The bubble finally deflating. not bursting.............

[REDVAN]

Originally Posted by squiggs96

These foreigners are ruining Canada. It's very bad. Very bad. We need to bring back houses to Canadians, unlike Harper who gave them away. Sad.

You've made a good joke, but the root of the problem is that more and more Canadians can't afford a house in their own country because non-citizens have bought them all and increased prices.

It's not like these foreign nationals are even living there, they're either keeping it empty or trying to rent it. Putting a significant punitive tax on non-citizens real-estate purchases would be good for the Canadian middle class.

[Flamenspiel]

Well aside from foreign speculators, Toronto is the best place in Canada to find a high paying job. Part of Real estate 101 is to follow the jobs.

[d00little]

Originally Posted by Flamenspiel

Well aside from foreign speculators, Toronto is the best place in Canada to find a high paying job. Part of Real estate 101 is to follow the jobs.

True, it probably is one of the better places to find a job right now. But fundamentally, the average income is lower than many other Canadian cities (including Calgary). Currently the detached house prices in the 416 is 3x higher than in Calgary ($1.5M vs $500K). It's spreading across the GTA that even places like Milton and Whitby are seeing large increases.

[The Fonz]

Out of curiosity, what does everyone believe the average household income would be in Calgary for the demographic that is purchasing the $500k homes?

[CliffFletcher]

Originally Posted by automaton 3

Even with the low interest rates I don't understand how the Toronto market has gotten so frothy.

The average family income doesn't support those prices. Where is the money coming from?

In a lot of cases, it's parents. Canadians Boomers hold enormous amounts of wealth, and are willing to pass it on to their children to get a leg up in the real estate market.

[CroFlames]

I get sad when I read that because I'm not getting jack from my parents. I might only get some debt :/

[activeStick]

Originally Posted by automaton 3

The average family income doesn't support those prices. Where is the money coming from?

As someone else mentioned, parents are a big factor to helping with down payments for their kids and the other source is of course borrowing due to low interest rates. Many people's financial plans are now based around borrowing money to finance basic expenses (housing, bills, food) and their monthly payments are made to service those debts (interest mostly).

Very dangerous for those that are over leveraged, especially when interest rates rise if they're just treading water monthly and paying off only interest.

[DiNaMo]

Just throwing an idea/numbers out there but what about for example if Canada implemented a 1% annual non-resident ownership tax based on property value, jumping to 2% if the property is vacant for say more then half the year and the proceeds were used as some sort of tax rebate to first time mortgage holders. Thoughts?

[puckedoff]

Originally Posted by CroFlames

I get sad when I read that because I'm not getting jack from my parents. I might only get some debt :/

You should have raised richer parents, sorry.

[shermanator]

Originally Posted by The Fonz

Out of curiosity, what does everyone believe the average household income would be in Calgary for the demographic that is purchasing the $500k homes?

From my anecdotal evidence the people I know buying homes in the $500k range make around $120k as a household or more. Not a big sample size, but it somewhat matches RBC's "how much home can you afford" calculator.

[Flamenspiel]

nm

[rubecube]

Originally Posted by CliffFletcher

In a lot of cases, it's parents. Canadians Boomers hold enormous amounts of wealth, and are willing to pass it on to their children to get a leg up in the real estate market.

I do wonder if it's time to start introducing some form of inheritance tax in this country. If we want to say that capitalism is meritocratic system, then let's make it truly meritocratic.

[Mr.Coffee]

Originally Posted by rubecube

I do wonder if it's time to start introducing some form of inheritance tax in this country. If we want to say that capitalism is meritocratic system, then let's make it truly meritocratic.

Wow. Disagree. That would be double dipping for sure by the old government.

[Sylvanfan]

Originally Posted by rubecube

I do wonder if it's time to start introducing some form of inheritance tax in this country. If we want to say that capitalism is meritocratic system, then let's make it truly meritocratic.

There are probate fee's which vary by province. In some cases, it's really cheap.

http://blog.taxresource.ca/tax-rates...s-by-province/

As a rule...don't let your rich relatives die in BC, Ontario, and likely soon to be Alberta

[Mr.Coffee]

But I think he's talking about a tax, above and beyond probate.

[Sylvanfan]

Originally Posted by Mr.Coffee

Wow. Disagree. That would be double dipping for sure by the old government.

It does sound like something socialists would say to get their hands on more money that was already taxed, and than increased in value legitimately in most cases.

[snootchiebootchies]

There is kinda already a death tax, right? When someone passes away, all of their properties and investments are considered to have been disposed right before their death, and thus the estate has to pay taxes on the capital appreciation of all their dispositions before it is inherited by someone else.

If you're calling for an estate tax like what they have in the US (I'm not sure the US federal estate tax will survive a Trump presidency), I can't imagine something like that could pass here. It would be seen as being too socialistic. Moreover, it encourages a bunch of financial shenanigans (hiding money overseas) rather than the continued investment into the Canadian economy, even after one has retired.

[Slava]

Originally Posted by snootchiebootchies

There is kinda already a death tax, right? When someone passes away, all of their properties and investments are considered to have been disposed right before their death, and thus the estate has to pay taxes on the capital appreciation of all their dispositions before it is inherited by someone else.

If you're calling for an estate tax like what they have in the US (I'm not sure the US federal estate tax will survive a Trump presidency), I can't imagine something like that could pass here. It would be seen as being too socialistic. Moreover, it encourages a bunch of financial shenanigans (hiding money overseas) rather than the continued investment into the Canadian economy, even after one has retired.

There are ways around this tax disposition currently with specific types of investments and ways to hold them.

I don't think we're likely to see the implementation of an estate tax at this point because it would be political suicide. The baby boomers and their heirs are not going to be in favour and they're an enormous voting block between them.

[DiracSpike]

Income Tax, Capital gains tax, Municipal Tax, Dividend Tax, CPP (Tax), EI (Tax), Government Sales Tax, Carbon Tax...now let's add an inheritance tax, I'm not sure we had enough already.

Now let me contradict myself slightly when I say we should have a foreign buyers tax. It's insane what's happened in Toronto and Vancouver and if the real estate board of Toronto is correct in saying that only a small minority of property buyers are foreign then a tax on them shouldn't make a difference. Lots of other countries, most notably Australia with Sydney, do the same thing and I think it's a good measure to protect the domestic housing market

[CliffFletcher]

Originally Posted by rubecube

I do wonder if it's time to start introducing some form of inheritance tax in this country. If we want to say that capitalism is meritocratic system, then let's make it truly meritocratic.

More robust inheritance taxes are probably necessary to slow Canada's acceleration into a class society. More and more of a person's station in life in determined by the advantages and money they inherit from their parents. In another 20 years, Canada will be a lot more like the U.S.

Of course it's politically untenable, so it won't happen.