Too much

Did you know there’s a “Fairness in Real Estate Action Plan” making its way around Ottawa? It’s intended to offer hope to the huddled, houseless Millennial masses who sent Justin Trudeau to the PM’s office for a third time last autumn amid flowery promises of ‘homes for everyone.’

If you need details on what’s coming, read this.

Let’s review a few highlights of the T2 agenda as outlined in the PM’s letter to his housing guy. Here are the key legislative changes that will be materializing. Some might make you wish you never bought that investment property.

First, the Income Tax Act will be amended to force landlords to track and declare the rent they were collecting before and after any renovation, “and to pay a proportional surtax if the increase in rent is excessive.” What would be excessive? How much will the surtax be? Beats me. Good luck.

Second, a measure is coming to discourage the sale of a property within 12 months of buying it. If you do, you get taxed.

Third, “policies to curb excessive profits in investment properties” will be forthcoming. Whazzat mean? When does a reasonable return on risked capital become dirty money? I guess we shall find out in the spring budget.

Fourth, new down payment requirements for investment properties. The current 20% could be jacked to 30% or greater. The chilling effect would be substantial, combined with rising mortgage rates. Of course this would result in fewer people buying properties to lease, thus reduced rental stock and higher rents. Consequences.

Fifth, a ban on renovictions, plus “consumer protection and transparency in real estate transactions, including a ban on blind bidding.” Both of those actions fall under provincial guidelines, so this is largely hyperbole. But it sells.

Sixth, build new housing for blacks, indigenous, homeless, veterans, low-income, women and LGBetc folks. In addition, creation a rent-to-own fund of some kind plus support for the conversion of empty office and retail space into housing units. All that is fuzzy, of course. Long-term. Guaranteed to have zero impact on prices or immediate supply.

It’s interesting that the “Minister of Housing’ (Ahmed Hussen) is also the ‘Minister of Diversity and Inclusion.” Oh, and he runs CMHC, too. This could explain why in the last few days his first announcements were $13 million to provide 16 homes for women fleeing domestic violence in Winnipeg, 22 units for Indigenous people and “modular homes for LGBTQ2+ Canadians” in Manitoba. On Thursday he announced $7 million for 16 housing units for Indigeous women in Kitchener-Waterloo, plus 44 units in Kitchener, 25 of which are for homeless youth, four for Indigenous youth.

Yes, all good and socially responsible stuff. But for a few million Mills waiting for the cost of a condo or townhouse to moderate, that wait goes on. And on. This week major real estate marketing firms (Sotheby’s, Royal LePage) have been flooding the media with their forecasts for 2022 residential prices. Up 8%. Or 10%. Even 12%, depending on the market. Meanwhile mortgage rates will be hiking, and lending volumes have spiked in advance as prospective buyers force-feed on pre-approvals. And this happens in the most inflationary environment in decades amid historically-low inventory.

In short, will any of the above actions that Trudeau has requested (plus a ban on foreign buyers, who have been largely non-existent) bring down house prices? Will not his pledge to increase first-time buyer tax credits, raise the CMHC borrowing cap by 25% to $1.25 million, enhance the shared-equity mortgage and create that wacky FHSA down payment tax shelter thingy pretty much wipe out the impact of anything poor Ahmed does?

To be sure, speculative investing in real estate by existing Canadian homeowners has helped shove values higher. Making them pony up more to buy, or restricting the use of HELOC money to finance secondary properties will throw cold water around. But that’s not a root cause. Nor will it be a cure to real estate average people cannot buy.

The only way to stop prices from rising is to make residential real estate less appealing as an investment asset – to halt the financialization of housing. It’s no coincidence FOMO has gripped the land when this is the only asset class with zero tax on capital gains. That’s propelled values skyward. Now, with talk that the inclusion rate for capital gains (on everything else) may be hiked by a cash-desperate government, the discrepancy with financial assets grows more extreme. Secondly, why do we have government-insured 20x leverage for real estate, when nobody can fund their TFSA in the same way? Since 5% down payments were ushered in, mortgage debt has exploded. Cheap rates brought on by the 2008-9 credit crisis, then the pandemic, have exacerbated the debt binge.

Would houses drop in value and cost less for the next generation if capital gains tax was levied on windfall gains and buyers were required to have at least 10% or 20% of the purchase price in cash?

You bet.

But that would take three things you have not seen in a leader. Courage. Vision. And the guts to act correctly, regardless of political consequences.

Until then, it’s a ReMax nation.

About the picture: “Greetings from Calgary!” writes Mike. “I’ve been reading your blog for over 7 years now, and can’t tell you enough how much I appreciate your work (and all of the ample dog content). It has helped me immensely over the years. I took this photo and thought you’d enjoy it. It was taken just outside downtown Calgary, and they were getting no shortage of attention! Thanks again for everything.”

127 comments ↓

#1 Prince Polo on 01.14.22 at 4:16 pm

Maybe once my entirely pathetic generation of Mills turns 65+, they’ll finally have the wisdom and courage to do what is required. Until then, PS5 party time in Mom’s basement!!!

#2 Jellodog on 01.14.22 at 4:17 pm

Wow. Tax on sales for property held for less than 12 months. I feel sorry for anybody that either loses their job, is forced to move because of their job or moves in next door to neighbours from hell. Sometimes there are genuine reasons that people need to sell, and in these cases it will only add to the misery.

#3 Beagleface on 01.14.22 at 4:18 pm

You nailed it, Garth. Life would be better if you were PM. Has that ship sailed?

#4 Penny Henny on 01.14.22 at 4:18 pm

Suggestions please.
Just sold off half my XEG at a 49% gain.
I would very much prefer to replace it with a CDN dividend payer. Anyone?

#5 Ambi and Vasu on 01.14.22 at 4:20 pm

“It’s no coincidence FOMO has gripped the land when this is the only asset class with zero tax on capital gains. That’s propelled values skyward”.
– Garth Turner in today’s Greaterfool.ca

Solution: Raise the CAPGAINS Tax on Investment properties and second homes

Already taxed. – Garth

#6 TurnerNation on 01.14.22 at 4:23 pm

The Great Kanadian Reset Rages on. 3rd year, no letting up. There have their orders.

.N.B. imposing 16-day lockdown, top doctor says ‘matter of life and death’ (globalnews.ca)

.Ontario’s top doctor “can’t guarantee” restrictions will lift on January 26 (dailyhive.com)

— From the ‘Killing us Softly Dept.’ All our rulers care about is enacting the New System.

.Ontario woman with Stage 4 colon cancer has life-saving surgery postponed indefinitely(toronto.ctvnews.ca)

https://twitter.com/anthonyfurey/status/1482024242212392961
Columnist/editor for Sun papers/Postmedia
“A hospital physician just pointed out to me that Trudeau’s stubborn refusal to budge on the trucker rules is going to cause problems for the healthcare supply chain as well — cited IV tubing as an example — and will only further exacerbate delayed surgeries.”


—Another Former First World Country is at least trying. But all the old culture must be shut down.

.Cafes and bars all over Holland will open on Saturday, in defiance of the rules. (www.dutchnews.nl)

.Hong Kong extends tough Covid measures into Lunar New Year, inc. 6pm dine-in ban; cancels flower markets (hongkongfp.com)

#7 Robert Ash on 01.14.22 at 4:34 pm

Unintended Consequences of Experimental monetary policy. It is sad to learn of Seniors in Eastern Canada, being given Notice of Rental increases. I am all for free markets, but Investors, are purchasing small Apartments, as Buyer Groups in search of Yield, of any kind. These groups are paying 100% over Municipal Assessments, since this is low hanging fruit, and cash flow comes from 50% plus increases in Monthly Rent. It has been in the Media recently,… but this is what happens, when the Electorate allows our Elected reps, to pick winners and losers… The Investors are Doctors, Business People, Regular folk, again just trying in any fashion to make some of their money provide a return. Great new policies, that are really regressive. And these guys, want to hobble our Oil and Gas Industry. Crazy times, but pretty sad for a Senior who has to now find a room mate or hit the Streets… O Canada! Polotz et Al. Figure they are Heros… ???

#8 Debel on 01.14.22 at 4:40 pm

#3 Beagleface on 01.14.22 at 4:18 pm
You nailed it, Garth. Life would be better if you were PM. Has that ship sailed?

—————————

Garth for PM!

#9 1-800-DOCTORB on 01.14.22 at 4:40 pm

1. Increase supply and density. Ease zoning and building restrictions. Municipal politicians need to grow a pair.

2. Increase interest rates. Unless…our economy is too fragile and government, corporations, and individuals are so over-leveraged it will cause mass insolvency.

Uh oh. Up she goes. Until it doesn’t.

#10 mike from mtl on 01.14.22 at 4:42 pm

If restoring housing affordability, prices need to be slashed full stop.

-End the CHMC taxpayer backed subsidy of subprime lending.
-Raise the overnight rates.

We all know this but unfortunately that would crash our house flipping dependant economy and the boomers would be up in arms.

#11 Cheese on 01.14.22 at 4:45 pm

Its all clown world, WW3 brewing in Ukraine and then everything will be mono-atomic plasma.

Sold some Riocan, bought some XEG because I’m an aggravating contrarian, drink of choice for Friday is Ardbeg.

It’s comedy, have fun while you can.

Stay safe, hugs to all.

