Friday, evidence. Two days ago this pathetic blog spelled out why the urban young are being enslaved by parental and societal expectations. The kiddos can’t afford a SF detached with actual dirt in the GTA, YVR or the LM, so they ‘get on the property ladder’ with a condo.
Bad, bad idea.
It’s a recipe for debt, disappointment and financial reversal, now that real estate has settled back to earth. In the absence of a boom market with steady appreciation, there’s zero valid argument for owning one of there units over leasing.
And yet we disparage renters. The comment section ridicules them (“I never met a rich renter…”). We refuse at accept that being a tenant – with the freedom to move to pursue a job or a love, plus enhanced cash flow and freedom from debt – is a totally valid lifestyle and financial option. So, untold numbers of Mills and Zs are entombed on the upper floors of towering slabs, many with monthly obligations they can barely cover and overhead growing worse in a time of escalating property taxes, insurance premiums and monthly fees. Behind many stand parents who have co-signed debt (and don’t understand the implications) or peed away a big chunk of their own retirement capital with a ‘loan’ to Junior.
We have two crises on the go.
First, our cultural obsession with real estate – which no longer jibes with economic reality. This is being called a ‘housing crisis.’ It isn’t. There’s enough accommodation for everyone. It’s a crisis of expectations.
Second, the way governments are addressing this perceived crisis is creating an even bigger one. Soon everyone is going to be suffering the consequences. Except renters.
There is no political solution to the problem – at least not within the ken of existing elected people. They don’t get it, and we should not believe anything’s about to change. Policies to create ‘affordable housing’ are aimed at the bottom of the economic barrel. Yes, those folks need help. But none of this will change the market price of real estate for young buyers in the vaunted middle class.
For example, the FHSA is a dandy little way to shelter $8,000 more a year from tax, while reaping a deduction. Once widely available, billions will eventually migrate into these accounts, and oodles of that will find its way into real estate. Will that make houses cost less?
Of course not. The FHSA will result in more demand by letting people create tax-deductible down payments. If anything, it will lure more young adults into larger pools of debt as they strain to afford higher-priced abodes. Big fail.
Another dismal tactic: busting up the hoods. Soon in all of BC local zoning rules will be kaput. In Ontario, Bill 23 has done the same. The object is to ‘densify’ neighbourhoods by allowing property owners to create three or six new units. In fact, this transformation is being encouraged in BC where homeowners will get loans of up to $40,000 to create secondary suites – forgiven after five years of renting them out. So, tenants win. Big. Adjacent homeowners on leafy streets who may have paid a hefty premium to own in a ‘demand’ area will suddenly be living beside a multi-unit structure, replete with more cars and humanity.
The lefties love this kind of anti-gentrification and argue that exclusionary zoning has always been evil. The impact on property values and municipal services is unknown. Incentivizing homeowners to create more saleable or rentable space could backfire, raising the commercial value of residential real estate.
And what about building zillions of new units? Won’t additional supply reduce the cost of a house?
First, it ain’t happening. Housing starts have declined, of course, because higher mortgage rates rained all over demand. Last week Ontario’s housing minister admitted the target will not be met. Moreover, land is no cheaper. Nor are building materials. Trades aren’t working for reduced wages. New tracts still have to be serviced, and while politicians try to slice red tape and expedite permits, there is zero reason to expect market prices will fade. It’s a lie.
Banning foreign buyers is a nothingburger since their impact on the overall market was miniscule and disproportionately skewed to higher-priced homes the kiddos don’t bid on. Slapping taxes on underutilized residences, punishing owners or buyers from other provinces plus swelling property tax rates – as in urban BC and Ontario – just adds to the cost of housing.
In short, governments are making this worse, not better. Until the principal residence cap gains exemption is removed, or a similar break on invested capital also offered to renters, nothing changes.
“When I speak with clients in their 30’s the distress is clear,” says crusty mortgage broker Ron Butler. “Why should THEY be the generation that CANNOT buy a house if Boomers bought houses that increased in value 400% providing massive financial support in retirement? Humans are social creatures. We are VERY attuned to UNFAIRNESS And this is clearly VERY unfair.
“Unless parents can assist with a big down payment gift and maybe also co-signing: the idea of saving up a $200K down payment and qualifying for an $800K mortgage for a $1M house is damn near impossible for the average 30 yr old couple. So they’re pissed off and they should be.”
It’s time to stop the discrimination against renters by ending the gift to homeowners. Then real estate demand will fall. Prices will follow. All we lack are leaders.
About the photo: “This is Punky,” writes Brian. “He’s shorting Canadian snow banks. Going long on cdn chain mfgrs. Positioned himself outside Saputo and Mapleleaf facilities. Loves his grandma Mary Kay, 60 on the fifth day of May in the drizzling rain.”
153 comments ↓
Happy Easter All !
( yeah… even you …you over there and the others)
Happy Easter Garth & other GF masochists
Happy Easter Mr. Turner, you were bang on with this post.
Whenever this real estate reckoning finally arrives, it will actually be a wreck’ning of many financial illiterates. Poor Canada.
*Applauds furiously*
Until the principal residence cap gains exemption is removed
——-
The devil is in the details Garth. Are you going to allow a deduction for putting in new windows? A new roof? Do I need receipts from paving my driveway in 2012? Or are you going to discourage upgrades and maintenance and kill that part of the economy?
ACB is simple to compute. – Garth
#18 Dolce Vita on 04.08.23 at 2:16 pm
^No no no no no — Corvid is not over, here In my prefecture I can name three stores with plexiglass shields (virus-busters) and masked staff. You will spot many masked people, outside.
The local transit system plays recorded messages at each door opening (“Masks are strongly recommended on the…).
The CAN-US border is closed still to those citizens without the perscribed amount of Mrna in their bloodstream. Fact.
Corvid is forever – in the Former First World Countries.
There is no affliction more important than this one.
There is nothing is cannot do.
—- We have the best Science that money can buy.
https://tnc.news/2023/04/06/rewrite-carbon-tax-report/
Liberals demand rewrite of report that shows carbon tax is costing Canadians
“In short, governments are making this worse, not better.”
*******
Car parks could collapse under the weight of electric cars
Electric vehicles are typically much heavier than petrol or diesel cars, with their batteries accounting for a lot of the extra weight
https://www.telegraph.co.uk/news/2023/04/08/old-car-parks-could-collapse-under-weight-electric-cars/
Then take that kick at the leadership can. I see that you are seriously thinking on it. I see that more than a few posts lately are posturing on your part. Con ticket is what I see for you. Step up! I’ll volunteer for you…
Similar to the word ‘Democracy’, when I hear the words ‘Affordable Housing’ I reach for my pistola. Always uttered by those who cloak themselves in piety and self righteousness. They haven’t a clue.
For ‘Busting up the hoods with the object to ‘densify’ neighbourhoods by allowing property owners to create three or six new units’, look no further than Calgary’s ‘Local Area Plans’. Use the word ‘Densification’ around these City planning types and it’s like The Rapture with all the living and dead ascending to heaven. All these Frankenstein- like experiments in the name of ‘social engineering’ and whatnot. Time to leave the big cities to the herds of ostriches with their heads in the sand. Keys are on the kitchen table. Pfffft.
As for UNFAIRNESS, who ever said life was fair? If you want to whine and blame something then blame life, not Boomers. Boomers just mosied through life like every other generation. Right time, right place. They weren’t plotting revenge on future generations. Go cry to your parents and see if you can get them to sign on to a big fat mortgage if you can’t live without a house. Just be sure to warn them that they’ll be on title and the responsibility for payments will factor in to any of their own future borrowing needs. Sorry, no guarantors where they are needed to qualify your sorry ass. Still not enough $$$? Maybe give Grandma a call. Self sufficiency is such an old fashioned virtue anyway….
I Agree with your post today, I’m retired and a boomer with a DBP (Thank F ). Principle Residence should be conditional tax free, but its been abused and like always we all have to pay the price because of the greedy opportunistic RE abusers and others.
Garth have you looked at CL at rent prices in the lower mainland especially those managed by Realtors for offshore owners? There’s Lots ! Outrageous rental prices with encouragement to bid higher. Been there and heard ” you don’t automatically get it (the rental property), its a completion”) My point being in the YVR area its very difficult to rent something decent especially if starting a family, if you dare!
You say, “…or a similar break on invested capital also offered to renters, nothing changes”. The FHSA seems close to this. Maybe if they loosened the definition of what you could buy with it, for example, renting should qualify.
#8 jim on 04.09.23 at 3:02 pm
Xxxxxxx
I did see one of the numbers or letters on the tires confirms what you said. It make the tires priceyer too. Best not to park in Elliot Lake spots.
#7 TurnerNation
No no no no no — Corvid is not over, here In my prefecture …
—-
That was good.
Italia back to normal. The odd person with a mask, usually with a cold and they don’t want to spread it. Me, I just stay home and weather it.
You would not know there had been a major pandemic in Italia a mere 2 years ago. Ranked #5 of all time based on deaths:
https://en.wikipedia.org/wiki/List_of_epidemics#:~:text=An%20epidemic%20is%20the%20rapid,weeks%20is%20considered%20an%20epidemic.
The Bug that could and did – good riddance.
——————-
Greetings to all 3 faiths being faithful.
Happy Big Electron Day to the rest.
“…Until the principal residence cap gains exemption is removed, or a similar break on invested capital also offered to renters, nothing changes….”
I vote for a similar break on invested capital. It’s about time the playing field is leveled.
Condos are financial suicide for every buyer at any age. No control over who rents units in buildings and cause water damage in the hundreds of thousands of dollars per incident – midnight moves popping sprinkler heads in hallways, over flowing sinks and bath tubs, barbecue fires on balconies and decks etc.
Owners get stuck with special assessments, levies, ever increasing strata fees, higher insurance costs and the list goes on. Go rent a basement suite or a rental unit instead. Take the difference to Garth and tell him to make some real money for you in the markets. Do the math – owning or renting means money disappearing every month – why not make a big chunk back monthly through investing?
Thanks Garth.
I guess if our kids settled in beautiful, bustling Nanaimo, we’d be comfortable building a smallish standalone house on the property that could then become our summer retirement residence when the time was right.
Maybe I’ll have an architect do up some renderings with breaching whales in the background…
And what is wrong with that?
We all have choices.
It’s a market which is heavily influenced by emotions manipulated by politics, be aware therefore, math rules do not apply.
All one needs to know is that when you buy into the hype, it cannot possibly end well.
Volumes have been written on the “madness of crowds” and manias- cheap to read.
I could buy, but I won’t.
Those who bought, choose to do so blinded by the fog of greed and fear, the results may take time to come in, but that won’t change the ultimate ending.
Feel sorry mostly for the curmudgeons, they should have known about fool’s gold.
TICK TOCK, TICK TOCK
#8 jim on 04.09.23 at 3:02 pm
“In short, governments are making this worse, not better.”
