test qualification rate, and making it harder for those buyers to buy.

But if foreign buyers can still buy in cash, then what are we doing here?

Scenario #3 is a problem for many, many Canadians.

But is it really a problem?

Or is it just supply and demand at work?

Is this something we need to “fix?”

Or should we “fix” people’s expectations and understanding of “wants versus needs?”

Scenario #4 is an interesting one, since I personally believe that society has deemed this to be “unfair” and governments are seeking to desperately level the playing field.

The definition of “fair” is one we can debate for years and to which we will never reach a consensus.  But circumstance plays a large role in many of our lives, as does luck.  We can’t control where we’re born, or to whom.  Some people are more fortunate than others, and some just have it better.

The idea of a capital gains tax to “cool the housing market” is a fraud.  It’s not going to cool the market, which is something we’ll debate later.  It’s a tax.  Taxes are implemented to create revenue, not solve problems.

There’s a growing perception out there that those who “have” should also be forced to give.  Give more, more, and more.  Some politicians say things like, “It’s time the top-earners pay their fair share,” as though 53% income tax, plus sales tax, property tax, land transfer tax, et al, isn’t “fair.”

I truly believe that Scenario #4 encompasses what much of the real estate rage is about in 2021.

Scenario #5 isn’t a problem.

It’s a reality.

It’s supply and demand at work.

Supply and demand have been at play in every instance of our lives from the very time we were born.  Everybody wanted to hold you when you were a newborn, but once you were 3-years-old, and your younger sister was the cuter, smaller, newborn, everybody wanted to hold her instead.

Supply and demand are based on tastes and preferences, and human nature.

The real estate market is a market, and sometimes, people forget that.  Concert tickets can sell out quickly, for prices that many people can’t afford, but we don’t fly into a rage about “fair,” do we?

Perhaps real estate is an essential right, and that’s where things differ.

But is it a right to own?  And to own in Toronto?  And to own the property, size, style, and location that you want?

I have come to realize that we will never agree on what the “problem” in our real estate market is, but we will continue to come up with solutions regardless.

And that, pardon the play on words, is the problem with the solutions.

All the solutions being bandied about have yet to address what the true problems in our real estate market are.

For many, the problem is that they can’t afford what they want, plain and simple.

But what is the difference between a “want” and a “need?”

That’s something that I feel has really been lost by society over the past decade.

Perhaps the solution here is to make high-school economics a mandatory course as well as a course on personal finance.  The public school curriculum, in my opinion, doesn’t prepare students for the real world.  It coddles them, teaches them they’re all equal, and that they’re all special, and that everything is going to be okay.  If we don’t teach kids the difference between “needs and wants,” as they do in economics, or allow them to pass/fail, or be celebrated for achievements, then is it any wonder why everybody wants everything out there in the world today and expects to get it?

But what about this idea that inequality is growing too rapidly, and the rising housing prices are, in fact, a problem for our country as a whole, and could lead to a societal breakdown?

I read all the comments on Wednesday’s blog, and I appreciate them all.

Here’s one that stood out to me:

Wow, Keith, you hit the nail on the head here!

You’d really hit it off with my colleague Chris, who talks like this all the time.

“Do you want us to be like Mexico?  Where the wealthy need to build walls around their houses to stop the peasants from breaking in and killing them?”

I think we can all agree that we’re a ways off from that.  But look south of the border and you can see how extreme inequality – including but not limited to racial inequality and financial inequality, have divided the country so deeply in two that they will never, ever find common ground.

I’m not going to suggest that house prices rising forever are a good thing.

I’m also not going to suggest that the government should step aside and put zero effort into helping the housing crisis.

But I am going to suggest that the government will not act in an appropriate way, and sadly, won’t actually address the root issues here.

I’m personally offended by the suggestion that a capital gains tax is going to “solve” the problem in the real estate market.

I was quite surprised to see this in the Globe & Mail:

“Canada’s Wild Housing Market Is Making A Case For The Country’s Most Unpopular Tax”
The Globe And Mail
March 20th, 2021

The capital gains tax is coming, trust me.

It’ll be on the wealthier Canadians, since as we know, “They don’t pay their fair share,” and that’s how the government will deal with the unpopularity of the tax, since people generally don’t care about things that don’t affect them.

I understand the basic argument that we’re “lucky” to have this exemption on capital gains on a primary residence or that it’s been “good while it lasted,” but that’s weak.  That’s an excuse.  If you look at why they’re going to bring this tax in, you’re a fool if you think it’s to cool the housing market.

You do not solve a problem by creating a tax.

Hard stop.

It’s never happened and it never will.  It’s an excuse to create a tax and raise revenue, pandemic to pay for, or not.