#12 Shirl Clarts on 01.14.22 at 4:48 pm

As usual, the government waits until the last minute to actually do something about these escalating house prices.

It’s like how prison guards watch as inmates beat each other until nearly dead before blowing their whistles to break it up.

Thanks but too little too late.

#13 Rent the Podium on 01.14.22 at 4:50 pm

Fun calculation: if current levels of growth continue, all working adults in Canada will be Realtors by 2070.

#14 Sail Away on 01.14.22 at 4:50 pm

#4 Penny Henny on 01.14.22 at 4:18 pm

Suggestions please.
Just sold off half my XEG at a 49% gain.
I would very much prefer to replace it with a CDN dividend payer. Anyone?

———-

I like Labrador Iron Ore Royalties Corp. because I believe iron has a bright future with N. American infrastructure stimulus. 15% eligible div., which is a bit high, so it’s volatile. I’ve held since 2019 and am quite happy.

Faron will probably chirp in, but suggest you ignore his mudslinging and do your own due diligence.

#15 1% prepper on 01.14.22 at 4:51 pm

I’m very happy to see this Real Estate Fairness plan come to fruition. As someone who has spent 20 years working for the federal government, I can honestly say that government is clueless and full of idiots in charge of the civil service. anything they set out to do will have the opposite consequences. So as a home owner, I look forward to more Liberal party tinkering, which will only result in ever escalating real estate prices. Party in Justin, Party on…

#16 Satori on 01.14.22 at 4:52 pm

With so many new rules, you can’t even move in this country without the gov’t telling you how it’s going down!?

Who in their right mind would want to rent… it’s a chore by itself, without these new rules! Next up, the the government will need to approve exactly ‘WHO’ you are going to rent your place out to.

And what??!!! “Ahmed Hussen is also the ‘Minister of Diversity and Inclusion.” Oh, and he runs CMHC, too.”???? Uhhhh, Conflict of interest in BOLD LETTERS!!! wth??? I am literally gob-smacked!

#17 ElGatoNerodeYVR on 01.14.22 at 4:52 pm

#7 Robert Ash on 01.14.22 at 4:34 pm
All of it while true it is smoke and mirrors.
The root cause is that simply there isn’t enough rental housing in existence or being built.
Solution is Not to manage to death a dwindling supply while demand increases but to build and sponsor the building of rental housing.
The government clearly does a very good job at confusing the issue and setting people up for a false target.
The only quick solution would be to nationalize investment housing at market rates and offer it up for rental at living wages rates.
Nedless to say no Canadian government would ever dare to do that.
Second would be to pre-approve rental housing plans(blueprints) and support (private or state owned ) builders to build them.

No amount of taxing the existing landlords or investors would make them rent out more in the current rental environment disgustingly skewed towards renters.
That is why AirBnb makes sense for lot of people , maybe less income monthly but no dealing with the Rental Tenancy Board.

#18 XGRO and chill on 01.14.22 at 5:07 pm

Seems like a lot of government interference to correct market imbalances caused by government interference.

#19 SpousalRSPwithdrawal on 01.14.22 at 5:07 pm

If someone last contributed to a spousal RRSP in April 2019, can their spouse make a withdrawal in January 2022 without having the income attributed back to them (the contributor)?

I think the answer is yes, because the 3 year withdrawal rule is based on calendar years, with 2022, 2021 and 2020 having had no spousal contributions.

#20 Satori on 01.14.22 at 5:11 pm

#17 ElGatoNerodeYVR on 01.14.22 at 4:52 pm
#7 Robert Ash on 01.14.22 at 4:34 pm
All of it while true it is smoke and mirrors.
The root cause is that simply there isn’t enough rental housing in existence or being built.
_____________________________
Must have been awhile since you walked downtown Vancouver. There is no building shortage. Tons of new buildings, tons of new tooted ‘affordable’ housing available for rent. Just yesterday walked past this $2600/month. I’m not sure if that is affordable but there is no shortage.

https://www.padmapper.com/apartments/12139112p/2-bedroom-1-bath-apartment-at-1395-davie-street-vancouver-bc-v6e-1n5

#21 Søren Angst on 01.14.22 at 5:11 pm

So brainy BC Math Prof says BC exceeded test capacity some time in Dec and in essence:

hasn’t a clue how many cases there really are.

—–

MENSA Candidate Global BC interviewer question afterwards, in as many words:

When will Omicron peak?

https://twitter.com/GlobalBC/status/1482098788324069379

[only thing left missing was a hair toss]

…you know, once Omi vanquished I’m really going to miss stuff like this.

#22 VladTor on 01.14.22 at 5:12 pm

Sixth, build new housing for blacks, indigenous, …. and LGBetc folks.

*************

100% discrimination by race and skin color.

Why not for white, Latinos, Chinese etc. ?

Is LGBetc folks has more rights than people with traditional orientation?

They need to be kicked out of parliament and put on trial.

In Canada, the constitution guarantees equal rights for all.
F O R A L L!!!!!

#23 wallflower on 01.14.22 at 5:13 pm

Hilarious. In Barrie, a REMAX agency just bought the naming rights to a civic centre.
(In a city where locals can no longer afford to buy…)

#24 Irish Stew on 01.14.22 at 5:14 pm

I recently inherited our family home.
Emotionally I do not want to sell it.
I will keep it – unless these taxes become a large burden.

Taxation always seems to be the Govt answer.
Success of people seems to be waning – Liberals wants everyone, regardless of effort, to be equal.

#25 SunShowers on 01.14.22 at 5:14 pm

“The only way to stop prices from rising is to make residential real estate less appealing as an investment asset – to halt the financialization of housing.”

Wouldn’t that goal be achieved by whacking flippers and landlords (achieved in this plan), and speculators who keep homes empty just waiting for them to appreciate (achieved with vacancy tax)?

It’s not flippers and landlords seriously overbidding for properties in blind auctions. – Garth

#26 Linda on 01.14.22 at 5:14 pm

I sure hope the human holding onto today’s blog dog photo of the day has superior upper body strength! That is quite the passel of pups to keep hold of:)

‘to halt the financialization of housing’ – maybe its just me, but methinks it is far too late for that. That ship has sailed. Now, if the goal is to prevent further ‘financialization’, maybe the lengthy list of new measures outlined in the letter to the housing minister might at least slow things down. When you have numbered companies purchasing housing with the intent to provide a high rate of return to investors – the one article quoted 11% ROI for units purchased by said company – one can see how those on the low end of the income scale may suddenly find themselves unable to afford the rent increases. The true issue being that replacement housing that is affordable may not be readily available or even exist in the first place.

As for the whole rights thing, I thought Canadians were guaranteed equality under the Charter already. So have some concerns about various groups being singled out for priority service. Doesn’t that in itself promote the very inequality we are trying to eliminate?

As for working with municipalities to increase densification etc. I can state that municipalities have been actively working to do just that for quite some time. Unfortunately thus far any densification has not lowered the cost of housing. Those new builds tend to come with very high price tags because of location – plus the developers are building what folks want, which includes all those high end upgrades that cost $. That doesn’t include all the fees collected for various assessments & taxes which add a considerable sum to the sale price.

As for the plans to tax returns on housing – no surprise that our revenue starved government is looking for $ – don’t quite see how restricting how much return an investor might realize from taking the risk to develop is going to encourage anyone to invest in the first place. So now the taxpayer becomes the developer? Is that how this is to pan out? History doomed to repeat & the history of government funded housing hasn’t been what I’d call a success story. Oy.

#27 AM in MN on 01.14.22 at 5:15 pm

Why not just have the feds cut back on provincial transfers (won’t happen because money is power), and force the provinces to raise property taxes, with a 1-1 reduction for provincial income taxes paid, thus getting a bigger slice from foreigners and the underground economy who don’t pay income tax?

#28 Wrk.dover on 01.14.22 at 5:15 pm

Thanks for being the adult in the room that read ‘read this’, Garth. I’m not up to it on a Friday evening.

I sense trouble, from my ten second exposure to it.

I’ll be back.

#29 the Jaguar on 01.14.22 at 5:18 pm

Everything goes and nothing matters. A ‘Race to the Bottom’ takes on special new meaning in reading this release from the Office of the Prime Minister. While it’s convenient to blame the generational divide (boomers/millennials), it doesn’t really capture the current level of chaos in the land.

This government is big on sweeping announcements that lack any logistical plan to carry them out, similar to ” All international travelers returning to Canada will be PCR tested”, which hasn’t been the case because it was never logistically possible. A lazy media, one in collusion with the government, or one which was just plain stupid rolled over. I expect they will do the same with this announcement.

Exactly how will any revision to the Income Tax Act hunt down and capture any ‘fibs or omissions’ given a significant portion of the population currently under reports rent if they even disclose it at all?

How will an ‘anti-flipping’ tax address issues such as marital breakdown or other legitimate reasons to sell within 12 mths?

Ban on non recreational foreign buyers? Fasten your seat belt Huntsville and other environs. “Non Rec” sounds a lot like “subject to interpretation”. Define also what “excessive profits” would mean as it relates to investment properties….in personal name only or does it include corporate entities?

Who will scrutinize and enforce increased down payment requirements for ‘investment properties”? People already lie their asses off in this regard to get insured mortgages ( CMHC, etc). Maybe have a read of Diane Francis’s article in the NP this morning which covers the extent of money laundering as it relates to down payments in Canadian real estate. ‘Honour’ is really such an old fashioned concept.

