In this post, I was going to talk about cryptocurrencies, their advantages and disadvantages they pose on our daily lives, but that got side-tracked when I started reading about the British Columbia’s new “Speculation Tax.” When I looked at how housing prices are being effected in different regions, I thought this was more of an issue than how we are going to buy things in the future. So I took some time to read further on how this tax was going to effect you and me, but more so, how the money lenders look at this.
There is an lesson I have learned in my life about money: you always need more, and you never have enough, and you fight to keep what you have. This sets the frame work between Land Owners, and everyone else in Canada. In Canada, over the last three decades, we have seen property values climb three fold. There are many factors at play here, but the main factor that I see is that more people want to be land owners, rather than renters, so this automatically ups the Land’s value as our populations grows. This is compounded in desirable areas like Vancouver and Toronto, and negatively dries up value in other parts of Canada. So no two areas are the same in terms of Land Values. But there is one constant: for most, property ownership is the biggest, and most profitable, investment–period–in one’s life. As a property owner, any tax or encumbrances, is a direct threat to that investment.
The double side of property owners is funny to me. Obviously, the land owner wants their investment to grow in value. Added to this, you want the enjoyment and happiness of your land, minus anything you feel would diminish that state of mind such as gentrification or industrialization around you. Your house, its location to the community, means that of all the investments to your future, your land is your greatest investment of them all, and you are going to fight if anyone taxes, or reduces its value for other means. You want that value to grow.
If you are someone who is looking to buy land, in this day and age, the bench-mark is almost unattainable for the vast majority of people based on their level of wealth and income. With cheap money (borrowing it from money lenders), and the lure of living in centres like Vancouver and Toronto, property values in these areas have tripled in price over the last decades. So many are willing to put themselves in huge debt for the pleasure of living in and around these areas. On the same scale, money lender’s are being ask to increase the criteria for borrowing on property, stamping out further those who wish to be land owners, but money lenders are still willing to lend to make their profits.
Today, the world seems to be looking at Canada, as our personal debt per Canadian is one of the highest among the G7 countries, noting how much trouble we could potentially be in. With so many carrying these mortgages, some are speculating either a meltdown, or a slow deflated collapse of the market, but nothing positive. Needless to say, we could be in trouble as Interest Rates and Market Forces start turning towards a new course in our economy, and these forecasts start coming true. I would not want to be the person who has to juggle public policies, and Laws, to keep everyone happy.
March 27, 2018
It was announced that the British Columbia Government has laid out sweeping exceptions to its Speculation Taxes. It appears that many who own land in smaller regions of the Province are spared the tax.