*******
Car parks could collapse under the weight of electric cars
=================================
COMMENT:
I posted a while back that the average EV battery weighs approx. 1,000 lbs. Hummer EV battery weighs about a ton.
Average ICE vehicle full tank of gas???
….. full tank weighs approx. 100 lbs.
I am tempted to laugh….but it’s fair to say that many of these parkades had engineering specs that never anticipate EV use, certainly not en masse.
Honest EV users admit charging stations are few and far between and are often out of service.
The Law of Unintended Consequences…dumbkopfs…
We might not have a housing crisis (although listings are about 60% of what they normally are), but we sure have a difficult rental market in most cities, not just Vancouver and Toronto. Vacancy rates < 1% cause hardship.
The elephant in the room isn't the capital gain exemption, it's short-term rentals. Airbnb is the worst thing that ever happened to renters and the poor.
I still shake my head when you say foreign buyers impact is minimal, having lived in neighbourhoods that there are still multiple empty homes owned by off shore buyers.
West Vancouver, North Vancouver, Gibsons BC, Victoria.
Houses still sitting empty, check out the British Property’s
some time.
How about the impact of money laundering?
Is that considered inconsequential?
Below is the 2019 results of the Real Estate Council of Alberta panel on money laundering.
https://www.reca.ca/consumers/financial-considerations/money-laundering-real-estate/
47 Billion Dollars- being considered a ‘conservative’ estimate for 2018 alone.
One billion = 1000 x 1 million.
So theoretically that could purchase 47 thousand 1 million dollar homes.
That’s almost 10% of all homes sold that year.
And the money that worked it’s way into businesses, think how much that screwed the honest small business owners…
https://www.theglobeandmail.com/real-estate/the-market/article-canadian-home-sales-in-2018-took-largest-tumble-since-financial-crisis/
Is that not a substantial amount of buying power capable of influencing property prices/ inventory?
And if the trend continued for another 5 years that equates to 235,000- 1 million dollar properties, ( low estimate ) acquired in Canada through money laundering.
All home buyers or want to be home owners have been effected by that influx of dirty money.
Two nuggets I will add to the mix…
One, Boomers ain’t moving out. We all know they were the largest generation of population growth but they live better, healthier lives for the most part (1970’s smoking aside) than the previous generation before them. Older folks used to move into retirement homes at a certain age, or they moved in with the kiddies into the “in-law suite”. Wrinklies are now happy to continue living in their own homes, and the kids have zero appetite to share their space with their old-fart parental units. Privacy ya know.
This means real estate doesn’t change hands until someone runs down the curtain, and joins the choir invisible. My mother in-law is 86 and happily living on her own quite well. She’s even said they will have to take her out of the building feet first.
Second, Mills and Gen Z have grown up with social media induced instant gratification, and the banks allowance for easy credit. They want it all and they want it now. It doesn’t matter if it’s a stupid-expensive pair of hand-made jeans using recycled organic hemp, or a postage stamp condo overlooking a dirty industrial river (aka New Westminster). Life is too short to wait.
I was talking with a man last week about a rental property that he changed from a single family unit to a duplex. He said he wished he never evicted the good tenant he originally had in the home, because he’s having trouble finding decent tenants that can afford the higher rent he believes he’s entitled too.
He said he knows other people who are in the same situation as him.
re: Another dismal tactic: busting up the hoods. Soon in all of BC local zoning rules will be kaput.
Bill 23 undermines home ownership for FTH even further as more and more of the already few remaining affordable single family detached dwellings c. 1950 to c.1970 are converted into duplexes and triplexes, sure you can convert one back but you will pay around 200K more than you should for a so called “income property”
Garth, Cdns see their Net Worth (wealth) tied to their Real Estate.
It’s very hard to argue against the numbers that follow.
StatCan shows the Owner/Renter wealth divide, end of Q4 2022, Dollars (x 1,000,000) – ALL Cdn households:
Characteristics
Owner with mortgage …………. 5,247,635
Owner without mortgage …….. 8,670,858
Renter ………………………………. 1,401,933
Though, in 2022 Owners took a big hit in lost wealth, most of it RE:
Characteristics ………………………. $ Chg, % Chg
Owner with mortgage …………. -542,519, -9.4%
Owner without mortgage …….. -422,346, -4.6%
Renter ………………………………… -42,476, -2.9%
Renters hold most of their wealth, 56%, in Other Financial Assets like bank deposit accounts, Mr. Market investments, etc. With their low wealth number it seems to me they are not making their saved Rent money vs. Owning work for them as in Mr. Market investing.
If they were, their Wealth number should be much higher, at least on par with Owners without a mortgage.
It will take a near miracle Garth to get Cdns to eschew RE as a retirement investment when you look at the above numbers.
Still, Renting is a carefree & less costly lifestyle though not lucrative in the long run.
“In short, governments are making this worse, not better.”
There are very few examples where government ever make anything better. Once the government sinks their tentacles into anything it almost always makes it worse.
If the government were in charge of the sand in the sahara desert there would soon be a shortage of sand.
It is a disaster. Look to your government for some true dough, not the kind that inflates away, or maybe some free land on which to build your tiny home.
“I never met a rich renter…”)
—————————————————————–
Yes, that was special, in a buffoonish, dunce in the corner kinda way. Me renter, top 2%
Own, dont own, but make sure emotion isn’t the guiding principle. 800k mortgage is a yuuge financial monkey on your back. In your investment account? Freedom. Current YVR/TO valuations, makes 0 economic sense.
Politicians, “Leadership” means continue to kick the can down the road, they know RE valuations are a ticking time bomb but…. bad news is BAD. Contrary to what emits from their pieholes, they dont care about you.
Not everyone appreciates freedom or has matured to accept the responsibilities that accompany freedom.
Freedom to move, freedom to choose, freedom to create your own circumstances.
Freedom isn’t free.
People want government subsidies, and government solutions. It’s free, and the individual has no responsibility. They are victims of circumstances instead of creating their own life. Free and easy.
Yes, the numbers clearly favour renting over buying, everything else being equal. But not everything else is equal.
I would argue that what most people want is predictability, and buying brings more predictability than renting, even if it costs more.
Renting now is very unpredictable. Renters who have enjoyed low rents for years are losing them because the market just does not allow a landlord to keep the rent low, even when they want to.
Renters can be evicted at any time to make room for new tenants at way higher rates, unless they are willing to pay the difference, which most of the time they just cannot afford to do.
The trick is buy what you can afford and adjust your expectations and be patient.
This: “Renters can be evicted at any time to make room for new tenants at way higher rates, unless they are willing to pay the difference,” shows you have no idea what you’re talking about. – Garth
#23 Shamus on 04.09.23 at 3:47 pm
I was talking with a man last week about a rental property that he changed from a single family unit to a duplex. He said he wished he never evicted the good tenant he originally had in the home, because he’s having trouble finding decent tenants that can afford the higher rent he believes he’s entitled too.
He said he knows other people who are in the same situation as him.
===========================
COMMENT:
I think there is this mythos re: the ” saintly” tenant.
Our SFH had a 2 BR suite which we rented out..and we never charged full market rent.
The first batch of tenants were very good…but our last (2) were disasters. aka “lets screw the landlord” types. I am owed several hundred $$$ in back rent.
Tenants should keep in mind that if they screw a landlord..and this leaves a bad taste…that’s one LESS rental unit available.
We(wife and I) may look at living in the suite and renting out the rest of the house. We live right across the street from a High School, which I assume takes in Foreign Students, which may be our best options as tenants.
My advice to landlords is charge market rent and weed out the shysters. Too many parties got emboldened by Govt’s with “Don’t Pay Rent” during CoVid.
Regardless….Balance Landlording with business and fairness.
Love today’s picture , one of the best ever on TGF blog. Happy Easter to everyone.
“And yet we disparage renters. The comment section ridicules them (“I never met a rich renter…”). We refuse at accept that being a tenant – with the freedom to move to pursue a job or a love, plus enhanced cash flow and freedom from debt – is a totally valid lifestyle and financial option. ”
+++++
Ahhh .
Confirmation.
The $8000 FHSA tax break is just the icing on the cake….
I think I’ll invest it all in a GIC….. so that my earnings are “subtle”.
:)
Once again this blog floats the idea of abolishing the cap gains tax on primary residences. Our scribe surely knows this is about as politically viable as outlawing gravity so why bring it up? Well, I’m not a psychologist so I’ll let others muse on the motivation. However I think a constructive solution does exist. Let’s go the other direction and abolish cap gains on ALL asset classes. This will greatly encourage “investing” in asset classes other than RE. Money flows away from RE thus lowering prices. Companies gain access to capital to grow their businesses. Everybody wins. What say you?
P.S. Happy Easter.
5 banks have the country and the politicians by the testicles. And financialized the path to Anne of Green Gables.
Zoning sucks! Zoning contributes to crazy commutes, expensive (to build and maintain) infrastructure, and to dependence on cars and complex (and hardly existent) public transportation requirements.
The secondary suites coming to BC also suck – for a SFH doesn’t want to have to choose between having a bunch of tenants himself (or selected by his neighbors), or increased property taxes (because clearly homes with secondary suites will be taxed much higher, as will all SFHs).
As for eliminating the principal residence exemption – silly idea. That would make Canada even less interesting – no civilized country imposes tax on the proceeds of one’s own residence dwelling.
Getting your money back on an ACB tax-free basis is fine. Profits would be taxed as all other profits are, with 50% tax-free and the other half added to income in the year of sale. Seems reasonable. – Garth
Thank you Garth for speaking badly needed and sobering truth of the situation our country is right now. Also so very true that we need leaders since nothing else will fix this.
Personally and naively I was expecting T2 to do what was needed back in the days he was just elected. Situation was not nearly as bad as it is now and if it was done back then 2015 by now we would recover and have much better situation with finances of people and our country. In some of the past blog entries I have mentioned this in comments section…..
I know that there are statistics point to the fact property owners have much higher wealth then renters alas all or much of that is just in the paper wealth category and it can all go away in the cinch taking the country finances down and most of us with it. Although it is untenable situation, this is the last thing anyone should or would want to happen. My family is renting home and i can report that dating scene for youngsters(I have a son and a daughter in final year of high school) is already polluted with the pecking order of who’s parents own the home and who is renting. My wife and I made sure our kids are polite and kind and traveled the world (in order to appreciate our country more) but it is becoming increasingly difficult to explain what is going on in our society. They are great students in the STEM field and we are hoping for them to attend the university here but unless things change by the time they graduate I can not confidently say that they should stay here. They will be look at as the second grade citizens unless they end up buying the property and as previously mentioned we are renting we are happy with our choice and as Garth very eloquently stated in this post it would be quite ridiculous to by condo(and how do you buy SF without selling your soul to the devil).
Can you imagine becoming the next PM and having to deal with this mess…..