The rest of the document is largely about ‘throwing money at a problem”. When you hear the words “Affordable Housing” or “Safe Injection Sites” I would advise you to reach for both your wallet and your Pistolla. It’s baffelgab to mask the greater issues at hand which are just too delicate for discussion as public discourse. Treat the symptoms, not the disease. How is that working for us?

#149 Sail Away on 01.14.22 at 12:36 pm
Glad to hear you and Mrs. Sail Away beat back the beast. I haven’t been tapped yet, but then again it would take Omnicron and a 900 pound gorilla to take down The Jaguar. Indeed it is time to ‘Get on with life’.

#30 Penny Henny on 01.14.22 at 5:19 pm

#14 Sail Away on 01.14.22 at 4:50 pm
#4 Penny Henny on 01.14.22 at 4:18 pm

Suggestions please.
Just sold off half my XEG at a 49% gain.
I would very much prefer to replace it with a CDN dividend payer. Anyone?

———-

I like Labrador Iron Ore Royalties Corp. because I believe iron has a bright future with N. American infrastructure stimulus. 15% eligible div., which is a bit high, so it’s volatile. I’ve held since 2019 and am quite happy.
/////////////

Thanks but I’m looking for something more Blue Chippy.
Once burned, twice shy.

#31 Ambi and Vasu on 01.14.22 at 5:20 pm

“It’s no coincidence FOMO has gripped the land when this is the only asset class with zero tax on capital gains. That’s propelled values skyward”.
– Garth Turner in today’s Greaterfool.ca

Solution: Raise the CAPGAINS Tax on Investment properties and second homes

Already taxed. – Garth”

Sorry Sir. Garth,

Then raise the taxes higher because if the investors do not make targeted profit, they will definitely give up investing in houses.

Houses then shall be available for first time buyers. End of the day, houses are for living, growing families and keep the dream of Canada alive.

#32 Penny Henny on 01.14.22 at 5:21 pm

I was thinking of adding some Magna and TRP

#33 Nonplused on 01.14.22 at 5:25 pm

“Would houses drop in value and cost less for the next generation if capital gains tax was levied on windfall gains and buyers were required to have at least 10% or 20% of the purchase price in cash?

You bet.”

Or nope. Does a capital gains tax suppress the price of stocks?

Taxes do not make things cheaper. Only a change in the supply – demand fundamentals can do that.

Meanwhile rampant inflation is raising the cost to build. New house prices must go up to compensate. When the price of new houses go up, so does the price of used ones.

If we should have learned anything from the used car market through covid it is that availability of new units sets prices. Speaking of which where are the federal programs to make cars more affordable to the various minorities?

Taxes can certainly reduce demand, because they make things more expensive, but that is counter-productive if the goal is to make housing more affordable. Causing houses to be more expensive to own does not make them more affordable. And yes, a capital gains tax would figure into that. Right now the capital gains partially offset the cost of ownership including mortgage interest, property taxes, maintenance, etc. Take that money away and that is just more money the homeowner has to come up with, forcing them to consider an RV or a tent down by the river.

The only solution to this problem is on the supply side, which unfortunately is largely in the jurisdiction of the municipalities, and who don’t seem inclined to act. It would also help if there were more than two cities in Canada that were viewed as habitable by immigrants and the millennials. Unless something really drastic changes at the municipal level in these two cities, they are full.

If there were enough supply of new units, one wouldn’t have to worry about blind bidding, renovictions, rampant speculation, excessive rents, or flipping. These are all symptoms of the shortage, not causes. But I guess if you can’t cure the disease, treat the symptoms. Or in this case, provide the patient with snake oil.

#34 Felix on 01.14.22 at 5:26 pm

6 dogawful mutts is absolutely Too Much.

Happy Feline Friday!

#35 Dave on 01.14.22 at 5:34 pm

Just raise the F#ckin Interest Rates….

.05% in January is a great start

#36 Andrewski on 01.14.22 at 5:36 pm

Wow Justin! Part of his statement from the link Garth provided:

Work with provinces, territories, municipalities and the Deputy Prime Minister and Minister of Finance to develop a Fairness in Real Estate Action Plan that includes:
Amendments to the Income Tax Act to require landlords to disclose in their tax filings the rent they receive pre- and post-renovation and to pay a proportional surtax if the increase in rent is excessive;
An anti-flipping tax on residential properties, requiring properties to be held for at least 12 months;
A temporary ban on foreign buyers of non-recreational residential property in the Canadian housing market so that housing does not sit vacant and unavailable to Canadians;
Supporting the review of, and possible reforms to, the tax treatment of Real Estate Investment Trusts;
Developing policies to curb excessive profits in investment properties while protecting small independent landlords;
Reviewing the down payment requirements for investment properties;
Increased consumer protection and transparency in real estate transactions, including a ban on blind bidding;
Identifying how federal regulators can be better positioned to respond to housing price fluctuations and to help ensure a more stable Canadian housing market; and
Preventing “renovictions”.

#37 under the radar on 01.14.22 at 5:36 pm

Take away the cheque book from the kids in Ottawa. Higher rates and a speculation tax will calm down the madness. Fed cannot permit currency destruction. Policy that everybody gets a house and pony not happening.

#38 The West on 01.14.22 at 5:38 pm

So, you’re saying human engineering and economic manipulation aren’t working….

LOL

There’s going to be a World War in the next five years. To avert, Washington will have to lower their flag just like the Soviets did in 1989.

Don’t look down, we can’t even see the bottom yet. Too comfortable, bred to be stupid and corrupt to the core.

Goodnight.

https://www.youtube.com/watch?v=njXaEZi9gDo

#39 Penny Henny on 01.14.22 at 5:40 pm

#27 Felix on 01.14.22 at 5:26 pm
6 dogawful mutts is absolutely Too Much.
/////////////////

There is 7. Look again

#40 Dominoes Lining Up on 01.14.22 at 5:54 pm

As you mentioned Garth, you can trace the roots of much of this to the idiotic policies of Stephen Harper.

If that gutless twit had not punted you, and instead had embraced courage, vision and guts, the current housing bubble would not have started back in 2008/09. We would be in a much more common-sense property market, like the USA.

Instead, we are now extremely vulnerable to a correction, with real estate being an incredibly large part of our economy. When this happens, and it will, the results will be devastating.

Thanks for nothing, Stephen.

#41 Barb on 01.14.22 at 5:56 pm

“modular homes for LGBTQ2+ Canadians”.

————————————–
Hilarious. Hussen’s doing the hustle.

#42 VladTor on 01.14.22 at 5:57 pm

Garth….Second, a measure is coming to discourage the sale of a property within 12 months of buying it. If you do, you get taxed.

****************
Will not work for cool down housing never!

Just imagine example.

I bought 3 years ago on stage 1 – for ex. 2019. I paid 40% of total price. Now in 2022 paid other 60% and I move in and will sell without problems.

I’m not sell within 12 month accordingly rule and you will laughing at government – I’m not going to sell within 12 month … b’s my goal was to sell later with profit.

Or to escape possible collision – I paid in 2019 full price. Done!

Should be minimum 3 years and with sliding taxation scale. In this blog in past I described idea.

Tax:
After 3 years – 100% on profit (capital gain)
after 4 years – 70-85%
after 5 years – 25-10%
after 6 years and more – nothing.

Like this with some exemption.

B’s people buying house for leaving in it!

That would kill mobility and therefore be a huge burden on young buyers. – Garth

#43 sailedaway on 01.14.22 at 6:14 pm

#17 ElGatoNerodeYVR on 01.14.22 at 4:52 pm

“the current rental environment disgustingly skewed towards renters.”

AHAHAH

I recall being evicted by a landlord from hell in Burnaby
BC

The guy was looking a bit too much at my daughters, evicted my family and then tried to sue me.

The cretin didn’t read the rules and lost the case as although he was a ‘doctor’ in civil engineering he didn’t read the rules.
And his wife worked at a saintly Catholic school.

But yeah the system protects renters. sure

#44 I don’t know on 01.14.22 at 6:18 pm

“ Would houses drop in value and cost less for the next generation if capital gains tax was levied on windfall gains and buyers were required to have at least 10% or 20% of the purchase price in cash”

-Nope. Not one bit. Not with an entire generation in the millions all vying for the same asset. I’m referring to the single family detached in large urban centres. Let’s be honest, when people “complain” about being unable to buy real estate..that’s what they really mean and want. Hard to see prices of a tangible and useful asset you can live in drop with demand far far exceeding supply.

Any taxes will be baked into price, making them go higher.

The proposal to inject funds into building affordable housing for people who need is greatly needed.

As for people who are on the fence, hoping to jump in. It is, and always will be buy the moment you are able (with dirt).

#45 45north on 01.14.22 at 6:21 pm

Yes, all good and socially responsible stuff. But for a few million Mills waiting for the cost of a condo or townhouse to moderate, that wait goes on. And on. This week major real estate marketing firms (Sotheby’s, Royal LePage) have been flooding the media with their forecasts for 2022 residential prices. Up 8%. Or 10%. Even 12%, depending on the market. Meanwhile mortgage rates will be hiking, and lending volumes have spiked in advance as prospective buyers force-feed on pre-approvals. And this happens in the most inflationary environment in decades amid historically-low inventory.

