Monday, March 12, 2012

What could be done...

There was an interesting piece on the CBC radio this afternoon about a Tyee reporter, who looked at what was available for the $340K he could afford as a FTB. He was renting a 1500 sq foot house in East Van and was looking at getting onto the property ladder. Basically a noisy 1 bed shoe-box near the International Village or heading out deep into commuter land.

He interviewed ex-councillor Peter Ladner, who said something he probably wish he hadn't. He claimed that the young leaving was a terrible thing for a city.."who is going to serve me my coffee at Starbucks?", he ended with. Now I cannot be too hard on Peter, at least he has been outspoken about the affordability problem, however unfortunate this last statement of his was.

The reporter (?name) ended by saying that many of his friends had left Vancouver, because they could not afford a reasonable home in this city and he was considering doing the same.

This is what seems to escape the foolish politicians, bank CEOs and Carney...all this CMHC bs, the zero rates, the gimmicky low rate mortgages are just making it even more unlikely that first time buyers can get onto the property ladder.

Think about it - the $10K tax rebate and the super-low mortgage deals from TD and BoM will only drive prices higher! Builders, sellers, speculators will just hold or up their prices.

If the idiots just left the market alone for five minutes, the lack of affordability would remove demand and prices would fall. They would fall a lot (10-15%) very quickly. That's 30-40-50K. But no, they keep thinking they have to DO Something, the result is they drag in a little more demand from the vulnerable and the over-stretched to delay any correction.

Mr Flaherty, and Carney, Multimillionaire bank CEOs and Ms Clark - the problem is NOT that rates are too high, or tax breaks are needed. The issue is that the prices are TOO HIGH.

The answer is not a quick fix or a ten second sound bite.

Until there is some dis-incentive to speculation whether local or off-shore the mania will continue and the quality of life for those living in this region will deteriorate.

No where is speculation currently encouraged as much as Canada.

1) The CMHC insures investment property loans. WHY?

2) We have a tax structure that allows the windfall gains of RE to be taken tax-free after one year of ownership. WHY? One year is too short a time period. I know many folks who buy, fix and flip in one year. If they claim it as their principle residence their gains are 100% tax free. I don't begrudge them the gains. They took a risk and deserve it, but why tax-free? If a businessperson starts a company, employs people, takes a huge risk and sells it after a year, their gains are NOT tax-free.

3) We allow unfettered access to our housing stock to anyone with money, regardless of their residential status and with no concern about source of funds.

4) Yes we do need more ALR thrown into the high density pot and yes we do need higher density on some plush areas where the NIMBYS live.

5) Empty homes pay premium taxes. Doesn't sound like capitalism. Well the most free-wheeling capitalist country in the world is Singapore and they regulate their housing supply and access like no-one else. So whether you are a dentist from Winnipeg, with a condo for future retirement or a Government Mandarin from Beijing buying a West Van palace, you will have to pay more if we find it is left empty.

Why? because if you chose to leave it empty...you are taking housing away from the cop who you will expect to risk their life checking your empty house when the alarm goes off or the fireman who will have to do the same to put out an electrical fire.

Who could do all the above. Not just one, but all of the people listed. It would take the Federal Government to take over the CMHC, it would need the Province and cities to deal with ALR and density and over-rule some very wealthy interest groups.

It would take the City with Provincial backing to change the taxation rules.

It would take bank CEO's to be responsible and put concern for the future above their bonuses.

And then maybe we can keep the young in this city to serve coffee and produce plays and then some!

10 comments:

  1. I am off for a couple of weeks. Fight the good fight.

    ReplyDelete
  2. Makes sense Fish. Doubt anyone has the will to do any of it. Lets see what comes out of Gregor's committee.

    Have a good break.

    ReplyDelete
  3. Everything is expansive is the BPOE.

    3 Zones fare is $5 (Surrey to where Peter works), A return trip would cause 1 hr net pay for the guy making his lattes.

    Very simple math, and very illustrative.

    ReplyDelete
  4. There are too many vested interests involved in the R/E market for the "powers that be" to leave it alone (thus causing your scenario of dropping prices). They will prop it up at all costs for as long as they can.

    ReplyDelete
  5. I'd simplify by stating this: a city's land mass should be used to facilitate value production of its citizens, in all fungible and non-fungible forms this "value" takes.

    An empty house produces nothing more than a small trickle of tax.

    Imagine in extreme the situation where all properties were vacant. Now imagine a less-extreme but corresponding situation where land is distributed unevenly, a few citizens in possession of an above-average share of the available land but contributing less, either through only partial tenure or through muted community contribution. We can state the first case is undesirable then deduce the latter cases have definite deleterious effects, albeit inconclusive in terms of magnitude, and that such situations should -- must -- be limited and scrutinized.

    ReplyDelete
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