Six Reasons Why Toronto Will Not Incorporate A Foreign Buyers Tax


7 minute read

August 31, 2016

This story will just not die a natural death.

It’s been a month since all the hoopla about Vancouver’s 15% “foreign buyer tax” started, and I never thought we’d still be talking about it into September.

It doesn’t affect us here in Toronto, and yet the stories continue to mount.

The story I’m second-most tired of hearing about: Toronto following suit with a similar tax.

Here are five reasons why it won’t happen…


My “vacation” to Idaho seems like so, so long ago…

I put vacation in quotations, since a colleague told me it wasn’t really a vacation.

He said, “You didn’t take a vacation; you just changed the scenery from your office.”

That’s deep!

He’s right to some extent.  I sold three properties while I was away, and had offers in on three others.

I blogged with the same frequency as I did when I was in Toronto, and I took a good number of calls.

But the one thing that actually increased when I was down in Idaho was the number of media requests.

This was right after Vancouver announced they would apply a 15% tax to the purchase of real estate by foreign buyers, and I was swamped with calls.

CBC, Toronto Star, Globe & Mail, Reuters, Bloomberg, Real Estate News, and a couple of papers in British Columbia that I honestly can’t remember.

Everybody wanted a piece of the action, and the new tax had all the makings of a great story – it made many people happy, it made many people mad, it involved money, there was a good guy and there was a bad guy, and it was ballsy; really, really ballsy.

I told one reporter, “Thirty years from now, university students studying political science and economics are going to see this in their textbooks and use it as a case study of one of the worst fiscal policies ever enacted by a wing of government.”

And I stand by that quote.  In fact, that was as nice as I could possibly convey how I felt.

As the week went on, the questions from the media moved from “what do you think about this tax” to the inevitable, “do you think Toronto could follow suit?”

That’s the media for ya!

Once the first story began to lose some lustre, they created a second story out of nothing.

Eventually, they began to ask the appropriate parties – John Tory, Kathleen Wynne, and any professor or economist who had a nameplate and a thought on the matter.

For the most part, I feel as though people agreed that what’s happening in Vancouver should not influence what’s happening in Toronto, especially when it comes to fiscal policy and taxation.

But people continue to talk about the new tax in Vancouver, and if and when we’ll see the same policy enacted here in Toronto, or throughout Ontario.

I’m of the opinion that this tax is not happening.  Not a chance.

So let me outline a few points that I feel put a nail in this coffin.

1) We don’t have the same foreign demand.

I don’t have data to back this up, but does anybody?

Don’t forget, much of the discussion over the last few years has been about how to track foreign buyers.

CMHC even admitted they have no clue if their numbers are accurate.

What is a foreign buyer, anyways?

Is it a buyer that lives in a foreign country?

Is it a resident of Canada, but non-citizen?

Is it a resident of Canada, even a citizen, who is getting money from a foreign buyer?

In any event, my opinion, estimation, and anecdotal evidence will have to suffice.

Simply put, I believe have a fraction of the foreign demand here in Toronto that Vancouver has, and has had, over the last few years.

Geography plays a huge factor here, as we know.

The term “foreign buyer” gets thrown around, but most people really mean “Asian.”

That’s not a derogatory term, by the way.  That’s the name of a regional group of people.

And when people refer to the rapidly-appreciating housing costs as a “problem,” and the word “Asian” continues to be thrown into the mix, it’s easy to see why people can become both overly-sensitive as well as overtly-racist, depending on how they feel about the issue.

The 2011 census of Metro Vancouver showed that 40.8% of the 2,313,328 person population was Asian, and furthermore, a 2006 study by Statscan projected that by the year 2031, that number will grow to 49.9%.

By comparison, the 2011 Toronto census showed that 23.1% of the population was of Asian descent.

Vancouver happens to be a direct flight away from mainland China.

So is it any wonder why people the other side of the pond are investing in Vancouver before anywhere else?

We have foreign demand here in Toronto, no doubt about it.  Not just from Asia, but from the middle east, the former Russian bloc, and from our neighbours south of the border.

But we have a fraction of what Vancouver has, er, um, at least did have before the crazy tax…


2) We are not in a “crisis.”

2016 opened with The Globe & Mail’s Kathy Tomlinson writing an expose on the “shadow flipping” in Vancouver.

I wrote a follow-up blog called, “Kathy Tomlinson Changed Real Estate Forever,” and I wasn’t exaggerating.

Shadow flipping isn’t why the government has introduced the 15% tax, but the shadow flipping being exposed in Vancouver brought a lot more attention to that market.

With that attention, came outrage, and with that outrage, came investigation.

And ultimately that led to politics, which is why we’re having this conversation.

The shadow flipping represented a very small percentage of properties, and was ultimately facilitated by a couple of brokerages that specialized in foreign buyers.  It wasn’t the epidemic that people made it out to be.

But it helped both residents of the area, and anonymous internet commenters, to pile on with their scorn for the “evil foreign buyer,” and soon those foreigners were blamed for the high prices.

3) Our prices haven’t appreciated as much.