Trudeau is a fraud. let’s add this up: 16 homes for women fleeing domestic violence in Winnipeg, 22 units for Indigenous people and “modular homes for LGBTQ2+ Canadians” in Manitoba. 16 housing units for Indigenous women in Kitchener-Waterloo, plus 44 units in Kitchener, 25 of which are for homeless youth, four for Indigenous youth. 16 + 22 + 16 + 44 = 98. Let’s round that up to 100. Drop in the bucket! And when’s the move-in date? And who’s going to fix the leaky faucet? Ahmed Hussen?

Affordable homes are cheaper homes. Simple fix would be to raise interest rates which would lower house prices. Raising interest rates would also solve the inflation problem. If interest rates went up, the economy will go down which would mean hardship and tough times for everyone. Coast-to-coast.

Trudeau has been Prime Minister for 6 years during which time cost of housing has gone through the roof. Now inflation is starting to bite.

#46 Flop… on 01.14.22 at 6:28 pm

Off to get my Booster Shot.

Things could be worse.

I could be going to get a Booster Seat out of the back of a minivan…

M47BC

#47 Kato on 01.14.22 at 6:31 pm

#31 Ambi and Vasu on 01.14.22 at 5:20 pm
“It’s no coincidence FOMO has gripped the land when this is the only asset class with zero tax on capital gains. That’s propelled values skyward”.
– Garth Turner in today’s Greaterfool.ca

Solution: Raise the CAPGAINS Tax on Investment properties and second homes

Already taxed. – Garth”

Sorry Sir. Garth,

Then raise the taxes higher because if the investors do not make targeted profit, they will definitely give up investing in houses.

Houses then shall be available for first time buyers. End of the day, houses are for living, growing families and keep the dream of Canada alive.
**************************

If landlords are taxed past the point of being able to hold properties, where will renters live?

#48 Warren-the-lagging_indicator on 01.14.22 at 6:38 pm

I figure it will seem like a whole new world near the end of 2022 due to the 4 rate hikes. The talk will be about how high they will go and how people can no longer sustain interest and mortgage payments. House lust will be reduced to a simmer before the inevitable decline. The debt wall has already been hit and renting will seem safer as the house lottery closes shop and skips town.

#49 Garth's Son Drake on 01.14.22 at 6:38 pm

Jamie Dimon says 7 interest rate hikes possible this year.

If 80s style inflation shows up, housing is all but finished.

This is front end loaded for 2022 and it is going to get interesting real fast.

Also, there is not a lot of talk about the economic hit Omicron is doing on the entire globe and my guess is because the people in charge have completely lost control and are busy adjusting their stock portfolios.

This has to be one of the worst starts to a year.

Usually January is a good month for stocks where most gains are made in the month of January.

#50 THE DANDADA on 01.14.22 at 6:44 pm

DELETED

#51 kc on 01.14.22 at 6:55 pm

140 Horseses on 01.14.22 at 10:56 am

#45 Faron
I’m sick of it top to bottom. From being restricted to the selfish libertardarians who just can’t get it through their heads that getting vaccinated is both a personal freedom and community well-being issue.

You know what’s selfish?? People expecting others to surrender their liberties so they can enjoy a FALSE SENSE OF SECURITY

*********

You and me both…. If people want the jab… go for it, knock your socks off… but stop pushing it on us….

134 IHCTD9 on 01.14.22 at 10:04 am

#131 crowdedelevatorfartz on 01.14.22 at 9:12 am
Gee.
Just when you thought the govt bureaucrats couldn’t get any stupider.

https://nationalpost.com/news/politics/in-for-a-rough-winter-ottawa-clears-up-confusion-on-trucker-vaccinations-but-shortages-loom

Lets make it even more difficult for imported goods like fresh fruits and veggies to get to Canada.
____

Trudeau is going to make all the doomsday preppers right if he keeps it up.

*********************

This could be over pretty easy… ALL TRUCK DRIVERS in North America should park their trucks for 2 solid weeks….. this will end all this talk about mandates for drivers and all the other crazy mandate crap….

But they don’t have the balls to do this… tsk tsk….

#52 Name on 01.14.22 at 6:58 pm

A simple formula could be applied to the capital gains exclusion for primary residences: Sell after less than one year, 50%; less than two years, 30%; less than three years, 10%; more than three years, nothing.

You could also have a mechanism for applying for an exemption if you could prove the sale was necessary for work, medical, or other reasons.

#53 yvr_lurker on 01.14.22 at 6:58 pm

Do not put capital gains on principal residences. I doubt this will ever happen. It would be political suicide for any party. Imagine a family who bought a fixer upper in 2010 and over the past decade has every year made major upgrades as their budget allows, spending 400K in the process to get a nice liveable home that they plan on leaving to their kids years later. How can the Gov’t retroactively put a capital gains tax on its sale and disentangle the appreciation due to the market and that due to the extensive 10 years of renovations. It is unlikely that the owners would have all the receipts for what they improved, and likely some of it was done with their own initiative. Nope, ain’t going to happen.

However, I’d be perfectly fine with taxing more extensively flippers and people who try to buy up the monopoly board with further properties that they either rent out, AIRBNB out etc… I realize that they pay capital gains on the sale, but it should be MUCH higher. Even with the nominal capital gains on the sale of non PR it does not seem like much of a barrier: There are many out there like that ahole Taleeb who won in Granville Center for the Liberals who have made their “living” doing this. Need a Tax that imposes a higher barrier to making a “living” this way.

#54 crowdedelevatorfartz on 01.14.22 at 7:05 pm

@#36 Andrewski

yep.
Thats our PM !
Promises promises.
Deliveries….?
Not so much.

But what the Hell.
The younger voters lap it up like hungry kittens to cream.

@#46 Floppie

No little Joey’s jumping around the Floppie Barbeque?

#55 Rod on 01.14.22 at 7:15 pm

What is the argument for the principal residence tax exemption? Also, instead of tax the rental income, allow renters to deduct part of the house rental from their income.

#56 TurnerNation on 01.14.22 at 7:20 pm

“The ‘Mother of All’ Supply Shocks Lurks in China’s Covid Crackdowns”
https://www.bloomberg.com/news/newsletters/2022-01-12/supply-chain-latest-china-s-covid-fight-risks-more-supply-turmoil

— Scammed. But the Hospital Capacity guys?

https://www.theglobeandmail.com/politics/article-federal-mobile-hospital-units-sitting-in-warehouses-as-omicron-surges/
Ottawa allocated $300-million at the beginning of the pandemic for the construction of 15 mobile hospitals, but only four 100-bed units have been completed and they are sitting in storage despite the strain on hospitals caused by Omicron across the country.
The federal government gave a sole-sourced contract of up to $150-million….

— Over this?

CDC Director Rochelle Walensky said testing for COVID-19 at the end of a quarantine period is no longer needed because PCR tests can detect the virus for up to 12 weeks after infection, even after the person is no longer contagious. “So, what we do know is the PCR test after infection can be positive for up to 12 weeks so that is not going to be helpful,” Walensky said Wednesday during an appearance on “Good Morning America.”

—-

– Mexico—the world’s most popular travel destination throughout the COVID-19 pandemic—has now dropped all COVID-19 entry requirements as of January 1, 2022. El Salvador was the world’s first nation to drop all COVID-19 entry requirements in November 2021, with Mexico now joining El Salvador as the world’s second nation to drop all covid-related entry restrictions.
https://www.traveloffpath.com/mexico-removes-all-covid-19-entry-requirements-including-health-form/

#57 Phylis on 01.14.22 at 7:24 pm

All the idle real-estate people will band together to find a new way to comply with the rules. The brainpower collective will blow triumphant when a few new frankennumbers are born and the industry saved.

#58 Squire on 01.14.22 at 7:31 pm

Canadians lack courage. Docile, the leaders will have their way. It’s too bad because it used to be a good Country. Saying it’s still better than many third world countries is lowering our standards instead of fighting for better.
wakey wakey folks It is almost over for all of us.

#59 Damifino on 01.14.22 at 7:37 pm

#24 Irish Stew

I recently inherited our family home.
Emotionally I do not want to sell it.

————————————

Learn to divorce your emotions from your finances.

If the home is yours and yours alone, and you do not need it as a residence, and you’re only keeping it because of fond memories, then liquidate it now, take your tax free windfall and diversify ASAP.

#60 Leftover on 01.14.22 at 7:44 pm

The Liberals are capable of squashing a shell game – remember they got rid of the income sprinkling that was going on in SBC’s a few years ago, and surely some bright light in Ottawa understands that the same (or worse) is going on with the PR capital gain exemption.

We don’t need new taxes, just enforce the rules already in place. Real estate is tax evasion for the masses and the Liberals can’t afford to ignore it anymore.

#61 Sail Away on 01.14.22 at 7:50 pm

#29 the Jaguar on 01.14.22 at 5:18 pm

Glad to hear you and Mrs. Sail Away beat back the beast. I haven’t been tapped yet, but then again it would take Omnicron and a 900 pound gorilla to take down The Jaguar. Indeed it is time to ‘Get on with life’.

——–

Thanks! It’s been quite pleasant for us chillaxin at home in front of the fire with a 1000 pc puzzle, Slivovitz, good books (‘The Dawn of Everything’, ‘A Sailor, A Chicken, an Incredible Voyage’, and ‘The Art of Arbitrage’).

Good luck

#62 Nonplused on 01.14.22 at 7:52 pm

#47 Kato on 01.14.22 at 6:31 pm

“If landlords are taxed past the point of being able to hold properties, where will renters live?”

