Real Estate

BREAKING NEWS..Ontario Considering Foreign Buyers Tax ..WHAT?!

  • Last Updated:
  • Mar 15th, 2017 8:32 pm
Deal Addict
Jan 26, 2016
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Toronto, ON
IndustrialKid wrote: Arguing with me doesn't change the fact protectionism hurts Canada more than China. We have white bums sucking off the system here like crazy and you want to shut the door on smarter people?
I didn't say we should stop immigration, or even put in the FHB tax. In fact, if you stop immigration, Canada's economy will collapse, as it is the main driver of growth in the country.

What I took offense at is that you said:
IndustrialKid wrote: let's face it, smartest minds in tech and finance are from China


That is the most bigoted and racist thing I have heard here. I work in tech, and I can tell you there are all sorts of races there, including China (who happen to be ~1/6th of world population, so they seem more in absolute numbers).

You should apologize and clarify your comment. Stop with the racism.
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Aug 20, 2009
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JayLove06 wrote: You can tell who really knows the market and who does not. Lets say we tax foreigners 50%. You think homes will become affordable? WE HAVE NO EFFING PRODUCT! For the love of God, we have a huge problem of lack of inventory and you have people crying about 5-10% of purchasers with deep pockets.
I used to believe this but data doesn't bear it out. The Greenbelt supply constraint argument has already been debunked several times, there is plenty of build space left. Overbuilding will just lead to the same problems Toronto faced in the late 80s. Supply is not the issue, its the frenzied demand from speculation, both foreign and domestic combined with low interest rates and peoples emotions. I think you under estimate the capital buying power that even 5% of the market can wield, particularly when they bring all-cash offers to the table. It vastly distorts regional markets and that ripples outward as locals seek affordability elsewhere which is why you have bidding wars brewing in places like Brantford and Oshawa.

Ultimately if there is no problem then this tax shouldn't have a large impact which begs the question why people are so afraid of it. We also saw this all take place in Vancouver not even a year ago. The same 5-10% claims were made there and we know how that turned out. I don't really see the harm in this, I think it will quickly address an unhealthy increase in asset valuation if nothing else. I like my home equity as much as the next person but it doesn't take a genius to see that these increases are not sustainable.
When homes are still unaffordable after the tax what will people cry about? Hmm?
You can't address affordability without first stopping the ramp up. The FBT certainly seemed to tame the market in Vancouver pretty quickly and prices will eventually recover to some level but it will take time. You're correct in the sense that markets will take time to correct no matter what happens. People expecting some sort of overnight crash will be disappointed. I remember the TO downturn and it took 7 years to play out.
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Jul 14, 2002
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Redmask wrote: I used to believe this but data doesn't bear it out. The Greenbelt supply constraint argument has already been debunked several times, there is plenty of build space left. Overbuilding will just lead to the same problems Toronto faced in the late 80s. Supply is not the issue, its the frenzied demand from speculation, both foreign and domestic combined with low interest rates and peoples emotions. I think you under estimate the capital buying power that even 5% of the market can wield, particularly when they bring all-cash offers to the table. It vastly distorts regional markets and that ripples outward as locals seek affordability elsewhere which is why you have bidding wars brewing in places like Brantford and Oshawa.

Ultimately if there is no problem then this tax shouldn't have a large impact which begs the question why people are so afraid of it. We also saw this all take place in Vancouver not even a year ago. The same 5-10% claims were made there and we know how that turned out. I don't really see the harm in this, I think it will quickly address an unhealthy increase in asset valuation if nothing else. I like my home equity as much as the next person but it doesn't take a genius to see that these increases are not sustainable.



