Cost of housing in Canada

[ueo]

This caught my eye,

The + average + selling price of a detached house in the City of Toronto has sailed past the $2 million mark.

Toronto home prices hit record, average selling price of detached house pushes $2M mark

Cost of a detached house in Toronto sails past $2 million average.

www.thestar.com

Now if new homes were built to a common standard, as they were post WW2 (read most PMQs) Smaller 800 - 1200 sq feet. no garage, few frills. Build cheap, modular etc! Why monster homes?

 

[Eaglelord17]

It would be nice if there was an actual policy/set of policies that could be hung around JT’s neck that accounted for this spike in house prices. Otherwise it’s just a coinkidink.

Bringing in substantially more immigrants is a directly controlled by the Federal Government of Trudeau.

A lot of the housing crisis is the result of many failed policies over the long term. The failure of our education system to train tradespeople (40 years of mistakes there). The failure of our cities, especially the larger cities to long term plan for densification instead relying on short term solutions which cost more in the long term.

The incentives the previous governments created to make single dwelling houses instead of more dense buildings. The treating of housing as a investment by private entities (especially foreign private entities). The laundering of money through the housing market to drive up costs and wash illicit funds (this is a partial federal responsibility).

The failure to raise interest rates when they should have and instead driving them lower to ‘spur the economy’ resulting in the suituation getting worse. If we had some short term pain 5-6 years ago we wouldn’t be hurting nearly as bad as we will be very soon.

Ultimately there is a solution but it is a market crash and lots of people will lose everything. If we had taken our lumps a few years ago it would have worked out better than the price we will pay today.

 

[lenaitch]

Now if new homes were built to a common standard, as they were post WW2 (read most PMQs) Smaller 800 - 1200 sq feet. no garage, few frills. Build cheap, modular etc! Why monster homes?

A) Because it's what the public has come to want.

B) Elevated land and material costs. I have no clue what the Toronto 1950, storey-and-a-half, two bedroom brick home that I grew up in would cost to build today, but I suspect the cost of the lot would make a plain-Jane house unmarketable. At least with bling like stone counters the buyer feels they are getting something for their money. I doubt, in the great scheme of things, the upgraded finishes add much the final cost.

 

[Kirkhill]

A) Because it's what the public has come to want.

B) Elevated land and material costs. I have no clue what the Toronto 1950, storey-and-a-half, two bedroom brick home that I grew up in would cost to build today, but I suspect the cost of the lot would make a plain-Jane house unmarketable. At least with bling like stone counters the buyer feels they are getting something for their money. I doubt, in the great scheme of things, the upgraded finishes add much the final cost.

B) First

The cost of the land is a massive impediment - but Canada has lots of land. Perhaps Ontario just needs to embrace its future and accept urban sprawl.

A) True. It is what the public has come to want - when the public was dominated by well off, employed baby-boomers. For kids used to living in basements, crammed into a apartments with roommates, willing to live in condos wherever they can find them....? Perhaps 800 square feet, a lawn and an internet connection might not look so bad.

 

[daftandbarmy]

Shots fired...

"Remember…they needed to introduce new taxes for climate change…we missed the small print where it said “and to build new holiday mansions for the Prime Minister aswell”. His new mansion probably helps climate change though so it’s all good"

Remember…they needed to introduce new taxes for climate change…we missed the small print where it said “and to build new holiday mansions for the Prime Minister aswell”. His new mansion probably helps climate change though so it’s all good | Health •

Remember…they needed to introduce new taxes for climate change…we missed the small print where it said “and to build new holiday mansions for the Prime Minister aswell”. His new mansion probably...

www.facebook.com

 

[Furniture]

An interesting opinion piece from NP.

Sabrina Maddeaux: The plan to solve housing needs to help renters, too

I found this idea interesting.

Eliminating the principal residence exemption isn’t politically palatable, so the question becomes how we provide similar, or equally appealing, opportunities to non-owners.


One option is a lifetime capital gains exemption, which would allow Canadians to earn tax-free profits up to a certain dollar value from a variety of investment types. This path would have the added economic benefit of encouraging more productive types of investment than home ownership, which is notoriously unproductive for the broader economy (and likely part of why Canada’s productivity growth continues to lag). It would also help even out geographic biases inherent in a tax policy that often rewards those who live in urban centres more than those who live in smaller towns or rural areas.