Exactly.

Blind auctions do not matter.
The ratio of owner0-occupied vs. renters does not matter.
Flipping doesn’t matter.
Investors don’t matter unless for some reason they leave the property vacant.
Foreign buyers don’t matter unless for some reason they leave the property vacant.
Interest rates don’t matter, only the monthly.
Renovictions don’t matter.
Down payments don’t matter.
The capital gains exemption doesn’t matter.
WHF is regional, over all it doesn’t matter.
The new under 40 savings plan doesn’t matter.

Only supply and demand matters.

Demand is largely based on population growth and who wants to live where, so relatively static but always increasing in Vancouver and Toronto. There is no way to change it without reducing immigration. Therefore demand doesn’t matter.

So only supply matters. The only way out of this mess is to build more units. Nothing else will do a damn thing.

But you have to build most of them in and around Vancouver and Toronto, which is tough to do.

#63 Quintilian on 01.14.22 at 8:10 pm

“But that would take three things you have not seen in a leader. Courage. Vision. And the guts to act correctly, regardless of political consequences.”

Garth you should take your own advice.

Don’t be a cowboy.

What responsible democratically elected government is going to assign themselves so omniscient and pop the housing bubble?

The bubble has about another 25-50% price appreciation before it pops on its own.

There will be much misery, lives destroyed, financial ruin.

What politician would want to be blamed for the collapse.

You cite the requirements for a leader as one with courage, vision, and the” guts to act correctly”, I submit that within the political cadre such qualities are rare.

#64 Flop… on 01.14.22 at 8:18 pm

Let’s role play.

The Breakfast Bar in this video is Canada.

The Corgi that comes scurrying in and demolishes the Breakfast Bar is Justin Trudeau.

The Other Corgi, over the back, that just stands around and does nothing, is Erin O’Toole…

M47BC

https://www.dailymail.co.uk/video/news/video-2586783/Video-Adorable-corgis-chaotically-destroy-breakfast-bar.html

#65 Frank B. on 01.14.22 at 8:21 pm

“Inflation is always and everywhere a monetary phenomenon.” Monetary economist Milton Friedman made this line famous after stating it in a talk he gave in India in 1963.

End the tapering, stop the stimies and raise interest rates. That’s all it will take. House prices will come down with everything else.

But the demon Jerome Powell has other plans.

#66 Shawn on 01.14.22 at 8:27 pm

What’s blind bidding?

The three houses I bought 1989, 1990 and 1995 were all traditional sales where I did not know what anyone one else offered. Was that not blind biffing?

Going to ban that? Weird.

An open auction would likely increase the price paid.

What seems different now is no bids accepted until a certain day and then ask the top three to bid again blind. What is the terminology for that? Second round of blind bids?

#67 Flop… on 01.14.22 at 8:34 pm

#46 Flop… on 01.14.22 at 6:28 pm
Off to get my Booster Shot.

Things could be worse.

I could be going to get a Booster Seat out of the back of a minivan…

M47BC

Uncle Crowdie.

@#46 Floppie

No little Joey’s jumping around the Floppie Barbeque?

///////////////////////

When Stephen Harper signed off on my Citizenship he stipulated absolutely you can stay, but absolutely you can not reproduce.

Didn’t want to risk it.

Did you see what happened to the last guy that went against his wishes…

M47BC

#68 Unvacinated on 01.14.22 at 8:44 pm

In the GTA real estate market, almost all listings are setup as multiple offers. Most properties sold within 7-10 days. It’s impossible to win bid wars without overpayment. Who are the buyers? Existing home owners using HELOC leverage to buy investment properties. It’s raging…

#69 Shawn on 01.14.22 at 8:56 pm

I said blind biffing. Meant blind bidding. But so be it, blind biffing should also be outlawed, whatever it is.

#70 Dr V on 01.14.22 at 9:10 pm

4 Penny

“Suggestions please.”

So you’ve sold half. Sounds like protecting that is paramount.

My big 5 bank has appreciated near 100% but I did not time the purchase perfectly either. You may wait awhile for more cap gain, but they are all less than 15 P/E and have a payout ratio of about 40%, suggesting some downside protection, with room to increase the dividend.

“On the other hand”…..maybe an etf that holds lots of the banks and not so much energy.

Vanguard has a “high yield” dividend etf that currently holds lots of the materials sector. Sailos pick has a payout ratio of over 100%, so that may say some of this
sector is a little dicey at the moment.

Research. Definitely.

#71 Dr V on 01.14.22 at 9:24 pm

Penny – further to above, Vanguard, invesco and ishares all claim to follow someone’s “index” of canadian dividend payers, but the sector ratios are not the same.

Ishares seems to have a large financial component and a
smaller energy component.

#72 Doug t on 01.14.22 at 9:27 pm

When your country slowly loses its direction after years of incompetent leadership and all you have is an economy hanging by a thread and the housing market – Oh Canada what happened to you

#73 Forzudo on 01.14.22 at 9:27 pm

“A Housing Accelerator Fund would aim to remove barriers and help municipalities build housing more quickly in an ambitious and innovative manner.”

https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2021/housing-accelerator-fund-rent-to-own-program

Sadly, there is no definition of “barriers,” and no elaboration on the help needed by municipalities. I guess that’s why the press release is a “Call for Ideas.”

#74 THE DANDADA on 01.14.22 at 9:33 pm

So now you don’t care about those children, the elderly, and ailing citizens being directly effected by the burden that the UN-VAXED has placed on our healthcare system?

Maybe when you become one you’ll change your tone.

#75 Russ on 01.14.22 at 9:40 pm

VladTor on 01.14.22 at 5:57 pm

Garth….Second, a measure is coming to discourage the sale of a property within 12 months of buying it. If you do, you get taxed.

****************

Tax:
After 3 years – 100% on profit (capital gain)
after 4 years – 70-85%
after 5 years – 25-10%
after 6 years and more – nothing.

Like this with some exemption.

B’s people buying house for leaving in it!
——————————————————–

That would kill mobility and therefore be a huge burden on young buyers. – Garth
——————————————————-

There has been many examples on this blog on how the above young couple is under water for a few years after buying real estate vs. rent (after closing costs, etc.)

So, under a new Federal home tax scheme, wouldn’t they be a bit ahead after capital cost deductions if they need to be mobile?
Similar to how corporations do it…

Asking for a friend.

Cheers, R

#76 crowdedelevatorfartz on 01.14.22 at 9:41 pm

@#66 Shawn
“An open auction would likely increase the price paid.”

++++

Then why aren’t commission based realtors screaming for open auctions?

Earf to Shawn.

What can be more fair than an open auction?

The current Canadian system. ( Australians think WE”RE nuts! )

The hidden bids are wide open to abuse by our friendly Realtors who can tell you ( with absolutely nothing to back it up) that “someone has outbid you”.

The self same Realtors that are making a commission on the sale.
The higher the sale price the higher the commission.

Not hard to see what can happen if you allow a poker dealer (realtor) to hold all the cards, oversee all the bids, and collect a juicey commish from the “winner”.

#77 crowdedelevatorfartz on 01.14.22 at 9:43 pm

@#67 Floppie

“Did you see what happened to the last guy that went against his wishes…”

+++

Yep.
You’re getting a puppie?

#78 ElGatoNerodeYVR on 01.14.22 at 9:46 pm

So to address the 2 counters:
2,600 a month is not affordable housing, my bad for not making it clear what I was thinking of ,and it definitely wasn’t downtown ,no big city on the planet has true affordable downtown market rents. And true, haven’t walked for a while downtown ,just drive through it.
Even if you look at Langley/Surrey you can’t find too many basement suites in the CAD 1,200 to CAD 1,400 / mo range,defining that as affordable for a 2 bedroom.

Renters vs. Landlords. Yes ,there are bad apples on each side of it,however here is where I was coming from :
a renter is able to not pay rent for months before being evicted , can destroy the place before leaving and the only recourse LL has is to go to small claims court ,in both cases one never collects realistically,how is that not severely skewed ?
Also good luck enforcing a no smoking ,no pot ,no parties addendum to the rental agreement or using that to get them out within 30 days.
If a renter cannot pay rent they should be out by end of that month and if they destroy or severely damage the place legal consequences should ensue.
Again, resolution at the tenancy branch should be 30 days not months and in cases of non-payment of rent should be automatic, no hearing required ,set a reasonable say 14 days to catch up on overdue rent ,if not then automatic eviction. Landlords run a business not a charity, governments run social programs.
I have been on both sides of it ( renter and landlord) for many years and the current system punishes the many due to the excess of a few on each side.

#79 opee on 01.14.22 at 9:49 pm

Ideas how to improve availability of housing would be more useful than the constant blaming to investments in the RE industry as the cause, taxing solves everything, not!
Try directing energies to planning departments, their shortcomings. Here are some ideas;
Increase density
Get rid of the NIMBY, how, just do it.
No more monster homes, unless in the country.
Encourage multiple units like duplexes, triplexes, row housing, apartment buildings ie. european design, not ugly towers.
Government subsidies to builders to build them, tax payers foot electric cars, why not housing subsidies and not meaning government housing.
Improve gov. productivity and direct $$$ savings to offer vacant, government lands at much lower rates
Stop building on good farm lands, stop building expensive new roads in new subdivisions. Focus on increasing present density; in areas of older homes, closed factory lands, vacant homes and unproductive farm lands, etc. etc..
Some suggestions that will help to increase housing availability very quickly may inspire someone.
What are your suggestions? not criticisms to the present market buyers and sellers. Taxes do not solve problems, the market is telling us, we need more housing, so come up with some ideas instead.