And if you’re a self-respecting, intelligent person, you should be offended by the load of bullshit that the government is feeding you – that this tax will “help” the real estate market.

This tax will raise revenue, and that’s it.

Then over the next few years, many home-owners will transfer their properties into holding companies, family trusts, and/or pass them down to their children.  Fewer and fewer houses will be sold on the open market, and this “strategy” of implementing a tax to “help cool the market” will backfire exceptionally.

Check out this line from the Globe & Mail article:

Today, the housing tax break is one whose biggest benefits flow to those with the deepest pockets. A $200,000 gain on the sale of a $300,000 home is tax free, but so is a $10-million windfall on the sale of a $15-million home.

I know that you don’t want to feel sorry for the person who owns a $15,000,000 home, but can you not admit that it’s up to these individuals to solve all the country’s problems?

The Globe article talks about “average” Canadians, but what does that mean?  The “average” Canadian in Toronto might own a $1,000,000 house, but the “average” Canadian in Winnipeg might own a $350,000 house.  How do you account for average with this tax?  How do you define “middle class” in this tax?

I’m trying my best not to run off on a political rant here, but I don’t believe that the government will address the “problem” in our housing market.  They just won’t, sorry!

Instead, they’ll look at the housing “problem” as a way to raise taxes and generate revenue.

You think I’m ranting, right?

You think I’m off base?

Chrystia Freeland was on Bloomberg Markets last week and had this to say:

“Some Canadian households, and it tends to be the better-off households, do have quite a lot of money that they’ve saved because there hasn’t been that much to do in the pandemic, and certainly it would be great if that money could go towards driving our recovery.  And I want to make an offer now to all of your listeners: if people have ideas on how the government can act to help unleash that stimulus, I’m very interested.  Maybe, as Doug Porter suggested, it happens by itself, that’s the best-case scenario for me.”  

Come on!

She wants to “unleash” your savings.

Imagine that?  You, having the audacity to save money?

This is the scary part: “Maybe it happens by itself.”

Because that maybe leads to an “or” or a “but,” which then leads to, “or maybe we find a way to unleash it ourselves.”


That’s how.


I swear, sometimes I think we’re about two weeks away from the government just coming into our living rooms, taking the TV off the wall, and saying, “Thanks, we need this…”

Folks, I realize I’m getting away from the conversation about the “problem” in our housing market here, but my point is simple: the government isn’t going to offer real solutions.  They are concerned, more than anything else, with finding new sources of revenue,and they’ll use the red-hot housing market as an excuse to find them.

Here’s a headline that’s refreshing:

“CIBC CEO Calls For Policies To Boost Housing Supply As Prices Surge”
Financial Post
April 8, 2021

It’s almost as though the various levels of government have all forgot that there are two sides to every coin.  I know that most people call “heads,” probably a little more than half of the time, but why doesn’t the govenrment ever address the supply-side “problem” in our real estate market?

Demand, demand, demand.

It’s always demand.

We need to make it harder to borrow, harder to qualify, and remove potential buyers from the market!  We will absolutely continue to allow dark money to flow freely into our country to buy real estate in cash, duh!  But yeah, back to organic, grassroots demand.  Yeah, that has to stop…

In the above article, CIBC CEO Victor Dodig asks:

“How do we make sure we have supply of housing in place and a plan to make sure that supply grows?”

That sound you just heard was my head exploding.

What a novel idea!

Supply, you say?  Nooooo!

“Part of the short-term aberration you’re seeing here is low interest rates, lots of liquidity, but not enough supply,” Dodig said in an interview late on Wednesday.

I see, I see, said the blind man.

So the demand in the short-term is being driven by low interest rates, but if we’re going to provide a “solution” to this so-called problem in Canadian real estate, we need to have a long-term plan to deal with demand?

Here’s another article that I rather enjoyed seeing in

“Psst, How To Build A $10 Billion Public Transit System At Half The Cost”
Financial Post
April 13, 2021

What a breath of fresh air!

I know the author is somebody who has a vested interest in the idea of a private/public partnership, but I’m just reading an idea.  Doesn’t matter who wrote it.

I’ve always said that the best way to address the housing shortage in an effective, long-term way is to build infrastructure that cuts down on commute times, and potentially allows people to live further from work or other places of interest.

You’ve heard this from me before, but here goes: what if a person could wake up in Niagara Falls, Ontario, and jump on the bullet-train that takes them to Union Station in 25-minutes?

Pie-in-the-sky, you think.

But I went to Japan in 2005 and rode the Shinkansen, which runs at speeds of up to 320 KM/H, and is known for punctuality, comfort, and above all, safety, since there has never been a fatal accident in its history.

We can all agree that our public transit system in Toronto is great………….for 1960.  But in 2021, we’re more than a generation behind.

