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Baby, we got a bubble!?

TheKingEast

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foreign buyers do contribute to job growth though and in other ways as well...indirectly. This boom has created many jobs.

Its not about foreign buyers IMO. It's about domestic and foreign investors. It's also a perfect storm of very low interest rates and a weak dollar.

There's never any talk about the people who buy up houses, fix them and put them on the market for double. They should be taxed if we're going to tax everyone. Want people to move? Get rid of land transfer. See , the government is way too invested in real estate and that's mainly because they've been lax and greedy at the same time. They won't kill the market willingly because it will hurt them.

Let's see how things play out. I still think prices will rise until rates go up significantly or we have a recession
 

ttk77

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In my mind it isn't even about the investors. As long as they're renting out the properties while they own them, they're participating in the real-estate market the way it was intended to work. IMO if we're going to tax anything here, put a sky high rate on anyone who leaves their properties (residential or commercial) vacant for significant periods of time. I'm also not opposed extra taxes on units sold less than a year after purchase so long as it isn't the owner's primary residence.
 

TheKingEast

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In my mind it isn't even about the investors. As long as they're renting out the properties while they own them, they're participating in the real-estate market the way it was intended to work. IMO if we're going to tax anything here, put a sky high rate on anyone who leaves their properties (residential or commercial) vacant for significant periods of time. I'm also not opposed extra taxes on units sold less than a year after purchase so long as it isn't the owner's primary residence.
You see, I don't have a problem with that. Problem with taxation though is it keeps the government from doing their part to solve the problem. We need better transit, more rental housing and more single family. Throwing yet another tax on the table is lazy imo. Tax in addition to other measures I'd be more receptive to. But tax shouldn't be the number one solution for everything. But this is Canada so...
 

jozl

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And those taxes would screw several generations. This notion that "I deserve a house and everyone needs to pay!" is completely ridiculous. 50% tax? First of all, please provide data on the amount of transactions that foreign buyers are a part of. It is ingrained in our culture to solve any problems with more TAX! On top of that you want to add more tax on primary residences? WTF?

real estate is not the same as dairy, or alcohol, or poultry. So much entitlement it makes me sick.
"The only entitlement" I see is that the capital gains "earned" on principle residences are not taxed. Why should home owners get a massive tax break? Your logic is flawed. I would allow home owners to deduct the interest paid on mortgages as is done in the States (I think) but not in Canada.
And yes, I agree, real estate is not the same as dairy or booze because shelter is a necessity.
 
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TheKingEast

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"The only entitlement" I see is that the capital gains "earned" on principle residences are not taxed. Why should home owners get a massive tax break? Your logic is flawed. I would allow home owners to deduct the interest paid on mortgages as is done in the States (I think) but not in Canada.
And yes, I agree, real estate is not the same as dairy or booze because shelter is a necessity.
Shelter is a necessity, yes. But who said a 4 bedroom house with 2 car garage was a necessity?

Why on earth should one have to pay for gains on their own home....something you call a "necessity? Utter nonsense.
 

krispyk84

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I would rather help them than some yuppie couple not prepared to make a few sacrifices like we did, or our parents did.
I don't understand how boomers don't think they're entitled and had it easy. Boomer entitlement bred the entitled generation. Bring back the days where a high school education can get me a sunshine list level job and a million plus in property value. What sacrifices really? Low education government workers are ripping around Ontario's lakes in pleasure crafts thinking the're entitled to these real estate gains and complain about government actions that could jeopardize that?

It's so easy for the boomer run media to point out avocado toast and entitled millennials but many millennials who did everything right (higher education, disciplined savings, etc. etc. etc.) are feeling the brunt of boomer greed. Eff that. The unionized socialist handouts of past government policy gave the boomer generation an incredible amount of wealth. It's not unreasonable to think that millennials got the shit end of the stick out of all of this...
 