#80 Cow Man on 01.14.22 at 9:50 pm

#51 KC

As a former long haul trucker I can tell you that truckers cannot afford to park their rigs for 2 weeks. Only a government employee would not know that.

#81 North snore on 01.14.22 at 9:58 pm

#2 jellodog,

It’s taxes on the profit made in those 12 months

#82 kc on 01.14.22 at 10:02 pm

71 Cow Man on 01.14.22 at 9:50 pm

#51 KC

As a former long haul trucker I can tell you that truckers cannot afford to park their rigs for 2 weeks. Only a government employee would not know that.

**********

no sh!t…. not many in canada can not go 2 weeks from a payday…. (I can) and I am not a gov employee…

as I said no balls….

#83 Cici on 01.14.22 at 10:06 pm

#7 Robert Ash on 01.14.22 at 4:34 pm
Unintended Consequences of Experimental monetary policy. It is sad to learn of Seniors in Eastern Canada, being given Notice of Rental increases. I am all for free markets, but Investors, are purchasing small Apartments, as Buyer Groups in search of Yield, of any kind. These groups are paying 100% over Municipal Assessments, since this is low hanging fruit, and cash flow comes from 50% plus increases in Monthly Rent. It has been in the Media recently,… but this is what happens, when the Electorate allows our Elected reps, to pick winners and losers… The Investors are Doctors, Business People, Regular folk, again just trying in any fashion to make some of their money provide a return. Great new policies, that are really regressive. And these guys, want to hobble our Oil and Gas Industry. Crazy times, but pretty sad for a Senior who has to now find a room mate or hit the Streets… O Canada! Polotz et Al. Figure they are Heros… ???
_____________________________________________

Yes, like this unfortunate man (who’s on disability) and his wife, who were forced to move after a jackass realtor from Ontario bought up their rental and jacked up their rent by 61% (no rent control in this jurisdiction). For the 61% increase, there were no improvements to his unit and he was told he would now had to shovel his own snow.

https://www.cbc.ca/news/canada/new-brunswick/disability-pension-rent-increase-1.6310235

I feel really bad for the community. A lot of them grew up in rural areas with slack industry with sparse career opportunities. And now there’s zero rent control to provide them with any protection or stability. That’s excessively savage capitalism.

From the article:

“”Rent control does not allow for legitimate costs to be incorporated into rent increases resulting in the risk that landlords spend less on maintenance,” said Wilson. “The more you regulate rents, the more you limit supply as it deters new development.”

But in many recent cases, large rent increases are being delivered within days of older properties selling to new owners and are not tied to building improvements or an expanded supply of new units.”

Deplorable. There is nothing productive, honorable or enviable about being a slimy dirtbag who takes advantage of seniors or throws them out into the cold streets. Just gross.

#84 inOttawa2012 on 01.14.22 at 10:13 pm

So we closed on a house at 150k over “Ask” in Ottawa for what amounts to a teardown in our dream neighbourhood. They might as well have listed it for $2 for what it’s actually worth. Ask vs. sold is meaningless without context. We’ll rent it out until demolition, but this was for us – not some investment power play. Yes we’re landlords and renting at a very fair price, but this is ultimately for us. Not all transactions are the same.

#85 Cici on 01.14.22 at 10:18 pm

#11 Cheese on 01.14.22 at 4:45 pm
Its all clown world, WW3 brewing in Ukraine and then everything will be mono-atomic plasma.

Sold some Riocan, bought some XEG because I’m an aggravating contrarian, drink of choice for Friday is Ardbeg.

It’s comedy, have fun while you can.

Stay safe, hugs to all.
_____________________________________________

Wow, Cheese is happy tonight. Is it the Ardbeg or did you get a raise? Or is it both? Because I checked out the price of that Scotch and it’s waaaay up there. But it appears to be worth it cause you’re definitely in great spirits (pun intended) tonight.

Still, I’ll think I’ll stick to my Canadian Rye because the comparative price tag makes me quite happy.

#86 DON on 01.14.22 at 10:36 pm

#47 Kato on 01.14.22 at 6:31 pm

If landlords are taxed past the point of being able to hold properties, where will renters live?

********
If landlords can’t afford and start running to the exits at the same time increasing supply…who will be able to buy? I guess it all depends on circumstances and sentiment at that point in time.

Of course richer landlords could buy from the poorer landlords if all else remains the same.

#87 Doug in London on 01.14.22 at 10:51 pm

But that would take three things you have not seen in a leader. Courage. Vision. And the guts to act correctly, regardless of political consequences.
———————————————————
In Thursday’s National Post there’s a good article about how RBC is having a hard time finding workers with coding and math skills. Here’s a clip from this article: In Canada, meanwhile, the borders are open to newcomers but high housing costs are threatening to scare away the workers needed to fill those slots, CEO Dave McKay said.

That sums it up quite well. These high housing costs are costing us and will be a drag on the knowledge economy of today. Is there anyone at all in government who has the basic common sense to see that? Obviously not. Donald Trump said he would Make America Great Again. He’s out of the White House now, but our own governments are doing a better job of making America great again than Trump ever could.

#88 Turkeys & Toiletpaper on 01.14.22 at 11:03 pm

Oh, but the realtor mantra; housing is a hedge against inflation.

When the BOC starts raising rates on January 26th the howling will start, like the winds of a noreaster.

#89 Dr V on 01.14.22 at 11:26 pm

Penny – yikes sorry. My initial source was way out on some of the sector allocations. Vanguard, ishares and Invesco are quite close and hold over 50% financials. Smaller components of energy, utilities, telecom, still smaller consumer and materials. Went to each providers site.

CI and Horizons offer active ETFs with somewhat
smaller financial weightings.

Beware free advice on the ‘net.

This is why you have an advisor.

#90 Bronze Bullet on 01.14.22 at 11:39 pm

Don’t listen to what they say, watch what they do.

Every single act of the government and central bankers is to make housing even hotter, driving prices further up and to lie about inflation.

This will continue to 2 million houses in GTA and Vancouver, then 5 then 10.

Inflation reported at 7 % while being 15.

Rates (oh, the horror!) potentially 1-2 %.

This people think that the general public is bunch of idiots, and the general public does nothing to disprove them. So the show goes on.

The mills waiting for ‘affordable’ houses will keep waiting for Godot but that is the smaller of the problems. The cost of living will keep skyrocketing until it makes living in the big cities virtually impossible for the vast majority, with the crime increase coming with it.

And they will blame the immigrants, poor people (excerpt from the ‘Big Short’ that no Canadian apparently has watched) while doing nothing about the real culprits – the great credit expansion that will wipe out retirees, savers and then the general public and the forces behind it.

Soon people will need 5 millions + retiring portfolios, so plan for one. And good luck in that.

#91 Horseses on 01.14.22 at 11:45 pm

“The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”

US President Ronald Reagan

#92 Bronze Bullet on 01.14.22 at 11:47 pm

#49 Garth’s Son Drake on 01.14.22 at 6:38 pm
Jamie Dimon says 7 interest rate hikes possible this year.

If 80s style inflation shows up, housing is all but finished.

.

The current real inflation as measured by the 80-es CPI methodology is 15 %. Higher than the numbers reported in the 80-es.

And it is just starting.

With interest rates at 0.25 % ‘potentially’ to go to 1-2 % (the bankers are being very ‘serious’ about it, trust them!), not 18%

It is all lies that become giant lies and then lies impossible to sell, dependent on the intelligence of the audience which unfortunately seems very low.

#93 salonist on 01.15.22 at 12:35 am

you can’t offend what you cannot bend
forget the name of the island inn the caribbean that

trudeau and a provincial pc insider went to
saint bart?
only heard of it as another youtuber mentioned it
his guest said any accomodation there was 6 figures a week
no masks needed

#94 Nonplused on 01.15.22 at 1:10 am

#55 Rod on 01.14.22 at 7:15 pm

“What is the argument for the principal residence tax exemption?”

Principal residences are not tax exempt. You pay GST on new ones, land transfer fees when you buy old ones, and property taxes all the way along.

The question you are likely asking is the principal capital gains exemption. I think the question boils down to whether a principal residence is a capital item or a “durable good”. Capital items usually generate revenue, and have allowances for deductions such as maintenance, financing costs, depreciation, and capital losses should such occur. A rental unit checks all the boxes. An owner occupied primary residence does not.

Then there is the question of what part is an actual capital gain and what part is just inflation. I guess that occurs with rental units too, but since those are businesses they get lumped in with other businesses. But on the owner occupied side, if your house goes up 10%, but so do all the other houses, where is the gain? You still only have one house and can’t actually realize the gain until you downsize. If you sell your house but need to buy another one, say because you have to move for work, or worse yet you have to buy two houses due to divorce, where is the gain? There is no gain until you die or are close to it.

#95 gregonomic on 01.15.22 at 1:16 am

“Of course this would result in fewer people buying properties to lease, thus reduced rental stock and higher rents”

I’ve seen this argument before, but can never follow the logic.

What happens to the property if an investor doesn’t buy it? Does it vaporize? No, an owner-occupier buys it. And, if they were renters, their previous place becomes available.