People on the east-coast in the United States will literally commute from other states to get to work, and sometimes roll through two states.

Why can’t we invest in ourselves?  Why can’t we spend money on longer-term projects, ie. 20-30 years down the line, to anticipate a time when people can live anywhere in the Golden Horseshoe, and still get around with ease?

That will help ease housing prices more than any “solution” the government will ever suggest.

Raising taxes, coming up with new taxes, and finding ways to “unleash savings” don’t address the problem.

But governments don’t think 20-30 years in advance, since city councilors, and members of provincial and federal parliaments are elected every few years, and the key to politics is staying in power.

I don’t trust the public sector to build our cities any longer.

It’s time the government looks into public-private partnerships to move the city and the province forward, and I could care less if we have Coca-Cola advertisements on every goddam seat on a new subway car.  But we have to start somewhere, and start now.

Collectively, the group of us could come up with a dozen ways to help increase supply or decrease demand in our real estate market before the government can even order lunch.

Open up the Greenbelt for development?

Fast-track residential construction projects?

Offer incentives or tax-breaks to developers who will build what we need, rather than what those developers want to sell to investors?

End NIMBY’ism?

Build more subsidized and low-income housing?

Partner with private-sector developers, either through financing, or job-creation in the construction industry, to spearhead development?

The “solution” to our “problems” in the housing market cannot be on the demand side any longer, save for the idea that we turn the Golden Horseshoe into one large city that can be accessed from anywhere via the best public-transit in North America.

The solutions must be on the supply side.

You can take buyers out of the buyer pool for now, and stop rapid price appreciation, but those buyers will be back, and so too will a flood of new buyers as our country continues to grow.  To truly address the housing “problem,” we have to focus on supply.

Build, baby, build.

That’s all I have to say.

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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  1. Appraiser

    at 8:02 am

    “CIBC CEO urges action on increasing rental housing supply”

    But Dodig said increasing housing supply should be a high-priority goal for the longer term.

    “That’s what we really need to work toward. That means increased density in urban and suburban areas. The larger urban centres are still going to attract most of the immigration into our country. That means purpose-built housing and focusing more on rental stock,” he said.

    “We have to recognize that low interest rates are here today, and that’s driving part of it. But we also have to recognize there is a generational transfer of wealth going on, where new home buyers are receiving money from their parents.”

  2. Roger

    at 8:15 am

    David in this post = Joe Carter, 1993

    1. Jenn

      at 9:08 am


      1. Ed

        at 9:28 am

        He hit it out of the park.

        1. Jenn

          at 10:57 am

          Oh lord I wasn’t even born! LOL

  3. Pragma

    at 8:37 am

    The problem isn’t that the government might intervene in the market, the problem is that they already do, and they are on the side of actively trying to support it. The BoC being independent is a joke, we can all see that now. When the pandemic hit, I guarantee you the first call JT made was to the BoC asking “how do we make sure RE doesn’t crash?”. And the BoC went and took all that mortgage debt off banks balance sheets at full value so that Banks knew that they could lend recklessly and that the tax payer has your back. Think about the toxic amount of moral hazard the Liberals introduced. And look around you, why do we even need zero rates? If the BoC didn’t hold 40% of outstanding gov bonds where would rates be? What do you think the market clearing interest rate actually is?That is why I don’t think the Liberals will do any “cooling measures’, and if anything it will just be lip service. We are all in on housing as a driver of our economy and we can’t let the party stop. Let’s just kick the can and let it be the next govs problem.

  4. Pingback: Best Real Estate Agent In GTA – Problems, Solutions, & The Problem With Those Solutions – Toronto Realty Blog
  5. Pragma

    at 8:52 am

    In regards to foreign ownership, why don’t we treat residential RE like a natural resource? Isn’t it?

    Canadian RE is an attractive destination for storing your wealth because of our stability. The problem is, all of us have paid taxes all of our lives to build that system and now someone else is getting to benefit from it, and that person has not paid a single cent into this country. You will never be able to compete with foreign buyers from ME or China. You have paid taxes your whole life, your company has had in to internalize the cost of its pollution, the cost of treating people well, the cost of contributing to social safety nets. That company in China didn’t. If they are just trying to get their money out of the country, and they see Canadian RE as a great capital preservation tool, the only way for you to compete is to take on more and more debt. I don’t want Canadians to do that. So yes, let’s ban foreign ownership of residential RE. And if its not a problem, ,then great, banning it won’t change anything.

