COVID and the housing market
- Thread starter mimico_polak
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Mad Mike
Well-known member
Not a very knowledgeable economist, I’ve worked with plenty and never heard one dis the transition to GST.
GST is a transparent replacement of a hidden tax on goods called the 13.5% MST (manufacturers sales tax) that was applied on all imports and manufactured goods at wholesale. Mort or less revenue neutral.
It was introduced at the depth of a recession, people were grumpy, service businesses hated the fact that services would be taxed, manufacturers rejoiced as they were no longer subsidizing service industries.
Mad Mike
Well-known member
Wow, it’s always saddening When I hear of these things - that’s a tough blow.
Condolences to you and your son, my thoughts are with you.
Thank you
Thank you. The coroner delays are my brain worm.
The developers know the zoning before they buy. It is not like they buy up some land and then realize, oh crap, I can only build four floors, Toronto rules are so crazy.... The city is also working on this: https://www.toronto.ca/wp-content/uploads/2017/09/9039-Avenues-Mid-Rise-Buildings-Study-Part-1.pdf Regardless the current zoning is actually very clear and easy to find throughout the city.
I used houses as an example. There is a crap tonne of empty lots or empty designated avenue mixed use, low rise apartments, many years and years on after the zoning changes were approved. Basically places where the development is fully approved, demo permits issued, nothing is getting built on those sites--years and years on, each developer has dozens of these no progress already approved sites in inventory, but is still putting in new applications for more... hoarding. And that is the better developers, not the super greasy ones...
As for taxes, they have their avoidance there. They put in the offer with a 1.5 to 2 year closing, the current owner owns the house or building and pays the taxes for that stretch, this covers the taxes for the initial application period as they don't actually own the land during the initial zoning applications. For houses they "let" the owner stay rent free (as long as they pay the taxes) for a year or more after the close (which may not be a bad deal for either party, depending). Then when it comes time to pay the vacant home taxes... it is around 12K PT and VT combined per lot (say high average). Even if they hold for 10 more years... that is only 120K on something they will sell for millions to a real developer. Vacant and property tax is a rounding error and is not working in this context.
What would work.... Once the application goes in a grace period to get approved and start building and then pay the taxes on either max zoning value or better yet IMO what they asked for, IF they play games and leave it in someone else's name, then they pay.... THEN limit new applications based on progress for open and approved ones.
Toronto is currently on pace for 10K new units in the next year, easily 10 times that is needed and that capacity has already approved zoning and them some. It is totally broken by bad behaviour.
Agree on resizing and closing loopholes on immigration to reduce demand until supply improves.
The ones that don't like HST are small contractors that double dip the HST system. Roofers seem to be #1 as it's a one day job. Pay cash and the owner saves a thousand dollars HST. EVERYONE wants to screw the government. The contractor is laughing because he didn't give away a cent of his money. His workers get cash, no tax.
The legit small contractor has to compete.
Mad Mike
Well-known member
It is and it isn't. There is lots of NIMBY in Toronto, so what can be built differs by neighborhood. Toronto should have harmonized zoning at the point of amalgamation, nailing down a standard that considered transit corridors (putting the 30 high buildings on the subway lines), rezoning all res lots to the same standard (so the same setbacks and lot dimensions for infill lots are consistent across the city).
This isn't new stuff, it's the city's unwillingness to clear the bureaucracy and bureaucrats!
What's stopping building? Can't build profitably? Can't build at all because of trades availability? Are these landowners getting off watching the little guys squirm?
I'm don't see this as an issue. Land, like stocks and bonds can be a long term investment. Are we supposed to take land out of the free market altogether?
I think it's part way there. Landowners pay taxes based on the zoning and value of the property -- if it's kept vacant or boarded up, they also pay the vacant home tax. I'd say once an application is approved, the grace period should start.
The number is higher than that. Starts in Toronto CMA are at 35,000 units Jan to Aug, forecasted at 4300/mo for the rest of the year.
