“purchasing new builds”
Hahahhahahahha… Yeah because us Millenials and GenZ are buying new builds. Not 1970’s Vancouver specials that need new windows and furnaces because that’s the best our wages will support with mortgage approval rules.
Pffffft.
LOL are you me? It’s either that or 1m $ for a shoebox
Even with a 30 year amortization, the prices of newly built or starter homes intended for the average Joe are getting a little out of reach. Signs are reading “new builds starting in the mid 400’s!” which isn’t exactly budget friendly in my eyes, nor starter home territory. The government has the spirit, they are just a little confused.
400k here won’t even buy you a tear down SFH here on the west coast.
I don’t think the government has the spirit. The governmsnt knows this is just another scheme to keep inflating the bubble and keep prices high. What we need is a plan to carefully deflate the bubble. All we ever do is inflate or keep it the same size, never deflating it and just praying its a different government in power when it finally pops.
This is Capitalism though. Big number must alsways go up. No matter the cost in human suffering. No exceptions.
I feel like back in my day we had 40 year mortgages— was that 15 years ago?
Just an American browsing c/all here. We have 30 and 40 year mortgages and no one can afford a house. I wish Canada the best of luck with it, though.
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Tomorrow’s news: House prices increase.
Public housing is part of the solution. Taxing capital gains far more aggressively is part of the solution. Rezoning and infill are part of the solution. Punitative taxation on ownership of multiple single-family homes is part of the solution.
This isn’t the solution, it’s just kicking the can down the road. Again. Because we’ve decided that the rich shall never, ever take a haircut.
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None of those are part of the solution.
The problem is simple, if house prices go up faster than wage growth housing will never become affordable. It’s literally the definition of a pyramid scheme. Land cannot be an investment for anyone, not just multi-owners.
Prices need to decrease over time, and there’s no possible way for that to happen with zoning, infill, multi-family taxes, technically you could do it with a 100% capital gains tax on property value but your other suggestions even added together will not achieve a decrease in housing prices. All those do is slow the growth.
There’s only one way to drive property prices back down to affordable levels, tax all profit from simply owning a home (every single residential property) and then add more tax on top of that so that owning a property costs money, and therefore only people who use the property for something (living, business, etc.) will be willing to pay to continue owning it. This should be done on a regular basis (yearly likely) rather than all at once like a capital gains tax to prevent people getting “stuck” in properties.
Then use all that tax money to fund the government and drop income taxes entirely.
This is not going to happen for decades though, this kind of policy would vaporize all the equity for every homeowner in the country and currently that’s about 65% of the population, and it’s very unlikely you’ll convince 65% of the population to give up $500,000+ just to fix this problem for “other” people. We have to wait for the ownership rate to drop much further first before policies like this will become viable.
Apart from being a terrible idea that almost exclusively targets the middle class (because poor people don’t own property and rich people should be diversified enough that it doesn’t matter), this does nothing to address what are three of the biggest factors in housing costs:
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Housing demand (current population increase rate is not sustainable and it shows in areas other than housing)
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Inflation (material and labour costs are up something like 40% or more since 2020)
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Wage suppression (very much related to (1))
And the kicker to this is that dealing with the three items above will fix a lot more than just housing, whereas your idea doesn’t.
Want to know why material and labour costs are up? Because we have to pay more for land for businesses, and wages so people can afford homes. It’s a carryon effect of land values increasing.
We can always build more, but that’s never going to solve affordability. Supply and demand doesn’t apply to this situation like you think it does. Japan (and even just Tokyo) have had a flat or declining population for over a decade and housing prices are still going up.
Want to know why material and labour costs are up? Because we have to pay more for land for businesses, and wages so people can afford homes. It’s a carryon effect of land values increasing.
This might be a small part of it, but many materials are market commodities that have a lot more behind them than just land values - think copper, steel, lumber.
Also, your entire comment presupposes that land value is causing inflation rather than that land value is reflecting inflation. Land doesn’t print money, governments do, and banks do with debt - a direct consequence of a fractional banking, which is regulated by the government.
