Mayor backs real estate speculation tax

Vancouver Mayor Gregor Robinson has come out in support of a speculation tax on real estate purchases.

We definitely need taxation tools that discourage speculation on real estate,” a statement from Robertson says. “It’s clear that rampant speculation on real estate is driving up prices in Vancouver. Vancouver needs the B.C. Government to take action on creating a speculation tax and recognize that we need a fair and level playing field to make housing more affordable for residents in Vancouver, and throughout the province.

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RFM

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Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

And for the contrary view: The free market system always leads to optimal prices. The price discovery mechanism will dynamically adjust to shortages, oversupplies or any other disruptions or changes in the market. There is nothing government needs to do other than trust in the natural profit seeking behaviour of the individual and stay out of the way. It is important to note that in most cases the government is attempting to act in our best interests with their free market manipulations. But you can’t fix an optimal system. Any attempt to regulate or control such a system will inevitably make the system less efficient. That neither we as a citizenry nor our political leaders have internalized this fact and educated ourselves in basic common sense economic theory leads to misguided attempts to fix something which isn’t broken. Finally, these… Read more »

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Guy Smiley

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Totally agreed. Misguided market rigging antics such as those taken by the CMHC, artificially low interest rates etc have totally made this market inefficient. Unfortunately it’s not just the individual consumer that pays the price however – it’s everyone who has shown a proper degree of prudence with regards to RE ownership and taxpayers who are subsidizing the thousands of empty homes littering the city.

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UBC in Crisis Mode

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Flipping works!
Talk to your Chinese speaking realtors, as they all made millions in commission (per year) in the last few years.

One example:

http://victorkwan.com/mylistings.html/SearchResults.form?cat=SOLD

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Royce McCutcheon

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@2: I would add, while (as ever) qualifying that I think the impact is overstated, that government market rigging is also evident in the government policies designed to attract foreign dollars/citizens of convenience. These dollars have been actively courted by government policy.

Still, I think your point is the bigger one.

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MikeS

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Free markets only work optimally when there is perfect or near-perfect information. Considering we have only NO information other than what realtors tell us… I don’t see how you can make any claims about the virtue of free markets.

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southseacompany

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@#2 et al. Yep. And it’s a worldwide issue. We’re not special here;

http://www.nytimes.com/2014/07/08/upshot/welcome-to-the-everything-boom-or-maybe-the-everything-bubble.html?_r=0

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hoy-poloz

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Mayor Robertson who has done nothing for the years he has been in power, who is closely associated to the RE industry and especially Rennie has suddenly discovered speculation in RE after the recent petition and the demonstration and the lashing he has got on twitter and FB has discovered a solution.

Well yippee for that.

Now he can say he has dealt with it and it is the provincial Liberals, who are even more closely associated with RE interests to do nothing.

As for Harper, ‘stay out of debt’ is the best he can add to the debate, while priming the debt pump with CMHC and Mr-bay-street-Oliver tells the banks they can do whatever they want. Poor Flaherty was a tower of fiscal conservatism compared to this bunch.

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Simon

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Why is it that when young people object to high real estate prices we are labelled entitled whiners, but when boomers and politicians object to policies that might decrease their easily gotten equity it is not seen as a sense of entitlement?

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Royce McCutcheon

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@8: I agree, but it’s not even an objection to policies that might decrease their position.

It is an objection to to the end of laser-guided policies that have the primary purpose of inflating their on-paper net worth. The notion of slowly raising interest rates even a little from emergency lows or moving CMHC mortgage insurance rules back to their historically normal bounds are met with resistance. Resistance to moderating foreign investment by removing government efforts to promote it is being/ will be met with similar resistance.

The idea you’re putting forward needs a hashtag or slogan. #vancouverboomerentitlement?

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Charlie

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It is of course far to nuanced to debated on here with any justice so this is my one post on the matter, (I aint falling into the agenda-drive turbo-posters trap!) – but the bottom line is it’s nonsense to apply pure free market economics to a debate about the Van Housing market. It is just too stupid for words. I’ll give you but two examples. The following in a pure ‘free market’ argument is possible. And allowable right here, right now, in Vancouver – but by no means everywhere. Round 1 A Vancouver Nurse vs A-corrupt-government-official-from-a-corrupt-or-unregulated-country/ economy with-the-access-to-free-printed-corrupt-government-money. Said person knows one day all this will implode in his country cos-you-cant-just-keep-printing-money-and-embezzling-some-of-said-printed-money BUT he sensibly hedges against such inflationary inevitability at home by dumping a few million of the free printed money in a house near the hospital of where… Read more »

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Bull! Bull! Bull!

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did anyone attend the “i listend to patriotz instead of my real estate agent and now i’m priced out forever” rally?

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hoy-poloz

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@ 10

I wish I could give you ten thumbs up.
taxed money just cannot compete with untaxed money. It doesn’t matter how it comes in…

The only way we can compete is to say Fuck it, we wont pay tax either, now maybe we can compete with the West Van guy who’s cousin bought it in his name to avoid paying taxes (and was chopped up as a thank you)

the free market option only works if the whole world is free market, if you get rid of the CMHC and banks have to eat any mortgage losses.

None of the above are true except ‘free market’ access to our RE by any money laundering , polluting , murdering crook in the world.

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Oracle

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the Indian restaurants are packed on weekdays at lunch in Surrey. The government has opened the floodgates.

mini countries within Vancouver will be created. Gov knows you can’t mix them. Have you ever seen a bunch of Chinese hanging out with a bunch of Indians?

