The Problem with a lower Loonie, the BoC and CMHC – A proposed tax on vacant homes in Toronto put on hold – February 5, 2020,
Personally I’m not a fan of CMHC as a Federal entity, at the very least if you believe in the existence of the CMHC, it should be a provincial crown corporation that adheres to the housing needs of the provinces. I’m also not a fan of the Bank of Canada lowering the Canadian dollar to appease Eastern Canada, namely Quebec, because if the Canadian dollar isn’t lowered the protectionism virus that now exists almost every province in Canada, would force us to compete and potentially sell off unnecessary public assets destroying the well being of future Canadians who will be forced to subsidize inefficient unionized public sector workers who as more and more retire will push the cost of living up for all of Canada.
Now, in Toronto, I know it and a large portion of Torontonians know that there are a bunch of empty homes and condos all over the city. There is actually a lot more empty condo than houses of course, but when you look at the data, Canada should have enough housing to house everyone in Toronto with an abundance of vacant units leftover and yes this even would include the influx of legal and illegal refugees who now made Toronto their home.
So what’s happened you ask? Well, Condos are built where rental housing should be and you have to be a person of means to purchase a condo. When there’s an abundance of rental housing, you could be recently bankrupt and have someone who is willing to take the chance and rent you a place to live. Even if you’re on welfare, there will be people willing to rent you a place to live in Toronto. But you see, with the B.o.C and the CMHC joining forces to make sure the Canadian housing market doesn’t deflate, major cities like Toronto have a dilemma.
Raise taxes and spook investors or ride this thing out and blame Premier?
Canadian real estate has become a hub for all sorts of money laundering if you invest in Stocks, what will amaze you as you get more educated are the different types of investors that exist in the stock market, finding multiple ways to make money based on pieces of paper.
You see when you make the Canadian dollar cheap, you invite interesting characters into the Canadian economy, who otherwise couldn’t afford to participate. As you invite particular people into Canada’s housing sector, what happens is they bring their mentalities from their home economies with them. So, financial complexities that exist in other countries, aren’t understood by Canada’s regulatory environment nor can many of them be addressed.
For money launderers, they don’t necessarily have to use their own names to launder money, they can use family or friends, legal entities, friends and other networking schemes that allow them to use the Canadian economy as a storer of their wealth. Now, higher municipal taxes would disrupt this, but it could also trigger unforeseen consequences, because the reality is, nobody knows how large these money laundering schemes are. I guess it’s about 20% but I don’t know, that’s only my eye test and based on what I’ve heard from sources.
The mayor of Toronto is well aware of what’s happening, but there’s nothing he can do about it, most politicians who study the matter, should have at the very least a basic understanding of what’s happening and why it’s happening, the problem is of course, that municipalities and Provinces have little control over what the CMHC and BoC does.
I personally think that if there’s a demand for CMHC to exist, it should exist similar to the Canada Health Act which basically means it would be delivered or its mandate would go through based on the needs of provincial and territorial systems, which be reflective on the taxpayers of Ontario. As CMHC and the BoC are structured today, the private sector can benefit from the protections created by Bank of Canada and the mortgage insurance of the CMHC which basically guarantees investors on both the borrowing and lender side that their money is protected by the Canadian taxpayer.
It’s a horrible housing system we have in Canada, which will be exposed when if there’s an economic downturn. With that said, the way I see it, the plan is deflating the Canadian dollar to pay for this crazy crap, which is why in Canadian dollar terms Gold out of all things has been a fantastic investment if you’re looking to protect yourself from inflation. If things don’t change on the Federal level in Canada there is no getting around economic stagnation in the Canadian economy without devaluing the Loonie.
In Toronto, what the mayor is trying not to do is trigger a housing crash, because even if you like Trudeau, the market doesn’t like his policies and has therefore only been hoarding a handful of Canadian assets one of them being housing.
City puts plan to tax vacant homes on hold, but the idea isn’t dead quite yet | CBC
Interesting times ahead