    1. Sirgruper

      at 9:37 am

      So a foreign buyer buys, pays 15% tax plus land transfer tax, doesn’t use free health care, infrastructure etc and rents it out so a Canadian can live there? Sorry I don’t see the problem. Should the cost be 20%? Maybe but the buyer is not the problem. Also never understood why there isn’t a Homestead policy as in Florida where residents pay less property tax. Also I’m sure you feel that all Canadian retirees should be banned from buying in the US and Mexico under the same principal. Old retirees wanting to get away from Canadian winters are the worst speculative opportunists clearly and should be banned. Come to think of it so should cottage owners or any second homeowner . Or investment property. Slippery slope. If you don’t like living in a growing in demand city there are lots of US towns and cities in the rust belt that wish they had our problems.

      1. Kyle

        at 3:07 pm

        Sirgruper, you are bang on. Foreign owners also pay property taxes, capital gains taxes when they sell and HST on their property maintenance and improvements and they use very little of government services in return. If anything they are subsidizing services.

        I also find it amusing how transparent bears are in their gerrymandering of the borders or cut-offs used in their arguments to benefit groups that they see themselves a part of. Would they be in favour of Hamilton, Brantford or any surrounding Cities closing their borders to Torontonians? After all all the exact same arguments can be made. Or those that argue the problem is when middle class people can’t afford to buy in Toronto, because they view themselves as part of the middle class. The entitlement of these arguments is just so blatantly obvious.

        Frankly, IMO there is no problem in any of the scenarios other than people having dated or unrealistic expectations. The only actual problem i see when it comes to housing is when it comes to those that can’t afford shelter period. Forget about owning or buying, I’m talking about those living in tents in parks. That’s what the Government should be trying to fix immediately. And not wasting their time or a cent of tax payers’ money trying to solve for unrealistic expectations, time will eventually solve for that. Which is why you don’t see the “middle class” or people shouting for solutions to allow them to afford to own in NY, London, Paris or any of the older more established world class cities.

        1. Appraiser

          at 3:49 pm

          Agreed. Job number one is housing the homeless.

          Then we can work our way up. Starting with purpose-built rental apartment buildings of all shapes and sizes.

          The rest is just noise.

          Build Baby Build!

        2. Average Joe

          at 5:23 pm

          Neither of you seems to understand how things like healthcare are actually funded – young and healthy people pay into social programs more than they extract. It’s pooled risk and requires new growing inflows to pay for older entitlements coming due. People who are absent don’t pay into the system – it isn’t free, it’s funded by taxes.

          A working Canadian couple would pay all the property and transaction taxes you just described. They would also pay income taxes, consumption taxes, payroll taxes, gas tax, you name it. And you might not realize this, but a lot of costs for thing like the TTC are fixed and the subway cars still cost money with lower ridership. People in neighborhoods (instead of dead capital) would spend money and work in the community and create businesses. Land/housing is only a productive asset when it is providing shelter, food, oil, etc. If property is just sitting there without workers or industry using it, it’s not doing anything. It’s idle speculation. And if it’s resale, and there’s demand there, we don’t need foreign capital. The end-user can set the market price.

          You’re both making up your own scenarios and then complaining about them – the OP didn’t write any of the things you’re ranting about. Are these gems the result of winning arguments you’ve had with yourself on a walk? Plenty of countries don’t allow foreigners to buy property at all or penalize it in some fashion. France, New Zealand, Singapore, Thailand, China. I’m guessing nobody complaining about prices here cares if old snowbirds can buy properties in the States. If snowbirds are just land-banking and speculating maybe they should be banned – Florida can figure that out. And if you don’t understand the difference between a national border and freedom of movement within the country which is protected by The Charter, and you think it’s “gerrymandering”, noone can help you.

          The government doesn’t have to spend a cent of taxpayer money to fix some of these problems. They can rezone the yellowbelt/greenbelt. Stop buying mortgage backed securities. Stop buying bonds to suppress the interest rate. Stop funding the CMHC to subsidize risk. Ban or tax foreign capital or unproductive speculation on existing assets. None of those cost anything. Toronto and Vancouver have prices more detached from incomes than NY, London, or Paris. All of those cities have much higher density than Toronto.

          Oh, and pro tip: If you’re using terms like “bear” to describe folks arguing negative societal impacts of high housing prices, it’s probably time to stop trading penny stocks and try to get out to see how the world works. You might even learn what aspects of society have made Canada such a nice place to live and why it’s such a stable place to put money. I only hope these wonderful ghost cities you’re advocating for don’t spoil the party.

          1. Kyle

            at 6:21 pm

            Average Joe, the foreign buyer that pays land transfer tax, foreign buyer tax and property tax, has funded more in healthcare and public transit in a single year than many young healthy local couples do in a decade, so your argument that someone who is absent isn’t paying into the system, is plain wrong

            Also who mentioned anything about the homes owned by foreign buyers not being used for shelter? They could be landlords. Are you sure you’re not the one coming up with imaginary gems in your head while out on a walk?

