We are at the point where foreign and Canadian speculation in housing is making housing totally unaffordable for the vast majority of Canadians. In a country of less than 40 million, it's pretty easy to swamp our markets.

We need to take speculation out of the marketplace.

I'd also like to see a ban on corporations purchasing private homes and significant tax increases on non principle residences.

Your last line is pretty much my exact opinion. I'm an idiot, but I struggle to see how significant taxes (and I mean SIGNIFICANT - something like having all rental income and cap gains on secondary residences taxed at the highest rate ~54%) in these cases wouldn't have extremely broad appeal. Make the sector unappealing as an investment class and you should stop seeing unfettered speculation. The idea of housing being an investment in general is warped.

The principal residence tax exemption is also a joke but I also understand it's political suicide to try and get rid of it and at this point, since so many people have their life savings tied up in real estate, you'd probably be causing more problems by removing it.

Rent control doesn't work because of liquidity preference. Rental income must exceed the liquidity premium of land or else it will be kept empty. Liquidity preference is effectively the concept that people prefer keeping assets exchangeable for other assets.

For real estate this means keeping the property ready to sell at any time. It is easier to exchange an empty apartment and even easier to exchange an empty plot than a rented out apartment.

The downsides of renting out, i.e. the inability of being able to quickly sell the property must be compensated and that compensation is part of your rent. If you cap rent, that compensation will be insufficient to "bait" the property owner into renting his property out. They would rather keep it liquid and wait for a better offer. To keep it simple, the owner has options, the renter doesn't, so the renter must go out of his way to attract the owner's attention by paying higher rent than if he had outright owned the property himself.

Eliminating the liquidity preference of land would require all land to be leased or a sufficiently high tax on owned land (so that waiting and doing nothing has opportunity costs).

> ...or a sufficiently high tax on owned land (so that waiting and doing nothing has opportunity costs).

For non-primary residences? Sounds pretty good to me!

> I'm an idiot, but I struggle to see how significant taxes in these cases wouldn't have extremely broad appeal.

It would have broad appeal, but not to the developers etc. that are buying 10K plates at fundraising dinners ...

> The principal residence tax exemption is also a joke

The problem is that without that exemption, you literally can't afford to move. The 6% "tax" for real estate fees are already painful if you are trying to move to a house of the same value in another city, but if 40-50% of your sale value was considered a capital gain ...

The real problem is people "moving into" rentals for 6 months and then declaring that their principle residence and selling the property. Once you start renting it should be forever be a business property.

> It would have broad appeal, but not to the developers etc. that are buying 10K plates at fundraising dinners ...

Definitely true and thought it would go without saying haha

The rest of your post is totally fair and I can't really disagree.

The CRA is fairly particular[0] about income from the sale of a property. They want to know, for example, how long it has been your primary residence and if it was rented before then, what was the appraised value. You will end up paying capital gains on the delta. So, if you've been renting out a property, move in to it for 6 months and then sell you'll be paying capital gains on everything but the last 6 months. The only time that works out is with a sudden spike in values.

[0] source: an accountant I know that wants to stay in good standing with the CRA :-)

The point is that you have changed your principle residence to the new property and, hence, it is not taxed on sale.

"When you change your principal residence to an income producing property, such as a rental or business property, you can make an election not to be considered as having started to use your principal residence as a rental or business property. This means you do not have to report any capital gain when you change its use. "

https://www.canada.ca/en/revenue-agency/services/tax/individ...

The scenario allowed in your reference is not the same. The original scenario was a rental/income property declare principle (for some short period of time) for the purpose of shielding capital gains whereas the exemption you reference is a principle residence allowed to be used for rental/income. Note that you cannot declare another property as principle while you're renting out your homebase. I expect it is meant for cases where you might take a job transfer for a period of time.

The taxman never leaves money on the table.

>I'd also like to see a ban on corporations purchasing private homes and significant tax increases on non principle residences.

This would actually solve the problem (the calls are coming from inside the house- foreign investment is merely a scapegoat), and as such it won't be done.

Foreign ownership is a problem, especially in some markets, but I agree it's not the only problem, nor the biggest problem.

But any step forward is a win.

Thank your MP and ask them to solve the next problem: Canadian corporate ownership.

How about you introduce a land value tax, primarily for corporate owned properties and a tax break for owner occupied properties and a small tax break for small private land lords with less than 5 properties. Like a 50% reduction for the first 500m^2 of land that a person owns.

Yeah, about 70% of Canadians are homeowners (almost 15% higher homeownership rate than in the US). Ideally, they find a way to keep home price growth at/below inflation for a few years rather than actually pulling prices down directly. There's very little appetite for reducing the notional price since that 70% is broadly "most voters."