Is there a number at which the market goes from “hot” to “crisis?”

Is it a 10% annual return?


Maybe there’s no number.

Maybe it’s just a “feeling” on the market, and as you’re starting to see, all these points interact.

A large percentage increase on it’s own might not be a reason to enact a 15% foreign buyer tax.

But a looming election, an angry population, a rabid media sensationalized a small problem – all these things, combined with hyper-appreciation, can result in extraordinary measures.

The average house price in Toronto was up a whopping 16.6% from July of 2016 over July of 2015.

That’s a crazy number.  Just crazy.

Anything into the double-digits is nuts.

But even 8%?  That’s high, is it not?  Imagine 8%, per year, every year, for ten years?  Would that put us in “crisis mode?”

I thought the 13’s and 14’s and 15’s that we were seeing in the spring were nuts.  But 16.6%?

Nothing tops that.

Wait…….yes, something does.

The MLS Home Price Index composite benchmark in Metro Vancouver this past July was $930,400.

This was an absolutely jaw-dropping 32.6% increase over July of 2015.

Year over year – yes, you see that correctly.

Now that puts our market in perspective, does it not?

16.6% is enough to make people move to Mississauga, but what if we were seeing house prices increase by 32.6%?

Maybe then our government would consider a 15% foreign buyer tax.  You know – if we also had the foreign demand that Vancouver does, and if we also had horror stories about shadow flipping dominate the headlines, and so on, and so on, continuing with….

4) We can do the math.

Every political move that is made on the housing front is done so to appease the voters.

The largest voter base, in any and all elections, is referred to as “the middle class.”

Christy Clark said, among other things, that this 15% foreign buyer tax is to make housing more affordable to the middle class.

Right.  Sounds great.  In a vacuum, that is.

Now let’s say that the would-be-buyer of a $1,500,000 house, happens to own a sad, pathetic, little $800,000 house.

Now let’s assume that suddenly, prices dropped, and that $1,500,000 house was “more affordable to the middle class,” and was available for $1,100,000.

That would be great!  Right?

Oh wait, sorry, I forgot – the would-be-buyers’ $800,000 house would now be worth $600,000, and they’d have $200,000 less to use as a down payment on their dream home.

So in the end, the idea of “making housing more affordable” doesn’t work, if you wipe out everybody’s gains.

Maybe for the people out there, sitting in a makeshift-bunker, with bottled waiter, waiting for the apocalypse; maybe for them, those who have been waiting for “the bubble to burst” for 12 years, saving their money; maybe they will be able to afford a house when prices across the board, crash.

5) Vancouver’s decision was a political move.

This isn’t a secret, is it?

British Columbia’s provincial election is in May of 2017.

Christy Clark’s government has fallen out of favour.

The NDP is pushing hard out in B.C., and while it seems like the suggestion that the NDP could win an election in British Columbia is far-fetched, you might want to talk to the folks in Alberta about that notion…

The 15% buyer’s tax was a political move, and if you don’t agree, then I’d love to hear an argument on how this makes sense for the economy as a whole.

Just as ignorant, unintelligent, uninformed citizens in the United States will vote for Donald Trump, whose policies will likely make their lives worse off (specifically the poor, who don’t understand the basics of economics), there are those in British Columbia who are so frustrated with real estate prices (and many other things in their lives, the outlet for which, of course, will be “foreigners”), that they’ll ignore the decrease in the average person’s net worth that will result from a real estate collapse, simply to get their Province just a little bit whiter.

From a municipal standpoint, I don’t see John Tory doing anything as drastic as what was done in British Columbia.

Kathleen Wynne, oh ye of the provincial pension, and $1.9 Billion in carbon taxes, is another story.

The provincial Liberals scare the crap out of me when it comes to taxes, and every time I think, “Okay, they can’t possibly create another make-believe tax,” they figure out a way to do so.  As an aside, did you read Kevin O’Leary’s latest “open letter” to Kathleen Wynne?  Looks like somebody is setting the groundwork for a political career…

6) We can use Vancouver as a “wait and see.”

One reason why Toronto won’t introduce a 15% foreign buyer’s tax is because Vancouver will.

We don’t need to spend money on studies and committee’s (although I’m sure Kathleen Wynne will…) when all we need to do is watch the litmus test that is Vancouver.

You couldn’t ask for a better situation.

Vancouver is going to be our guinea pig.

When this tax was first announced, I remarked that it was amazing how quickly we went from a “vacancy tax” on empty properties owned by foreign buyers to a “15% foreign buyer’s tax.”

It was as though the government was being reactive rather than proactive.

It was as though they spent only 3-4 weeks coming up with this idea, without really studying it, or considering the long-term effects.

So now if Toronto’s government, or Ontario’s government, ever wanted to consider a foreign buyer tax of their own, all they need to do is sit back, and take “wait and see” approach.

And the best part for the politicians, is they get to use hindsight to make themselves look good!

If the tax blows up in Vancouver’s face, our own politicians can say, “We didn’t introduce a similar tax back in 2016 because we knew it wouldn’t work.”

But rest assured, people are watching Vancouver intently…

If I’ve missed any major reasons, please have your say below!