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TheKingEast

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I don't understand how boomers don't think they're entitled and had it easy. Boomer entitlement bred the entitled generation. Bring back the days where a high school education can get me a sunshine list level job and a million plus in property value. What sacrifices really? Low education government workers are ripping around Ontario's lakes in pleasure crafts thinking the're entitled to these real estate gains and complain about government actions that could jeopardize that?

It's so easy for the boomer run media to point out avocado toast and entitled millennials but many millennials who did everything right (higher education, disciplined savings, etc. etc. etc.) are feeling the brunt of boomer greed. Eff that. The unionized socialist handouts of past government policy gave the boomer generation an incredible amount of wealth. It's not unreasonable to think that millennials got the shit end of the stick out of all of this...
Meh....Boomers, gen Xers, milenials. I see entitlement everywhere.
 

Ex-Montreal Girl

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I don't understand how boomers don't think they're entitled and had it easy. Boomer entitlement bred the entitled generation. Bring back the days where a high school education can get me a sunshine list level job and a million plus in property value. What sacrifices really? Low education government workers are ripping around Ontario's lakes in pleasure crafts thinking the're entitled to these real estate gains and complain about government actions that could jeopardize that?

It's so easy for the boomer run media to point out avocado toast and entitled millennials but many millennials who did everything right (higher education, disciplined savings, etc. etc. etc.) are feeling the brunt of boomer greed. Eff that. The unionized socialist handouts of past government policy gave the boomer generation an incredible amount of wealth. It's not unreasonable to think that millennials got the shit end of the stick out of all of this...
Your whole post reeks of entitlement.

Yeah, I'm a nasty baby boomer and I created this mess with my masters degree (hubby has one too) and our "incredible wealth" that had me slinging burgers all through university, every weekend and summer holiday.

It's all our fault that lemmings are now rushing into the housing market and bidding up houses into the stratosphere.

It's all our fault that greedhead developers didn't build family-sized condos. (Read that thread for my long-held thoughts on that looming disaster.)

It's all our fault that government after government in the 40s, 50s, and 60s went for sprawl rather than density.

It's all our fault that our parents, happy that WW2 was over, multiplied like rabbits and created a bulge in the population.

BTW: the only time a highschool education could land you a great job was before 1965. After that, once the Boomers hit the job market and competed with each other for the good jobs, a university degree was de riguer, unless one went to trade school to become an electrician or plumber or went into Daddy's business.

By the early 80s, unemployment was hitting double digits.

We bought our first house in Toronto in the mid-80s after living in Montreal rentals (didn't make sense to buy there) and saving for YEARS. I used to joke that it cost twice as much for half as much as a similarly-sized and located house back home would. We were lucky because we could afford a decent house, already mostly renovated. But we were on a very dicey street (back then.) When my mother came to visit for the first time, she CRIED for me.

Toronto was already much more expensive than Montreal because the housing stock could not keep up with the metropolitan population growth. Anyway, development of single family homes ground to a halt during the recession. So, if you bought an older house in a "desirable" neighbourhood like Riverdale or Cabbagetown or the Annex -- which we did -- you often bought an unrenovated duplexed or triplexed rat trap. (Leslieville wasn't called Leslieville back then. It was called "south of Gerrard.") No three car garage. And, in many cases, not even a driveway or much of a lawn.

Sure it was cheap (ish) but then you had to renovate and get rid of the termites. Usually you lived with one crappy bathroom and one ancient kitchen (or three) for a while. You might have had a biker gang for neighbours. Or a crack house across the street. We had one house across the street that was raided TWICE by very intimidating ETF teams.

Interest rates skyrocketed to 19, 20, 21% There was a recession in the early mid-80s. It was scary. People were losing their houses. There were "power of sale" signs everywhere. I know people who had to sell for less than what they paid to buy. Meanwhile, real estate agents partnered with contractors and were renovating and flipping. People who bought these over priced, poorly finished flips were screwed.

But then interest rates and inflation settled down and demand for our houses went up. All our fault.

So yeah. We were "entitled."

PS: The "boomer-run media" no longer exists. Most of those boomers were forced to take early retirement. The ones running the media now are all in their 40s.

