In a country with some of the world’s most expensive real estate, Prime Minister Justin Trudeau’s government wants housing to become more affordable.
Whenever they say “I don’t want to drive down prices” that demonstrates a fundamental unseriousness about the crisis.
Yes. By having an official policy of propping up prices, the government is effectively giving a subsidy to homeowner profits at the cost of renters.
That’s the core tenet of neoliberalism: to transfer wealth to the wealthy.
It seems to me that increasing supply alone is not going to cut it. Are there not a bunch of financial groups with nearly bottomless wallets that enable them to afford to buy up any amount of property to rent or flip at any price they want, even if it means some properties sit on the market empty for a long time? This government policy seems analogous to having people with $100 dollars sitting at a no-limit poker table with a bunch of billionaires who can afford to endlessly put you all in on every bet, so they always bet more than you have and then the government comes in and says they will allow for more games to be played. Wouldn’t the policy be pointless if you don’t also limit the number of games the wealthy players can play?
You are not only right, but foreshadowing the astroturfing all of that area is going to receive. Regulating real estate is the only answer and then we’ll talk about building more. We know this to be true:
- Limit ownership to either you live on the property and 1 more house.
- Corporations and all of its subsidiaries are only allowed owning for renting above a certain amount of people. For example, they couldn’t own a duplex, they could only own above a 10 unit rental or something. Not sure what that number would be.
- Airbnb’s only allowed if the owners live on property and one more spot. No corporations unless they become a hotel and follow those regulations.
I think personal ownership can go higher than just two properties without problems. The issue isn’t everybody owning five properties, but a small handful owning thousands.
Following that, limiting corporations’ ownership is definitely a top priority. Only owning housing with 30 units or more would probably help a lot. 10 units is just too little I think, as that’s just a conjoined townhouse, which can easily be personally owned and operated. 30 is more like a really small low rise.
AirBnB is definitely an issue as well, and is probably the hardest to regulate. Though definitely not the hardest to pass (that’s the corporations one). I’m not sure what can be done with it, as there’s already laws in place regarding hotels. Maybe force the company to register all BnB locations to a government database in real time? Though with enough housing, I think this will be an insignificant issue. Especially combined with the other changes. BnBing a spare room is quite a different thing compared to an entire unit/house on a permanent basis.
I like the idea of progressively higher taxes. Second house might have a modestly higher tax, but the third will be a steep increase and it only gets higher from there. Anyone who truly wants/needs multiple homes can have em, but they’re gonna pay through the teeth for them (which we can invest into building more homes).
We have such a shortage that IMO any extra home ownership is a problem. But it’s the kind of problem that I don’t think is a concern if they pay sufficient taxes on it. It’s the kind of problem that we can largely throw money at to fix.
I think you’re probably right about the numbers, that’s definitely a discussion to be had. I originally said 30 on the units but there are units that I walk past a lot and they have about 10. I couldn’t see a small business owner owning that, but I guess they could.
Living in Seattle and watching it be demolished was hard to watch, I’ve accepted it now. We’re still fast becoming San Francisco where you have the rich and then no one to work there, it’s not a good situation. Regulating the corporations is the only way to begin truly fixing it, imo. All of the best cities in the world are becoming disneyland and nothing behind the curtain.
Those sound like better ideas to prioritize to me. Besides political machinations, what reasons are there not to implement those types of policies?
Corporations have lots of money and so a lot of people are told that it’s the “nimby’s” who aren’t letting things get built and that “Trickle Down Housing works!”. There is a slight chance Trickle Down Housing would work in 30 to 40 years, but regulating real estate is the fastest, easiest and best for the people who live there. So basically, the people who want more and more money.
Please no, don’t stop building supply until we get the demand side just right. We also massively lack supply, with the lowest housing per capita in the G7. It takes years to build supply. It’s insane that people want to slow that down!
When are people going to understand it’s both? What makes housing such a “good investment” is that we don’t build enough of it for the people we have. Investors aren’t snatching up affordable housing in rural Arkansas because they have way more supply. We should absolutely deal with investors, make their lives miserable, but we ALSO need supply.
Don’t slow it down for who?
- The corporations that want to rent out the housing as airbnb’s and taking away rental units for the people who live and work there?
- Or maybe the corporations that price fix their rental properties so that the rent never goes down like they did/do in Seattle?
- Or maybe you’re talking about the condos in high rises that buy their way out of providing affordable housing and then won’t lower their rent, but rather keep it unrented so they can get a tax break or whatever?
Out of interest, what impact do you think zoning regulations play in all this? @PeleSpirit, care to comment as well?
Supply and demand control prices. Period. Adding supply will only fail to control prices if demand keeps rising. And if buyer demand keeps rising to keep up with prices? It would suck, but there’s actually a silver lining to that: Rent goes down then.
Remember, now that we’re punishing vacant units, every investment unit must be rented out. So as the investors make a mad dash to build and buy our endlessly-rising housing units, more and more inventory gets dumped onto the rental market.
Now, there’s obvious downsides to this story, I’m not going to pretend the “own nothing and be happy” end is ideal. But it’s better than the “own nothing and live in a fucking tent” ending.
No, market failures exist. It’s not all supply and demand. The cartoon economic world of libertarians is not reality.