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. Julia

    at 7:23 am

    I don’t think your math is correct in 4. We can do the math. A buyer who owns a $800k house would need an additional $700k to purchase a $1.5M house. If the prices drop as per your example, that buyer would then need ‘only’ $500k to purchase the more expensive house. Sure they would see the equity in their reduced by $200k but what is more important is that the new, more expensive property would be reduced by $400k

    1. David Fleming

      at 12:56 pm

      @ Julia

      Let’s assume that the owner of that $800,000 house paid $600,000 a few years ago, with 20% down, or $120,000.

      They had a mortgage of $480,000.

      Now that their house is worth $800,000, they have $320,000 of equity to buy the $1,500,000 house, or 21.3% down.

      When that $1,500,000 house drops in value to $1,100,000, and their $800,000 house drops in value to $600,000, now they only have $120,000 down on that $1,100,000 house – or 10.9%.

      They can no longer afford to “move up” because their equity has been wiped out, even though the “move up” house is priced lower.

      That is the point I’m trying to make.

      That if house prices drop on the whole, then all the equity gains are wiped out.

      In this case, the would-be buyer is right back where he or she started.

      The government’s idea that “a decrease in housing prices will make housing more affordable” only makes sense to those who aren’t already in the housing market, and most people looking to buy $2,000,000 houses are not renting.

      1. Math is awesome

        at 1:30 pm

        What matters more has to be income when talking about affordability, which also takes into account interest rates.

        So prior to the drop, the buyers would have to take on a mortgage of 1.18mm to afford the 1.5mm home, after putting forward a down payment on 320k. We ‘assume’ their income remains unaffected, interest rates are stable and prices correct, thus increasing their affordability.

        So now, they put forward 120k as a down payment on the now 1.1mm home, thus being required to take on a mortgage of…980k.

        Assuming you are able and looking to move up, would you rather have a mortgage of 1.18mm or 980k?

        1. Julia

          at 1:56 pm

          Math is awesome indeed – that’s exactly the point I was trying to make. If the market does go down it will be to the benefit to the move up buyers, in spite of the equity they may lose in their properties.

          1. David Fleming

            at 2:36 pm

            @ Julia & Math Is Awesome

            I appreciate your perspectives.

            From what my clients tell me, they want more down on the property.

            You guys are saying you want a smaller mortgage.

            Perhaps the votes are split on this one, but I still think Christy Clark’s idea of “making housing more affordable” ignores all the net worth that would be wiped out in the process.

            And one study showed that in order for “housing to be affordable,” based on the average income for the middle class, prices would have to drop 70%.

            I just don’t like the political rhetoric.

          2. Kramer

            at 1:43 pm

            Everyone stop and take a finance course right now before you buy anything else using debt.

            I hope the following breakdown makes it painfully obvious that CURRENT homeowners LOOKING TO TRADE UP would want the market staying put or advancing and NOT going backwards.

            Taking on $38K more in low 2% rate mortgage in order to have $200K MORE in Net Worth and a Debt to Equity Ratio of 3.69 vs 8.17… that is the easiest decision on earth. Trading up with less downpayment leaves you leveraged to the #### and in a much more vulnerable financial position, as shown by one of the most common and important financial ratios known to man and business.

            Scenario #1: Market goes back down for move-up buyer
            Asset: $1.1MM House
            Liability: $980K Mortgage
            Equity: $120K
            Debt to Equity Ratio: 8.17

            Scenario #2: Market stays where it is for move up buyer
            Asset: $1.5MM House
            Liability: $1.18K Mortgage
            Equity: $320K
            Debt to Equity Ratio: 3.69

            I know what the next question is… what happens if you trade up in scenario 1 or 2 and the market drops – isn’t there more risk in scenario 2 because the house is starting from a higher number? The answer is no, because you are less levered up (as evident by the debt to equity ratio). The market could go down by 0.320/1.5 = 21.5% before your equity is wiped out. In scenario #1 that somehow “FEELS” safer, the market can only drop 0.12/1.1 = 10.9% before your equity us wiped out. And you cannot say that there is a greater chance of a 21.5% drop from $1.5MM than a 10.9% drop from $1.1MM that is speculation and, even worse, charlatanism. One could easily debate that if the market already dropped from $1.5MM to $1.1MM that there is a much better chance of it dropping another 10.9% than if the market never dropped from $1.5MM to $1.1MM in the first place because it means there is already something wrong in the system to cause the first drop… also speculative and charlatanism. My point is, you can’t sleep better thinking scenario #1 is is somehow a cushion.

            If you are somehow dead certain that the market is going to go down, then a) tell me how you know, and b) sell your house and rent.

            If you want to trade up or trade down and deleverage (reduce your debt to equity ratio) in the process, then use your equity and “climb the property ladder”… the whole premise of “climbing the property ladder” is by using built up equity.

            Or, maybe you should just stay put… you now have $320K in Net Worth (highest case) and a debt to equity ratio of $480/$320 = 1.5 (lowest best case). The market would have to drop 40% for your equity to be wiped out completely (best case).

