Economists, realtors, governments and banks love to hype up housing sales and home ownership because of the “value” they provide to an economy and one’s personal net worth.
But now, with affordability out of reach for many people due to the financial burden it imposes, home ownership is just a shell game.
So I have this suggestion for would-be home buyers – don’t play the game of home buying. Instead, rent a house or an apartment and save yourself the anxiety and enjoy the lower financial burden.
The July 16 edition of the Edmonton Journal had a report on nationwide homes sales cited these statistics:
“Canadian home sales rose in June at the fastest pace this year, led by a 17 per cent surge in Toronto, a sign the market may be regaining strength.
“Transactions climbed 4.1 per cent from May after touching a five-year low, the Canadian Real Estate Association reported Monday from Ottawa. Benchmark prices fell 0.1 per cent on the month and advanced 0.9 per cent from a year earlier.”
The report also says, home sales declined through most of 2018, after the government made getting a mortgage more difficult and the central bank raised interest rates.
“Both measures constrained buyers, causing sharp declines in sales particularly for the most-expensive properties. The market seems to be through the worst of that adjustment, at least for now. Bank of Canada policy makers said last week the housing market appears to be stabilizing.”
Those are the kinds of statements that you will get from those in the real estate business, the banking system, as well as from governments and economists. But affordable home ownership is a myth. Let’s consider the tax burden that most Canadians already carry, which makes affordable home ownership impossible:
. Payroll taxes and other deductions such as income tax, the Canada Pension Plan and Employment Insurance, as well as provincial or Territorial income taxes.
. The Goods and Services Tax, the Provincial Sales Tax or Ontario’s Harmonized Sales Tax.
. The Alberta Carbon Tax, fuel taxes and fuel surcharges.
. Environmental levies for things like plastic bags, old tires, electronics and appliances.
Then there are other financial burdens, like vehicle ownership or leasing – insurance, fuel, maintenance and monthly payments.
Now factor in home, condominium or cottage ownership – the mortgage, property taxes (municipal, school and seniors home levies), condominium fees, insurance, maintenance and garbage removal, as well as water and sewer.
With all of these financial burdens, I am emphatically suggesting that home ownership is something either completely out of reach or ill-advised for many people.
For example, how many seniors can afford the property taxes that they have to pay each year, especially in big cities like Toronto, Vancouver and Victoria?
This is especially true for those who are on fixed incomes, whom I call “house rich and cash poor.” They’re the people who shouldn’t have to be burdened by high property taxes.
Moreover, I’ve heard many stories that home ownership for Millennials is out of reach and many are wise enough to abandon the idea altogether, at least for the foreseeable future.
I scoff at municipalities like Vancouver that impose an “empty-homes tax.” They view this as a measure to increase residential occupancy. But ask the owners, especially if they are wealthy and living overseas, if this penalty tax is going make them more amenable to increasing occupancy. They’ll just laugh and pay it, with no measurable change for the better.
My detractors will say, without home ownership and property taxes, how can municipalities provide essential services like infrastructure repair?
But it is because of high private property taxation rates that make people leave and keep new and prospective families and others from moving in.
While organizations like the banking system, the Canadian Real Estate Agency, the CMHC, and the Bank of Canada promote home ownership, it is always with strings attached – and very tight strings at that. They can tout the rule that nobody receives a mortgage who cannot afford to pay it, but the reality is that only the wealthy can afford to buy, houses not the first-time home buyer or the senior citizen on a fixed income.
It is time to dispense with the myths about home ownership and promote renting as the fair and equitable means of housing Canadians.