That said, we do have a supply problem. Vacancy is essentially zero in Canadian cities, and that’s not true in more affordable housing markets like the US or Japan.
Canada wants to eat it’s cake while also having it. Something like 60% of Canadians own their home or live in a home their parents own. 40% of a country is more than sufficient to tear the country apart if they lose faith in the society they live in. Allowing housing to become investments has been a mistake that needs to be corrected for the long term stability of the nation.
Allowing housing to become investments has been a mistake that needs to be corrected for the long term stability of the nation.
Canadians are using real estate as their retirement nest eggs. That means they’re investing less in productive businesses and are woefully under-diversified. Reducing/removing the capital gains exemption on real estate sales would encourage actual investment.
Shit, when was such an exemption passed? That’s literally a law that turns housing into a non-productive investment.
Making a necessity to live in the modern world an investment is the way to turn a portion of the population resentful and unproductive.
Googling around, all I can find is that Canada didn’t have a capital gains tax until 1972. I think that means all investment profit was tax free.
To be fair, the reason they’re using it for retirement is because every other method (defined-benefit pensions, defined-contribution pensions, bonds, mutual funds, RRSPs) have been systematically broken by the wealthy.
The dotcom bust, and the lesser extend the 2008 crisis, wiped out a lot of Boomer and elder-Xer equity. Real estate was the next thing that “weath advisors” pushed after they ran the other options into the ground.
If people could retire with dignity and security, we probably could have headed off some of the early stages of the real estate speculation boom. Of course, that would have required rich people to make less money, or face some kind of consequence. As it stands, the economy suits them just fine, even if it fails everyone else.
Those people will also need to factor in how much housing is causing localized inflation which is eating into their monthly cash flow. Unless the person has a rather large real estate portfolio they could defer the burden to I don’t think the current situation is going to work out well for most single dwelling owners unless they plan to move away soon.
As someone who struggled to get into homeownership in vancouver area it not about investment by candians. you are actively bidding on homes where asian investors trump your offer by 100K without even seeing the property. And the vacancies are bad. Two of my friends rent small basement suite in a giant home. The asian owners have not lived in the rest of the house for 2 years. So an entire family is denied housing for an investor to just sit on the property…not a canadian nest egg.
If government had the power to just snap their fingers and halve the price of all real estate, regular home owners should not be negatively affected.
It’s mostly only the people who own multiple homes as investments, developers, and people who rent out their properties.
If you own a home that you live in, yes it will suck that prices dropped after you signed your mortgage, but you already agreed to pay that before so you should be able to afford those payments wether your house is $1M or $500K.
If you need to move, the house that you need to move to will now be half price so you didn’t lose anything with your own house going half price. If anything you win by not having to pay as much taxes.
If you need to move, the house that you need to move to will now be half price so you didn’t lose anything with your own house going half price. If anything you win by not having to pay as much taxes.
This part is incorrect. If you buy a $1MM home with a $200K down payment, then you have a $800K debt. If you sell at $500K, then you still owe $300K and will declare bankruptcy and need to start saving for 7 years (?) for that bankruptcy to fall off your credit history to be able to get a new mortgage again.
This is the problem some people are facing now. They bought at the peak, with a variable rate mortgage, and are now underwater on their house and can’t afford the payments that have literally tripled. This will get worse in the next ~3½ years as fixed rate mortgages signed before/at the peak of the market come due for renewal, if interest rates remain this high.
Housing prices going down absolutely kills people’s wealth. Which is a huge problem since this means half the population is selfishly benefiting from maintaining high real estate prices.
They want the existing houses to remain expensive while the new houses somehow are cheap? Sounds like they’re wishing for a magic trick, or are trying to put lipstick on their business-as-usual pig.
Just tax homes past a primary residence like Singapore. We know it works and at least it’ll be real obvious those against are the immoral asses we thought they were
This is the simplest solution. But the annual property tax on 2+ properties has to bite otherwise corporations hoarding housing stock would just see that as cost of doing business.
The best approach would be progressively higher (like, exponentially) property taxes according to the number of properties held
I suspect this would crash the housing market immediately.
1% annual tax on the total value of a property, increasing at 2x the rate of inflation, first for corporate owners & foreign individuals of residential properties, then individual owners of any residential property that’s not their primary residence. The money raised goes directly to build affordable housing and first time home buyer rebates.
This doesn’t shock the system, and frees up homes over a period of time, rather than eviscerating demand after a particular date, and slowly releases homes into the market over the course of years, as individual properties fall into non-profitability.
Someone PLEASE steal this idea.
This.
Every property owned above primary should double in tax.
At this point it’s the only way to stop the hoarding immediately. Canada is rolling into what may be a viciously cold winter soon, and if we don’t do something RIGHT NOW, people will not survive.
We do tax homes past a primary residence. In fact, we also tax the primary residence.
Are you talking about the capital gains? Because that’s not enough as it treats homes like any other commodity. Homes aren’t an ETF. That’s the whole point of the tax, to make it no longer an attractive investment vehicle for amateur landlords.
Again look at how Singapore does it, it works.
No. Capital gains isn’t a tax on homes. It is a tax on income.
We’re talking about taxes on homes, and homes in Canada are taxed, including your primary residence.
But if you want to randomly start talking about income tax for some reason, yes, income generated by housing is also taxed. This is Canada – we tax everything.
