Victims

Apparently every eighth property sale in the GTA last year (and there were 113,200 of them) went to a person who already has real estate. This ratio exploded in the last decade according to government stats. More than 120,000 locals now own multiple places.

So what?

So if foreign buyers (according to local realtors) equal 4.9% of all deals, if 50% of all condos (according to Urbanation) are bought by people with no intention of moving in and if 14% of total buyers (according to the province) already own homes, then the changes announced last Thursday are doomed. The centrepiece of Ontario’s big douse-the-fire program was a 15% tax on foreign buyers (who don’t move here), but the numbers show the real culprit for runaway pricing is clearly old stock speckers.

By bringing in an anti-foreigner tax, spanking realtors, extending rent controls and opening the door to an empty-houses levy, the province missed stomping out the hot coals responsible for this conflagration. Forget Chinese dudes, assignment clauses or rich people with a downtown condo for game nights – prices have romped because GTA properties (ditto in Vancouver) are now an asset class, and part of the futures market.

The mania to acquire real estate is unlikely to be abated by anything last week delivered. Nothing Ontario did will immediately reduce sales or prices. A detached house will be just as unaffordable to the average moister couple in July as it was in March. That won’t change until government has the backbone to create a serious speculation tax of the kind last seen in the 1970s.

On April 9th, 1974, out of the clear blue came a bolt of lightning that sautéed the rear end of every speculator and multiple-property owner in Ontario. The province imposed a 50% tax on any and all profits an investor might realize from the sale of any piece of real estate. The only exceptions – your farm or your principal residence. And this was on top of the federal capital gains tax.

It was an astonishing thing for a conservative government to do, but it worked. Sales collapsed overnight. Within days, prices followed. The 30% year/year price gain which triggered this draconian action (currently the bloat is at 33%) was arrested, then interest rates started to rise and the party was truly over. Real estate remained relatively affordable until the next bubble formed in the mid-1980s (burst by mortgage rate hikes in the early 1990s).

The hate mail this pathetic blog has garnered over the past three years of suggesting locals, not dudes from Guangdong, were responsible for peak house, is impressive. I’ve been told what to do with literally every orifice on my bronzed, taut body. Most Canadians have bought into the meme that shadowy foreigners and traitor realtors have conspired to steal houses so they can launder their stolen fortunes. They want to believe it. They hate people who reject it. Life’s so much more understandable when you’re a victim.

Well, victims they are. Of their own frenzied obsession with dirt.

Renters are discriminated against. Household debt levels are reckless. Our media’s obsessed (“Buy now or risk saying bye-bye to affordable Montreal home ownership,” said the Gazette on the weekend). Our kids have turned into condo junkies. Financial balance has been sacrificed on the altar of potlights and polished cement. Worse, this bubble we’ve created for ourselves has turned many of us into xenophobes, racists and generally despicable, envious, venomous people. So we get the government actions we deserve – a tax on foreigners and collars on agents. Tomorrow houses will cost a little more. Risk on.

Frenzied buyers line up outside the sales office of Brad Lamb’s latest condo development on the weekend in downtown Toronto.