You can't address affordability without first stopping the ramp up. The FBT certainly seemed to tame the market in Vancouver pretty quickly and prices will eventually recover to some level but it will take time. You're correct in the sense that markets will take time to correct no matter what happens. People expecting some sort of overnight crash will be disappointed. I remember the TO downturn and it took 7 years to play out.
maybe people are afraid of the psychological effect. if you are an investor and banking on an increase, you want the psychology of the market to keep thinking that it is still rising.
when something turns down, e.g. cheaper electronics next year, people will hold off on purchasing even if they have money available.
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Sep 8, 2007
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Way Out of GTA
Redmask wrote:
You can't address affordability without first stopping the ramp up. The FBT certainly seemed to tame the market in Vancouver pretty quickly and prices will eventually recover to some level but it will take time. You're correct in the sense that markets will take time to correct no matter what happens. People expecting some sort of overnight crash will be disappointed. I remember the TO downturn and it took 7 years to play out.
The latest data from Vancouver shows Towns and condos raced to all time highs in Feb and detached aren't far off from the previous highs.

Image
Deal Expert
Feb 29, 2008
21738 posts
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Tarrana & The Ri…
Redmask wrote: I used to believe this but data doesn't bear it out. The Greenbelt supply constraint argument has already been debunked several times, there is plenty of build space left. Overbuilding will just lead to the same problems Toronto faced in the late 80s. Supply is not the issue, its the frenzied demand from speculation, both foreign and domestic combined with low interest rates and peoples emotions. I think you under estimate the capital buying power that even 5% of the market can wield, particularly when they bring all-cash offers to the table. It vastly distorts regional markets and that ripples outward as locals seek affordability elsewhere which is why you have bidding wars brewing in places like Brantford and Oshawa.

Ultimately if there is no problem then this tax shouldn't have a large impact which begs the question why people are so afraid of it. We also saw this all take place in Vancouver not even a year ago. The same 5-10% claims were made there and we know how that turned out. I don't really see the harm in this, I think it will quickly address an unhealthy increase in asset valuation if nothing else. I like my home equity as much as the next person but it doesn't take a genius to see that these increases are not sustainable.



You can't address affordability without first stopping the ramp up. The FBT certainly seemed to tame the market in Vancouver pretty quickly and prices will eventually recover to some level but it will take time. You're correct in the sense that markets will take time to correct no matter what happens. People expecting some sort of overnight crash will be disappointed. I remember the TO downturn and it took 7 years to play out.
It's not about being afraid, it's about a lazy government not doing its job. Please tell me how the raised tax has made Vancouver homes more affordable? Again, as I said, the issue is that there isn't just one factor. There are many but people seem to be focussed on one.

Foreign involvement is just one issue, but I think there are bigger ones. As for the greenbelt comment. Are you telling me there's enough available land right now in the city to build large subdivisions?

I just see a whole lot of tinkering by throwing darts at the board.
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Dec 7, 2012
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A professor of community planning at U of T argues one of the major issues is really local investors, not so much foreign buyers




A British Columbia-based organization called Generation Squeeze is giving Toronto some advice on how to cool down the red-hot housing market

Deal Expert
Feb 29, 2008
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tk1000 wrote: A professor of community planning at U of T argues one of the major issues is really local investors, not so much foreign buyers




A British Columbia-based organization called Generation Squeeze is giving Toronto some advice on how to cool down the red-hot housing market

So a foreign tax will do nothing. As I said.
Banned
Feb 13, 2017
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rkanwar109 wrote: Then let's implement it!
Yes, lets tie up government resources for the next 2-3 months (and probably pay them a crap load of useless overtime) ...and they will obviously have to also a hire consulting company for $3-4M to figure out/analyze and implement a tax that will do nothing or barely anything....great use of public money.
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Apr 11, 2006
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crocp8 wrote: Yes, lets tie up government resources for the next 2-3 months (and probably pay them a crap load of useless overtime) ...and they will obviously have to also a hire consulting company for $3-4M to figure out/analyze and implement a tax that will do nothing or barely anything....great use of public money.
It wouldn't be the worst use of money in the history of the Ontario government in the last decade or so.
Member
Jul 16, 2006
414 posts
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crocp8 wrote: Yes, lets tie up government resources for the next 2-3 months (and probably pay them a crap load of useless overtime) ...and they will obviously have to also a hire consulting company for $3-4M to figure out/analyze and implement a tax that will do nothing or barely anything....great use of public money.
Agreed,, This Canada we are talking about, It will cost millions of dollars to implement..