Might not solve the problem, but likely not a bad idea for the overall economy and for individuals.

 

[captloadie]

An interesting opinion piece from NP.

Sabrina Maddeaux: The plan to solve housing needs to help renters, too

I found this idea interesting.



Might not solve the problem, but likely not a bad idea for the overall economy and for individuals.

Is this not what the TFSA is though?

 

[Brad Sallows]

Dig deep into who benefits from capital gains exemptions before running away with that one.

Maybe first look at how people in the bottom 2 or 3 quintiles make money and pay taxes.

 

[IKnowNothing]

An interesting opinion piece from NP.

Sabrina Maddeaux: The plan to solve housing needs to help renters, too

I found this idea interesting.



Might not solve the problem, but likely not a bad idea for the overall economy and for individuals.

I don't see how that would actually equalize things. Odds are that people that are renting and struggling/ keeping their heads above water are already sitting on unused contribution room, both RRSP and TFSA- creating further opportunity to invest tax free doesn't do any good if there isn't personal cash flow to take advantage of it.

To level the playing field the change to tax policy would have to enable wealth generation within the existing amount the renter is paying for housing. Further down in the article the propose making a rent tax deductible that could be a start.

Combining the two would be interesting- something along the lines of a tax sheltered investment account funded by a partial income tax refund for Primary residential rent.

 

[Furniture]

Is this not what the TFSA is though?

Except a TFSA grows by taking your income and hiding it from taxes, and adding a tiny interest rate on top. Most investments grow faster than savings accounts, and property values definitely grow faster than TFSAs.

I'm not going to pretend I'm a financial expert, but adding incentives for renting similar to those that exist for home ownership is not really a bad thing.

 

[IKnowNothing]

Except a TFSA grows by taking your income and hiding it from taxes, and adding a tiny interest rate on top. Most investments grow faster than savings accounts, and property values definitely grow faster than TFSAs.

I'm not going to pretend I'm a financial expert, but adding incentives for renting similar to those that exist for home ownership is not really a bad thing.

Not quite.
TFSA is after tax income, with tax sheltered gains -> no tax at time of withdrawal. Tax Free Savings Account is a silly name, should be Tax Free Registered Account as while you can choose to use your TFSA space on a true Savings Account, it can also be used to hold anything from GIC's to mutual funds to ETF's to stocks.

 

[YZT580]

I don't see how that would actually equalize things. Odds are that people that are renting and struggling/ keeping their heads above water are already sitting on unused contribution room, both RRSP and TFSA- creating further opportunity to invest tax free doesn't do any good if there isn't personal cash flow to take advantage of it.

To level the playing field the change to tax policy would have to enable wealth generation within the existing amount the renter is paying for housing. Further down in the article the propose making a rent tax deductible that could be a start.

Combining the two would be interesting- something along the lines of a tax sheltered investment account funded by a partial income tax refund for Primary residential rent.

so right. people at the bottom i.e. renters probably do not have even a savings account let alone RRSPs etc. What they need is simply to pay less tax. Ford got it right when he suspended the gas tax and gave people free licensing on their vehicles. People don't want an end of year rebate they want cash in their pockets that they don't have to pay out in the first place.

 

[IKnowNothing]

so right. people at the bottom i.e. renters probably do not have even a savings account let alone RRSPs etc. What they need is simply to pay less tax. Ford got it right when he suspended the gas tax and gave people free licensing on their vehicles. People don't want an end of year rebate they want cash in their pockets that they don't have to pay out in the first place.

What does this have to do with trying to equalize the subsidized tax/ wealth generation incentives between owning and renting?

 

[YZT580]

What does this have to do with trying to equalize the subsidized tax/ wealth generation incentives between owning and renting?

simply put, you can't do it. Those who cannot afford to buy unfortunately cannot afford to have a method for wealth generation. All you will be doing is providing the folks in the penthouse of a luxury apartment/hotel another means to increase their wealth.