PPS: Unions were never government policy. They were supported by and fought for by workers. If it weren't for unions -- e.g. the postal workers -- there would be no maternity leave. It's a rare millennial who has anything good to say about unions nowadays.
 

ttk77

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I'm a late 70's tail end gen-Xer, but not too young to remember what my parent went though back in the 80s. My father, despite his degree and pilot's licence was laid off and delivering pizza to help ends meet while raising two young children. My mother went back to work full time but wasn't paid much. We ended up moving several times during the 80s between several provinces before my father managed to find a good job here in Ontario. We rented until I was in highschool.

Every generation faces its challenges, and millennials are certainly facing one now trying to start out their lives in the middle of a fairly broad affordability crisis (of which housing is only part). Even so, it's not fair to look back on older generations and the wealth they've accumulated over the decades after weathering their own challenges, and calling them entitled. I'm seeing a lot of articles lately calling boomers selfish and over-housed for not upending their own lives to make life easier for everyone else, and I think it's totally out of line.
 

krispyk84

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Ex-Montreal Girl,

I wasn't trying to single you out, but your anecdotal personal story is not enough to convince me. This day in age, it's almost required to hold more than a post secondary education to get a decent paying job. Arts degrees are worthless unless you're willing to work for next to nothing to pay your dues in order to get that 'decent paying' job. Without a technical degree in engineering, computer science, chemistry, etc. it's more difficult than ever to find a job in your studied field. https://www.theglobeandmail.com/news/national/time-to-lead/when-a-university-degree-just-isnt-enough/article579230/

That's a big contrast from generations past, when a BA could get you a decent job with a large firm, and high school could get you into a high paying unionized government job at the TTC, or a similar government run organization. You didn't need more than high school back then to be a police officer, a fireman, a social worker, etc. etc. etc. These days, I know countless people looking to find work in those fields but are being overlooked due to nepotism, education requirements, and boomers refusing to retire. Me saying I know countless people is anecdotal yes, but here's a source in one industry that is suffering from boomer delayed retirement: http://www.macleans.ca/work/jobs/two-thirds-of-new-teachers-cant-find-full-time-work/
Are teachers, who not only have post secondary but specialized graduate degrees, entitled for wanting jobs in their field?

"It's all our fault that lemmings are now rushing into the housing market and bidding up houses into the stratosphere."
Partly. Lobbyists for the real estate industry, homeowners associations, etc. have a huge amount of political sway and have been suppressing any measures that could have tamed the market, creating a market that is favourable to rampant speculation.

"It's all our fault that government after government in the 40s, 50s, and 60s went for sprawl rather than density."
Did the boomers really need big yards for oversized bbq's and giant lush green lawns that serve no other purpose than vanity for impressing their neighbours? Governments played into the demand of the generation, and the demand of the generation played the government policy. Suburban sprawl was driven by the boomer want and need for bigger and more.

BTW: the only time a highschool education could land you a great job was before 1965.
When the TTC and Government Services ramped up their hiring blitz, you didn't need more than high school. One could make a good living from 1965-1990 on college/vocational school credentials or a liberal arts degree. Those days are LONG gone.

By the early 80s, unemployment was hitting double digits.
As bad as that was, and not to discredit that hard time, that (the lower unemployment rate) seems to be only thing we got going for us (millennials) comparing the 80's to Today https://www.theglobeandmail.com/globe-investor/personal-finance/2012-vs-1984-young-adults-really-do-have-it-harder-today/article4105604/
PS. That article was written in 2012. Things got worse for millennials since then (housing prices are WAY higher, and many of the jobs out west that Ontarians were taking are no longer there)

You can talk about how you bought an old house and fixed it up, but many of us can't even afford crack houses to fix up these days. You can talk about high interest rates on loans, but the savings interest rates were really high back then too (rewarding those that were responsible). Todays low rates are completely offset by todays high prices, and those with money to save are lucky to get 2.6%, barely beating inflation.

