New housing and the HST

Whether due to high prices or HST, the sales numbers for new houses and condominiums in Vancouver has taken a tumble. Volume of new units sold is near record lows in the last month, but what does the news about next years BC HST referendum mean for our housing market?

This is happening at a time when house prices are starting to fall all across the province. Will we see buyers sitting on the sidelines and delaying the purchase of a new condo, house or townhome in the hopes of saving money on HST?

This could be one more small element that contributes to a collapsing housing bubble. Will it help to tip our market further over the edge or is there another rabbit in the hat? Negative interest rates? Home-buyer credit? Tax deductions? High paying government jobs for everyone? What could support the current high cost of housing in Vancouver?

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bullwhip29
bullwhip29
10 years ago

Back onto subject of HST…here is an example of some of the idiocy we can look forward to over the coming years……just drains the life out of you, doesn't it?

http://www.vancouversun.com/news/should+refunded+

/dev/null
/dev/null
10 years ago

@fixie guy: Those are from 2005 so I wonder where we stand now. Didn't Harper increase income taxes (or at least roll back a reduction) when he dropped the GST?

fixie guy
fixie guy
10 years ago

jesse Says:" In my opinion BC has some of the best doctors in the world…"

Tell me where they're hiding because I've dealt with a consistent series of cynical fuck-ups specializing in billable time.

Before getting too deep into why Canada's income tax is a problem, it might be useful seeing how it compares to other countries:

http://en.wikipedia.org/wiki/File:Income_Taxes_By

The notion Canada taxes income to death might just be a fantasy. But it would be a useful one for, say, a hypothetical prime minister with a political philosophy antithetical to Canada's social safety nets.

patriotz
10 years ago

@jesse:

I see the need for higher taxes going forward. If you believe this, it can come in the form of higher income tax or higher consumption tax.

I also see higher property taxes coming, as they are the only tax that cannot be evaded, and are not a tax on production. BC's property taxes are low compared to many Canadian provinces (or US states for that matter).

Another reason to be bearish on RE.

jesse
10 years ago

"This is just stupid. They do go elsewhere. "

Immigration and migration statistics disagree. In my opinion BC has some of the best doctors in the world, many who hung around in the '90s under the communists when they could have made mint moving to the US. From what I've seen of the general caliber of doctors, new and veteran, BC has been doing alright regardless of what party is in power.

jesse
10 years ago

@Renting: "Our income tax system is much more competitive now. Paul Martin lowered income taxes significantly as did Gordon Campbell especially for high income earners. The results speak for themselves. " Well we can argue partisan tax policies until we're blue in the face. I can see, however, a few things. First the government has a deficit they need to close. If housing turns out to be a severe drain on the province's economy in the coming years it may turn into a structural deficit. There needs to be some plan in place to resolve this. I don't know if I entirely buy reducing taxes will reduce a deficit through higher economic growth. Second there will be a shift towards supporting an older demographic who are starting to retire. Someone needs to fund their retirements because, on balance, they haven't… Read more »

CashedOut
CashedOut
10 years ago

@Dave:

Way to throw out this straw man:

>Would you prefer that we wallow in a depression for a couple

>decades to prove your point?

and then follow it up without even a hint of irony…

>We all need to get ourselves away from extreme position and be

>more pragmatic.

Dave Dave Dave…

stagnate
stagnate
10 years ago

jesse says: Have you tried reading his books?

i've read all of garth's books going back to the eighties. i swear, garth has never been right on any prediction for any market. entertaining writer though, remember garth is for entertainment purposes only.

Frank
Frank
10 years ago

@Devore:

We probably have too many doctors now!

Surely you jest.

….

No I do not jest. the numbers are on the College of Physicians web-site and we have more per capita than almost anywhere else in North America except New York, California and Florida.

They may not be well distributed and maybe it is hard to get a family doctor, but you can go to a doc-in-the-shop at any street corner.

Kaspar H.
Kaspar H.
10 years ago

@SuperSmartBull:

Well, why don't you then just get the hell out of here for once and all.

Jerry Boyle
Jerry Boyle
10 years ago

sez:

The market values housing as evident by the price of housing. That’s dollar democracy at work. People get to vote with their pocket books.

1 dollar == 1 vote. Not everyone's idea of a democratic ideal.

Still, I'm sure plenty folks here would agree with your point that there are many things government shouldn't be involved in. The CMHC, for instance.

Let's get rid of mortgage insurance backstopped by government, and see how the market really values housing.

Anonymous
Anonymous
10 years ago

Wealth, productivity, and taxes? Chipman? Is that you?