In addition to my earlier comment #30 I would like to point out that abolishing capital gains taxes has the advantage of actually being politically viable. Yes, socialist heads will explode but most people vote with their wallets and given that we didn’t even have a capital gains tax until 1972 (thanks for nothing Carter commission) it’s not that revolutionary an idea. If abolishing outright wont fly there is still the option of reducing the inclusion rate to help rebalance the investment landscape which can be done with one line on a budget. For those who lament lost tax revenue it is worth considering the augmented business revenue from the increased economic activity this could produce. As this blog often points out RE is locked up money and does not enhance economic activity. In keeping with the season, Pharaoh let my money go.
Dont know any wealthy renters? How about the author of this blog
As for eliminating the principal residence exemption – silly idea. That would make Canada even less interesting – no civilized country imposes tax on the proceeds of one’s own residence dwelling.
///////
Gee whiz! And here I have just completed several tax returns for USA clients who had to pay capital gains tax on the sale of their own principal residence. Do you think the USA is not a civilized country?
Christopher Mewhort
519-525-9277
I have read in the Comments about how the Baby boom is hogging all the Real Estate and it’s all their fault.
That is simply WRONG.
GenX doing an admirable job of hogging Cdn RE, in fact, better than the Baby boom.
StatCan, end of Q4 2022, Dollars (x 1,000,000), REAL ESTATE:
Pre-1946 ………………….. 315,334
Baby boom …………….. 2,285,178
Generation X ………….. 3,381,495
Millennials ……………… 1,947,115
Dear, sweet, innocent, few of them population wise, GenX holds +48% more in RE relative to the Boomers.
FORTY-EIGHT PERCENT MORE.
Blame GENERATION X for hogging the RE in Canada. Even when you net out Mortgages, GenX still holds more:
Pre-1946 ………………….. 312,145
Baby boom …………….. 2,079,886
Generation X ………….. 2,370,809
Millennials ……………… 1,073,190
So, STOP bashing the Baby boom as the EVIL DOERS of Cdn RE, bash GENERATION X instead, better, bash them MORE.
https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3610066001
Good post today Garth. Its a fairness issue.
As a boomer property owner in YYZ I am sitting on a $1.8 million tax-free gain on my principal residence. This seems very understandably very unfair to a millennial. All this is creating a very classist society – one with RE and one without. I Suggest a Way forward is to freeze the principal residence tax-free gains and then tax any subsequent gains going forward. This will break the obsession with RE while also appeasing the propertied class and getting to some measure of intergenerational justice.
“All we lack are leaders.”
Trudeau?
Singh?
Polievre?
Yeah, you got that right. Sigh.
GT, you wrote this the other day.
– “Remember, giving people money to retire on (who have not looked after their own finances adequately) becomes a right politicians can’t revoke. Just look at what is happening now on the streets of France.”
Let’s do a little social experiment. What would the populace say if the TaxMan found $21B in additional revenue by taxing the top 50 corps (such as Brookfield) and the top 1000 highest didvidend earners who make up the 0.5% of the richest people in our nation?
I can almost see that expression one makes when your facial muscles tense up and the skin on your forehead as well as your ear lobs pull back.
The horror one might think to actually tax people who don’t actually declare a salary to pay taxes like the common schlepp, but instead have special rules for their didvidend paying companies who shelter their revenues in tax-havens Brookfield Infrastructure Partners – Bermuda, Panama, US Virgin Islands, etc…
You see when such companies as Brookfield ‘LPs’ earn $Billions funded by Canadian Tax payers for govt projects and then run along scheming to hide these revenues and give NOTHING back to the wellfare of society but instead pocket everything so they can afford mansions, private jets, yachts and every other luxuries they feel entitled to, you seem to think there is absolutely nothing wrong with that?
Then you better be prepared to leave this place with your amassed wealth as the France situation is quickly approaching.
#42 baloney Sandwitch on 04.09.23 at 5:13 pm
The justice of more misery for all. Not much justice in that. Abolish cap gains now. That’s justice for all.
Garth, apart from lifestyle and I read you on Renting being cheaper than Owning
BUT
per my #25 Dolce Vita StatCan wealth data, the Renters are not doing as one would expect … accumulating wealth.
Seems to me Cdns, as Owners, need to be muzzled into regular monthly mortgage payments to accumulate wealth.
Because the Renters aren’t doing it that’s FOR SURE.
My guess is the Renters are spending the saved money vs. Owning instead of investing it.
On what?
Lord knows.
——————
I conclude Cdns need
DISCIPLINE IMPOSED UPON THEM
to accumulate wealth and RE does that for them.
The numbers do not lie.
People do.
The Real Reason Americans Aren’t Returning To Work
https://www.youtube.com/watch?v=NtEuAWBLfOE
===============================
COMMENT:
Intriguing insight…..
Basic gist is the younger crowd are far more aware of what the future holds. …..such as how their employers
take advantage of them via “Charge Out ” scale.
Recommend reading the comments.
20 Leftover on 04.09.23 at 3:36 pm
We might not have a housing crisis (although listings are about 60% of what they normally are), but we sure have a difficult rental market in most cities, not just Vancouver and Toronto. Vacancy rates < 1% cause hardship.
The elephant in the room isn't the capital gain exemption, it's short-term rentals. Airbnb is the worst thing that ever happened to renters and the poor.
Finally! Someone with a bit of sense on this blog.
I would suspect that the reason that this elephant in the room is not being mentioned is because many of our elected representatives are themselves profiting by having a a number of rental units, many of which might be rented out on a short term basis. It would be interesting to know how many elected politicians are landlords of multiple units. Smacks of conflicts of interest to to me and could be a serious problem if there are a lot of them.
It's pretty clear cut that high house prices are a result of the excess profits to be earned by renting by the night or renting to the thousands of foreign students who don't mind living in crowded quarters.
There are consequences to higher education institutions relying on the tuitions of offshore students and the exorbitant loans that Canadian students must carry. Personally, I think that both are big mistakes for which society is now paying the price.
The elephant in the room is ….”no matter how much you give in incentives and freebies, it will never be enough”
Sure, penalize the ones who have worked for decades so that you can make the whiners happy. If you want to start taking the cap off principal residence cap gains exemption then start with the whining generations.
You gotta start somewhere and heck, they’re gonna get the money from the bank of Dad and Mom eventually. Then in a few more decades they will have what they wished for, less money and no taxpayers to support all these “incentives”. Oh and more generations chasing their sorry butts because they have too much…..the never ending cycle of greed IMHO
#40 Christopher Mewhort, EA
As for eliminating the principal residence exemption – silly idea. That would make Canada even less interesting – no civilized country imposes tax on the proceeds of one’s own residence dwelling.
///////
Gee whiz! And here I have just completed several tax returns for USA clients who had to pay capital gains tax on the sale of their own principal residence. Do you think the USA is not a civilized country?
Christopher Mewhort
519-525-9277
Dear Christopher,
On whether the US is a civilized country – no comment.
Regarding CG tax on the sale of the primary residence – you do realize that in the US the interest on the mortgage is tax-deductible, right? Do you think that in Canada it is as well?
PS #41 Dolce Vita to all you WHINY MILLENNIALS
about the EVIL Baby boom hogging RE.
Well there turkeys, your RE wealth just
14.8%
less relative to the Baby boom and they are a DAMN SIGHT MORE OLDER than you are so that number should be much, much larger but alas it is NOT.
So that makes you there Millennials, near RE hogish as the Baby boom.
Let that sink in.
So quit whining about the Baby boom as RE hogs, biatch at GenX instead. They are the heavy weight hogs of Canada when it come to RE.
The numbers do not lie. People do.
Can’t do away with the capital gains treatment unless deductions normally associated with a business are allowed, including maintenance, property taxes, and mortgage interest. This isn’t where the problem lies. And anyway once the real estate bubble ends it is a non-issue if inflation adjustment is allowed, which it should be. Otherwise you are just taxing inflation. Which they do, sure as Tuesday, but it isn’t right.
Sooner or later them boomers who are “hogging” all the housing will die. The houses don’t die with them. It could be the bubble is just a matter of changes in life expectancy. Birth rates and immigration figure in for sure, but a stable population shouldn’t have a housing shortage, or at least not for long. Unless, of course, there is something seriously wrong with money, which there is.
In any case, why are people still moving to the cities? It’s bad long term planning the way things are going. They are becoming hellholes of drugs and crime. Living 10 stories above the melee won’t help. You got to come down for groceries eventually, assuming the grocery store hasn’t closed down due to looting. And the trend for the amount of time people are required to spend in the office is on a certain downward trend. WFH is one factor, but AI (such as it is) will also play into it, as well as the energy intensity of moving all these people around for no good reason. There will always be people in the office, but it is no longer a “growth” industry. Peak office is in the rearview mirror.
AI at this point is not much more than an extrapolation of the automation of white collar jobs that has been going on for a long time, but it will continue.
Programmers have been automating accountants and secretaries out of a job for a long time. But the programmers themselves are in the crosshairs now.
And then there is energy. Can you imagine working on the 34th floor in a situation where the elevators only work when it is windy? Worse if you live there as well. Worse yet if you have to rely on a vehicle or public transportation to get from one high rise to the next. It’s not going to work.
If a walkable 15 minute city running on solar and wind is the future, nothing above 6 stories has a future. Get away from the high rises.
Nope. Operational costs have nothing to do with a property’s adjusted cost base, upon which gains would be measured. – Garth
Here’s how it works to the South
https://www.irs.gov/taxtopics/tc701
I could see something similar working here. Or a tax
reduction if another home is purchased in a set timeline.
What I would not want to see is a huge tax bite on the wrinklies (like me) when they want to downsize. That
could actually backfire as far as affordability goes.
You know Garth, I’m still trying to reconcile the Owner vs. Renter Wealth gap:
Characteristics
Owner with mortgage …………. 5,247,635
Owner without mortgage …….. 8,670,858
Renter …………….…………………. 1,401,933
It’s a total number thus NOT per capita so assume 70% Own (the number most bandied about nowadays) and the rest Rent.
The ratio becomes:
= 70/30 = 2.33 times as many Owners as Renters, repetend 3 on the 2.33.
So if I bump up the Renter wealth to reflect an equal number of people Renting as Owning, Renter wealth becomes:
= 1,401,933 x 2.33 = 3,271,177
That is still $2 TRILLION less than Owners with a mortgage.
WTF?
My guess is that Renters are in Lower Income Quintiles and/or spend rather than invest the surplus cash vs. paying for a mortgage.
Puzzling to say the least. My best shot at explaining the wealth divide.
Getting your money back on an ACB tax-free basis is fine. Profits would be taxed as all other profits are, with 50% tax-free and the other half added to income in the year of sale. Seems reasonable. – Garth
////////////////
Seems ridiculous.
Tax half the gains in the year of sale. Crazy idea with no thought behind it. No one would ever move as it would be too expensive.
Troll much Garth?
Why should residential real estate provide the only tax-free capital gains, and when it is essentially an unproductive asset? – Garth
This new law in British Columbia allowing for multi units on present single dwelling lots is not a product of the lefties. I am a lefty and disagree with it as do all of my lefty friends.
