In a country with some of the world’s most expensive real estate, Prime Minister Justin Trudeau’s government wants housing to become more affordable.
In a country with some of the world’s most expensive real estate, Prime Minister Justin Trudeau’s government wants housing to become more affordable.
Canada wants to eat it’s cake while also having it. Something like 60% of Canadians own their home or live in a home their parents own. 40% of a country is more than sufficient to tear the country apart if they lose faith in the society they live in. Allowing housing to become investments has been a mistake that needs to be corrected for the long term stability of the nation.
Canadians are using real estate as their retirement nest eggs. That means they’re investing less in productive businesses and are woefully under-diversified. Reducing/removing the capital gains exemption on real estate sales would encourage actual investment.
Shit, when was such an exemption passed? That’s literally a law that turns housing into a non-productive investment.
Making a necessity to live in the modern world an investment is the way to turn a portion of the population resentful and unproductive.
Googling around, all I can find is that Canada didn’t have a capital gains tax until 1972. I think that means all investment profit was tax free.
To be fair, the reason they’re using it for retirement is because every other method (defined-benefit pensions, defined-contribution pensions, bonds, mutual funds, RRSPs) have been systematically broken by the wealthy.
The dotcom bust, and the lesser extend the 2008 crisis, wiped out a lot of Boomer and elder-Xer equity. Real estate was the next thing that “weath advisors” pushed after they ran the other options into the ground.
If people could retire with dignity and security, we probably could have headed off some of the early stages of the real estate speculation boom. Of course, that would have required rich people to make less money, or face some kind of consequence. As it stands, the economy suits them just fine, even if it fails everyone else.
As someone who struggled to get into homeownership in vancouver area it not about investment by candians. you are actively bidding on homes where asian investors trump your offer by 100K without even seeing the property. And the vacancies are bad. Two of my friends rent small basement suite in a giant home. The asian owners have not lived in the rest of the house for 2 years. So an entire family is denied housing for an investor to just sit on the property…not a canadian nest egg.
Those people will also need to factor in how much housing is causing localized inflation which is eating into their monthly cash flow. Unless the person has a rather large real estate portfolio they could defer the burden to I don’t think the current situation is going to work out well for most single dwelling owners unless they plan to move away soon.
If government had the power to just snap their fingers and halve the price of all real estate, regular home owners should not be negatively affected.
It’s mostly only the people who own multiple homes as investments, developers, and people who rent out their properties.
If you own a home that you live in, yes it will suck that prices dropped after you signed your mortgage, but you already agreed to pay that before so you should be able to afford those payments wether your house is $1M or $500K.
If you need to move, the house that you need to move to will now be half price so you didn’t lose anything with your own house going half price. If anything you win by not having to pay as much taxes.
This part is incorrect. If you buy a $1MM home with a $200K down payment, then you have a $800K debt. If you sell at $500K, then you still owe $300K and will declare bankruptcy and need to start saving for 7 years (?) for that bankruptcy to fall off your credit history to be able to get a new mortgage again.
This is the problem some people are facing now. They bought at the peak, with a variable rate mortgage, and are now underwater on their house and can’t afford the payments that have literally tripled. This will get worse in the next ~3½ years as fixed rate mortgages signed before/at the peak of the market come due for renewal, if interest rates remain this high.
Housing prices going down absolutely kills people’s wealth. Which is a huge problem since this means half the population is selfishly benefiting from maintaining high real estate prices.