The Globe article above comparing 1984 to 2012 should say enough that millennials don't have it easy. So it's hard for us to just turn over and take it. The biggest opponents of real estate protectionist measures are the homeowners who are reaping the most benefit of the big real estate gains that are hurting us millennials, and the response from these boomers tends to be "Suck it up and make some sacrifices". Many of us have and it's still no better for us. We're going to inherit an aging population that is going to put an incredible strain on the countries resources that our generation will have to pay for. It's scary to read the stats on just how unprepared many boomers are for retirement. We're gonna end up with economic stagnation, much like the situation that kept Japan standing still through the 90's and 2000's.

I'm not anti-union. In fact, I'm very far left on the political spectrum, and think unions have done a great deal to build this country. It's a fact though that a HUGE portion of the boomer population benefited from unions and government protection. Whether it be directly through their government jobs, or from the industry protecting measures the governments put in place. But the old saying goes, you're born left, you die right. As these boomers age, many tend to speak against the 'welfare' and protectionist policies that they benefited from. And I find it extremely hypocritical. With 25% of Canada to be over the age of 65 by 2035, the progressively right leaning boomer voice will only get louder, leaving us millennials without the favourable market to grow and flourish in that the boomers had. So convince yourself that boomers had it harder and that we should suck it up. It looks like our lives are shaping out to be more of an up hill battle, even though many of us may not realize or act like it yet.
 
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krispyk84

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I'm a late 70's tail end gen-Xer, but not too young to remember what my parent went though back in the 80s. My father, despite his degree and pilot's licence was laid off and delivering pizza to help ends meet while raising two young children. My mother went back to work full time but wasn't paid much. We ended up moving several times during the 80s between several provinces before my father managed to find a good job here in Ontario. We rented until I was in highschool.

Every generation faces its challenges, and millennials are certainly facing one now trying to start out their lives in the middle of a fairly broad affordability crisis (of which housing is only part). Even so, it's not fair to look back on older generations and the wealth they've accumulated over the decades after weathering their own challenges, and calling them entitled. I'm seeing a lot of articles lately calling boomers selfish and over-housed for not upending their own lives to make life easier for everyone else, and I think it's totally out of line.
I don't normally care to point fingers at a generation and call them entitled. Every generation has their own unique challenges. I was responding to the overwhelming hypocrisy that I often see when boomers point the finger at us millennials and call us all entitled. No disrespect to what your family has gone through.
 

jozl

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Identifying who's "to blame" and "who's "entitled" won't fix the affordability problem. I really think the Feds need to address the problem in order to avoid a crash like those that happened in Ireland and Spain. Further to my suggestion that capital gains on ALL real estate be levied ( as is done in the US.)

https://beta.theglobeandmail.com/report-on-business/rob-commentary/a-capital-gains-tax-would-go-far-to-cool-torontos-housing-market/article34654462/?ref=https://www.theglobeandmail.com&


Rhys Kesselman is the Canada Research Chair in Public Finance with the School of Public Policy, Simon Fraser University.

Toronto's housing prices have escalated so sharply that the federal Finance Minister is seeking to consult on this crisis with his Ontario counterpart and the city's mayor. However, while mimicking policies adopted in British Columbia could be a stopgap to calm markets, addressing housing affordability will require bolder measures.

Prescribing remedies for economic problems will, as with medical maladies, be only as effective as the diagnosis. Developers and realtors have repeatedly cited a shortage of supply, which they attribute to constraints on zoning and approvals. While increased supply of appropriate housing will need to be addressed longer term, recent price inflation cannot be explained by the sudden emergence of supply shortages.


Like the spiralling prices in Metro Vancouver, Toronto's experience reflects a surge in demand that can only be described as speculative. The "speculators" include foreign buyers seeking refuge for their wealth, domestic investors and, yes, ordinary residents anxiously seeking their first home or moving up the home-ownership chain.

In this environment, every purchaser has become a speculator; at current prices, a person would be crazy to purchase without expecting or hoping for further appreciation.