It is just stupid. Not left or right, just plain stupid.
The problem of course is that there is no cure for stupid!
It’s an NDP initiative. Lefties. – Garth
Those who oppose the house capital gain tax on the sale of real estate are just stupid and greedy idiots.
Let’s take a quick look at the situation.
How did the house price get higher?
As a result of the owner’s labor? No!
As a result of actions and omissions of the state-that’s the right answer!
Firstly, as a result of the government’s ACTION, which kept rates at a critically low level.
Secondly , as a result of the INACTION of the state, which did nothing to prevent an unmotivated increase in real estate prices and the creation of a bubble in the RE.
So you actually entered into a partnership with the state, which helped to increase your capital. This means that without the state, it would be impossible to increase your wealth and state can be considered as your legitimate and equivalent business partner.
On the one hand, this is yours efforts -you have invested your capital (in full or persuaded the bank to give you money).
On the other hand, it is a state that has “worked hard” to increase it.
This means that the state, as your equivalent business partner, has a legal right to a share of your profit when you selling the RE. I think it’s fair-it’s 50-50 (I’m in a good mood today and it’s Easter today!).
Otherwise, if you don’t agree, they will come for you. In the world of crime, it’s the mafia. In the world of law, this is the tax system.
Do you think that my logic is not logical? Then, if you’re from Toronto, go to North York (it’s a Jewish neighborhood), stop any Jew on the street (two or three are better – that’s enough) and tell them my point of view. You will see that they will completely agree with me, except for one point. The fair distribution of profit should be 70 (state) – 30 (property owner). You can guess why.
#36 Zoning sucks! on 04.09.23 at 4:50 pm
As for eliminating the principal residence exemption – silly idea. That would make Canada even less interesting – no civilized country imposes tax on the proceeds of one’s own residence dwelling.
^^^^^^^^^^
Not true. For example, USA – which according to many is “civilized” – taxes captial gains of principle residences.
I’ve said it many times, it’s not the Boomers who set the prices, it’s the buyers. In other words, the Mils and every Gen after that. The seller (Boomers) wouldn’t be getting these prices if there were no one willing to pay. You can’t blame the person selling the Tulip Bulb, blame the fool willing to pay the price.
#40 Christopher Mewhort, EA on 04.09.23 at 5:07 pm
Gee whiz! And here I have just completed several tax returns for USA clients who had to pay capital gains tax on the sale of their own principal residence. Do you think the USA is not a civilized country?
__________
Given that they can deduct interest expense on the mortage of the home it’s not apples and oranges.
#43 Kurt
“All we lack are leaders.”
———
I disagree.
And you to Garth, you know I love you, but here we part company and the following is why.
Look it, RE at the end of Q4 2022 in Canada was, Dollars (x 1,000,000):
7,929,122
$8 TRILLION.
In Q1 2022 RE was:
8,773,542
GDP in Dec 2022 was:
2,068,605
$2 TRILLION
Gov Canada spending in 2022 was:
467,362
$Half a TRILLION
—————–
So you tell me how every LAST CENT OF GOV CANADA PROGRAM SPENDING can influence the RE Juggernaut of Canada, you know, 4X the amount of 2022 GDP?
The simple answer is:
It Can’t.
No Leader can influence the Cdn behemoth called RE. Not in this time continuum, universe anyways.
Maybe BoC can with 20% rates but that will only slow down the juggernaut, not diminish it.
It will take a complete rewiring of how Cdns figure the best and safest way is to accumulate wealth.
Bon chance with that, incl. the Upper Deity of your Choice or Not (Big Electron).
When Singh, Trudeau or Poilievre can walk on water, change that water into wine, raise the dead, etc., not going to happen until then.
Folly to think they can.
RE: #19 Alois on 04.09.23 at 3:34 pm
I posted a while back that the average EV battery weighs approx. 1,000 lbs. Hummer EV battery weighs about a ton.
Average ICE vehicle full tank of gas???
….. full tank weighs approx. 100 lbs.
=======================================
What a ridiculous comparison! Compare the ICE vs EV curb weight or gvwr instead of just the fuel source.
Oh, and what happened to the “right” wing argument that heavier vehicles like F150s and SUVs are safer than lighter ones?
I rented happily in downtown Montreal for 10 years. I liked the mobility and lack of financial commitment, as well as the stable, affordable payment. If I wanted to fly to Dublin for the weekend, no worries. A week or two in Peru, Australia or, Thailand? Take the bike or convertible into the US? No problem – lock the front door and go. At the same time, I was able to sock away low six figure savings while studying part time, despite a fairly mediocre salary. I have no regrets about that part of my life.
It was only once I was coupled up and looking for a larger place that we started looking at buying a house. 2 bedroom apartments were renting for $1500+, even outside the downtown core. House rentals in the suburbs were thin on the ground and easily $2,000+ and have climbed considerably since. At that point buying a house with a 20% down payment and a $1,200 mortgage started looking more attractive, but ultimately it was a lifestyle decision: lots of living space, a double garage to play with my cars, a little swimming pool, and a nice sized yard to call our own.
It almost pains me to say it, but it’s been a good financial decision. The house has appreciated about $30k per year since we’ve lived here, which has done a lot to offset property taxes, utilities, maintenance costs and the opportunity cost of our down payment.
I haven’t even gotten into the paid-off house my parents own (among more liquid assets), which they plan on leaving to my siblings and me – wealth which will in turn trickle on down to our respective offspring.
I don’t think this country’s housing policies are in the best interest of generational fairness, but I also don’t think they’re going to change appreciably. Real estate is religion in Canada and any politician who even tries to mess with it is going to commit political suicide. No matter what lip service is occasionally paid, they’re bending over backwards to keep this gas bag inflated.
Sure, rent if you want, but never ever again in a million years will I be a landlord. It’s like managing psycho chimpanzees. I grew up maintaining my parents’ rentals then rented out our Van house for a few years.
Broken everything, garbage, hoarders, renter ‘repairs’, all lightbulbs and consumables removed because they bought them, extra nonworking appliances left behind, owner equipment sold, the secret unhousetrained dog, for a few… And even better when they refuse to pay.
RE: #56 Grateful in Victoria on 04.09.23 at 6:09 pm
This new law in British Columbia allowing for multi units on present single dwelling lots is not a product of the lefties. I am a lefty and disagree with it as do all of my lefty friends.
It is just stupid. Not left or right, just plain stupid.
The problem of course is that there is no cure for stupid!
It’s an NDP initiative. Lefties. – Garth
=======================================
As a long time BC NDP supporter, I will no longer vote for them. No party in BC appeals to me any more. So unless a decent independent comes around, I won’t even bother voting in the next election. The choices all suck that bad.
#60 Love_The_Cottage on 04.09.23 at 6:21 pm
#40 Christopher Mewhort, EA on 04.09.23 at 5:07 pm
Gee whiz! And here I have just completed several tax returns for USA clients who had to pay capital gains tax on the sale of their own principal residence. Do you think the USA is not a civilized country?
__________
Given that they can deduct interest expense on the mortage of the home it’s not apples and oranges.
^^^^^^^^^^
Point is that there is capital gains tax on principle residences in USA. How is “apples and oranges” relevant?
Our family of 3 has a net worth of > $1,050,000 and we still rent.
Not sure how long I can hold on though… wifey is getting antsy for a townhouse.
If only the Smoking Man were still here, to lend his sage advice…
He’d say drop everything, pus some Cash on the buds, liquidate the portfolio and head direct to Casino Niagara, and see what happens….
Garth is conveniently generalizing. Rent>Own.
But what is left unsaid is that Garth isn’t competing with the masses when looking for shelter. His competitors are others with means. Which is a low percentage of the general population (Garth classifies himself as a 1%er, thus the others competing for the same rental properties are probably similar). This makes all the difference.
Additional to that is that in Garth’s case, it’s likely that part of the rent will be offset by various tax deductions (self-employed WFH etc. perhaps), which again isn’t available to the working stiffs.
Last but not least, “the rich” aren’t choosing between a rental unit and the “under a bridge” option. They generally have a fallback option (perhaps the beach house, or the cottage in the Maritimes?), thus the whole “finding a rental exercise” is more relaxed and can be quite fun.
There is no solution without massive 90%+ price roll backs and pay increases. There is no wiggle room on this matter. Real estate is a place to live and not a GD investment. Any other way and you have financial crimes against humanity.
#61 Dolce Vita on 04.09.23 at 6:23 pm
Crazy Talk
You don’t need 20% at the current level of indebtedness.
All you need is to remain close to the existing rate of 4.75% for just a few more months.
Governments can pile on the debt, existing debtors can extend the amortization, but new entrants to the ponzi scheme, critical to keeping the bubble afloat, will dry up.
The latest blip will only accelerate the trip to the cliff.
TICK TOCK, TICK TOCK
Why should residential real estate provide the only tax-free capital gains, and when it is essentially an unproductive asset? – Garth
/////////////
Because it’s 2023.
Trolling’s fun!
the incentives that exist and for a reason in the sytem is to encourage economic activity. renters dont build anything, they just consume, and as such paying 13% sales tax is a discouragement to consume.
people who invest and spend money , big money on a home spin the economic wheel and add gdp growth to the system, hence the benefits that they offer for that.
Now having established that Leaders have little to no leverage at influencing Cdn RE there is always this approach:
UNBENEVOLENT DESPOT FOR A DAY (or TWO, maybe THREE)
1. Gov Canada registers the purchase price of a home and when the Owners reach 65 yrs of age, the increase in $ value becomes 100% taxable as wage income and taxes must be paid that year.
2. Mortgages are done away with, homes may be only purchased with Owner cash in the bank and NOT transferred from others. No CDIC necessary. [email protected] will be watching your deposit account and that of others like a hawk.
3. Mr. Market investments are 100% deductible, matched $ for $ by Gov Canada. Mr. Market losses are 100% deductible. There will be $0 in Capital Gains and $0 in Dividend taxes.
4. There will be no loans against the value of a home, thus no HELOCs or other forms of loans where the pledge is the home value.
5. Any home inheritance will be taxed at 100% as wage income.
6. Pretty sure Steerage can come up with some equal if not be better ideas.
——————-
Before the Canadian Bastille Overthrow Gov Day to come, the collapse of the Cdn Financial System, that is my best shot at rewiring how Cdns see the safest way to accumulate wealth = NOT RE.
Now THAT is Leadership.