There is no net effect of properties being taken out of the rental pool, unless they are actually torn down and not replaced.

#96 Loonie Coder on 01.15.22 at 1:20 am

#4 Penny Henny

Curious, why sell XEG now? The world is still reopening.

#97 Frank Buck on 01.15.22 at 2:49 am

#4 Penny Henney

Greedy shortsighted ill-informed emotion led you to crystallize the 49% gains on XEG. Trudeau gets to tax you now. 49% is just the beginning of the exploding commodity complex. You sold for all the wrong reasons. If you’d sold half to reinvest I’d half understand.

I just finished my year end accounting. I did over 100% ++++, ( Sorry Garth) in each sector, Maple Finance, Consumer Disc, Utility, Tech, Industrial. 100% gains but no capital gains tax. Maple returns actually higher than my aggregate US holdings.

Have I sold a single winner, No!! Did I sell three ‘also ran’, sure, but overall paid zero tax to Trudeau. BtW, I also own XEG, holding for more. IMHO, the XEG index will outperform all other sectors in the next year. I didn’t say ” outperform all stocks”. I said it will outperform all other indexes. Individual stocks I’m buying are already gearing up for another banner year.

#98 under the radar on 01.15.22 at 6:43 am

Landlords- The REITS which have bought up a majority of all the purpose built rentals , improve the quality of the rental stock but do so with above guideline increases which get passed along . They are now susceptible to increased legislative scrutiny as the stock of apartments across Canada are in the hands of a few.
They also develop and exploit density by increasing development on the lands they acquire. They can afford to purchase at rock bottom cap rates while I think why bother. For them, they have tremendous cash flow and access to public markets.
They finance everything. We refuse debt. Increasingly burdensome bylaws and a municipal council which is always moving to the left make it less and less worth it. So in 2022 we will sellout to a REIT or developer and be done with what was a sometimes difficult but rewarding journey that took shape over many decades.
Let the REITs have it or a developer that will build a condo and charge $1800 a sq ft that will sell out in a few weeks. Th ones lining up to buy will be the same people renting out their units at twice and three times the rent we charged . But , the new tenants will have the latest and greatest in their 303 sq ft bachelor that cost 500k. Best of Luck.

#99 Prince Polo on 01.15.22 at 7:02 am

#153 IHCTD9 on 01.12.22 at 12:00 pm
#98 Ponzius Pilatus on 01.11.22 at 11:00 pm

We need more people who appreciate what they have, rather than complaining about what the don’t have.
____

No, we need more people to insist that future Canadians have it at least as good as they did when it was their turn to build a life in Canada.

Houses have doubled since Trudeau took office. Debt has doubled since Trudeau took office. Inflation has more than tripled since Trudeau took office. Taxes will soar eventually too.

Tractor guy for PM!!! Keep ’em coming, good sir.

#100 Wrk.dover on 01.15.22 at 7:05 am

#46 Flop… on 01.14.22 at 6:28 pm
Off to get my Booster Shot.

Things could be worse.

I could be going to get a Booster Seat out of the back of a minivan…

M47BC
________________________________

I read yesterday that booster seats leads to private school tuitions with over a decade of week day chauffering, orthodontists, multi year university tuitions, RE down payments, all followed up with a generous will.

Only 7.9 billion of us. All with differing goals.

Thank Dog, Trudeau has Canada’s best interests at heart.

Oof!

#101 Peter Kook on 01.15.22 at 7:48 am

“… build new housing for blacks, indigenous, homeless, veterans, low-income, women and LGBetc folks”

New Canados Apparteid? or just segregation by race and ‘normality’?

#102 Haby on 01.15.22 at 8:40 am

61 Sail Away Great you and squeeze doing fine. Often don’t agree with you but always read your posts. Good food for thought eh. Any suggestions for those that haven’t been afflicted yet? Thanks eh

#103 Just_Dave on 01.15.22 at 8:57 am

What’s wrong with working to get a career and still working that career job, starting a PT business, employing people, saving and sacrificing to buy a 2nd 3rd or 4th property to provide rental housing. All while risking personal capital, stress of non paying tenants, a property manager who steals – disputes. All to maybe make a gain if the “market” doesn’t collapse as predicted many times here over the years.

In real estate investing you take the good with the bad and bad the bad with the good. I’ve lost money and made money. Nobody likes to talk about when an investor loses money or their rental property stress almost causes a divorce because of the tenants. Nobody would be taking about investors if the cheapest “market” in the world hasn’t of started to catch up.

I love real estate, I work 1 career and have 2 PT businesses and employe people. Wife works too. We work everyday for what we have and would never change it.

Investing in real estate and teaching my kids about personal finance and business was the best thing that I ever did.

I used to listen to your blog about 7 years ago because my mom talked about it all of the time. Then a real estate investor who owns apt buildings now said “don’t read Garth” – I stopped. Since then I have increased my net worth substantially and could pay off my mortgage tmw, at 43 years old. But why would I when I can invest instead. Instead of complaining about never being able to afford a home and waiting for the government to do it for you, get off the couch or Tik Tok and figure it out.
We will retire at 50.

#104 Cheese on 01.15.22 at 9:25 am

#85 Cici on 01.14.22 at 10:18 pm
Wow, Cheese is happy tonight. Is it the Ardbeg or did you get a raise? Or is it both? Because I checked out the price of that Scotch and it’s waaaay up there. But it appears to be worth it cause you’re definitely in great spirits (pun intended) tonight.

Thanks Cici, it was a Christmas present, sharing with dad, its a bizarre flavour XD.

A raise or benefits would have been a nice present too, but you cant always get what you want :P

#105 westcdn on 01.15.22 at 9:34 am

Stock picking is a danger game. I agree with Garth, if you cant stomach the losses, go home. I left home a long time ago. I was homeless a few times and cold in the dark. Just made me stronger and willing. I intend to add to humanity for better. Perhaps a stupid goal given the selfish but I will fight for light. That kind of rolled off my tongue.

#106 crowdedelevatorfartz on 01.15.22 at 9:55 am

@#93 salonist

“forget the name of the island inn the caribbean that

trudeau and a provincial pc insider went to
saint bart?”

+++

Was that before or after he and his family spent Christmas at a private island resort….

https://www.thestar.com/news/canada/2017/01/06/trudeaus-trip-to-aga-khans-private-island-kept-secret-to-protect-privacy-pmo-says.html

One wonders if he and his family wore costumes to make the Agha Kahn more relaxed at dinner.

https://www.bbc.com/news/world-asia-india-43151115

#107 Dharma Bum on 01.15.22 at 11:11 am

#24 Irish Stew

I recently inherited our family home.
Emotionally I do not want to sell it.
———————————————————————————————————-

Sell it.

Get over it.

Let go of what’s past.

Do not be attached to anything.

Non-attachment will set you free.

Sell the bloody old house. Enlightenment awaits you.

#108 Michael in-north-york on 01.15.22 at 11:20 am

#22 VladTor on 01.14.22 at 5:12 pm

Sixth, build new housing for blacks, indigenous, …. and LGBetc folks.

*************

100% discrimination by race and skin color.

Why not for white, Latinos, Chinese etc. ?

Is LGBetc folks has more rights than people with traditional orientation?
===

Because the political left have evolved from the champions of equality they were once, into outright racists.

And we keep electing them.

#109 Peter Stoll on 01.15.22 at 11:22 am

If housing was used only for basic shelter, not status, homes could be a lot cheaper. Especially for homeless an apartment should be very basic with a few shelves, sink, stove, fridge and a shared bathroom. Units could be built at a fraction of the cost.

House have become progressively larger each decade with more bathrooms and much more expensive finishes. It is entirely possible to build much more basic, lower maintenance shelter.

Homeless apartments for $500k is ridiculous.

#110 Michael in-north-york on 01.15.22 at 11:28 am

#17 ElGatoNerodeYVR on 01.14.22 at 4:52 pm

#7 Robert Ash on 01.14.22 at 4:34 pm
All of it while true it is smoke and mirrors.
The root cause is that simply there isn’t enough rental housing in existence or being built.
Solution is Not to manage to death a dwindling supply while demand increases but to build and sponsor the building of rental housing.
The government clearly does a very good job at confusing the issue and setting people up for a false target.
The only quick solution would be to nationalize investment housing at market rates and offer it up for rental at living wages rates.
Nedless to say no Canadian government would ever dare to do that.
Second would be to pre-approve rental housing plans(blueprints) and support (private or state owned ) builders to build them.
===

Agreed. Adding a sizeable amount of purpose-built, government-owned rental housing will help. First, that’s a net addition to the rental stock. Second, it will not be bought as investment for resale and will not stand empty. And lastly, it will not interfere with the existing private rental market.

#111 Ralph Ris on 01.15.22 at 11:36 am

Have read the blog for years and am impressed with your grasp of and insight into politics.

There is one major point I disagree with you. You have, for some time now, advocated for levying capital gains on the sale of a primary residence.

But you have also said a house should not be an investment. If capital gains are levied on the sale, in which case it manifestly is being treated as an investment, then if you need to move, for whatever reason (job, family) then the capital gains “penalty” could easily be so substantial (even if it is just inflation over 10 years) that you can’t buy an equivalent house where you land without taking on more debt. Doesn’t seem reasonable to tax people into debt on account of a life’s necessity; housing. We don’t tax food or school supplies. Do it doesn’t seem reasonable to me to tax housing either.