Renting
Renting
10 years ago

"These high income earners aren’t going anywhere. Tax ‘em.”

Right out of the NPD playbook. Too bad it has been proven wrong so many times.

Why not just take 100% of everyones income and redistribute equally to all! Oh ya that was communism and it didn't work either.

Phil
Phil
10 years ago

Does anyone know the current inventory level?

Renting
Renting
10 years ago

"Agree with Jesse. We have a lot of people moving up here from the US and elsewhere eg Doctors, Entrepreuners, and investors because they like living in a safer more fair society. We probably have too many doctors now!"

And how were things 10 years ago when income taxes were much higher? There was a flight across the border by doctors, etc. People have a short memory of what things were like under the NDP. Our income tax system is much more competitive now. Paul Martin lowered income taxes significantly as did Gordon Campbell especially for high income earners. The results speak for themselves.

Although I must admit the NDP would speed up this housing crash by killing the economy.

Dave
10 years ago

@oneangryslav2: I can't because our tax system is to complex to give a simple answer. I can say that I believe in progressive taxes. Higher income earners should pay more than lower income earners. The problem is defining where that line should fairly be. As a general rule, lower is better IMO. But we also have to provide services and products through government. I believe in balanced budgets, so the real question to me is where do we draw the line on government services and spending. The tax structure should follow that question. There are all sorts of things that the government shouldn't be involved in. And there are all sorts of things were the government is not effectively involved. I think our first focus should be to create an effective and focussed bureaucracy. This is a task that will… Read more »

Anonymous
Anonymous
10 years ago

We all need to get ourselves away from extreme position and be more pragmatic. The World and our finances are very very complex. We can’t approach our problems with a single minded approach under the blanket of some ‘ism’.

The Central Banks do…it's called print-money-ism.

Devore
Devore
10 years ago

@frank:

We probably have too many doctors now!

Surely you jest.

Well Dave that ‘risk taking’ by the wealthy brought the US to it’s knees, and when the cards started falling they insisted on getting tax-payers money anyway to pay for their losses.

Oh, ok, here we go.

Progressive taxation and wealth redistribution: class warfare in a can. Just open and unleash!

Absinthe
Absinthe
10 years ago

@Dave: Hm. There are a few assumptions in the idea that higher taxes hinder the work of those that produce most: that the rich produce most; that private (as opposed to corporate) income is necessarily working stimulus in rich hands; and that if the currently rich leave that those who are slightly less rich won't jump into the void as entrepreneurs, etc. Taxation too high, of course, and you have an economy out of balance and limping – as with house prices now. So absolutely, there is a point at which too great an imbalance in the economy breaks things down, and that applies to taxes as well as to anything else. But it's not some magic about "the rich". If "the rich" bailed out and no one was left here but us chickens, there'd still be opportunities to be… Read more »

oneangryslav2
oneangryslav2
10 years ago

@Dave:

Excessive tax stifles investment, risk taking and productivity growth.

Please define "excessive."

SuperSmartBull
SuperSmartBull
10 years ago

@Dave:

We all need to get ourselves away from extreme position and be more pragmatic. The World and our finances are very very complex. We can’t approach our problems with a single minded approach under the blanket of some ‘ism’.

Best comment on this blog in a long time.

I believe the same applies to RE, trying to label everyone as either realtor bull or armageddon bear limits the discussion immensely.

Dave
10 years ago

@Yalie:

And how do we measure production and value? IMO… the best way is dollar bills.

The market values housing as evident by the price of housing. That's dollar democracy at work. People get to vote with their pocket books.

So I am completely consistent with my position and my interests.

Dave
10 years ago

@frank:

I don't agree with your characterization but even if I did, it does not take away from my point of view. It doesn't follow that I believe in bailouts when risks turn sour. I don't.

In the case of the US financial crash, I think the Federal Reserve did the right thing. They and the government have an obligation to prevent systemic collapse.

Would you prefer that we wallow in a depression for a couple decades to prove your point?

We all need to get ourselves away from extreme position and be more pragmatic. The World and our finances are very very complex. We can't approach our problems with a single minded approach under the blanket of some 'ism'.

Yalie
Yalie
10 years ago

:

You shouldn’t hinder the work of those who produce the most.

For once I agree with you. But I find it ironic that you're saying this, since it's the flip side of "You shouldn't reward the work of those who produce the least".

Which is exactly what Real Estate pumpers like you want the government to do.

VRENGD
VRENGD
10 years ago

US Supreme Court Justice Oliver Wendell Holmes once said in a decision in a tax case, "Taxes are the price we pay for civilization."