Fascism. Or the Commie approach where Gov gives you a home, they own it and you can’t buy one.
what a mess
https://moneyweek.com/investments/property/605113/the-curious-case-of-struggling-german-property-group-adler
Airbnb
some hosts with lots of units are going off the platform and going direct
The Airbnbust is upon us’
lol…”stay at a hotel with 24/7 staff, transparent pricing, and standard amenities or I can pay 30 per cent more and pray that ‘Superhost Jerry’ isn’t a toilet-cam guy and spend the last six hours of my trip doing chores in his condo.”
hidden cameras, surcharge fees, among others
https://www.independent.co.uk/life-style/airbnb-booking-decrease-hosts-compain-b2208582.html
Hundreds of hosts booted from Airbnb after Toronto city audit, some for minor clerical errors
Review designed to prevent illegal ‘ghost hotels,’ bolster Toronto’s rental market, city says
Shawn Jeffords · CBC News · Posted: Mar 15, 2023 4:00 AM EDT | Last Updated: March 15
ln December, the city warned Airbnb users that it would be auditing their registrations to ensure they matched the names and addresses exactly
Before we had our system, there were 16,000 apartments [on Airbnb],” she said. “Now we’re down to 4,000. So, 12,000 have shifted somewhere. My big concern is where are those? And how are they getting around the city’s rules?””We’ve seen duplicate permit numbers pop up, people have put in arbitrary numbers,” he said. “And people have tried to circumvent the city’s regulations.”
https://www.cbc.ca/news/canada/toronto/airbnb-audit-delisted-1.6777187
8 Jim: Not to worry about the heavier electric cars being too heavy for parking garages. Why? Parking garages will become obsolete. Fully autonomous robo taxis will provide transportation as a service. It will be uneconomical to own your own EV when ride hailing is cheaper than owning. The total number of vehicles used in the global fleet will go down, even if total number of people miles travelled goes up.People not owning a car means no reason for parking. This provides an opportunity for repurposing of the real estate dedicated to car parking ( shopping malls, parking structures etc ). This space could be used to provide extra pedestrian friendly accommodations ( Condos, SFRs etc) in prime central city serviced areas. Just some thoughts .
WTF
Politicians, “Leadership” means continue to kick the can down the road, they know RE valuations are a ticking time bomb but…. bad news is BAD. Contrary to what emits from their pieholes, they dont care about you.
Why would politicians care for you? They are in the business of being hanging on to their jobs and will only care about you comes election time. Then come all the futile promises, which are mostly worthless, forgotten after being re-elected. So you better care for yourself and your loved ones, the political leadership is too busy with leading and will by default forget about their promises…until the next elections.
It’s exactly that thinking outside of the box that will save the country from debt disaster. Brilliant post.
It’s really very simple, provide the incentive and the results are entirely predictable.
I’m assuming this is some form of a renter’s tax rebate on private investment without the obligation to buy real estate? Please clarify exactly how that would work?
So that gets young people to invest capital in (Canadian, right) corporates that expand with it which increases job growth and tax revenue, or simply GDP?
Essentially diverting capital from the overpriced housing market to investments much more beneficial to the young people and the country and saving them from becoming debt slaves. A viable alternative to building wealth through real estate. Brilliant.
Extending low or no tax on earned dividend and interest income to seniors for dropping the OAS and then collecting the tax through inheritance after life ends is another one. Imagine, a class of seniors that actively contribute to the economy beyond essential purchasing.
Same effect on corporate growth and tax revenue but added benefit of lowering cost obligations.
Of course, a lifelong capital gain limit in exchange for all real estate capital gains being taxed.
I’m going to a local Conservative party fundraiser for my MP soon. The last one I missed because of work obligations featured the finance critic.
I will be making a sizeable donation and asking my MP if I could have five minutes with the finance critic. I’ll be talking to him about exactly these kinds of strategies and ensure he is aware of this blog.
Never say die.
Canary in the mine re: abolishing SFH
==========================
Richmond under Construction: Rapid densification in Spires Road area
1960s homes on large lots in the area are selling for more than $2 million.
https://www.richmond-news.com/local-news/richmond-under-construction-rapid-densification-in-spires-road-area-6755279
===============================
COMMENT:
Very familiar with this Spires Rd. neighbourhood.
One of Richmond BC’s very first SFH subdivisions.
In early 1960’s…they carved off back portions of deep properties and created approx. 100 smaller lots in an Oval shape configuration.
They had ditches and wide boulevards and everyone was on septic tanks. No sidewalks.
Spires area is within 1/2 mile of Richmond City Center.
Within a year or two..in mid 1960’s…. the septic fields failed as they leached into ditches..which forced the Spires property owners to collectively fund a sanitary sewer system.
Rest or Richmond was large farming parcels( quarter sections/134 acres)) that developers bought, rezoned and sold….a lot of it under CMHC.
City Of Richmond later rezoned the Spires area to higher density ….and now SHTF.
Minimum assembly for higher density is (3) lots.
Construction workers are parking on the boulevards and chewing up the grass…but the city states property owners are responsible for maintenance. Its a bloody gong show now.
The City had to go in a while back and upgrade the infrastructure….took months…there are only (2) roads in and out…but this created more stress for Spires Rd. owners.
Many of the Spires property owners still live there…so now its a frikking war zone with development and noise.
I am simply mentioning this as a 1st hand warning/ “cautionary tale” should Gov’ts mount an attack on SFH. This pattern will be repeated throughout BC and Canada.
I am looking at documenting this with a video.
I call it blockbusting.
IT WILL GET VERRY… VERRRYY …UGLY as this spreads.
Yes…many will gain big $$$ for selling… but that was not their intent when they bought a SFH and yet are subtely forced out via noises and higher property taxes. etc.
Is this the “Canada” you want ?
Best closing statement you’ve ever written Garth!
Depressingly accurate post today of where we are in much of Canada for the next generation. Little hope to purchase something decent and raise a family in our major cities even on 300K per year joint income, as the marginal taxes are very high, and rents are increasing rapidly. It would take years to amass a large downpayment without family support or inheritance etc.,
to try to reach an ever changing goalpost. Somehow I feel that we have lost our way in much of Canada….
My comment, was it too shocking for you Garth?
Government orders people to do things they don’t like all the time. Like pay taxes and to put up with people they don’t like. Mandatory price reductions is no different.
‘then real estate demand will fall’. So the idea is demand will fall & so will prices by ending the capital gains exemption on primary residences when sold. What to expect: a total shriek of outrage from all those who mortgaged their future to purchase said RE. The whole point was bragging rights as that much desired RE continued to rise in value & of course, those juicy, untaxed gains upon selling said RE. You are talking about taking away the winning lottery ticket. Do not see this winning the hearts & minds of those young would be home owners. Do not see those Boomer owners whose entire retirement strategy is based on being able to realize those gains to live on in retirement being on board with that plan either. Of course, it is possible that many voters would not understand the financial implications of ending the exemption – many would likely focus on the possible lower RE price result – but is it not also possible that lower prices will see more purchasers entering the market, thus keeping prices elevated?
I didn’t detect my first comment until after my second comment. Still a 90% + price roll back would strike people with a stake in the real estate market as shocking.
Which is worse from your point of view? A 90%+ roll back on RE prices or adding a zero to wage rates to improve peoples ability to buy a home and live at the same time? Not an easy issue to resolve for some.
The comment section ridicules them (“I never met a rich renter…”).
I saw this comment two days ago lol. And I was wondering… How much wealth should a family have to be considered rich? Is it slightly over 1M? Or is this kind of “meh” these days?
The thing I can’t figure out is this: if nobody can afford starter houses then who is buying them? The unaffordability crisis never seems to lead to houses not being bought.
#70 Quintilian
BS walks and $8 TRILLION end of 2022 talks.
Value of RE in 2010, Dollars (x 1,000,000):
3,448,339
about $3.5 Trillion or 43.5% of what it was at the end of 2022.
A compound annual growth rate of:
7.2% *
And that after the considerable headwinds of the:
1. GFC and
2. Covid.
Shows your admonitions do not hold water vs. the great Cdn Juggernaut of RE.
Wishful thinking and no more on your part. Even with BoC rates of about 14% in 1992, RE recovered within 10 yrs (Toronto late 80s to late 90s).
Garth is correct that -30% was the bottom earlier this year.
———————
* S&P 500 Index Average Closing Price 2010-2022 compound annual growth rate = +10.3%
Debtors prisons are back! Yes our Rulers will house us, first the poor in literal garden sheds/shacks.
Next up those homeowners unable to afford payments?
(These appear suspiciously like those China forced “quarrantine” camp huts)
https://kitchener.ctvnews.ca/tiny-homes-arrive-at-hybrid-shelter-move-in-target-date-pushed-back-1.6342296
Tiny homes arrive at hybrid shelter, move-in target date pushed back
The hybrid shelter will be managed by the Working Centre, and each person will have their own small cabin, equipped with electricity, heating and air conditioning.
—- Climate Science has changed. No longer will melting ice caps cause waterfront properties underwater (previously here I’d offered to buy said properties for 10 cents on the dollar — before it is too late. Swell guy).
No now melting ice will have another but different DISATEROUS effect!!! zomg.
https://www.theweathernetwork.com/en/news/climate/impacts/rising-antarctic-ice-melt-will-dramatically-slow-global-ocean-flows
SINGAPORE (Reuters) – Rapidly melting Antarctic ice is dramatically slowing down the flow of water through the world’s oceans, and could have a disastrous impact on global climate, the marine food chain and even the stability of ice shelves, new research has
If owners get a cap gains tax break when selling, renters should be given some kind of tax break too.
I would be happy if they made all the rent i pay, tax deductible on my income tax at the end of the year.
If owners get a break because the government sees that it is necessary to have a place to live, why doesn’t a renter get the same consideration.
My accountant says that I make too much money to get a tax break from my rent payment. So you have to be poor to get a tax break from paying rent, but sell a multimillion dollar house and you deserve a big tax break on the whole amount. How is this fair!
Who do I yell at to get some kind of reform to the tax system, so buying isn’t the only way to profit from living in a doweling in Canada.
Random thought that came while driving to my MIL’s place for Easter dinner. If we need more land for housing development, let’s use golf courses. What a waste of land and resources. George Carlin was right. Golf is not a sport.
“Banning foreign buyers is a nothingburger since their impact on the overall market was miniscule and disproportionately skewed to higher-priced homes the kiddos don’t bid on.
The premise that foreign buyers only impact the higher end of the housing market is just false. Vancouver in 2016 if a perfect example of this. The property values in the west side of Vancouver influenced the prices in the east side. Demand is just deflected. The foreign buyer effect in Vancouver in 2016 caused a flood of Vancouver residents to cash out and move to other cities in BC pushing their property prices up as well.
Zero evidence of that. Anyway, they’re gone, and no price plop. – Garth
It makes sense for rent to be fully tax deductible for the renter since it will be taxed as income to the landlord. The government shouldn’t get to collect tax twice. First the renters income is taxed and rent is payed with after tax dollars, then the same money is taxed again when the landlord declares the payed rent as income.
This makes a lot of sense, and it should not be a limited by a persons income, or the amount of rent they pay. They don’t limit how much capital gain exemption you have on a sellers principle residence.
Why should residential real estate provide the only tax-free capital gains, and when it is essentially an unproductive asset? – Garth
Agreed. Abolish all capital gains tax to encourage the flow of money into productive assets.
Most scary words in the universe. “We are from the government and we are here to help.”