Doesn't the 70% ownership stat include those living with their parents? I have friends at 30 who still live with their parents.

I believe the 70% stat is from the census, and it would % of households. So it is possible that it reflects a higher % of kids not leaving the nest and renting something, but I also don't think its fully compatible with the narrative that Canadians are being squeezed out of housing (by foreigners) if the home ownership rate is higher than at any other time in history.

Google Statistic Canada data which breaks it down by age group.

Every age group, including the youngest (18-25) have a higher rate of home ownership than 20 years ago.

Those kids will get that house passed down to them.

Literally my brother's retirement plan. Good luck to anyone who doesn't have a well off family!

Actually no, because you still need a place to live. So it doesn't really matter if your home is worth $!M or $100K because it would cost you the same to move somewhere else. As such reducing home prices across the board isn't that problematic, because there's no loss in 'value'. You can still sell your apartment in Vancouver and buy a 5-bedroom in Saskatoon.

The issue becomes people with existing outstanding mortgages. If we considerably reduce house values, would outstanding mortgages need to be reduced pro-rata? Who would 'eat' that cost? The government? The bank?

Most common scenario is to sell your Toronto home for 2m and retire to a 500k condo in Florida. And no, neither banks nor government would absorb the delta between mortgage value and current property evaluation. Banks are probably covered by some form of government insurance which people would have to pay up through taxes

There is another option. I believe Japan went through it in the 90s. So lets follow their example and do nothing about the real estate bubble too.

Not doing something about it eventually ruins the community and then takes the life savings away in an even more dramatic crash.

Canadian Real Estate is pretty clearly in bubble territory. Something can happen now or later, but it only gets worse with time.

>I think people are missing the fact that for many Canadians values of their homes represent their live savings.

Let's ignore the property itself, which is a depreciating asset which was built and can be improved through manual labor.

That land is going to stay the same no matter how much you pay. Paying more for the same plot of land doesn't make it better. You don't get a bigger plot or a plot of better quality by spending more on the land. The land isn't wealth, it's the community around the land that gives it value. If you have demographic problems, your land is going to be worthless because the community is too old and shrinking.

Betting on ever growing populations is a pyramid scheme by the way.

> Betting on ever growing populations is a pyramid scheme by the way.

it has been a good bet in the past. Whether it remains a good bet is unknown - that's what makes it speculative. However, i don't see the population declining within the investment time period of a typical person buying the home.

And ruin lives for everyone who did not manage to buy house when it was affordable. Fuck that.

Just in case, I do own the house.

Do you have a mortgage too? Would you be happy owing the bank more than your property is worth?

Not the op but I have a mortgage; Bought in Toronto in 2018 so fairly high. It is possible to have two adjoining thoughts:

1. It'd suck for me if house prices went substantially down.

2. It is nevertheless absolutely positively the right same thing for society.

The assumption that house is mandatory, can be your main retirement or even only plan, and prices can only go up is crazy and unsustainable. Pain is coming and I see no reason to keep making it worse while enriching people in undeserving ways.

This was my opinion for 20 years,from poor university student to renter to condo owner to house "owner". But I come from Europe so my brain can grok the notion of "you don't have to have a massive house. You just don't". This may sound insulting but my wife is love of my life, born Canadian, and cannot comprehend not having a house, having a family without a house, or that prices can go down. It's like seeing ultraviolet - no matter how much she squint she's not physically equipped :-)

Government with their policies and regulations has brought us into this mess and it is up to them to figure out graceful exit. Somebody is going to get hurt either way. But if you leave things untouched you will end with two castes eventually. If this what happens what is the fucking point of our "advanced" system where everyone can pursue a "happiness".

Who would be happy with that? And who is happy with not being able to afford a house? What does happiness gave to do with it? You made a financial bet on buying your house for certain price. There’s always a risk in that price going down after you buy it. Sucks for you but the price going up for you just sucks for someone else.

Unhappy voters matter

That wouldn't be a big deal if the house was affordable to begin with.

It wouldn’t ruin lives to reduce wealth that was stolen from people unable to buy homes. It would also help their kids. Something lots of modern homeowners don’t give a shit about at all.

Stolen from people unable to buy homes? Someone else's house that you wish to own does not make it stolen property from you.

If you purchased a home that someone who had less money wanted is that stolen property?

Can I have your computer, phone and your car. I don't have any money but you having something I want means you stole it.

Stolen as in you literally cant build a home on your own property because the government with guns wont allow you to. The price of homes is not remotely the product of fairness or any kind of free market.

Can you please explain to all non-Canadians why you "can't build a home on your own property"?? Are you complaining about permitting, or what? Please explain the context.