            Yes, plenty of countries ban foreign owners. So what? Just cause some countries do it, we should? That’s incredibly stupid logic. There are just as many or more countries that don’t ban it. Also Singapore’s average home is $2,080,533. New Zealand banned foreign ownership in 2018 and their prices grew 19.3% in 2020.

            If you confuse using an example to form an argument for the argument itself, then no one can help you.

            Pro tip: before you give pro tips about understanding how the world works, you should probably make sure you yourself understands how the world works.

          2. Average Joe

            at 7:56 pm


            I’m not sure why you think local buyers are exempt from paying land transfer tax and property tax. The foreign buyer in Scenario #1 bid $200K over comps which prices out locals but does not pay for a decade of services. Buyers at $1.4M would have paid taxes. The $200K the seller receives is untaxed. And if the local buyers had sold before buying, there may have been more total taxes.

            As far as funding healthcare, non-residents are not very helpful:


            “Publicly funded health care is financed with general revenue raised through federal, provincial and territorial taxation, such as personal and corporate taxes, sales taxes, payroll levies and other revenue.”

            I already said end-users can set the market price for resale homes. If someone needs to live there they can buy it using Canadian income. And if it ends up rented anyway, a lower purchase price can translate to a lower rent and more money for other parts of the economy. And Singapore has a 90%+ home ownership rate by the way, they don’t need foreign landlords.

            About New Zealand, my own property in the GTA increased almost 40% in value this year. Maybe 19% is comparably good and it nets out to zero extra carry cost from lower interest rates?

          3. Appraiser

            at 9:04 am

            Proposals that focus on money-laundering, foreign ownership and other fringe issues that have little aggregate effect on the market are myopic.

            They serve as little more little more than noisy headline-grabbing distractions, that also tend to feed towards xenophobia.

            The longer that our governments, regulators and others continue to deny that supply is the main issue, the longer the housing crisis will persist.

          4. Kyle

            at 9:47 am

            @ Average Joe

            I never said local buyers are exempt from LT tax & prop tax, my point is they contribute to it just like any locals. Locals pay income tax, but unlike foreign buyers locals don’t pay FBT or cap gains tax on sale. Lots of factors will determine which group contributes more to tax over their ownership horizon, so whether the local couple actually contributes more than a forign owner is questionable. Not to mention this line of thinking doesn’t hold water when you expand beyond to other scenarios. Retired Canadians don’t pay much income taxes, nor do they pay FBT or cap gains, why aren’t you asking for them to be banned? And not all foreign buyers are absent, many NPRs work in Canada and pay income taxes, why should they be banned?

            What isn’t questionable is that local buyers consume services funded by taxes, foreign buyers do not. That local couple uses roads, sidewalks, and other infrastructure, they could have local kids, who will use the health care system, daycare, libraries, the education system, Parks and Recs, Summer camps and City programs, public transit, etc. As they age they will use more health care, one of them could lose their job and require support. There are a million other scenarios that you are conveniently ignoring.

            At the end of the day, local buyers ***MIGHT*** make a net contribution to taxes, Foreign buyers ***WILL*** make a net contribution. You can argue that in aggregate it doesn’t contribute to a large amount for healthcare and public transit, but that’s got more to do with the number people in the taxable base.

            Despite your continued arguments, you seem to now be getting this which explains why you’ve changed your tune. You started by saying “People who are absent don’t pay into the system – it isn’t free, it’s funded by taxes.” This is patently wrong. There is no debate that foreign buyers subsidize services for Canadians. So now your tune is, a local buyer “could” also contributes to taxes, so we don’t “need” it to be a foreign buyer.

            While it’s true locals could contribute to taxes. This isn’t the point, you’re simply using a strawman argument. Sirgruper and i aren’t asking for local buyers to be banned, so whether they ***MIGHT*** make a net contribution in place of a foreign buyer is irrelevant. You on the other hand are saying all foreign buyers should be banned and haven’t provided a valid justification for it. So if you still think foreign buyers should be banned, explain why a foreign buyer who ***WILL*** subsidize services should be banned, so that a local who ***MAY OR MAY NOT*** make a net contribution can buy.

  6. Ed

    at 9:12 am

    Problems with 1 and 2.
    1. The issue is not with the offer being ridiculously high but more so with parking overseas money here.
    2. Stress test rates already contain more buffer than is necessary.

    1. Sirgruper

      at 9:40 am

      So if every foreign owner was forced to sell this year would it be a good thing? What if they did that in Miami, London or New York? Would a sudden crash be good for the economy?

  7. Joel

    at 9:19 am

    A couple of solutions that are very easy to implement would be to toughen the lending guidelines on investment properties and to add a foreign buyer tax that goes directly to pay for affordable housing projects.

