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June 25, 2018 | Go Away

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Sam is Pete’s pal at work, a Brit who recently emigrated from the UK to Victoria. S and his family have been in Canada now for about five months, love it, want to stay forever. Pete implies they’re the kind of people the country could use – skilled, employed, determined. “But despite my advice to read your blog and shun real estate, they made an offer on a townhouse a few weeks ago – in the burbs, no less, for over $400k!”

So far, unremarkable. Just another family wanting to nest, despite the odds.

“The insanity of buying a property about 45mins outside Vic (1.5hrs in traffic) is baffling. At least he put some conditions on the offer; inspection, and financing,” Pete continues.

“Anyways inspection was fine, bank approved his mortgage. He lifted the conditions and then got a lawyer to write up the contracts. Two days later his new lawyer asked him how he planned to pay the new 20% foreign buyers tax?

Sam: Hmm? Come again?

Neither his real estate agent, the sellers agent, his mortgage broker, house inspector, none of them told him about the crippling tax he is now on the hook to pay. And they all know he has only been in the country for a few months. Well.. he can’t pay it and is now stuck with a contract he can’t close. What can Sam do? He’s feebly trying to find someone to buy his contract – I’m sure at a massive discount. The place was on the market for over 50 days before his single and only offer. Good thing his agent told him to move fast and put in a high offer cuz the place wouldn’t last! Baloney!”

So, Sam and his family – because they’re ‘foreigners’ despite moving here, working here, being financed here and buying a home here – are expected to pay 20% more than anyone else. The $80,000 being stolen from them by the government means financial ruin. The buyers can’t close. The sellers are left stranded. The bankers wasted their time. The real estate agents involved get nothing. No land transfer tax will be paid. No commission. No fees. No financing. No sale.

And how does that benefit BC, or make housing in Victoria, Vancouver or the LM any more affordable?

So far in June, 570 properties have changed hands in Victoria. Sales are therefore running a full 30% behind last year. Inventory, meanwhile (as in Vancouver) keeps piling higher – there are 28.4% more properties for sale than at this time last year. The city’s housing market is headed for a big thud.

But this is not about Victoria. It’s about the crowd of people now leading us. In BC the Dipper government and lefty city councils have birthed laws based on lies. That the speculation tax, the property surtax, the empty house tax or the foreign buyers tax will make homes affordable or decrease rents is, so far, false and lame. They won’t. Taxing stuff doesn’t make it cost less, and these are no different than every other tax – intended to extract money. It’s astonishing both the government and its tax-tax policies enjoy such overwhelming public support. Democracy is a tough room.

Moreover, real estate doesn’t need a push. It’s falling over all on its own.

The trade war exacerbated this week as the American president dissed Canada and pushed China. He stands alone in his nationalism and protectionism. Dangerously, it is combined with the vilification of non-citizens – the kind of alt-right tribalism that makes Americans want a border wall just as it leads Italians to refuse a shipload of desperate migrants. The world has not seen this kind of action from advanced, western, wealthy societies since the 1930s.

Predictably, the disruptor-in-chief is causing grief. Stock markets have swooned again, commodity prices have fallen, consumer confidence in Canada has dropped and, yes, people are thinking twice about buying houses. If NAFTA fails or the White House brings forth tariffs on maple-made cars, then one in five Ontario manufacturing jobs will be gone. Those big car plants, by the way, are located in places where lost jobs will hit hard – Brampton-Mississauga, Oakville-Milton, Oshawa-Whitby.

To date our leaders have been feckless and voiceless against the odious America-first plague, or the populist political movement that is heating up a racial war in Europe. Weekly the world is becoming a more dangerous place of us-vs-them, walls, barriers, shields and trade wars nobody will ever win. And we’re part of it.

Sam just got the door slammed in his face. I’m not proud of that.

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June 25th, 2018

Posted In: The Greater Fool

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