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January 19, 2020 | The Canard

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.

Are single-family homes a waste of space, a crime against Greta, arrogant, egocentric, bourgeoisie and a hateful, hedonistic social extravagance? Duh. Of course they are. At least governments are now thinking that way, and the consequences are piling up.

BC and Vancouver have declared war against detacheds, as you know. As a result, valuations have taken it on the chin (even condos are following now). Second homes are taxed extra, just like those the state thinks are under-utilized. Digs in expensive hoods get a property tax penalty, while in Toronto we’re just days away from a new uber-land-transfer-tax on top-end homes. The GTA may also soon have a vacancy tax, along with an 8% increase in municipal levies. (Van is going up 7% this year.)

The latest vitriol against single houses comes from Evan Siddall, the boss of CMHC who’s just unloaded on the nation’s realtors as he prepares to leave his post. “Our dream of home ownership is static and regressive,” he says. “We need to call out the glorification of home ownership for the regressive canard that it is.” And this: building more SFHs is ‘wrong’ and the real estate industry, “is drunk on its own excess.”

Wow. But 68% of Canadians own houses, and a recent poll of Millennials aged 28 to 32 found 72% of them are salivating to buy. In the US a similar study of the moisters found 63% of renters want to own and 83% of owners think they’re geniuses.

By the way, that survey also discovered the kids justify over-spending on real estate not for spouses and kids, but for dogs!

Here’s the issue, though:

(a) Houses cost too much. Prices have been inflated by cheap money, pro-housing policies, easy credit and rampant speculation.

(b) The result has been epic, historic levels of debt and the need for massive mortgages.

(c) Wage inflation hasn’t kept up with price inflation and new buyers are at risk as never before.

(d) The economy’s in the 11th year of an expansion and so we’re overdue for a reset, so

(e) any downturn would absolutely nuke first-time buyers with mucho debt and poco equity. Therefore,

(f) maybe dudes like Siddall are right. Building 2,000-foot suburban houses on forty-by-100 feet of former fields with $300,000 in materials so two people (and a dog) can live there and drive a minivan on a divided highway to work an hour away is insane.

But, that’s the dream. It’s everywhere, and being challenged. Look at the UK for example. Eerily similar to us here in Meghanlandia. In 1991 67% of young adults in Britain owned a house. Not it’s 38%, and falling. The average UK property costs eight times average income – same as Toronto, but way lower than YVR. Half of buyers there need the Bank of Mom. In London it’s two-thirds. A million more 18-to-24 year old Brits live with their parents than in 2002.

In the US experts say the real estate market would likely crash if it weren’t for obsessed young people taking on big debt. Inflated house prices in places like California have led to serious social upheaval, as the Moms4Housing episode has shown. Working people cannot afford to own, and yet owning remains the dream Siddall is talking about.

This sense of disenfranchisement is leading us to a new place – as governments are asked to ‘level the playing field.’ That could mean letting squatters take over Oakland houses that are sitting empty, having Toronto and Vancouver level a vacancy tax, jacking the property taxes owners have to pay with after-tax dollars, busting up protective neighbourhood zoning or taking $53,000 for nothing every time the average GTA detached house changes hands.

There’s a pattern developing here. Surely you can see it. If the bulk of your net worth is in residential real estate, challenge that. You’ll soon be the enemy. You might even consider what Phil did. Here’s his Sunday email to me.

I’ve been following you for a long time. We sold the house in 2010 in Kelowna and rented a two bed condo the minute the kids left the house. Our son called and said, “I guess this means I can’t ever come back”, which of course was the point.

We’ve kept all equity and as much as we can in the markets. We retired, at 55, last January and have been playing since then. Currently travelling for a year in a 22 foot camper van. The first three months was a test to a 32 year blissful (really) marriage as we had repeated issues with the camper and getting used to living in a phone booth. The last two months we are back on track. We left in September and I’m writing from a coffee shop in Southern Louisiana…Cajun Country (many oppressed Acadians settled here in the 1800’s). We are sampling the culinary delights of cracklin’, boudin, crawfish, and gumbo. Other than the camper, we are “homeless”. Having a blast.

Home is not a thing. It’s where you are. The dog doesn’t care.

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January 19th, 2020

Posted In: The Greater Fool

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