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Baby, we got a bubble!?

TheKingEast said:
A lot of fear mongering by the media and the government doing whatever they can to bring prices down. I'd sell too.
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Is the government going to try to control the price of stocks now, since those who own them may be happy, but those that want them can't get them? When government gets into controlling supply and demand they generally screw up what the market naturally manages.
 
Admiral Beez said:
Through the control of illegal activities, certainly. But when was the last time the government coerced the price of real estate, stocks or other investments to benefit buyers to the detriment of the sellers?
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Its naïve to say that the government doesn't try to control markets.

The biggest lie 'capitalists' got everyone to believe is that the markets are 'free'.

Here's an example with the government playing around with stocks:

http://www.cbc.ca/news/business/flaherty-imposes-new-tax-on-income-trusts-1.573751

Lots of people lost a lot of money on the stock market because of this.
 
narduch said:
Its naïve to say that the government doesn't try to control markets.

The biggest lie 'capitalists' got everyone to believe is that the markets are 'free'.

Here's an example with the government playing around with stocks:

http://www.cbc.ca/news/business/flaherty-imposes-new-tax-on-income-trusts-1.573751

Lots of people lost a lot of money on the stock market because of this.
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Yes, of course they try, but they screw it up. You're supporting my earlier point, see below.
Admiral Beez said:
When government gets into controlling supply and demand they generally screw up what the market naturally manages.
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Toronto housing prices are high because the demand is high. And it's not rich offshore folks keeping empty houses to flip, but local residents who have the cash. In my neighbourhood of Cabbagetown, any house on the market goes for over a million dollars in under a week, and it quickly renovated, moved into, sold and then moved into by the next folks. The house is never abandoned or emptied in order to restrict housing supply. Everyone in the deal made money or is happy - what's the downside?

The fix for housing prices is not to restrict prices, but to open up supply. We're importing tens of thousands of families into the GTA each year, but are not building housing for them. And not everyone wants to raise their kids in towers.
 
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I have no idea what the solution is. I just don't want to see the market crash, because I think we all get hurt if that happens. And if the price gains continue at this massive pace the chances of a crash are more likely.

I don't know if I should be complaining. I bought my house for $500,000 in 2011. And even then we though the price was outrageous. Similar homes are now going for $1.2 million in my neighborhood.

I know a lot of people on this site believe in a sustainable city. But I think insane real estate prices will just lead to more sprawl. That's really the main reason why I think the governments should take action.
 
Admiral Beez said:
Is the government going to try to control the price of stocks now, since those who own them may be happy, but those that want them can't get them? When government gets into controlling supply and demand they generally screw up what the market naturally manages.
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Stocks aren't a necessity, but housing is. I think that should afford the government some ability to set policy on keeping housing reasonably affordable.
 
Admiral Beez said:
Is the government going to try to control the price of stocks now, since those who own them may be happy, but those that want them can't get them? When government gets into controlling supply and demand they generally screw up what the market naturally manages.
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I am a huge proponent of free markets but real estate is in no way a free market. The government has actively distorted the real market and is really the driver of the current bubble, just as it was in the USA.

A few examples:

-CMHC (artificially creates cheap credit and low loan underwriting standards)
-Low interest rates (cheaper credit)
-Development fees (tax burden is greater on new home buyers than existing home owners)
-Land transfer tax (increases costs and reduces transaction volume)
-Immigration policies (raises demand)
-Lack of resources investigating and prosecuting financial crimes (makes Canadian real estate a prime target for "hot money")
-Lack of regulatory oversight of realtors (shadow flipping, bidding wars, lack of transparency)
-Bureaucratic inefficiency and red tape (slows down development)
-Restrictive development legislation (NIMBYism, Green Belt, etc.)
-Advantageous tax treatment of real estate (no cap gains on primary residence)
-Lack of enforcement of existing tax laws and/or closing loopholes (non-residents for income tax purposes claiming residency when selling real estate, assignment sales, flippers who use family members to claim primary residency, etc.)

All of the above create upward pressure on pricing and are in the direct control of the government. To say that the government shouldn't interfere with a "free market" like real estate by imposing some policies which create downward pressure on pricing is an absolute joke. EVERYTHING the government has done to date creates upward pressure on pricing.
 
The government is going to kill this thing if they keep trying to play around with the market. They'll slap a tax before trying to address the supply issue.
 
Pressa said:
I am a huge proponent of free markets but real estate is in no way a free market. The government has actively distorted the real market and is really the driver of the current bubble, just as it was in the USA.