            Unless you are certain the market is going to keep going up… in which case… a) tell me how you know, and b) TRADE UP RIGHT F’ING NOW!!!!!

          3. Math is awesome

            at 1:31 am


            Debt/Equity is a measure of leverage and skin in the game. Affordability is measured by the ratio of Debt/Income.

            Of course we all want to be rich because housing is purely an investment, right?

            So putting aside the matter of equity, cushions and viewpoints on whether the market will go up or down, what matters most has to be income.
            – On a national level we look to Debt/GDP.
            – On a personal finance level, when applying for a mortgage 2 ratios are closely monitored: GDS and TDS. Both measure and determine affordability. Equity and net worth are an afterthought as the percentage downpayment is but a fraction of the total investment – what matters is the debt being taken on and the GDS and TDS ratios.

            Percentage down is the protection to the bank/CMHC…you can have negative equity and be okay, as long as your income continues to pay the bills… People don’t sell at a loss unless they have to.

            As for the political spin on this, it is difficult to conclude what the right perspective is for the economy. But the argument goes that even if net worth declines, if your income remains stable and less of it is spent on housing, then consumers have more money to spend in the economy on other items. And that is undoubtedly good for everyone, not just certain pockets as we are currently experiencing in Canada and globally due to low interest rates inflating the value of real assets. Breadth indicates a healthy economy.

            The flip side is if you can downsize and are risk averse, take money off the table while you can (before the inevitable crash) and spend it. Squirreling money away is bad for the economy (insert comment here about trickle down economics)….and yes, if your net worth drops, then you are worth less – but you still have a home to live in.

            We are not talking about Equity – we are talking about Affordability, and homes are more affordable for everyone looking to buy when prices drop, all else equal. Both first time homebuyers and existing homeowners.

            One final example:
            Say you have 200k in equity on a 800k home, and you are looking to downsize to a 650k home. Now say your home drops to 700k and the downsize home to 575k. Thus your equity drops from 200k to 100k, however, your mortgage on the downsize home would drop from 600k to 450k by downsizing before the price correction, and 475k after.
            – if you are upsizing, you want prices to drop (from previous example)
            – if you are downsizing, you want prices to rise
            – if you’re looking to get in then you want prices to drop.
            All depends on where your equity is: while on the sidelines it outperforms a declining market, but underperforms a rising market.

            And a final conclusion: when there is no need to downsize, just continue to own and let housing be for shelter first, investment second. Let prices drop and make housing more Affordable, thus enabling consumers to free up their income to spend elsewhere in the economy. It’s time to stop punishing (stealing from?) savers and raise interest rates…

          4. Kramer

            at 10:20 am

            We can skip the back and forth on the math aspect… I understand the very high level conventional wisdom and simple math that if you want to upsize then a lower market is better and vice versa on downsizing… there are other elements however when it comes to real estate and long term financial position with the long term outlook in mind (market and personal outlook alike)… whether you look at real estate as an investment or your simply home, or whether you look at your personal finances from a balance sheet perspective or not. Whether it’s about “being rich” or not… if you don’t think your net worth is important then, well… you probably will one day… but maybe you won’t… that’s all personal, no right answer. I would open up your mind and ask why to all of David Fleming’s clients look at the market differently than you. If your answer is “they’re all greedy dicks” or “they’re all morons and don’t understand math” well, that’s your opinion. Overall, we can agree to disagree on this one… I wholeheartedly wish us both luck on our financial futures and I’m sure we will both be OK… but probably not “rich” if we are both spending time on this blog! 😉 I value your opinion though seriously. You are clearly a very intelligent person. Disagreement happens and often it is because of personal biases.

            As for your affordability issue… my perspective is that there is still plenty of affordable housing in the GTA… does this affordable housing look the same as it did 5 years ago or 10 years ago? Clearly no. This is a rapidly growing city and population… and when you add in the fact that historically low interest rates impact valuations of stocks, houses, and other real assets, you wind up with the reality we are in today. I understand why so many are pissed… we’re in a period where it’s not like watching grass grow as in the past… it’s a scenario where last year House A was affordable and now House A is flat out NOT affordable… you can see it happening fast, so it can sting more. But the fact is that what affordable looks like changes in a growing city. This has always been changing and will continue to change one way or another based on a slew of factors. Maybe it will retreat significantly one day, closer to “affordable”. However there are other cities in the world that became “unaffordable” and then have standard market fluctuations but remain “unaffordable” – cities I view as far less desirable than Toronto, Ontario, Canada which I love dearly… so it might not fully retreat… Who knows. How would you change things/impact the market? Do you think if a beautiful 4-bedroom detached home near Yonge and Eglinton is only $750K that there will be enough of them for everyone who wants one given the economy and employment of this city and the long term interest rate outlook?

  2. Ralph Cramdown

    at 8:44 am

    How can we use Vancouver as a “wait-and-see”?

