British Columbia’s proposed speculation and vacancy tax will not tackle the housing crisis – October 18, 2018
To sources to consider reading if you want more information about the changes being proposed in British Columbia:
The problem with provincial changes that are being imposed is that they’re superseded by the Federal government, who created the CMHC which is the root cause of this disaster. The Government has created a situation in Canada where there isn’t any bottom, meaning that if there’s a housing crash entities will be bailed out but the Bank of Canada, the Federal Government and the Canadian taxpayer. Making matters worse is that because the federal government allowed this happen for so long the housing market in Canada can’t go down, it get remain stagnant and it can’t crash.
Canada, whether it knows it or not right now, has a currency crisis, in my opinion, what’s going to happen is hyperinflation of the loonie. Because the other result would be deflation if the government sits idly by while the Canadian market crashes. I’ve been saying for years now that I’m not sure why the Canadian loonie is so high, my theory is that people assume that it should be high because it’s always been a relatively stable currency. But the fundamentals of the Canadian economy are gone now, we have a serious labor skills shortage in this country while at the same time having a very high barrier to entry in our job market.
A lot of area’s of the Canadian economy are already heavily regulated, what’s not understood about heavily regulated economies is what happens when a large number of job seekers simply don’t want the headache of meeting the regulatory standards to buy the federal, provincial and even municipal governments, what happens is people stop applying, people don’t even think about that line of work, people in those lines of work take their talents out of the country and then what happens is that population starts to age.
Canada has a lot of welfare programs and are welfare programs have long ago made it more profitable to either work less or be on welfare so you don’t end up in the highly taxed upper middle class. Income taxes as I’ve said for years are the worst type of tax a government can create and our housing market is going to be a lesson on what not to do in the future. Because condos are being built to cater to foreign investors, there really is a housing shortage in BC and the truth the only remedy to fix it is to make interest rates go up.
The Canadian dollar is only low because our country is built around corporatists. Despite what some people think America’s welfare system is actually a lot more generous than Canada’s, even with all our government intervention, Canada’s CURRENT ECONOMY is still better than America’s our way of life is better than America’s, what’s wrong with Canada is that we manipulated our currency to achieve this and the negative effect of this is that our cost of living is higher than it should be.
Because Canadians are spending more for less, Canadian taxpayers are getting the shaft while outsiders get to benefit. As an example China’s interest rate is almost 4.5% as of 2018, the Chinese are known as some of the best savers of Cash in the world, the cost of living in China is a lot lower than it is in Canada, plus because they manufacture things in China chances are they probably get a lot more discounts on items than Canadians living in Canada. So they average Chinese person who may have a lower standard of living may indeed have more real money than Canadians
How does that translate into real estate you ask? Well, If a Chinese person is looking to park his or her money somewhere, Canada is the ideal place for them. The value wouldn’t really matter much, because Canada has trapped itself in a low-interest rate environment, what would get rid of foreign investment in real estate in Canada would be raising interest rates, but because Canadians are in debt to do that would equate to a crashing of the Canadian economy, but to not do that or to gradually raise interest rates in Canada will like I said in time make the Canadian economy come to a grinding halt.
The BC vacant property will do nothing more than force the government to get more involved in the housing disaster. Last time I checked government workers get paid and more than they would if they had to compete in the private sector. So, this is another nail in the coffin for the Canadian economy if this becomes law in British Colombia.
Interesting times ahead.