B.C.’s property assessment agency-The Agency Used To Justify Raising Property Taxes in British Columbia, says B.C. home values rise 12% on average – January 04, 2023,
Typically when a State or Province is broke, municipalities and Provinces will seek to raise taxes on the “Rich” first. Property taxes have little to do with the actual market values of homes; the market value of a home could be dependent on a host of different factors. I argue that British Columbia is Canada’s most beautiful province, so I can see why there’s a premium attached to living there.
But most of B.Cs over valuation problems are due in large part to government mismanagement of finances, resources, and overall central planning. The NDP, which is a far-left socialist political party in Canada, has been the political party of choice for BC voters for a long time; the Provincial Government of B.C.has all sorts of government redistribution schemes, used to extract as much money from B.C taxpayers as possible.
Because of this reality, the COST OF DOING BUSINESS in British Columbia is extremely expensive. The claim the article below makes is that “negative numbers are likely next year.” which would be in 2023 as the 12% spike was based on 2022 data. But I argue, that, negative housing MARKET numbers won’t stop the province of B.C. from raising or maintaining the amount B.C property owners pay for property taxes.
The B.C. government gets to control property taxes; that’s not a function of the market, meaning that if the MARKET metrics suggest deflation in the market, the B.C. government can create a whole new program to keep property taxes elevated. When I do my numbers on the Canadian housing market, all three branches of government will be seriously affected if there’s a housing market downturn.
By that I mean a lot of government employee paychecks can not exist without INFLATIONARY prices. Let me correct that; a lot of government employee paychecks can’t exist WITHOUT governments going into debt to pay them. Inflation targeting at 2%, worked well prior to the government declaring war on fossil fuels.
But this war on fossil fuels is actually a war on consumers, leaving consumers with not only less purchasing power but less disposable income. Now, common sense would tell you that to fix this problem, the central banks should lower interest rates back to zero, but domestic inflation and the import, export markets function differently.
If my country has to IMPORT resources or finished goods from a foreign nation, my country can’t tell the foreign nation what price to charge me for their product(s). What I’m getting at here is that PRICE CONTROLS might work domestically, but they don’t work internationally.
The forex value given to the Canadian dollar differs from the domestic value of a Canadian dollar. Domestically Canada has a very high cost of living compared to what citizens receive for their high cost of living. With that said, if Canadians were allowed to shop TARIFF/TAX-free internationally, they’d enjoy a much higher standard o living.
But because the government RESTRICTS economic activity and charges a tax for these economic restrictions; eventually, a financial bubble is created that requires stimulus SPENDING to finance. When I look at the numbers, all signs point to a debased Canadian dollar moving forward, meaning a lot more consumer price inflation.
As long as this war on fossil fuels continues, there will need to be viable alternatives to replace petroleum before prices can be stabilized. A lot of emphasis these days is made on the central banks; I personally see the VOTING PUBLIC as the problem. These Justin Trudeau-David Eby politicians won their elections fair and square because the voting public wants something for nothing.
Central banks exist to prop up governments and make stupid insolvent political ideas appear solvent. Most VOTERS know they’re getting more out of government than they’re putting in, and for many, they ACCEPT the consequences of this immoral system of governance. The problem with moral behavior is that it eventually becomes part of the culture and once embedded, “lazy-think” gets normalized to the point that people have a hard time recognizing HYPERINFLATION.
The housing market in Canada has already experienced hyperinflation; what hasn’t happened yet is hyperinflation for other consumer prices. I personally expect that will happen sometime in the future unless the Bank of Canada actually starts fighting inflation.
Although the price of borrowing has gone up in Canada, the Bank of Canada still hasn’t fought inflation; the inflation rate is still higher than the central bank borrowing rate. Meaning that the Canadian economy is still getting WELFARE and still being REWARDED for malinvesting. Either the Liberals or the Conservatives are expected to win the upcoming 2023 snap election.
The current Conservative Party leader Pierre Poilievre says he will fire the current bank of Canada governor, Tiff Macklem, and replace him, however, no word on what policies the new Bank of Canada governor will have regarding rates. Because in case Pierre Poilievre isn’t paying attention, a lot of developed nations have embraced this “Zero carbon” mantra.
Even the Conservative governments in the U.K. went Green; what I’m getting at here is that the way I see things is austerity or nothing. What I’m hearing from Pierre Poilievre is that he wants to better manage the economy Justin Trudeau created, which based on the rhetoric from Pierre Poilievre, appears to coincide with what the real estate lobbyists want which are lower interest rates.
Suppose CENTRAL BANK interest rates come down in this environment. In that case, I expect more inflation because you have also to remember that if rates come down, that will be the central banks giving up their inflation fight and governments deciding that they will try not to make consumer price inflation go up, which from my perspective doesn’t make much sense, as Canadians are heavily dependent on IMPORTS.
The Canadian government can’t decide the forex price given to the loonie, and if the markets see Canada giving up its inflation fight, I’m not sure what that equates to in the long term. Pierre Poilievre also has not declared that he will force Quebec or B.C. to allow pipelines from Western Canada to be built going to sell to Asia, Europe, or even the United States.
I’m hoping Pierre Poilievre will have some positive economic surprises. Still, I don’t know, and you have also to expect that if Pierre Poilievre beats Trudeau that the NDP and Liberals will form some sort of coalition to block everything the Conservatives propose.
In a nutshell, what I see is a problem with Canadian culture moving forward; it’s why I’m bearish on the DOMESTIC Canadian economy, which also includes housing.
Interesting times ahead