  8. Chris

    at 9:29 am

    “…new listings hit their highest level on record in seasonally adjusted terms in March. Please keep that simple fact in mind when you hear the inevitable onslaught of rhetoric about how the housing market’s imbalance is all about weak supply. The only possible world in which supply can be considered anything remotely in shortage is when stacked up against the extraterrestrial level of demand.”

    – Doug Porter, BMO

    “…supply side policies help over the long term while demand side policies tend to have a more immediate impact”

    – John Pasalis

    And as you correctly point out, David, politicians are looking for quick results to win elections.

  9. cyber

    at 9:37 am

    Plenty of ‘gentle density’ opportunities in the Yellow Belt, which covers 2/3 of Toronto’s land mass and is ALREADY generally transit accessible. And it would take single digit years to see impact on supply if we had, say, triplexes or even fourplexes allowed “as of right”.

    Even with public private partnerships, major new transit time to completion is measured in decades, one decade on the low end. And given there’s pretty much zero chance ridership will be high enough for the systems to be self-sustaining, government would in effect be subsidizing Niagara to Toronto commuters by paying the private party “availability payments” (basically, fixed monthly payments for having the system available and running in good order as specified). The private sector only finances, it does not PAY for, new public infrastructure like that. (With the few North American exceptions, mostly toll roads in already congested Texas corridors, having tolls effectively pay off 20-30% of the upfront capital cost.) Private developers almost never take “revenue risk” on transit infrastructure in North America, because densities and ridership is not enough. The Toronto Pearson to Union link did have a more substantial portion of capex paid through fares, but then people complained the fares were too high and contract was amended so that it’s now mostly paid through the availability payment.

    1. Nick

      at 10:42 am

      This guy right here! 100% accurate.

      Why even look at the green belt when we have all this underused land in the city of Toronto?

      Gentle density increases, streamline zoning processes, ending all the back and forth with NIMBYs and developers having to go to court. Building where transit already is!

    2. Kyle

      at 3:32 pm

      This is bang on. When you look at other large cities, they are way, way denser. Loosening zoning is the only “solution” that has worked to keep prices from rising uncontrollably. Tokyo is a good example. For a world class City, Toronto is very low density. If we want to keep the 60% coverage and the 4′ side yard set backs across the vast majority of lands then hell yeah TO RE is going to become an expensive luxury good as it continues its rise on the world stage. And frankly there’s nothing the Government can do on the demand side to stop that . Name another world class city where you can buy a detached house downtown with a big back yard and garage? They don’t exist elsewhere, but if such a thing existed in downtown NY, Hong Kong, or London it would be ridiculously valuable.

  10. Izzy Bedibida

    at 9:51 am

    Rewrite the Condo Act so that the sorely needed larger family sized suites aren’t dinged with outsized condo fees. This will both increase supply and affordability affordability.

    1. Geoff

      at 1:51 pm

      that.. is interesting.

      1. JL

        at 10:24 am

        Interesting indeed. The smaller units would need to pay more than their proportionate share, so you’d make things harder for them, although having a “fixed portion” and a “per sq ft” portion might balance things out a bit, and more closely reflect the underlying costs (i.e. more sq ft doesn’t necessarily mean the unit causes more condo costs in all the cost categories, and is an imprecise proxy).

  11. Libertarian

    at 10:27 am

    “Build baby build”

    The problem with that David is that we can’t build more of what people want. People want:
    1) detached houses with front and back yards, a driveway and garage, and the white picket fence
    2) for that house to be as close to the core in Toronto
    3) at a price under a million.

    I don’t care how many elections we have, how many public-private partnerships created, how many houses are built in St. Catharines or Uxbridge, none of these things will solve those 3 items above. Nothing will solve those 3 items – it’s impossible.

    P.S. – the problem with Scenario #1 isn’t the foreign buyer. It’s that the selling price has now set the market for that neighbourhood. That shouldn’t be the case. Sorry to dump on real estate agents, but the next house for sale in that neighbourhood should go back down to $1.4. The $1.67 is an outlier.

  12. adam

    at 10:28 am

    Property taxes should be much higher.

    1. Nick

      at 10:45 am

      At the very least, the rate should be reflective of the actual value of the home. MPAC valuations are almost always way under.

      Mind you if we did that all of a sudden someone that bought a $1m house in the city of Toronto would be on the hook for around $9000 a year in taxes.

      1. Ciena

        at 1:47 pm

        It’s that way in Halifax … but their rate is 1.04 % of property price. So 10,400 on 1m house. Personally find that pricey for the taxpayer. Why is higher property tax the solution? What problem is it solving? Canadians don’t pay enough personal tax already?

        1. Jimbo

          at 6:49 pm

          Look at Oshawa’s property tax rate…..