Making it easier to save for a down payment (FHSA) is just going to inflate prices more. Of coarse I am assuming people use them. RESPs are a good deal and a lot of parents don’t use them.
“Why should THEY be the generation that CANNOT buy a house if Boomers bought houses that increased in value 400% providing massive financial support in retirement? Humans are social creatures. We are VERY attuned to UNFAIRNESS And this is clearly VERY unfair.”
Completely. Unfortunately no politicians will do anything about this. Even a graduated tax system is needed, it’s completely unfair for the younger generation.
#63 TalkingPie
…The house has appreciated about $30k per year since we’ve lived here, which has done a lot to offset property taxes, utilities, maintenance costs and the opportunity cost of our down payment.
************
When I read this, I had a nervous breakdown and an attack of cognitive resonance.
Could you explain in more detail how by living in a house that went up in price by 30k a year, you could compensate for all this. Is it that you were getting this damned amount of money in advance before you even sold the house?
Who gave you this money? The house itself? Who???
DELETED
#47 Alois on 04.09.23 at 5:37 pm
The Real Reason Americans Aren’t Returning To Work
https://www.youtube.com/watch?v=NtEuAWBLfOE
Recommend reading the comments.
___________________________________
I went straight to the comments.
They so well portray why I dropped out at 35, 35 years ago. We hired me full time for our benefit, as I point out here from time to time. I had been doing most of what most people pay people to do, to their home or car, while exploited and subsidized by my wife’s superior earnings.
Most of my wife’s earning have stuck to us because of that arrangement.
The paper gain on the 35% of our worth sunk in RE equals what we have spent in 41 years that is gone for good. Still though, we are almost worth her career total earnings before she too retired 17 years ago with a teachers DBP, which has since filled two TSFA’s and gone on vacation and nothing else, as I also point out here.
(Disclosure; A recent inheritance gave us a 15% boost.)
Our total accumulation of productive ‘stuff’, is spinning non taxable dividends of convenience daily. All this stuff was invented for that, so why not have and do, rather than being a parsimonious holder of little other than gobs of equities doing your gain (or not)?
Quote the Cat in the Hat, It’s fun to have fun, but you have to know how.
A hands on task I’m not qualified to do, is my fun!
Every time.
#73 Dolce Vita
….Commie approach where Gov gives you a home, they own it and you can’t buy one.
************
You do not understand that this is just what we need.
The house belongs to them, but I live in it !!!!
The communists have never driven people out of the house onto the street. Unlike you, I know this from my own experience.
Does it matter that I can’t sell the house. I am not going to! I just pay my utilities and enjoy life. By the way, they take over the repair of the house – well, except for trifles.
Unfortunately, this will never happen in Canada.
#8 Jim “Car parks could collapse under the weight of electric cars”
I saw this too.
Hope they don’t fall out of older models like tires!!!
Also, are we going to ship those old batteries to India?
Who cares about the third world as long as we are green, right? (We are exceptional… someone said.)
#87 TurnerNation on 04.09.23 at 8:11 pm
Rapidly melting Antarctic ice is dramatically slowing down the flow of water through the world’s oceans
___________________________________
The gulf stream meets the “elevator” over by the British Isles. I was told long, long ago, when the elevator stops rising….everything else is over. (PREPARE!)
although I don’t feel rich, by numbers alone I am a ‘rich renter’… not sure how or why it matters, as there are plenty of poor homeowners (typically retirees) out there too
Well said Garth. As a renter in YVR I’ll pray for the day that livable housing becomes increasingly affordable, it’s been going the other way for a long time.
I have to disagree that we can get there without more supply. Low vacancy rates mean rents can be pushed up even if the house value stays constant. Pickings are pretty thin around here.
Until things do get better, I’m flying south. California has high prices too, but at least has the salaries to match.
I don’t disparage renters. I just don’t want to be one.
Solution:
You give the kids the house to get on with their lives producing grandkids without all the stress, and leave to retire someplace warm and sunny. The kids family, so you don’t lose the capital gain exemption.
They just become “ house sitters” and enjoy all the comforts. They might even kick up some rent money if you need it, most don’t.
Retiring into the sunny climes come with fantastic benefits, no GST or Tru-Inflation prices. Where I am is paradise for the wallet.
A few weeks ago someone posted a picture of a three pack of chicken breast in a “Super Grocery” in TO showing the price tag….$37 bucks. That same pack here costs $2 dollars. You’re crazy to retire in Canada…bona fide.
A nice average local meal here is under two dollars on a plate, fresh and hot. The same ‘ seafood fried rice’ just an example in a Vancouver restaurant would be $15 bucks.
Since your house , whatever the current valuation , is a non fungible asset, brings in no income anyway, why not just give it away as living space and move on. “ Transitioning is a populate idea nowadays. But you don’t have to attend a drag queen story hour at the local library to catch this new wave.
What stands in the way for most is the idea that your retirement money has to be budgeted around the idea that you need to afford the outrageous cost of living in Canada, you don’t. It’s a big world.
Worried about healthcare? My country of choice has resort style private hospitals and you’ll never find yourself grieving over a loved one who’s dying in a cold hallway as so many Canadians find themselves in at the end. The cost saving of not living in Canada more than pays your insurance premium.
Your governments jacked up the cost of living so much in the past 8 years that it looks like you’ll need up eating cat food on a six figure retirement income. Take that down to $2000 a month in a sunny climate and that cloud of dispair dissipates within days.
Think outside the box. Don’t destroy your nest egg to afford Junior a down payment. That only makes both of you poor. Anyway, it works for me….off to the pool.
I’m with Punky – just chill, snuggle and NAMASTE B*TCHEZ
No political party that wants to get re-elected would ever enact this type of taxation.
The best way to bring prices down would be to increase property taxes, especially increase them on ready to go vacant land that have services available.
Behind many stand parents who have co-signed debt (and don’t understand the implications) or peed away a big chunk of their own retirement capital with a ‘loan’ to Junior.
AND THAT AS A MOTHER/NOT A FURRY BABY MOTHER (I DO BELIEVE YOU ONLY HAVE DOGS) IS THE BEST THING TO DO, MR. TURNER!
It’s time to stop the discrimination against renters by ending the gift to homeowners. Then real estate demand will fall. Prices will follow. All we lack are leaders.
————————————————————
That’s consistent with what I’ve been reading not just here, but many other sources.
#104 Humble
What the country???
#104 Humble on 04.09.23 at 9:43 pm
“……Retiring into the sunny climes come with fantastic benefits, no GST or Tru-Inflation prices. Where I am is paradise for the wallet…..”
=========================
COMMENT:
Question ……if you don’t mind my asking…
……..what country which you are referring to are you residing in?
Re: Capital Gains taxes and Primary residence.
I’ve yet to see anyone simply state that Gov’t has made this “tax break” possible..it has nothing to do with average citizens’ input.
Thus we work within Gov’ts rules, but playing the “socialist “envy game accomplishes nothing.
Much of the housing industry and its jobs depends on this “tax break”. To attempt to tweak it would create a nightmare, as many will be caught up in various scenarios they hadn’t planned for.
In other words…..Leave it alone….
RE: #91 Saint Herb on 04.09.23 at 8:37 pm
It makes sense for rent to be fully tax deductible for the renter since it will be taxed as income to the landlord. The government shouldn’t get to collect tax twice
=======================================
LOL! That’s how it works for every transaction.
ie: You earn money at your job and you pay income tax on it. If you hire a mechanic to fix your car, you pay him with after tax dollars, which he pays income tax on. Then the mechanic hires a plumber, etc….
Why should rent be any different? It’s just another service that you are buying.
#100 Wrk.dover on 04.09.23 at 9:19 pm
#87 TurnerNation on 04.09.23 at 8:11 pm
The gulf stream meets the “elevator” over by the British Isles. I was told long, long ago, when the elevator stops rising….everything else is over. (PREPARE!)
—
Erm, not quite. And, as usual, TN is out to lunch.
But, interestingly, one of the consistent cold anomalies observed year after year on the planet is centered right about where North Atlantic Deep Water forms. Consistent with the freshening of the waters there amd reduction in the thermohaline circulation. This effect was predicted by Wallace Broecker many decades ago and now is observed in the climate system and is predicted by coupled AOGCMs.
During glacial times, the changing strength of this current system led to rapid changes in sea ice that forced very cold temperatures over northern Europe. In our interglacial, the effects will be more subtle, but could still lead to paradoxical cooling of lands downwind of the North Atlantic offshore of the UK and Norway even as the planet elsewhere continues to warm ever more dramatically.
109 VladTor on 04.09.23 at 10:33 pm
#104 Humble
#110 Alois on 04.09.23 at 11:28 pm
……..what country which you are referring to are you residing in?
—
SE Asia. My guess The Phillipines or Thailand.
Ya it’s all pretty simple. Older Canadians are not dying off fast enough to free up housing for the migrant tsunami.
Corporations need to produce greater returns every year and that means importing cheap labor.
Enjoy the diversity though. Done good food will come from it.
Losers
I will just leave this here.
https://www.visualcapitalist.com/cp/mapped-global-housing-prices-since-2010/
Canadians are a massive collection of losers. Your county is up for grabs and your too stupid to reali it.
‘We refuse at accept that being a tenant – with the freedom to move to pursue a job or a love, plus enhanced cash flow and freedom from debt – is a totally valid lifestyle and financial option.”
Its a lifestyle that few aspire to in North America. People are conditioned to own dirt for security of tenure, a method to build future equity and a place to call their own. Its not changing anytime soon.
I don’t think there is an answer to what is “fair” because people have their own views. People with similar views will form camps/tribes for mutual benefit. Lines are drawn or alliances formed between camps.
I read a story about a sheep farmer’s experiences. It looks cute when the sheep are grazing in a field or moving as a herd but only have a few rams at best. There is a dark side. Sheep are actually selfish and arrange themselves to watch each other. If one ewe finds good grazing, others will pounce. Sheep stay within eyesight of the herd as there is safety in numbers. If one gets spooked, they immediately run off together and follow the butt in front. Usually, the front runner is clueless. He tried feeding grain by hanging net baskets. He lost many sheep as they hung themselves trying to get more. I thought the observations were interesting.
Poor Galen Weston Jr recent compensation bump was recommended by a boardroom committee and accepted. The committee used CEO comparables for the recommendation. I don’t know who the comparables were but I suggest they were overcompensated. The rules of the game you know. The rules ensure elite status.
I am curious if the civil servants will vote again for T2 in the next federal election. I know he has the gullible in his pocket. In my view, the election is too close to call. I wait to see what Quebec will decide. The GTA is divided and can only shift slightly for now.
Such are my opinions. I hear that:
1. TD bank is heavily shorted (due to US exposure?)
2. A credit crunch is forming leading to bank failures
3. Low unemployment and higher wages
4. More demands for public subsidies
The above factors can result in a lower GNP and sticky inflation in the US and Canada. I understand there is a government department that will make the recession call. I doubt it will be a political decision (sarc).