This is going to get ugly in the future. All the politicians fault.

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Oracle

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And admin FYI,

You can’t upvote or down vote on an iPhone for some reason. Mobile browser.

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Bo Xilai

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Gregor Robertson reminds me of Captain Renault in Casablanca… (from IMDB.com

Captain Renault: “I’m shocked, shocked to find that gambling is going on in here!”
[a croupier hands Renault a pile of money]

Gregor Robertson: “I’m shocked, shocked to find that real estate speculation is going on in Vancouver!”
[a real estate agent hands Robertson a cheque for $1.9M (or equivalent in Chinese Yuan) for his pile in Kitsilano]

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Charlie

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Look, we can argue points of detail all we want but the fact is we are a regulated society / economy and you are asking residents of a regulated economy to compete against global competitors where in some part regulations are at best not as restrictive or at worst are heavily manipulated.

When all these resources / wealth is bundled in one giant pot and allowed to compete HERE in our regulated market (remember we have no ownership restrictions) – then that is NOT a free and fair market. Whilst we have different regulations globally then it’s folly to talk about a free and fair housing market here which is open equally to all globally.

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Simon

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@9: Yep. I am not any more entitled to low prices than homeowners are entitled to high prices. I simply can’t believe how Christy Clark’s statement of “[Lower prices would be] good for first-time home buyers but not for anybody who is depending on the equity in their home to maybe get a loan or use that to finance some other projects” can be seen as anything but homeowner entitlement. So lets stop favouring any one group over another. In addition to looking into speculation (foreign or otherwise), there are many things that could be done. Lets remove the moral hazard of CMHC insurance or at least increase the the qualifying requirements. Let’s raise emergency interest rates. If the economic outlook is as good as Sunny Steven says, then this should be no problem. Let’s enforce FINTRAC reporting of suspicious… Read more »

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crikey

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RFM said in post#1: “The free market system always leads to optimal prices. The price discovery mechanism will dynamically adjust to shortages,” … “Finally, these ill-advised attempts at market rigging introduce additional overhead into the system in the form of the army of bureaucrats needed to draft and administer the regulations.” You can’t possibly be serious, and think that readers here are that stupid. It is not even close to a fair free market system when you have buyers from foreign markets that make their money by: – paying little or no taxes in the country where their money is earned (assuming their money is even made on the up-and-up) – hiring workers in slave-like conditions and for slave-wages while Canadians meet actual human rights standards and semi-living wages – having little or no environmental regulations to worry about in… Read more »

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Royce McCutcheon

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@16: I don’t disagree with your point. But the fact that there may be many “unregulated global competitors” using Vancouver as a hedge both in terms net worth AND citizenship is worth considering. Is Vancouver as appealing without both being attainable? How much are locals competing with foreign money with no local ties vs. foreign money that is brought in via immigration, visas, etc.?

http://www.scmp.com/comment/blogs/article/1804916/something-grotesquely-wrong-vancouvers-housing-market-and-time

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crashcow

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Us: “Politician, you’re drunk. If you don’t stop drinking you’re gonna have a massive hangover tomorrow”

Politician: “Not if I don’t stop drinking”

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crikey

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For sale: largest private island in Canada
583 hectares
Asking price: starting at ~$50 Million.
Assessed at: ~300k (according to commenters)
Annual property taxes: ~2k-3k

That’s right: $50 Million investment property paying less in property taxes than most cheap Vancouver condos. Yes, the property includes some farmland — but that is a complete joke nonetheless.

I hate to ruin Garth’s day and burst his impenetrable fantasy-bubble, so Garth go ahead and avert your eyes for the next bit:
This, Canada’s largest privately owned island, is currently foreign-owned (by “a Hong Kong-based family”, according to the article).

http://www.timescolonist.com/news/local/island-near-victoria-can-be-yours-for-50-million-1.1945759

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Shut It Down Already

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21, you think the nationality of that island’s owner impacts the price of an East Van duplex?

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southseacompany

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@#17 Re: “Let’s raise emergency interest rates. If the economic outlook is as good as Sunny Steven says, then this should be no problem.”

It doesn’t quiet work that way. The BoC has influence over short term variable rates, but long term rates are set by the bond market. The US and Europe, through their QE and bond buying, have had more influence on that than Poloz has had.

“Move over Stephen Poloz, here’s the real reason mortgage rates are so low in Canada”

http://business.financialpost.com/personal-finance/mortgages-real-estate/move-over-stephen-poloz-heres-the-real-reason-mortgage-rates-are-so-low-in-canada

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Lee

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I’m not sure what this anecdote is worth, but I’ll post it as a data point. I had a business associate, who I used to have lunch with. A mainlander, permanent resident now, whose dad runs a large condo development business in China. He has his kids here, they may even be citizens. He was dragged back to China a couple of years ago, but so he’s back here now. He’s trying his hand at redeveloping lots in the Dunbar area. I believe he’s doing a half-dozen at a time. I asked why there are so many storefronts and office for-lease signs on the Broadway strip. He says many of the new residents don’t live here much, and if they do, they don’t know how to do business here. As part of that conversation, he said the locals “have to… Read more »

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Lee

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Oops, missed a sentence:

“He was dragged back to China a couple of years ago…”

…to be groomed to take over his dad’s condo business. But he didn’t do that well, so he’s back here now.

Vancouver Condo Info

Mayor backs real estate speculation tax

Bubble? What Bubble?