#112 SoggyShorts on 01.15.22 at 11:36 am

#97 Frank Buck on 01.15.22 at 2:49 am
#4 Penny Henney

I just finished my year end accounting. I did over 100% ++++, ( Sorry Garth) in each sector

Hmmm. Congrats on being the most successful investor in the world for 2021?
What are the chances we’d find you on this humble blog… Oh right, I guess you would have pretty good WiFi on your Mega Yacht

#113 Damifino on 01.15.22 at 11:41 am

#103 Just_Dave

Then a real estate investor who owns apt buildings now said “don’t read Garth” – I stopped.
——————————-

Apparently not.

#114 KLNR on 01.15.22 at 11:44 am

But that would take three things you have not seen in a leader. Courage. Vision. And the guts to act correctly, regardless of political consequences.

will be status quo.
we don’t have leader, no matter the political stripe that would do any of these things. they know it would be political suicide.

#115 PastThePeak on 01.15.22 at 11:52 am

#94 Nonplused on 01.15.22 at 1:10 am
#55 Rod on 01.14.22 at 7:15 pm

“What is the argument for the principal residence tax exemption?”

Principal residences are not tax exempt. You pay GST on new ones, land transfer fees when you buy old ones, and property taxes all the way along.

The question you are likely asking is the principal capital gains exemption. I think the question boils down to whether a principal residence is a capital item or a “durable good”. Capital items usually generate revenue, and have allowances for deductions such as maintenance, financing costs, depreciation, and capital losses should such occur. A rental unit checks all the boxes. An owner occupied primary residence does not.

Then there is the question of what part is an actual capital gain and what part is just inflation. I guess that occurs with rental units too, but since those are businesses they get lumped in with other businesses. But on the owner occupied side, if your house goes up 10%, but so do all the other houses, where is the gain? You still only have one house and can’t actually realize the gain until you downsize. If you sell your house but need to buy another one, say because you have to move for work, or worse yet you have to buy two houses due to divorce, where is the gain? There is no gain until you die or are close to it.
+++++++++++++++++++++++++

Excellent point.

Sadly, knowledge and sense are two items in short supply in the general Canadian public, as exemplified by the comments here.

#116 Satori on 01.15.22 at 11:58 am

#63 Quintilian on 01.14.22 at 8:10 pm
What responsible democratically elected government is going to assign themselves so omniscient and pop the housing bubble?
There will be much misery, lives destroyed, financial ruin.

_________________________________

So you think it’s best that Trudeau keeps on handing out free money to people who don’t want to go back to work or find a different job? Keep increasing taxes to pay for those who don’t actually ‘save for a home’ but see it as an entitlement? Increase the cost of living and continue to drive the value of our money down as a better alternative?

I think you need to ‘re-think’ because the ‘misery’ has already started. Your statement just shows how blind people are as to what is happening in our country.

#117 Linda on 01.15.22 at 12:13 pm

#109 ‘Peter’ – using the numbers quoted for all the ‘new’ housing units cited in today’s blog post, that is $20 million for 98 units altogether. Or just over $204K per unit. Which is very cheap indeed & not overly believable. There was a headline concerning a City of Calgary affordable housing development in 2021 which had been experiencing some sewer issues. This resulted in at least one tenant being relocated while the issue was being dealt with. Thing is, those affordable units were built on donated land – so no land cost – & were prefab for maximum efficiency/savings. Said units were about 4 years old & had cost $250K each at the time. Since then costs for materials as well as labor have exploded. Also, there is the possible issue of levies being collected by the municipalities involved. In Toronto, levies for development currently range (as of November 2021) from $25,470 per unit for a room to $93,978 per unit for a SFH or semi. Maybe government built housing gets a by on those levies, but I wouldn’t bet on it. So not quite sure how the promised units cited in today’s blog are going to cost so little. What are they being constructed out of? Paper? Oh, wait, the housing minister mandate is to pursue green building methods. Maybe they’ll do the old style prairie sod home. A bit difficult to do multiple levels but I’m sure they’ll figure it out!

#118 Satori on 01.15.22 at 12:17 pm

#78 ElGatoNerodeYVR on 01.14.22 at 9:46 pm
So to address the 2 counters:
2,600 a month is not affordable housing.
_______________________________________
Agreed. And for this price, you have to prove you are making under 100G. ??? Only a small part of the workforce makes enough to pay that much. $2600 is most people’s entire monthly pay.
As for being a landlord, it is alot of work but for that price, paying ‘more’ than a mortgage for a tiny little place… I can see the appeal.

Until you couldn’t evict people who didn’t pay their rent because of the pandemic. Now that changed everything! Now the government tells you what to do with your property and forcing you to take a loss… did those landlords get any compensation? Nope, but the renters did and they got a fat cerc cheque on top of ‘free rent’.

#119 Satori on 01.15.22 at 12:24 pm

#85 Cici on 01.14.22 at 10:18 pm
#11 Cheese on 01.14.22 at 4:45 pm
‘drink of choice for Friday is Ardbeg.’
______________________________
Ardbeg scotch, it smells exactly like a campfire and taste like one too. Unique. Very peaty. Try it in a bar, IMHO not worth the entire bottle.

#120 Sail Away on 01.15.22 at 12:28 pm

#112 SoggyShorts on 01.15.22 at 11:36 am
#97 Frank Buck on 01.15.22 at 2:49 am

I just finished my year end accounting. I did over 100% ++++, ( Sorry Garth) in each sector

———-

Hmmm. Congrats on being the most successful investor in the world for 2021?
What are the chances we’d find you on this humble blog… Oh right, I guess you would have pretty good WiFi on your Mega Yacht

———-

I’m waiting for the next installment, where our hero battles the lizard people with toothpicks, skill, and stunning ingenuity, simultaneously rescuing scantily-clad hotties, before being installed as ruler of the free world.

‘Just doin’ what any real man would do, ma’am’

#121 Linda on 01.15.22 at 12:40 pm

#109 ‘Peter’ – further to my earlier comment about housing costs there may be a way to keep those costs down. 3D printed houses have been constructed for very low cost by a number of charitable causes like Homes for Humanity. Of course that technology is also being used to construct for profit housing. However let’s just say our government utilized government owned land to construct affordable housing & used 3D printing. Apparently a 6 inch thick wall of the special concrete used for 3D has an R value of 20, which is equivalent to traditional 2×6 lumber frame walls. One 3D example of 450 square feet was built for a cost of some $10,000 USD in Russia a couple of years back. I’ve no idea if 3D could be used to construct multilevel housing but it does seem like that kind of technology could allow the government to construct housing for a very low per unit price.

#122 Just_Dave on 01.15.22 at 1:01 pm

#113 Daminfino
Ha! I thought I’d look back to see if there was still a community here. And there is. And it hasn’t changed since I last checked back about 6 years ago.
Good luck everyone. Don’t listen to what the media or anyone else tells you. There is no easy way. Read, research, do your own homework and take some calculated risk.
Good luck everyone!

#123 dragonfly58 on 01.15.22 at 1:52 pm

3D printed houses ? I know a little about the process as it is used to some degree in the vintage vehicle hobby. A person I know has invested the computer time to make a pattern necessary to brass cast a hard to find headlight housing and bezel. Less than the size of an average shoe box. The process makes a very accurate, plastic pattern which he then takes to a foundry for the actual part to be cast.
But the 3 D printing of each one takes close to 12 hours. Nice and accurate , but you better be getting your printer time cheap.
Why would you print concrete when it is so easy to just build a form and call in a concrete truck ?

#124 Doug in London on 01.15.22 at 3:02 pm

@KLNR, post #114:
Political suicide? You’ve forgotten that a lot of Millenials, priced out of the housing market are old enough to vote. You’ve missed that a lot of business people, as I described in my post #87, see high housing costs as a major obstacle to getting the talent they need are eligible to vote. In the last election the Conservatives REALLY BLEW IT. If they had a platform of making housing affordable, and ignored the social conservative rubbish most Canadians don’t give a damn about, and said they would have vaccine mandates like the other parties did they would have won in a landslide.

#125 Linda on 01.15.22 at 3:15 pm

#123 ‘Dragonfly58’ – well, according to companies that have built these homes they can be erected in as little as 24 hours. That is for some of the small (350-400 sq ft) affordable housing units. However, larger homes have been created in as little as 48 hours. I’m just guessing that was for all the wall work – interior finishes, plumbing, electrical etc. plus a roof probably added a few days to the time it took to create the end result. Keep in mind a wall doesn’t necessarily require the precision of a machine part in order to do the job. As for being plumb, your average house built these days usually requires some cut to fit work due to not being perfectly square. Ditto for older places that have settled or undergone renovations over the years.

#126 Graeme on 01.15.22 at 8:35 pm

Price controls. Coming to an economy near you.

#127 Rosemary on 01.16.22 at 1:54 am

Point #4 shows how disconnected you are from reality and that you haven’t had any recent experience in the trenches attempting to buy a home. Investors outbid the folx who actually want to live in the home only to rent it out (in crap condition most of the time). The demand from folx who want to actually live in homes and, in some cases, rent the mortgage helper out is more than high enough. We don’t need any more s*** condition rentals out there owned by the aristocracy. There are enough people who want to buy them and have the means to do so if it weren’t for the huge number of investors. For God’s sake go and diversify your portfolio and stop investing in real estate.

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