    Pre-tax, nobody could agree whether Vancouver was a bubble or merely rationally priced for the ‘Best Place on Earth,’ whether foreign money was a major or minor influence, or whether doing anything about it was a good idea. Whether Vancouver now goes up, down or sideways, people will continue to argue about the causes and effects. Without a counterfactual or an experimental control, they’ll just keep arguing, often according to their own financial interests. Litmus test? More like a Rorschach test — people will see what they want to see in the ink blots.

    P.S. Toronto also happens to be a direct flight away from mainland China.
    P.P.S. My bunker is connected to municipal water. Bottled water is for wimps.

    1. Appraiser

      at 7:38 pm

      The cure for high prices is high prices, which Vancouver is finally experiencing.

      Incidentally, those who have been watching the Vancouver MLS stats closely know full well that the slow-down was in full bloom well before this vile, ill-informed, punitive and probably illegal 15% head tax was initiated.

  3. Real estate millennial

    at 9:06 am

    Number 5 hits the nail on the head and shows a lot of people’s true colours. We use the word “foreign” buyer because we don’t want to say “Asian” because the comment following is negative and inherently racist. White people in British Colombia (metro Vancouver) are being priced out of their “own” market as they see it and are upset. The majority no longer has the strongest purchasing power and it makes white people uncomfortable because they believe that’s their inherent right.

    Demographics shows something really simple there are 1 billion people in China and no different than any other nation 1% of their population is extremely wealthy. That’s about 10 million people and would make up 1/3 of Canada. As David pointed out B.C is a direct flight away and a very attractive place to live. Canadian immigration seeks out highly educated or extremely wealthy people to live and invest here (Trudeau is in China right now trying to open trade). The problem is not a real estate problem it’s a tolerance problem. In short, people need to stop complaining about “Asian” buyers because you just sound racist! Unless you are and if that’s the case don’t hide behind a keyboard.

    1. Wut

      at 10:20 am

      Is is just me or do people who throw around the racist card always make dumb arguments. If you’d been paying attention lots of Asians in Vancouver have the same complaints. I guess they are racist too, or as you’d probably call them a “sell out”.

      1. jeff316

        at 10:50 am

        It is definitely just you. Do you really think that if the majority of foreign buyers in Vancouver (or elsewhere in urban Canada) were Americans or Brits there would be the same outrage? Come on.

      2. Real estate millennial

        at 11:34 am

        “Just as ignorant, unintelligent, uninformed citizens in the United States will vote for Donald Trump, whose policies will likely make their lives worse off (specifically the poor, who don’t understand the basics of economics), there are those in British Columbia who are so frustrated with real estate prices (and many other things in their lives, the outlet for which, of course, will be “foreigners”), that they’ll ignore the decrease in the average person’s net worth that will result from a real estate collapse, simply to get their Province just a little bit whiter.”

        I bolstered a point I believe is valid and I think I made a pretty fair argument. The tax is political, its not based on an economic premise cause it does more harm than good. Given that I believe it’s political I made a point for who the politicians are trying to appease. If you don’t believe the tax is political and makes sound economic sense, explain why, don’t just avoid the blog post.

        1. RobM

          at 9:56 am

          Okay, Millenial…. then what you are saying is that Chinese people in China are more racist than Canadians because they have even more restrictive foreign buyer rules and they will be getting more restrictive. That is just dumb. It is not about racism. It is about a limited supply of housing being bought by foreign money as an investment and denying Canadians that work and live here full time a place to live.

    2. David Fleming

      at 12:58 pm

      @ Real Estate Millennial

      Good point – Justin Trudeau is over in China right now trying to bolster trade.

      Christy Clark has been in China many times over the past couple years, trying to bolster trade.

      Now Christy Clark wants to eliminate foreign ownership via the tax.

      Something doesn’t add up. Trudeau is pro, and Clark is against?

      Maybe this is just politicking at its finest?

  4. Kyle

    at 9:08 am

    It’s early days still, but so far prices are still rising while # of sales has plummeted. Assuming this trend continues, the tax will not have had the intended affect (i.e. lower prices), but will have definitely reduced the economic activity in the region and more importantly it will have reduced the overall tax revenues taken in by the Province. It doesn’t take a genius to figure out that when sales are down 90% + Y/Y that the small gain from the foreign buyer tax will not offset the large loss of property transfer tax, which ultimately means an increase in taxes elsewhere to make up for the shortfall, which no doubt will land squarely on the backs of the “middle class”.

    1. mike

      at 3:43 pm

      Prices are still rising in Vancouver? Do you have any evidence of this or are you not going to let something as simple as facts get in the way of your argument?

  5. Mr. Late

    at 11:24 am

    The tax certainly was unnecessary. The RE market has been directly affected by low interest rates (much like equity markets). Sooner that later, buyers will hit the affordability wall, where they cannot afford to pay higher and higher prices, and then, well, sellers who want to move their properties will be encouraged to lower their prices. The BC government should have left Mr. Market to do his work.

  6. Liza

    at 11:56 am

    1) “Vancouver happens to be a direct flight away from mainland China” — not sure that’s a reason, as Toronto is also a direct flight away from mainland China. Takes a couple of hours longer but that can’t really matter when the difference is between 11.5 hours and 13.5 hours. Vancouver might have a stronger expat community, which attracts more expats, which grows the community, etc.
    2) “The former Russian bloc” — you mean “the former Soviet bloc”, unless something happened to Russia overnight!