You’re thinking too few cycles deep. Even metal and lumber companies employ significant numbers of people or spend money on things which employ significant numbers of people, who all need to be paid more due to increased housing costs. The metal/wood needs to be exported by people, transported by people, with equipment made by people, using fossil fuels that are extracted by people.
It’s not uncommon for 50% of someone’s wage to be going to housing these days if they haven’t owned a home for a decade or more.
The amount of wealth being sucked out of the economy by real estate right now is obscene. My wife and I bought our first home in 2010, we now have around 1 million dollars in equity. We’ve paid only around $350,000 on mortgage payments in that period. So we’ve made $650,000 in 14 years simply by owning a home. That’s tax free, and essentially a third full time income that we did nothing to earn.
Many construction materials aren’t only affected by the Canadian economy, we are a very small part of it even if the material is produced here (ex. if it’s more profitable to export why would a company sell locally?). If global demand goes up prices here go up regardless of the situation.
Also, that money you’ve made isn’t real “made” until you sell, it’s an unrealised gain.
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if house prices go up faster than wage growth housing will never become affordable. It’s literally the definition of a pyramid scheme
It’s not. A pyramid scheme is a business model where you get the most of your money by getting other people to join the business, instead of providing a product or service. Think MLMs
Where do you think the money to buy the house from you later comes from? The next layer of the pyramid.
Fucking hell, government willing to do everything except what’s actually needed: reduce housing demand, reduce wage suppression, reduce inflation.
Mortgages are just tools used by the government to keep workers productive. They are scared shitless that people will have enough food to eat and a comfortable place to live and thus not have to work day in and day out.
Support credit unions and support proportional representation to kick out the powerful few from politics to have affordable housing.
Québec has one of the largest credit unions and it’s the most popular in the province, Desjardins.
They’re just as bad as any bank in terms of services and rates.
And the profits being shared amongst members? You get a couple of bucks per year.
This government can’t think outside the box.
EVERYONE and their mother knows what needs to be done, but that involves taxing their rich friends and themselves.
Taxing the rich doesn’t solve wage suppression and housing demand. It could be used to help solve inflation if the government committed to use the additional taxation to reduce the money supply rather than spend it, but I doubt that’s what you had in mind.
So, sorry, we probably should look into our tax regime but it’s not the silver bullet you think it is.
Putting a wealth tax on the ultra rich and properly tax companies by removing loopholes in our tax system could bring in enough money to fund practically every social program that we have and some that we need.
Right now, companies and the ultra rich who are behind these companies are taking advantage of an education system that trains their workforce, a healthcare system that keeps their workers healthy and productive, infrastructure that allows their employees to get to work and also allows them to communicate, provide services and move their products. Yet, it’s the working class that has the burden of financing all of this. Meanwhile companies get tax breaks and subsidies. How is that fair?
Our whole system is crumbling because the working class is getting increasingly poor and can no longer afford to support all of this. People’s pay don’t reflect the productivity and profits of companies anymore. Most profits are from capital gains now.
Taxing this may not be the only solution, but it would help to fix a vast majority of the problems were facing.
Yet, it’s the working class that has the burden of financing all of this.
https://www.cbc.ca/news/business/wealthy-canadians-fair-share-taxes-1.7179031
Top 20% earning families pay over 60% of income taxes. Doesn’t sound like the working class is financing most of it.
Meanwhile companies get tax breaks and subsidies.
Yeah, this needs to end, 100% agree on this point.
The Fraser Institute’s 2023 report suggests that the top income-earning families — those making just under $250,000 — pay the majority of Canada’s taxes.
First of all. It’s the Fraser institute. It’s a Conservative think tank that favors the rich elites in all their so called research.
Additionally, a combined income of $250k isn’t “rich” by today’s standard. That’s fairly middle class. Upper middle class maybe but still middle class. It takes about that much in combined household wages to afford a big enough home, utilities and food for a family with kids to live comfortably but not in any luxury whatsoever, especially in urban areas.
These are not the people I’m talking about.
You are insane if you think it takes a $250k family income to live comfortably anywhere in this country except major urban centres.
Can you elaborate?
Not really sure what you want me to say… Plenty of people with kids are living comfortably with kids making far less than $250k/year as a combined family.