A few examples:

-CMHC (artificially creates cheap credit and low loan underwriting standards)
-Low interest rates (cheaper credit)
-Development fees (tax burden is greater on new home buyers than existing home owners)
-Land transfer tax (increases costs and reduces transaction volume)
-Immigration policies (raises demand)
-Lack of resources investigating and prosecuting financial crimes (makes Canadian real estate a prime target for "hot money")
-Lack of regulatory oversight of realtors (shadow flipping, bidding wars, lack of transparency)
-Bureaucratic inefficiency and red tape (slows down development)
-Restrictive development legislation (NIMBYism, Green Belt, etc.)
-Advantageous tax treatment of real estate (no cap gains on primary residence)
-Lack of enforcement of existing tax laws and/or closing loopholes (non-residents for income tax purposes claiming residency when selling real estate, assignment sales, flippers who use family members to claim primary residency, etc.)

All of the above create upward pressure on pricing and are in the direct control of the government. To say that the government shouldn't interfere with a "free market" like real estate by imposing some policies which create downward pressure on pricing is an absolute joke. EVERYTHING the government has done to date creates upward pressure on pricing.
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But fair enough, but you don't fix the prices through taxation, since there will always be those willing to pay (as Vancouver will soon see as the market there adjusts to the FBT). Instead, do it honestly, by legislation (addressing much of your list).

Now, admitedly contradicting myself here, but if you really want to crash the market and make pricing affordable to the mob, follow the 1970s speculation tax, http://business.financialpost.com/p...n-property-and-the-market-collapsed-overnight
 
From the Ontario government this afternoon:


Today, Charles Sousa, Minister of Finance, issued a statement following a meeting on housing with Federal Minister of Finance Bill Morneau and Mayor of Toronto John Tory:

"A strong housing market reflects Ontario's strong economy. Canadians are moving to Ontario at the fastest rate in 29 years, and the Greater Golden Horseshoe (GGH) continues to be one of the most attractive places in the country for newcomers. While this is good news, our government has become increasingly concerned about rapidly rising rents and housing prices, and their impact on the many people looking to find a home.

Today, I met with Bill Morneau, Federal Minister of Finance, and John Tory, Mayor of Toronto, to discuss new ways to collaborate to address rising housing and rent costs, and share information across jurisdictions. Our meeting was productive and included discussions about how speculative activities may be driving up housing costs, and resulting in homes being left vacant, constraining supply.

We have committed to meet quarterly to collectively discuss how we can address the challenges of housing affordability, managing expectations, and the impact of market speculation in the GGH. Our government will also continue to meet with the GGH's municipal leaders to determine ways to collectively respond.

We will be sharing relevant data more regularly between governments to enhance understanding of the Ontario housing market and to help inform analysis of current and future measures designed to provide market stability. I am also pleased that the Canada Revenue Agency will be dedicating resources to support the enforcement of tax compliance within the GGH's real estate sector. This will contribute to our strengthened enforcement efforts.

While ongoing collaboration with the federal government and City of Toronto is key to improving housing affordability for renters and those looking to purchase a home over the long term, our government is also aware that a response is needed now to address recent dramatic increases in rents and home prices. In the coming days, we will announce a suite of measures designed to increase supply and address demand, making housing more affordable for people across Ontario."
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digitalis said:
Ontario to start collecting citizenship data on real estate buyers
http://www.theglobeandmail.com/real...p-data-on-real-estate-buyers/article34748588/

It's frustrating that it took so long to implement such basic data collection. This should have been done ages ago. Willful blindness.
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The doublespeak from the 3 amigos meeting yesterday was hilarious.

"We want to cool the market, but we don't want to affect peoples equity". Just paraphrasing.

This reminds me a lot of the way the Liberals handled the Hydro portfolio. They let the system get abused for years and did nothing. Then all of a sudden they claim to be just as outraged as the public. They come across as so fake.
 
narduch said:
The doublespeak from the 3 amigos meeting yesterday was hilarious.

"We want to cool the market, but we don't want to affect peoples equity". Just paraphrasing.

This reminds me a lot of the way the Liberals handled the Hydro portfolio. They let the system get abused for years and did nothing. Then all of a sudden they claim to be just as outraged as the public. They come across as so fake.
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Bunch of idiots.

They caused a lot of this mess. Double land transfer tax, allowing developers to build unliveable shoeboxes, letting developers run a muck, underbuilding SFH, allowing foreign buyers to manipulate the system....and here we are. In the "good ole days" foreign investors were buying out floors upon floors of units. Government didn't care because they were making money. They helped create the bubble.
 
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