Meanwhile, I am building dry powder to pay my property taxes. It now exceeds my mortgage payments. Granted my mortgage is small and I am okay with the terms. Currently, no spare cash for me as apparently there are greater needs than mine. At least I still have an all-star credit rating which may be useful.
Regarding CG tax on the sale of the primary residence – you do realize that in the US the interest on the mortgage is tax-deductible, right? Do you think that in Canada it is as well?
/////////
As a professional EA, I have prepared over 16,000 US tax returns. And I am well aware of the possible tax deductibility of mortgage interest payments. Are you aware of how the standard deduction works? NONE of my US clients were able to take advantage of the deduction this year. NONE.
Christopher Mewhort, EA
519-525-9277
“One in three Canadians in ‘bad’ or ‘terrible’ financial shape, up from pandemic highs: Angus Reid survey”
https://www.ctvnews.ca/business/one-in-three-canadians-in-bad-or-terrible-financial-shape-up-from-pandemic-highs-angus-reid-survey-1.6347751
HAPPY HOUSING CRASH – IT’S COMING!!
#84 Jacob
How much wealth should a family have to be considered rich? Is it slightly over 1M? Or is this kind of “meh” these days?
——————————————————————————————————–
Pretty ‘meh”.
$10 million, minimum, to have the privilege of calling yourself “rich”. You need to generate at least $500K per year to walk with the big dogs.
Just sayin’.
https://ca.style.yahoo.com/income-level-considered-rich-140003986.html#:~:text=Based%20on%20that%20figure%2C%20an,earners%20make%20%24335%2C891%20per%20year
This Leftie renter is totally in agreement with you Garth. What a mess.
#86 Dolce Vita on 04.09.23 at 8:09 pm
WRONG
GEF and Covid ushered in negative real interest rates- free financing of real estate.
Therefore, not a headwind, but a TAILWIND
Also:
Does the increased value of $3.5 Trillion take into account the $2.3 Trillion of mortgage debt, and the increase crazy amount that went into upgrades to the existing stock?
Vladtor 109.
there are many countries offering these benefits and easy retirement visas. I’ve visited all of them and done the research, Europe, Eastern Europe, Central and South America, SE Asia in particular… Philippines. Take your pick.
I know people who’ve retired in all these places and they live happily. My choice might not be yours. There are many many thousands of retired Canadians in every country mentioned. You might be shocked at the extent of the Canadian diaspora both retired and working. Good luck. .
“It’s a crisis of expectations.” This is so true.
Subsidies never work to actually bring the price down to end users. All it does it inflate the price of the good (anyone try to shop for an EV at a dealer lately?)
Putting in an income suite into the basement of a house inflates the purchase price of that house by some cap rate of the rental income. Again, does not help affordability as it floats your entry price upwards.
In a country this big we should be able to support 2-3 more big cities, but it’s always easier to just keep piling into the same places. Figure out a way to draw people to those locales that need the population growth…
The photo is lovely. Be well all.
@#117 Radar O’Reilly
“People are conditioned to own dirt for security of tenure, a method to build future equity and a place to call their own. ”
+++
Nothing is ‘owned” until the last mortgage payment is made…..decades down the road.
Just ask the hundreds of thousands of Americans that had their places repo’d in 2008-2010.
Million dollar mortgages with payments rising exponentially.
All while we are being told “inflation is over”.
Lets see how may “toys” are for sale this spring and summer.
Lets see how many unexplained fires there are this year.
This ain’t over yet.
I definitely feel this. Late 30’s with what I thought was a good income (~100kpa). Have $225k invested via RRSP/TFSA/taxable, and a DB pension plan. Yet I live with family because it’s too expensive to do otherwise as a single person.
Current rents in my area (west GTA) for a 1-bed are often asking nearly (and often more than) half my take-home income. For those same rentals, often condos, the vast majority available have no rent control, meaning the landlord is in the driver’s seat on my monthly housing costs, every 12 months.
Obviously, to buy is even more expensive when you add in condo fees, taxes, etc., especially at 4%+ interest. If I wipe out my savings to put a downpayment on a place, I’d still be paying more than half my income to put a roof over my head.
I’ve been tut-tutting for so long at the rising price of all forms of housing for over a decade. I keep thinking something’s gotta give, but so far, even the reprieve of rising interest rates still relegates those who need a place to live and who don’t have the option to live with family, or move to a LCOL area and WFH, with no other option than to live paycheque to paycheque.
I personally don’t care if I own or rent. I just want a safe, clean roof over my head that still allows me to put a little money away for the future, cover a lease for a basic car, and maybe go to dinner or a movie a couple times a month. If I can barely do it at current costs, how do those making the median Toronto income of $68k pa?
Interesting, top of the page 1 story right now at CNN, concerns about vacant offices and bank stability:
https://www.cnn.com/2023/04/10/business/commercial-real-estate-banks-offices/index.html
Looks like continuous rate hikes from the JPow, if banking settles down could see a couple 50 basis point increases, most likely another 150 basis points coming down the pipe this year.
https://wolfstreet.com/2023/04/07/the-fed-isnt-having-a-lot-of-luck-cooling-this-labor-market/
Nope. Not chance. – Garth
The problem is severe loose lending changes since 2000. Back then you could not get a mortgage on a house with a tenant in the basement even with 30% down. It happened to me with perfect credit and solid work record and income.
Fast forward to 2007 and Harper allows 40 year mortgages with zero down on high risk borrowers. Time to turn back the clock. Stress test isn’t enough.
I read on here that the OFSI is forcing banks to tighten lending soon ? Crickets.
In a survival situation, the first order of business is to deal with the most critical life-threatening items. After that, continue improving your situation in order of importance to build a reserve.
Approach life the same way. Deal with the critically important, opportunistically leverage if possible, build a reserve.
And be grateful.
Think food is expensive now?
Just wait.
https://www.ctvnews.ca/business/more-than-40-per-cent-of-canadian-farm-operators-to-retire-by-2033-report-1.6348911
AND the Liberal govt is still going ahead with their “30-30 ( 30% fertilizer reduction by 2030 ) climate warming” fertilizer ban.
Is it any wonder farmers are quitting and there is no one to replace them?
Even large multinational agri-companies have stated the profit margins are non existent.
https://www.cbc.ca/news/canada/calgary/government-emission-fertilizer-unrealistic-1.6574486
I’m reminded of the 1930’s Communist grain confiscations in Ukraine ordered by Stalin.
The Holomodor was a human caused famine that killed millions in Ukraine.
“Let them eat cake” comes to mind…..
Or
Soylent green.
The arrogance of the current federal govt is only exceeded by their gross incompetence.
All the own > rent people are missing an important point that the rent > own people have difficulty explaining. (and I probably do as well)
You can only afford to buy a property that falls within your ability to pay for it with a down payment and a mortgage and you need a permanent source of stable income in order to finance it.
You can afford to rent a much higher value property in a much better neighbourhood that you would never be able to afford to buy on your own because there aren’t the same restrictions on how much rent you can afford to pay. So an illusion is created that you are enriching a landlord and not saving any money for retirement or whatever but you are actually paying less than the mortgage interest and taxes would be on a similar property if you bought it.
An actual example would be some people we know that moved to Calgary and were looking for a house to buy. They only house they could afford was in a crappy neighbourhood where the houses were about $225k. So they rented a house for the past 20 years in a good neighbourhood close to everything with a perfect school half a block away for about $22k per year in a neighbourhood where houses were consistently selling for $600k+. The rent has only recently gone up to $32k per year, still a very good deal, especially now that interest rates have gone up.
If they would have bought the crappy house in a crappy neighbourhood and lived there for the past 20 years they likely would have paid it off by now and would have a property worth $400k but they would have had to live in a crappy neighbourhood for 20 years far from everything and had their kids go to a crappy school. Living in a nice neighbourhood is worth a lot of money.
#90 richard on 04.09.23 at 8:31 pm
“Banning foreign buyers is a nothingburger since their impact on the overall market was miniscule and disproportionately skewed to higher-priced homes the kiddos don’t bid on.
The premise that foreign buyers only impact the higher end of the housing market is just false. Vancouver in 2016 if a perfect example of this. The property values in the west side of Vancouver influenced the prices in the east side. Demand is just deflected. The foreign buyer effect in Vancouver in 2016 caused a flood of Vancouver residents to cash out and move to other cities in BC pushing their property prices up as well.
Zero evidence of that. Anyway, they’re gone, and no price plop. – Garth
***********
Let’s see; an influx of YVR sellers taking their untaxed, PR capital gains to Victoria, Kelowna and Parksville has (in a few short years) inflated all housing prices well beyond the reach of local incomes.
But an influx of foreign students and astronaut families, with access to untaxed, foreign income, into certain YVR neighborhoods has had no meaningful effect on the broader market. M’kay.
And the foreign student exemption was never stopped.
Now we’re discovering that foreign students have also been implicated in election interference. Time to throttle back on the fuerdai.
#121 Dharma Bum on 04.10.23 at 8:44 am
Yep, I thought so… You can’t impress anyone with a 1M wealth these days.
If I remember correctly Turner Investments had a threshold of 1M. I wonder if it was increased…
You made that up. No such threshold exists. – Garth
#111 Alois on 04.09.23 at 11:52 pm
Re: Capital Gains taxes and Primary residence.
I’ve yet to see anyone simply state that Gov’t has made this “tax break” possible..it has nothing to do with average citizens’ input.
Thus we work within Gov’ts rules, but playing the “socialist “envy game accomplishes nothing.
Much of the housing industry and its jobs depends on this “tax break”. To attempt to tweak it would create a nightmare, as many will be caught up in various scenarios they hadn’t planned for.
In other words…..Leave it alone….
…….
We change things all the time to improve our living conditions…why not now? Would help a large portion of the population who are having difficulty surviving without going into a lot of debt.
Oh, “many will be caught up in various scenario’s they hadn’t planned for”…you mean like they figured record low interest rates would stay in place for 25 years? Like the government would never allow an increase? Like housing always goes up so I will become rich by flipping?
etc So sad….a large part of the population, unfortunately, does not actually spend any time “planning”!
Garth has already laid out very well, how in many cases landlords are subsidizing renters, and yet people still buy property. Perhaps what’s needed is better financial education, a better understanding of investment options (eg. learning about diversified ETF investment options) in order for people seeing buying property as the best investment choice. We also need a cultural shift away from viewing owning a house as superior to renting.
I could get behind adding a capital gains tax on principle residences if I thought it would make property cheaper. Given the cultural pressure to own and the view that owning a house is the best way to secure your financial future, adding capital grains tax on PRs will just make sellers poorer and not drive down prices.
Post-Trudeau Canada heralds a new era for recent newcomers and youth, and it kind of looks like serfdom. House prices up 100% since 2015. Public debt up 100% since 2015. Homelessness, drug addiction, and mental health crises exploding from coast to coast. Violence and hate in our city streets are almost daily news items. Yes he could have done lots to avoid/mitigate all this, but even now he de-facto works to make things worse. He just doesn’t know what the hell he’s doing.