  7. Wut

    at 5:25 pm

    His point that the government is trying to make the province whiter is as stupid as you saying “it makes white people uncomfortable because they believe that’s their inherent right”. You’re actually saying something racist while trying to call others racist when they’re not.

    So I guess the Asian who started the whole ‘don’t have a million’ thing is just confused. She’s not white so where did she get this idea it’s her inherent right to own in Vancouver. Right?

    The tax is dumb, but it isn’t racist.

    1. Wut

      at 5:26 pm

      sorry, this was a reply to real estate millenial post below.

  8. Appraiser

    at 7:38 pm

    The cure for high prices is high prices, which Vancouver is finally experiencing.

    Incidentally, those who have been watching the Vancouver MLS stats closely know full well that the slow-down was in full bloom well before this vile, ill-informed, punitive and probably illegal 15% head tax was initiated.

    1. LM

      at 6:43 pm

      there are lawsuits already in place against the government. and i hope they win. our government is full of idiots that don’t deserve their salaries, our tax dollars. working against us rather than for us.

  9. A

    at 10:09 pm

    Most ridiculous idea ever. A group of inexperienced government officials with no business backgrounds, coming up with a random number to quell a free market problem purportedly caused by the same asians your prime minister is trying to now court. Yeah, this is “really” going to work. If this comes to Toronto, you can kiss your gentrification and condo build-outs goodbye. Next time just call it a fuck you yellow man tax, while taking their money in the form of full price university tuitions, real estate taxes, hit when they purchase goods. It’s no wonder their government said fuck you to the canola industry. Build more housing and you will dampen the demand. Eventually, like in the US, the prices do stop going up. The trolls that call for bubbles never buy anything anyway so who really cares about them anyway.

    1. Appraiser

      at 10:20 am

      Quite right good sir. In Ontario, full-time foreign university students pay on average four times the tuition of Canadians.

      I also agree with David and others I suppose, in that this tax will go down is history, but not in a good way.

    2. LM

      at 6:41 pm

      exactly, the people crying the loudest weren’t buying anything in the first place. they are just mad someone is. and someone is wealthier than them.

    1. Appraiser

      at 2:44 pm

      Beware the tyranny of the majority. Also known in ancient Greece as an ochlocracy.

      1. LM

        at 6:40 pm

        the general population are mostly dumb sheeple with stupidity and inability to learn and adapt baked into their dna.
        these are the lower middle class and lower

  10. lui

    at 3:56 pm

    I think the tax was needed to stop the money laundering that was being spun from a single property,you cannot deny or ignore when a house is sold three times before it’s was ever listed that something isn’t right.Toronto is not even close to what happen in BC but I bet now foreign investors are eyeing Toronto as a alternative.If it was Swedish investors people in Vancouver would feel the same way about seeing their city being turned into a money laundering capital and having their dream of owning a home out of reach.

  11. Joel

    at 9:48 am

    I was just looking up the rules regarding purchasing a property in China and it says that you must have lived and worked there or studied for one year before buying. This seems like a reasonable rule to me as it ensures that money is being spent in the local economy. When you don’t care about the community you are investing in it causes problems. I relate this to a hedge fund investing in a company, they want profits, but don’t care about the well being of the worker that has to work for minimum wage so that their dividend is $.02 higher.

    Right now real estate agents and developers as well as baby boomers (selling their houses) are making a disproportional amount of money from this foreign investment.

    I understood why they tried to do something as once the city is too expensive for teachers, firemen and police officers it becomes a serious problem. The tax was probably not the right thing, but I don’t think it was racist.

    1. T

      at 9:10 pm

      As someone paying 53% marginal income taxes, I actually don’t mind if the government snatches a bigger share of real estate profits at the expense of people paying 0% (or negative) income taxes, even if it has no impact on prices. I have little to no faith that they’d use that windfall wisely, so I guess that makes me petty…

    2. RobM

      at 9:51 am

      Not only that but the cities in China have their own rules and the big ones that international ones would buy in either have even more restrictive rules or are in the process of doing so. In one Chinese city you must work for 5 years before you can purchase a residence and you must provide way more documentation than in Canada too. Every where around the world there are these restrictions and Canada sits and lets our real estate be bought and sold as a commodity by foreign money (not buyers but money) and we do nothing about it – the current generations of house owners will benefit but the next generation of Canadians will never be able to buy homes in the neighbourhoods they grew up in and that is just BAD.

  12. Peter

    at 4:06 pm

    You seem to be hung up on the “move up” buyer in your example of why a decrease in prices is a bad thing due to the impact on equity.

    What about for first-time buyers? Presumably a starter home dropping from $800,000 to $600,000 would make it much more affordable. A loss of equity doesn’t engender a lot of sympathy amongst people who can’t even afford to get into the market in the first place.

