The City of Toronto proposed tax on vacant homes is really a war between municipalities vs. The CMHC and The BoC refusal to normalize interest rates – November 19, 2021,

The Federal governments in Western nations worldwide have declared war on Municipalities, whether it’s the Federal Reserve, the EU, or The Bank of Canada, structural barriers have been created to PROTECT certain investors from NATURAL market corrections and it’s for this reason that cities like Toronto in an effort to solve a problem that should have never existed in the first place, have to get creative in their attempt to make housing more affordable. I don’t care how left-wing current Mayor of Toronto John Tory is, this is not his fault. Even when I disagree with a person’s economic ideology, I’ll defend them.

Now, in some nations, there doesn’t exist a FEDERAL CROWN CORPORATION involved in the mortgage insurance business, designed to assure domestic and foreign investors that the Canadian housing market will be bailed out by the Canadian government before it crashes. Built into the Canadian economy is guaranteed fiat-price inflation.

Private mortgage insurers exist and one would assume be abundant in Canada right now, but still, the Canada Mortgage and Housing Corporation(CMHC) exists to not only provide mortgage insurance, but now I think they help Canadians with a getting downpayment? This is beyond stupid if you understand that the CMHC is one of the parties responsible for the higher home and rental prices in Canada.

So now not only are home prices more expensive ALL over Canada, but now, the CMHC is loaning Canadians money for a downpayment along with providing them mortgage insurance? Compounding the problem is another FEDERAL CROWN CORPORATION known as the Bank of Canada(BoC). The keyword in all of this is that it’s the Federal government is causing price and behavioral distortions in the rental markets.

The municipal governments have little incentive to offer developers, to build rental housing because after all, rental controls are a thing, and if a developer builds a condo and someone purchases a condo unit, that purchaser who rents the condo can rent it out but also has the LEGAL right to terminate the rental agreement with the tenant anytime they feel like it.

So, it’s a win-win scenario if you’re a developer to build condos, collect strata fees instead of rents and pass those costs to the purchaser of the condo who then passes those costs over to the renter, a bonus for the owner of the condo unit is they can kick out the renter anytime they feel like, because unlike rental purposed housing which is designed for renters only a condo can have multiple purposes, even prostitutes use Condos in Toronto, which can provide the owner of a condo some additional income, without the worry of a tenant.

Plus to top it off, the owner of the condo can sell the property once the price for the condo inevitably goes up in value. This is how the Federal Government is destroying Canada. Now, in response to this stupidity from the Federal Government, the Municipal governments, look for creative ways to stop investors from making common-sense decisions.

So let us imagine this law is passed to tax vacant homes, the reality of the situation is if I as the investor own the condo, I’ll pass the potential of that additional cost to the renter and even if I rent out my property, I might put it up for sale and just wait for it to get sold, maybe I work out a deal with the purchaser ahead of time, explaining to them that there’s a tenant inside the unit and the deal can’t close until such and such a date.

There are all sorts of things that can happen, that wouldn’t happen if interest rates were normalized and fluctuated like they’re supposed to. I think it’s about 50% of Canadians who own their homes outright, but even these individuals who own their homes outright are often strapped for cash because a house is a money pit and requires maintenance, now as many people know debt fuels the housing market but as long as property values keep rising bad investments will keep getting rewarded and you have to remember that as rental prices rise, so does the cost of commercial property, which makes the cost of living, in general, go up.

Now despite what people think, this is not INFLATIONARY for the economy, it’s actually deflationary because now more money can buy fewer goods and services, so you’ll notice that all over Canada small businesses are usually suffering, because who can blame Canadian consumers for wanting to pay cheaper prices for things? If the business owner doesn’t raise prices to pay for their commercial leases and inflated energy costs, they’ll go bankrupt and this is obviously problematic for municipalities, but again this problem doesn’t need to exist, it exists because of a lack of financial education.

This problem will probably accelerate in the future, so you’d be wise to prepare yourself for it!

The trouble with vacant home taxes when trying to fix housing supply issues |

Interesting times ahead