 

[IKnowNothing]

simply put, you can't do it. Those who cannot afford to buy unfortunately cannot afford to have a method for wealth generation. All you will be doing is providing the folks in the penthouse of a luxury apartment/hotel another means to increase their wealth.

But you could.
A small percentage of annual rent (to a reasonable cap) credited back via income tax refund, refund payable into a registered tax free account, locked in for a set number of years. Could also be means tested.

Would it be meaningful housing policy? I'm not convinced. But it could definitely enable renters to "build equity" tax free out of their rent payments by way of the government foregoing tax revenue. Hell if you really wanted to close the loop you could have the fund/accound be an investment in a nationalized REIT / Bond directly funding a housing accelerator loan fund, etc.

 

[brihard]

Except a TFSA grows by taking your income and hiding it from taxes, and adding a tiny interest rate on top. Most investments grow faster than savings accounts, and property values definitely grow faster than TFSAs.

I'm not going to pretend I'm a financial expert, but adding incentives for renting similar to those that exist for home ownership is not really a bad thing.

Oof. You have a terrible misunderstanding of what a TFSA is. You’re taking “savings account” literally and assuming a TFSA must function like a savings account at your bank. Yes, that exists as an option, but TFSA rules allow much more than that. A TFSA is not unlike an RRSP in that you can hold stocks, bonds, mutual funds, ETFs, and other investments within it. All your capital gains, dividends, and interest income are tax free. There have been cases of people making a lucky pick on a cheap stock that skyrocketed, increasing the value of their TFSA massively- capital gains many multiples of what they originally invested, all tax free. Now, that’s not to say you want to use them that aggressively, but a diversified aggressive growth portfolio within a TFSA can do quite well over time. TFSA is an amazing investment vehicle if you have the free cash to spare. It very much favours those of us in that privileged position, and does SFA for people living paycheck to paycheck.

 

[Furniture]

Oof. You have a terrible misunderstanding of what a TFSA is. You’re taking “savings account” literally and assuming a TFSA must function like a savings account at your bank. Yes, that exists as an option, but TFSA rules allow much more than that. A TFSA is not unlike an RRSP in that you can hold stocks, bonds, mutual funds, ETFs, and other investments within it. All your capital gains, dividends, and interest income are tax free. There have been cases of people making a lucky pick on a cheap stock that skyrocketed, increasing the value of their TFSA massively- capital gains many multiples of what they originally invested, all tax free. Now, that’s not to say you want to use them that aggressively, but a diversified aggressive growth portfolio within a TFSA can do quite well over time. TFSA is an amazing investment vehicle if you have the free cash to spare. It very much favours those of us in that privileged position, and does SFA for people living paycheck to paycheck.

Fair, it's been a while since I stayed at a Holiday Inn.

 

[mariomike]

Posted one day ago.

Experts say there's zero chance of affordability returning to Toronto's real estate market.

Experts say there's zero chance of affordability returning to Toronto's real estate market

Toronto's housing market may have already gotten about as affordable as it's ever going to get, economists are now saying, with inflated mortgage i...

www.blogto.com

 

[YZT580]

But you could.
A small percentage of annual rent (to a reasonable cap) credited back via income tax refund, refund payable into a registered tax free account, locked in for a set number of years. Could also be means tested.

Would it be meaningful housing policy? I'm not convinced. But it could definitely enable renters to "build equity" tax free out of their rent payments by way of the government foregoing tax revenue. Hell if you really wanted to close the loop you could have the fund/accound be an investment in a nationalized REIT / Bond directly funding a housing accelerator loan fund, etc.

who pray tell is going to provide that small percentage: the landlord, the government of Canada, the tenant himself as a tax (later rebated) on his rent? Rents anywhere in the Golden Horseshoe take 50% of a minimum wage earners gross salary.

 

[Furniture]

who pray tell is going to provide that small percentage: the landlord, the government of Canada, the tenant himself as a tax (later rebated) on his rent? Rents anywhere in the Golden Horseshoe take 50% of a minimum wage earners gross salary.

Since it's a tax credit, it would be the government giving renters back a portion of their taxes.

If it is tied to this must go into a ________ (investment of some sort), then yes it "costs" the government some money, but it allows more Canadians to invest their money to increase the overall Canadian economy.