    2. Joel

      at 10:49 am

      100%, drop the land transfer tax, increase property tax by 50%. It allows people to buy and sell easier and gives a predictable income to the city.

      The problem is that boomers will complain as they sit on the millions of equity and don’t want to have to pay the property taxes for services used. Governments very rarely bring out policy against the elderly as they have the highest voting turn out and right now there are enough to swing an election.

      1. adam

        at 11:18 am

        Raising property taxes would also increase the carrying costs to those boomers (interest rates would not as most own their properties outright) and encourage them to downsize and add to the supply. It is politically fraught (“they are forcing us out of our homes!”) but is a sensible policy, is straightforward to implement, and can’t be easily circumvented.

    3. Geoff

      at 1:52 pm

      public service salaries and benefits should be much lower. how about that as a solution? why are public sector benefits gold plated, and amazon workers get the shaft?

  13. jeanmarc

    at 11:21 am

    It doesn’t take rocket science to figure out that the banks have made it too easy for people to borrow given the low interest rates. $600-800K+ are the new normal. Add the low supply and “money laundering” coming from various sources, it only compounds the issue. Any government intervention will just mean increased taxes. Unfortunately, the damage has been done.

    1. jeanmarc

      at 11:28 am

      It will take a multitude of “solutions” to fix this. Something in which the government is too clueless to figure out.

      Some of which are already mentioned by David and others.

      .designate new land for housing development (reduce red tape)
      .reduce the developmental, building permit charges, etc.
      .provide more incentive to builders
      .implement a foreign ownership tax each year (lots of “dirty” money being parked here in Canada)
      .make it more difficult to borrow money

  14. R

    at 12:45 pm

    Only problem is this is 1000 words too long. You need an editor.

    1. Jenn

      at 7:13 pm

      And yet you keep reading! Every day and you always come back to spread your joy!

      1. R

        at 12:30 pm

        I skip ahead to the comments 😉

  15. Condodweller

    at 12:46 pm

    If you want to get an idea of who you are competing with when you try to buy your home even if you have help with the down payment take a look at forums that help people immigrate to Canada and the kind of questions being asked. Sample from 2017:

    “I have my PR landing next week. I studied in Canada and worked for a year and am now getting my PR (i have already been a resident for 5 years and paid tax aswell from my job). When I do my PR landing, what is the best way for me to declare my assets back home (these are not declared yet). I have shares in private company over 1.5 million USD and real estate of over 1 million USD given to me by my parents.”

    Let’s call that 3 million between friends and this person can buy a house anywhere in Canada for cash and will still have money left over for the designer bag and a Ferrari.

    1. Bal

      at 9:45 pm


  16. Marty

    at 1:09 pm

    This is only true of you believe the media – and never talk to real people:

    **** But look south of the border and you can see how extreme inequality – including but not limited to racial inequality and financial inequality, have divided the country so deeply in two that they will never, ever find common ground. ****

    The media features the 5% or 10% on each pole. But never the 80 or 90% in between, because that’s not a good story.

  17. Johnc

    at 1:21 pm

    You hit the nail on the head again.

    People say it isn’t supply, but if you added another 20% housing it would of course reduce prices! It’s common sense, everything boils down to scarcity, high school economics!

    Issue has always been policy makers only think short term, because they have short term targets (elections). This is why we have shitty transit, and and no housing plan. We open the welcome mat for record immigration but no plan on where folks will live. Like inviting over the whole block for a bbq but only have enough to feed your own family.

    1. jeanmarc

      at 2:05 pm

      Gov’t too busy attracting more immigrants into this country (basically to win votes). Either you are rich or you are poor. There is no in between. Who the hell cares about a world class city mentality when you cannot even take care of your own people who have lived/or born here for decades and contributed to the system. All bs.

  18. Nic

    at 3:19 pm

    I think there is a deeper ‘problem’ to the whole conversation. The best way I could compare it to is: Imagine every stock in the stock market had a price of around 500K for each stock. So a single share of TD bank could be 592K for example.

    What is the problem with this? Same problems as with real estate:
    – New investors can’t save enough even to buy a single share – they will never get exposure to equities and cannot grow their portfolio
    – Middle class investors can’t diversify their portfolio. They need to pick one or two stocks for their entire nest egg (terrible diversification)

    This is what its like with real estate – hard to get into the market anymore, and its such a big purchase that it takes up a majority of your portfolio.

    What compounds the problem is that there is an equally important aspect of the real estate being your dwelling place. To extend the example, its as if you can only buy one stock and its the stock of the company you work for.

    Whats the solution? I think there could be some creative ideas solving the different aspects. I wouldn’t want to call it financial engineering, but some way to make real estate exposure more accessible.