The greatest gift of my life was the good leadership of Chretien, Martin, and Harper. We were able to accumulate liquid and hard assets before Trudeau came along and subsequently shot their values to the moon via his bungled policies. Many Gen-X’ers are doing great for this reason alone. The Boomers prospered mightily as well – maybe that is why Boomers are Trudeau’s voting power base today, when it used to be the youth.
I feel bad for big-city Mils and Z’s who have been Euchred by Trudeau.
@#116 The Gorn on 04.10.23 at 2:54 am
I will just leave this here.
https://www.visualcapitalist.com/cp/mapped-global-housing-prices-since-2010/
Canadians are a massive collection of losers. Your county is up for grabs and your too stupid to reali it.
++++++++++++++++++++++++++
I mean, at least get your grammar straight before you start calling other people stupid.
#137 Hookshott on 04.10.23 at 11:31 am
We change things all the time to improve our living conditions…why not now? Would help a large portion of the population who are having difficulty surviving without going into a lot of debt.
=============================
If not mistaken….Canadians were allowed $100,000 lifetime capital gains exemption on investments outside of primary residence RE….Chretien Gov’t axed it back in early 1990’s…but it was grandfathered for those to designate an existing investment and still claim it.
Lets say T2 and Co start to claw back capital gains exemption on primary residences..how would that work and what would it look like ?
Some will dodge a bullet selling under the wire , while others would get caught up in some tax situations.
No one actually owns…we are all “renters”.
Eventually the home is sold…and the money circulated in the economy. The sellers often downsize as well, perhaps buy a condo.. or move elsewhere. Lots of jobs are connected to this Primary Residence tax break.
Regardless….we have enough socialism…we need some sense its not becoming communism.
Re: #116 The Gorn on 04.10.23 at 2:54 am
I will just leave this here.
https://www.visualcapitalist.com/cp/mapped-global-housing-prices-since-2010/ +++
How can Italy be -24% when Dolce Vita sings its praises everyday as the finest country on earth, lol?
Or if you really want a laugh, check out the video of Senator Marco Rubio and his view on Macron’s comments after visiting with Xi Jinping. You’re either ‘with them or against them’, doncha know? Nobody does Venganza like the Cubans….
https://mobile.twitter.com/brianlilley/status/1645244036117331969
I have friends with kids aged between 21 and 29. They keep telling me their house is “worth” $1-million, and that all of their kids want houses but can’t afford them. But my friends are on the mission to help their kids get a house, like many other 50-ish parents do.
The strange thing is that, whenever I suggest they sell their house to their kids for $400k (which is $90k more than they paid for it), they refuse to give up their “right” to the gain in value for the sake of their own children, yet they’re going to help their kids give $1-million to some other couple in their 50s who feel entitled to their own residential RE gain.
It surprises me how so many people don’t recognize this is only a small step removed from taking their own children’s money – instead of doing that directly they’re taking each-others kids’ money so they feel better about it. For example, Bill helps his kids buy Shirley’s house for a $1-million in capital gain, and then two years later Shirley helps her kids buy Bill’s house for a $1-million in capital gain. And think of all the commissions and taxes tacked on to these transactions as a percentage of the sale price … so dumb.
I think one way that things could get back in order is to track the ACB of everybody’s PR on their annual tax returns. We already declare our PR on our tax returns anyway, so all we need to do is declare the ACB every year (including adjustments resulting from improvements supported by recepits) and then each owner has a running record of the value of the PR Capital Gain Limit like they do RRSP contribution room. The CRA can even allow 3% to be added per year to adjust for inflation (noting that 3% is the BoC target rate).
So for example, in the year you buy the house, your ACB is what you bought for, say $800k, so on that year’s tax return your PR Gain Limit is $800k. Then year 2 let’s say you add a deck for $25k. Then year 2 tax return your ACB moves to $825k (supported by receipts), plus 3% for inflation, to arrive at a value of around $850k. This declaration continues every year until the year the PR is sold, at which point that year’s tax return calculates capital gain (or loss) as the difference between the ACB and the sale price, and then works it in with that year’s income. Doesn’t seem that difficult to do, and it would encourage people to hold their houses longer instead of flipping them to make a quick buck.
The lever pulling button pushing lieing to stay in power and zirp. Messing with free markets can have disastrous consequences. The fact they have no idea what their doing a day late and a dollar short. There’s going to be difficult times ahead to say the least. A large contraction will not surprise.
I prepaid for this crap years ago. Hiding nuts lime a squirrel for what could be and will be a long cold winter.
People on this blog 2-3 years ago were voting for a housing Wipeout. I said the markets will go with but I doubted a major decline in RE.
I have 14 Properties 3 residential mine and 2 penthouse condo’s. I rented my commercial tenant the condo I used for a bit as Commercial office so I’m not tied to stupid rent controls.
The time to get fire insurance is way before a burn starts.
Now I’m cashed up 7 figure no debt on the 14 props.
The lesson here is use your own noodle. Watch out for T2 and crew their not your friends and go against the herd. Anyone can do it.
So good luck and get yourselves some astute business people in power to run the country.
PS Cerbians how did that free money work out for ya?
And I talked to my hard core T2 supporters he is no more and that’s a good sign. Garth your up!
Sorry no checking Grammer or spelling.
Another option:
Friends of ours..family of 5…parents are in their 80’s (3)children are boomers… had a bungalow.
The eldest was married…divorced…has 2 children.
Her siblings never married and no kids
A few years ago….they tore down the bungalow and built a 2 storey home with 4 self – contained suites…all legal which they all currently live in .
So..there is an option in this case..effectively turn SFH into multiple suites.
Governments are making it worse and nobody bat’s an eye. Of course, the lying, virtue signaling, oh so righteous msm is helping distort reality. It’s what they do, besides info-tainment.
143 silverson
“The strange thing is that, whenever I suggest they sell their house to their kids for $400k (which is $90k more than they paid for it), they refuse to give up their “right” to the gain in value for the sake of their own children, yet they’re going to help their kids give $1-million to some other couple in their 50s who feel entitled to their own residential RE gain.”
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And what exactly, are the parents going to do with $400k? Buy an old townhouse, or maybe a mobile?
That is is the problem for them. They have to realize wealth from their PR to either buy back in to decent digs, or invest it for income in order to pay a high rent.
I always hoped to get some gains from my PR, but I am
fine with a large market correction so that I can buy back in.
“……The lefties love this kind of anti-gentrification and argue that exclusionary zoning has always been evil. The impact on property values and municipal services is unknown.
Incentivizing homeowners to create more saleable or rentable space could backfire, raising the commercial value of residential real estate…..”
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COMMENT:
Does this Provincial mandate imply a “Higher and Better use” re: assessment?
…….. ie they will penalize you for not building a suite when its permissible ?
Huh? Whatchoutalkin’ bout, Garth? Yes, I’m sure many of the people demonstrating in France didn’t sufficiently save for retirement.
But a government pension is a binding contract, isn’t it? If you make an agreement, the government shouldn’t be able to just move the goalposts because they screwed up. And this isn’t some freebie. The pensioners earned their pensions-they’re entitled to them. What are you saying I’m missing, Garth?
That being said, I’ve visited France on more than one occasion. Let’s just say workers there weren’t exactly…hard working. I saw very little work getting done. People I met there from other G7 countries also said the same thing to me over dinner.
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GT, you wrote this the other day.
– “Remember, giving people money to retire on (who have not looked after their own finances adequately) becomes a right politicians can’t revoke. Just look at what is happening now on the streets of France.”
“Soon in all of BC local zoning rules will be kaput.”
How is that even remotely a bad thing?
It’s a step AWAY from government interference.
You’d rather have urban central planners and neighbourhood busybodies determine density, would you?
What this country needs is an actual free market, and respect for the property rights of individuals to do as they please with their own goddamn land.
If you do not own your neighbour’s plot, then it’s really NONE Of YOUR BUSINESS what he builds on it.
You do not have any property rights, and zoning is responsible for livable cities. – Garth
#150 Jack Regan
If you do not own your neighbour’s plot, then it’s really NONE Of YOUR BUSINESS what he builds on it.
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Years ago we had a dude on our suburban residential street running an auto wrecking operation from his back yard. He had about ten cars parked there in various stages of disassembly.
I felt strongly that it WAS MY BUSINESS. The other neighbors agreed. We called city hall. The whole mess was cleared away within three days.
Sorry Garth. I respect your acumen and insight on financial matters, but on zoning and densification you’re just plain wrong.
I was a professional urban planner who lived and breathed this stuff for twenty years.
Zoning that restricts whole swaths of land to detached houses is directly responsible for so many of our housing and environmental woes that I can’t even begin to get into it here. But a few things:
First, more housing doesn’t automatically mean more cars. That’s a myth. It depends on where you are. Much of existing single-family zoning actually keeps multi-unit rentals out of areas where you don’t need a car. Take a 600m radius around transit stops, commercial mainstreets etc. and you often find that it’s all frozen in 1950… but if you allowed more multi-unit rentals to gradually replace the now eighty-year-old houses, you could put a lot of people where they don’t have to drive.
Secondly, houses don’t last forever. Nothing does. The idea that human rules should forever lock a neighbourhood into the same typology that made sense when it as a greenfield subdivision across the street from cow pastures is ridiculous. Eventually the house needs to be replaced but the land is invariably mispriced (thanks in large part to mortgage rules that treat a tear-down the same as an actual viable building.) If you have to pay $600k for the lot, what would YOU build on it? Not a 1970’s bungalow, that’s for sure.
Thirdly, you’re contradicting your own logic on renters. People freak out about multi-unit going up on their street BECAUSE it’s going to be renters (a triplex/fourplex/eightplex generally being too small to support a condo corporation.) Does renting make you a no-account sub-citizen or not?
Fourth, and finally (for now) single-family suburbia is environmentally and economically ruinous. You simply cannot freeze whole cities at that level of spread-out low density without condemning everyone to endless traffic, crap transit and no transport options; the sheer amount of infrastructure that has to be fixed, replaced, cleared of snow, salted, served with police and fire services, etc. etc. etc. etc. etc. is just ruinous.
I respect your wisdom and frankness in your area of expertise, Garth, and I appreciate your offering it here gratis. But city planning is a different beast entirely and I know of what I speak and…. you’re just wrong.
“You do not have any property rights, and zoning is responsible for livable cities. – Garth”
True, Canadians do not have explicit property rights.
But presumably that would apply also (even moreso) to those who have paid a”hefty premium to own in a ‘demand’ area”.
Is there a right to have the state preserve your surroundings in amber for your aesthetic pleasure?
To protect your neighbourhood from the free market by artificially keeping the density of our major cities far below their economic pretensions?
I should think not.
Real estate will do to this country what trade unions did to the UK in the 1970s. Where is our Thatcher?