This speculative process is abetted by record-low mortgage rates, but speculative motivations are further propelled by the absence of tax on the capital gains of resident homeowners. Slack enforcement by tax authorities has also facilitated evasion by others whose housing sales should be taxable even under current legislation.

Serial flippers who buy properties to renovate while residing in them and then sell are among those who escape tax on their gains. Foreign students who use their parents' wealth to acquire residential property to use while studying in Canada also can avoid the gains tax. Astronaut families living in upscale homes in different countries, with their breadwinner concealing their foreign earnings, can skirt both the gains tax and their income-tax liabilities.

Would a capital-gains tax on all home sales in the city, the province or even nationwide be a draconian response to these issues? The lack of such a tax is a major gap in the country's tax system, since all other incomes from business and investment (outside of registered plans) are taxable. This omission distorts the economy's savings toward excessive housing investment and away from productive business investment.

The lack of tax on home gains is also inequitable in its treatment of renters versus homeowners with similar wealth. Many people have made hundreds of thousands, others millions, in tax-free gains on homes in recent years based purely on good fortune. At the same time, others making far less through their labour are fully taxable on their earnings.

The design for a capital-gains tax on home sales could follow several principles. Gains accrued prior to the legislation's effective date would not be taxed; most would deem it inequitable to impose ex post taxation. However, if applied at appropriate rates, such a tax would powerfully dampen speculative psychology and thus housing demand.


The tax rate on gains should be set very high – even above 50 per cent – for homes owned two years or less. The rate should decline incrementally over the next 10 years of ownership, perhaps reaching a rate of 20 per cent or lower after 12 years.

The cost base for computing taxable gains should allow for general inflation and outlays for major improvements, so that only the owner's real gain since enactment of the law would be taxed. In addition, the tax could allow each Canadian resident a lifetime exemption amount of gains, thus easing the movement to larger homes as a family grows.

If the federal authorities are not willing to act on taxing home gains, Ontario and/or Toronto could fill that void and use the proceeds to eliminate their heavy land-transfer taxes. Housing affordability would be better served by relieving homeowners when they buy and recouping revenues when they sell.

Implementing a capital-gains tax on all home sales would go far toward restoring housing affordability by reducing the speculative motivation in housing demand. It also would revive the notion that home ownership is primarily for the benefits of enjoying secure occupancy.
 

krispyk84

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Identifying who's "to blame" and "who's "entitled" won't fix the affordability problem. I really think the Feds need to address the problem in order to avoid a crash like those that happened in Ireland and Spain. Further to my suggestion that capital gains on ALL real estate be levied ( as is done in the US.)
Ahhh but that's the thing. Boomers call us entitled for wanting more federal intervention, and millennials call boomers selfish for wanting this gravy train to ride high. In the end, a crash is not good for anybody (boomers lose too much home equity, and millennials lose their jobs).
 

OneCity

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Construction is a big part of the economy for now and certainly domestic investment is not going anywhere. Therefore this will get worse and its not the fault of any specific generation Its greed mixed into the global economy with desperate Politicians trying to spur growth in anyway as jobs flee and foreign money is being waved. Boomers, Gen X, Millenials.... Seriously we're all a greedy bunch with the same human nature traits when given the same opportunities. Only difference is its a different time and opportunity

Absurdly low interest rates, flooding of foreign capital avalanched in from decades of excessive growth emerging nations, Politicians sitting on hands while economy slowed, manufacturing jobs leaving and in turn construction becoming a main job creator are all parts of the problem here. I truly feel horrible for the young average Joe today. Politicians can meddle to appease the public as the problems worsens but in the end they will only accelerate or decelerate an inevitable outcome and the only realistic long term outcomes are:

1. continuation of rapid financial inequality and divide where those with means continue to hoard housing as investments
or
2. a massive financial crash with the likelihood of higher rates. This could be seen as the worse outcome for the next generation and wont even shake out the rich, but will shake out the remaining middle class to hand over more property to those with greater means.
 
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