    As a starting point, there was that program where the government can take a 5% equity stake in certain purchases to help people afford to buy. What if that was expanded so that the government could take an equity stake in all housing types, not necessarily a requirement but an option. Any Canadian could invest in the fund and any homebuyer could use the equity to help their purchase. It could have several benefits (and admittedly unknown consequences), but it would be a start towards giving diversified RE access to any Canadian.

  19. Jimbo

    at 8:17 pm

    I’m not a fan of taxes, and I know when a tax is introduced it will not go away, nor will they lower other taxes in return. All that being said……

    A federal property tax of 2% on the purchase price would fix the price of houses. They would have to lower income tax for it to offset the overall cost.

    It would derive income from satellite families that don’t pay income tax, would make parking money in real estate less attractive and it wouldn’t punish someone who bought 20 years ago.

    It would also lower what people would be willing to pay for a property which would lower prices.

    Not perfect, but much much better than a capital gains tax.

    Canada needs the money…….

    1. Alexander

      at 5:57 pm

      Taxes do not solve problems, they create revenues. IMHO we are already stretched with all those taxes we are paying and adding to them will just make Canada less friendly. I never paid so much taxes in my entire life and honestly suggesting to my kids to move to another country. It is not too bad to be poor here, but once you start having some butter on bread it will be halved by government.

  20. Keith

    at 12:38 am

    Scenario # – 41 (1980) True story.

    My sister graduated high school in 1979, having saved a very good portion of her babysitting and part time waitressing income from her high school years. She got a job with the government as a file clerk soon afterwards, and decided to not go to university.

    A year later, she asked my parents what would be the best way to invest her money. They said real estate is the best investment. but you can’t afford anything. She found a good agent.

    She put $8000 down on a $30,000 one bedroom condominium in Victoria, qualifying for a $22,000 mortgage. My parents had to cosign the mortgage, not because she didn’t have the income, but because she was 18 years old and not legally an adult.

    She owned that property free and clear before the age of thirty, and wound up buying a cottage in one of the best neighbourhoods in Victoria, which she owns to this day. One really good financial decision can change your life.

    It used to be possible, on a very modest income. The more people we shut out of a chance at the middle class, the closer we get to serious chaos.

  21. Fangru

    at 1:54 am

    “Do I need to own a house or do I want to own a house”…

    1. Condodweller

      at 1:48 pm

      Everyone needs housing. Rising house/condo prices mean rising rents. If you can’t rent it shouldn’t mean a shelter or living in your car.

      If your come back to that is to move away, what if you have a decent job in the city you can’t replace elsewhere even with lower housing costs or if you have family ties?

      Read the story in Toronto Life about the divorced guy making 63k living in his van and can’t afford gas to go see his kids. He has to rent a suite to have his kids for a weekend.

        1. Kramer

          at 3:03 am

          Don’t drive 200km to get your kids without car insurance… and many other financial and life lessons. What an extreme example to throw out there in a housing market discussion. Poor form.

  22. Wahed Fidaali

    at 11:55 am


    Raising taxes is not completely at odds with your preferred solution to “build, build, build”. You’re advocating for investing in transit infrastructure, financing and incentivizing developers to build what we need and building more affordable housing. Each of these requires government action, and importantly government funding. Even under a public private partnership approach where private sector finances such investments, someone ultimately has to fund these investments (i.e pay the morgtage payments). That someone is government. Raising taxes is one way government will be able to fund the investments required for the solutions you are advocating.


    1. Dickson L.

      at 3:27 pm

      The problem with “raising taxes for infrastructure” is that under the current Canadian tax expenditures system, there is no requirement that such increases will go towards a specific cause. There is no such thing here as an “infrastructure tax”, any more than there is such thing as a “national defence tax” — it all goes into the same pot. For any given expenditure, all of it depends on a government caring enough to budget a large enough chunk out of that pot for it, and in the case of long-term things like transit, one or more successor governments that also care enough to keep doing the same. The provincial and federal governments could advertise some cause to garner public support on the tax hike, then they could 180 on that at any time and reallocate the increase, often to political vogues and ineffective programs.

  23. DDofG

    at 4:34 pm

    Japan is one of the highest taxed jurisdictions in the world. But David wants their bullet trains with lower taxes than Canada has now. How exactly is that supposed to happen?

  24. Terry Daley

    at 8:06 pm

    it is not only supply
    it is the understanding that not all people, single, couples or families [small or large] are either entitled, to, can afford, or will ever have a single area that is completely theirs and not shared!
    on the other hand all should or could aspire to doing so.
    the other major obstacle is location and the people living in areas do NOT want housing [shelter] that does not meet their standards.
    until these items are understood I don’t things will change much.

Pick5 is a weekly series comparing and analyzing five residential properties based on price, style, location, and neighbourhood.

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