    1. Kramer

      at 2:00 pm

      There’s tons of opportunity to get into the market if you’re a first time buyer with a reasonable down payment saved up. It’s just not gonna be a detached house in Rosedale. This is not a new phenomenon in this city. The phenomenon has just continued to develop, and it will keep doing so unless the city stops growing in population. Considering this is the economic hub of one of the best countries to live in on earth, I wouldn’t bet against it.

  13. KD

    at 11:36 am

    Two things will determine if Ontario imposes a BC type tax here: a) how the Liberal’s stand in the polls as the election draws near; b) the Ontario public’s perception (fueled by the media) on whether the tax has “worked” in flattening price increases at an acceptable cost.

    August sales results from Vancouver are mixed. While one month year-over-year unit sales dropped across the three major categories (detached down 45%, towns fell 25% and condo apartments off 10%), median prices have barely been impacted and continue to record absurd price gains from last year (i.e. detached up 36% in August vs 38% in July; towns increased 31% compared to 29% last month & condo apartments grew 27% – the same as in July).

    Month over month changes are a bit more promising for those looking for price relief: detached DOWN 0.1% from July; condo apartments up only 0.7% and towns up 1.3%. However it’s quite possible that product mix and seasonality account for these change and the tax has had no impact whatsover on prices.

    So while it is early days, to date it looks like the biggest impact of the foreigner tax has been to chop demand for detached homes, especially the most expensive properties. Many of these sellers will need to get used to spending a bit more time on the market and getting fewer multiple offers. However there are few signs that prices are about to be impacted in a meaningful way. Of course, If I’m wrong and detached prices do slide in the early autumn, many detached sellers will likely pull their properties off the market until the supply/demand situation is more in their favour.

    Down market demand remains pretty robust, especially for condo apartments and there is even less of a likelihood of prices falling in the town and condo apartment segments.

    While the next couple of months will be critical, early indications are that the only impact the foreigner tax has had is to dramatically shrink the number of unit sales of higher end properties, with next to no impact on prices, especially prices of the most “affordable” homes on offer.

    So here’s the Billion Dollar question: what does the BC government do next? If come November their draconian foreigner tax is widely perceived to have failed to have any impact on prices, are they really prepared to go into the next election, amid the fresh stench of defeat. Or will they lash out with an even more outrageous move that will do much more damage.

    And of course the bigger question is: how desperate is Kathleen? Egged on by the media and unwilling to confront the real reasons for Toronto’s housing affordability debacle, will she follow BC into the abyss. One thing is for sure: it’s going to be an interesting year.

    1. Kramer

      at 12:40 am

      “Two things will determine if Ontario imposes a BC type tax here: a) how the Liberal’s stand in the polls as the election draws near; b) the Ontario public’s perception on whether the tax has “worked” in flattening price increases at an acceptable cost.”

      Really? That’s what’s going to determine it? Really? Those two things? Really? Those two things? ………..really?


      1. Kramer

        at 4:23 pm

        I apologize, I was drunk when I wrote that post.

        You make a lot of strong points.

  14. really

    at 11:36 pm

    I found the article biased. The real estate industry has a vested interest in protecting property price inflation completely out of whack with the rest of the local economy. The negative effects of a free flow of foreign capital into local markets isn’t acknowledged. Who would buy a house for $3-4 million and not live in it? Let the house sit empty for over a year? This is happening in Toronto neighbourhoods. Not just a few isolated cases. Not really different to , what has happened over the past five years on the west side of Vancouver. The only plausible explanation is money laundering. Make filing of a Canadian tax return a prerequisite for anyone buying property in Canada. No purchase of residential properties by proxy or through corporations. If the buyer is not paying tax in Canada or income declared has no relation to the cost of the property purchased, treat the value of the property as income and tax it accordingly. Real estate taxes and property taxes are just drops in the bucket.

    1. LM

      at 6:28 pm

      one thing that you may not understand. is that foreigners don’t trust banks. instead of depositing 5 million in the bank, to them it’s safer to deposit 5million into a home. a physical asset. They took the risk. that’s their risk. and when they win, they get the prize. if they lose, they lose, not you. you don’t see many locals paying 5million for anything

    2. LM

      at 6:30 pm

      you know what a property management company or property investment firm is? those are companies whose business is real estate investing and developing. to stop corporations from buying property is like asking you to not buy a new fridge.

      1. Really

        at 7:33 pm

        Corporations can and do buy real estate. Undeclared money, foreign or otherwise, shouldn’t be allowed to be invested in corporations that buy real estate. The problem is the undeclared income, and corporations and government that overlook it.

  15. Economy

    at 8:03 pm

    Can’t impose a blanket foreign buyers tax charge in Toronto. This is the country’s international business hub. People from all around the world come here to work and contribute their skills to our economy… The best imported talent wants to buy real estate… Would be devastating to the long term future of the economy. Need a better long term solution to the supply issue than just supresing demand. Slapping a tax on would be like firing a BB at a freight train in terms of affordability, but would shift the track so we end up somewhere worse in ten years.

