Regardless of their (well-earned/unjust) reputation for temperament, personally and/or collectively, one fact about experienced journalists is indisputable – they are unmatched at obtaining, synthesizing and evaluating the relevant facts.
I believe that the folks who are required on a daily basis to process vast amounts of information provided by experts, distinguished and not, and present it in an objective manner are really the experts in their particular subject field.
Good journalists keep us well informed and help us understand the issues.
We get the pleasure of interacting with a number of really knowledgeable and thoughtful real-estate-focused writers. One of our favourites has always been Romana King, because she pens articles like this.
Romana is a pivotal voice at MoneySense.ca, where she serves as senior editor. She keeps readers abreast of practical issues that matter, provides clearly worded explanations of complicated topics, and maintains the Home Owner blog.
She’s also a licensed real estate agent, but let’s not hold that against her – it just makes her objectivity all the more commendable!
Given her extremely busy schedule and stellar reputation, we were quite chuffed and grateful that Romana took the time to provide Welcome Mat readers with her thoughts on the big issues in today’s Canadian Real Estate Market.
Is British Columbia’s 15% tax on home purchases by foreign investors a good idea?
Short answer: Yes. Long answer: Yes, but… The way this tax was rolled out wasn’t wise. It hit the market hard and impacted far more than just foreign buyers.
With that in mind, do you think the Ontario government should look into creating a similar tax in Toronto?
Yes. Canada and its municipalities are only just waking up to the fact that real estate is seen as a commodity. Citizens of other countries have been buying up properties in other world-class cities for years. Now Canada is on this list. It should come as no surprise, then, that Canada should also consider taking localized measures to direct foreign interest in Canadian assets. A tax on non-resident homeowners is a good step. Other restrictions may also be necessary.
So you think governments should be intervening more in the housing market?
Not necessarily, but the purely economist perspective of letting the free market reign just doesn’t make sense in Canada. There are too many regulations and stakeholders already in the real estate market that it’s no longer a free market, subject simply to supply and demand.
That’s not necessarily a bad thing. It’s good that we have regulations and policies that dictate land development, zoning and renovations, permit processes, and taxes on the transition and use of land. Now, we need to examine whether or not there are unnecessary loopholes that have been created because of the many different stakeholders that operate in the real estate market.
Personally, I think that’s the step the Federal Liberals have taken, and it’s wise. Rather than implement new and potentially painful policies, the Liberals have looked to tighten up the holes and create more robust rules. They want to level the playing field. Do this and then the free market can have its way.
What do you feel has been the biggest real estate story in Canada this year?
There have already been several! Yes, the BC foreign buyer tax is important. Yes, potential housing bubbles are important, but the fact that the Feds are strategically closing loopholes and tightening up regulations is big. It signals that they are concerned that heated pockets exist in the nation’s real estate market. But it also signals the market that they aren’t going to be “the” solution.
There is no one solution. Instead, we have to consider each market and deal with each problem in a systematic way.
Localized tax may be ideal for one city, like Vancouver, but horrendous for another, say Quebec City. The Feds know this. And responded accordingly. But they also showed that they have the guts to take action—not just to cool market sentiment, but also to reign in the banks who’ve chased returns using low-rate mortgages on high loan to value loans and then passing the risk buck on to the taxpayers.
One last question, Romana: if you could describe the Canadian housing market in one word or phrase, what would it be?
A multi-headed beast.
Have a story idea, comment or want to be a contributor? Connect with us at [email protected] today!
Gavin is a media relations consultant and news junkie based out of Collingwood, Ontario.