Have you ever seen the sunshine list, Everyone in the Government makes so much money.
Deal Addict
Sep 14, 2007
1001 posts
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Toronto
I'm probably missing tons of other points, but here's a couple:

Supply side:
1) Those with homes don't want to sell cause double land transfer tax + they're sitting on a gold mine
2) Finite land available in Toronto to build on

Demand side:
1) Lowest interest rates in history allowing easy money
2) Speculation that prices are going up forever and "it's now or never" mentality
3) Foreign Buyers (the sentiment in China is Toronto is a great place to live and super cheap compared to what they can buy locally)
4) Home equity rich boomer generation that have paid off their mortgage years ago, have tons of cash to pick up investment/rental properties/flip and not getting taxed hard to do this
5) Young couples starting families need a home at some point, so they decide to join the game in a highly leveraged position

The FBT will at least help "alleviate" some demand side pressure, but it's not bringing about a crash any time soon, not even a correction. Probably just ease the bidding wars, and slow down the pace of volume.
Member
Jul 16, 2006
414 posts
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stryder1587 wrote: I'm probably missing tons of other points, but here's a couple:

Supply side:
1) Those with homes don't want to sell cause double land transfer tax + they're sitting on a gold mine
2) Finite land available in Toronto to build on

Demand side:
1) Lowest interest rates in history allowing easy money
2) Speculation that prices are going up forever and "it's now or never" mentality
3) Foreign Buyers (the sentiment in China is Toronto is a great place to live and super cheap compared to what they can buy locally)
4) Home equity rich boomer generation that have paid off their mortgage years ago, have tons of cash to pick up investment/rental properties/flip and not getting taxed hard to do this
5) Young couples starting families need a home at some point, so they decide to join the game in a highly leveraged position

The FBT will at least help "alleviate" some demand side pressure, but it's not bringing about a crash any time soon, not even a correction. Probably just ease the bidding wars, and slow down the pace of volume.
We also have 250k immigrants coming in every year..
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Jan 5, 2003
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joepipe wrote: Image
Yes, it's uncanny how much this chart looks like YVR housing.Face With Tears Of Joy
When the truth offends, we lie and lie until we can no longer remember it is even there. But it is still there... every lie we tell incurs a debt to the truth. Sooner or later, that debt is paid.
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Sep 30, 2011
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stryder1587 wrote: I'm probably missing tons of other points, but here's a couple:

Supply side:
1) Those with homes don't want to sell cause double land transfer tax + they're sitting on a gold mine
2) Finite land available in Toronto to build on

Demand side:
1) Lowest interest rates in history allowing easy money
2) Speculation that prices are going up forever and "it's now or never" mentality
3) Foreign Buyers (the sentiment in China is Toronto is a great place to live and super cheap compared to what they can buy locally)
4) Home equity rich boomer generation that have paid off their mortgage years ago, have tons of cash to pick up investment/rental properties/flip and not getting taxed hard to do this
5) Young couples starting families need a home at some point, so they decide to join the game in a highly leveraged position

The FBT will at least help "alleviate" some demand side pressure, but it's not bringing about a crash any time soon, not even a correction. Probably just ease the bidding wars, and slow down the pace of volume.
The argument was exactly that "FBT not gonna work, it only make frustrated buy feel better "temporarily",
to save the government butt for next election".
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Mar 18, 2015
238 posts
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Mississauga, ON
My take on the FBT.

If they implement it properly by saying all deals that gets signed after this date will be taxed, if they get signed before it, there is no retro-active taxation.
If it cools the market, then it did it's job.
If it doesn't cool the market, did they at least make some money out of it. I don't care if some foreign investor has to pay extra taxes.

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