    1. really

      at 2:33 pm

      Just make sure the “best imported talent” is paying Canadian income taxes commensurate with its real estate purchases. So, no proxy or corporate purchases of residential, no purchases without a Canadian tax return, and full disclosure of how money for a purchase links to reported income. No-one should be able to buy a million-plus- residence without reporting to CRA the million-plus dollars of income that support such a purchase. Self-reporting “no-income” or “low-income” purchasers of million-dollar homes should have the market value of their residence treated as taxable income. To do otherwise invites money laundering and pushes the overall income tax burden (which pays for health care, schools, infrastructure, etc. ) onto others in the community. Apply tax rules fairly and the market will adjust itself accordingly. If residential prices fall, so be it: the level will be dictated by what the “country’s international business hub,” fair taxation included, can afford.

      1. Economy

        at 10:23 am

        I think I agree with everything you are saying… but all I am saying is that when someone from headquarters down in the USA accepts a 5-year assignment in Toronto, don’t charge them one year’s salary just to buy a condo in the city. If you do that then you are forcing them to rent. If you do that, then you are empowering investors/multi-property owners/speculators even more and clogging up the rental situation even more. Whatever rules or taxes they slap on, they have to have allowances for situations like these, and hence “can’t impose a blanket foreign buyers tax in Toronto”, to quote me again. Hitting everyone with 15% in Toronto would be irresponsible… It’s a big deal so take the time and come up with the precisely correct policy, don’t be lazy and just fire a shotgun, hit everything and have a mess to clean up later…

        1. Economy

          at 10:33 am

          And while it may bother you that Toronto is Canada’s international economic hub, you better get used to it and factor it into your real estate forecasts.

          Also, random, but no one ever talks about this on here… on the average day, about 1070 babies are born in Canada, and 575 people die.

          ON AVERAGE, all else equal, every day the real estate market in Canada should be ticking up based on the stat above. Factor in the quality of living in Canada, and immigration numbers, is anyone really surprised that in the biggest economy of the country, Toronto, is increasing in value at a record clip while we are in a zero to negative interest rate environment globally?

          All the talk on these foreign buyers taxes for Toronto is so ludicrous… it’s such a half-assed solution. Add a layer to it… comment above from Homeowner, I like it, if it is a primary residence, happy hunting… only issue there is that this condition could be cheated on very easily… it would cost Canada too much cash trying to prove someone is lying, and we would end up losing money as a result if it.

    2. RobM

      at 9:44 am

      Hey “Economy”! You were completely wrong!

  16. Homeowner

    at 8:46 pm

    Why isn’t anyone talking about imposing and extending this tax also on those who are not buying homes as primary residence ?

  17. Darren

    at 2:40 pm

    4) We can do the math.

    “Now let’s say that the would-be-buyer of a $1,500,000 house, happens to own a sad, pathetic, little $800,000 house. Now let’s assume that suddenly, prices dropped, and that $1,500,000 house was “more affordable to the middle class,” and was available for $1,100,000. That would be great! Right? Oh wait, sorry, I forgot – the would-be-buyers’ $800,000 house would now be worth $600,000, and they’d have $200,000 less to use as a down payment on their dream home.”

    I’ve never met an agent who liked the idea of a 15% tax, why would they, it’s not like it would benefit them in any way, it will just reduce the number of potential clients they will have.

    In your math scenario I’d rather the drop because as you pointed out typically the $1.5M+ homes will stand to drop more under such a tax because that is the real market for foreign investors (foreign investors are not targeting 600K starter homes). And as your numbers reflect,500- 800K homes will not correct by the same percentage. This all adds up to making the 1.5M+ homes today more attainable for middle class folks after such a tax. It will take time but in the long run the tax will be a good thing.

  18. LM

    at 6:23 pm

    who really cares where the money came from.

    the problem is the blanket statement that foreign riches/fortunes are from corruption or money laundering.

    it’s not as if born Canadians in Canada don’t have their own illegal industries (drugs, cocaine, heroin, marijuana, meth, mdma, ecstacy, black market, stolen goods, under the table, cash only and other various scams)

  19. Mike Ge

    at 10:58 pm

    So, how about now, when time has spoken? Vancouver market cooled down so they had to play reverse and Toronto is going crazy.
    Nice example of financial visionary :))))

  20. John Mayler

    at 6:57 pm

    what a clearly bias article. Almost every point you made reeks of sponsorship.

    I won’t waste my effort basing every point, but one glaring BASIC math error: if the guy in the 800k house wants to buy a 1.5M house it will be cheaper for them if the market declines. the decline on the 1.5M will be greater than the decline on the 800k one.

    Go back to your realtor job, keep manipulated the less educated and desperate on borrowing way more than they can afford. Keep selling out the Canadian economy for minute short term gains.

  21. Sergio

    at 4:03 am

    Still against the foreign buyers tax in Toronto? Even after seeing 30%+ appreciation in feb 2017 over feb 2016?
    If you’re not for it at this point then your entire article holds no merit as you’d be eating your own words.

    1. RobM

      at 9:41 am

      Sergio is dead on. The author is eating crow now on his loud and wrong opinions.

  22. michael

    at 4:22 pm

    Just the header of this article show how clueless this author is… Time to eat crow moron..

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

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