Toronto vacancy rates are 2.6% for rent-controlled units, that's up from the pre-pandemic rate of 1%. Free market vacancy is 3.5%, double the prepandemic average of 1.7%. While still quite low, rising vacancy rates don't excite builders.
What does this mean? Vacancy tax is working to bring stock online? Large numbers have become unhoused? People are moving out of Toronto to lower cost areas?
Gta severe delinquencies climbing fast but no price reductions yet. Probably investors not willing to lose money but soon enough banks will start to pull the plug and not care about the loss.
betterdwelling.com
Toronto Real Estate Is Collapsing Much Faster Than Most Realize - Better Dwelling
Canada’s largest real estate market is turning into a headache for the country’s largest bank. Yesterday we mentioned RBC’s Greater Toronto Area (GTA) mortgage portfolio has seen serious mortgage delinquencies (90+ days) soar in Q3 2024. We received a few requests for a deeper dive, so here it...
betterdwelling.com
It’s still 0.3% of all mortgages. Blip on the radar.Gta severe delinquencies climbing fast but no price reductions yet. Probably investors not willing to lose money but soon enough banks will start to pull the plug and not care about the loss.
Toronto Real Estate Is Collapsing Much Faster Than Most Realize - Better Dwelling
Canada’s largest real estate market is turning into a headache for the country’s largest bank. Yesterday we mentioned RBC’s Greater Toronto Area (GTA) mortgage portfolio has seen serious mortgage delinquencies (90+ days) soar in Q3 2024. We received a few requests for a deeper dive, so here it...
Doubled from 0.15-0.3%….
We’re not holding anything.
BoC dropped 0.75% in the last few months.
US is down 0.5% in the same time frame.
If anything the USFED is behind us.
Getting really close to making a really dumb decision I hope prices don't crash any time soon and start rising again.
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Mad Mike
Well-known member
I doubt banks will start pulling the plug anytime soon, the last thing they want is to do anything that might trigger a price correction.Gta severe delinquencies climbing fast but no price reductions yet. Probably investors not willing to lose money but soon enough banks will start to pull the plug and not care about the loss.
Toronto Real Estate Is Collapsing Much Faster Than Most Realize - Better Dwelling
Canada’s largest real estate market is turning into a headache for the country’s largest bank. Yesterday we mentioned RBC’s Greater Toronto Area (GTA) mortgage portfolio has seen serious mortgage delinquencies (90+ days) soar in Q3 2024. We received a few requests for a deeper dive, so here it...
Private lenders might act sooner as they try to get out before borrowers go underwater.
My guess is BOC might do a half point drop in October for a lot of reasons including supporting real estate prices.
Agreed. I don’t expect any big lenders to start calling loans. Especially if people keep paying. Why bother? Still making money and unless there’s a 3-6 month default…let the customers suffer.
BoC wants / needs to drop because there is a LOT of mortgage renewals coming up in 2025 and even small mortgages going up $200/biweekly….makes the 2-3% jump on <2% mortgages very painful if you have been having lots of fun.
Mad Mike
Well-known member
BOC has more concerns than mortgage rates, the solution of using interest rate hikes to cool inflation has side major economic side effects.
I think they may have slowed the economy too much. Manufacturers are not investing in productivity, unemployment is rising and GDP/capita is falling. BOC will need to shift priorities from fighting inflation to fighting recession.
I expect big cuts over the next 12 mos.
The US is making some large cuts and since our economy is a bit connected to them we like it or not , we may have some suffering coming .
I suspect private lenders are feeling the pain faster than banks as people that need an unconventional source of finance will be sooner to default.
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I suspect private lenders are feeling the pain faster than banks as people that need an unconventional source of finance will be sooner to default.
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I was thinking shorter term.
At this point the volatility of rates and prices, are the problem and no one wants to take the hit.
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I thought the GST was to help exporters at the expense of home service businesses like auto and home repairs. Domestically, the parts should drop a tiny bit in price but we got hammered on the labour rate unless you went underground. Enforcement is pathetic.
Like any tax it has its goods and bads. Some things are taxed that shouldn't be but the CRA is challenged enough by basics now. Adding making rational decisions to their job would fry their brains.
