BC Political Discussion: Election 2020 and Beyond

[chowhou]

Originally Posted by Migrant_Coconut

If a building is 95% sold before it even gets to market, that's not "equal" opportunity, nor added supply.

You're conflating a couple different conversations here, early investment in housing developments is not an equal opportunity, but investment in housing developments is absolutely added supply and hopefully not something you're arguing against.

Originally Posted by GenWhy?

I think you might see stagnation in price of units, but not necessarily in unit quantity, due to this policy.

If you agree that this policy has a cooling effect on investment, then it would be a stagnation in unit quantity and subsequently as supply stagnates, unit price will do the opposite of stagnation (as demand continues to grow).

[GenWhy?]

Originally Posted by chowhou

If you agree that this policy has a cooling effect on investment, then it would be a stagnation in unit quantity and subsequently as supply stagnates, unit price will do the opposite of stagnation (as demand continues to grow).

But exactly! If there is still the demand (as we seem to have a seemingly unlimited amount of) then units will be bought, say at pre-sale, and they'll come on the market - they just won't be bought and sold within 2 years.

They might not be bought at the same frenzied speed and at such high prices as before, maybe.

[Migrant_Coconut]

Perhaps you'd like to stop mixing flippers with investors, then?

How about we break down the different stages:

1) Pre-construction investors
2) Mid-construction investors
3) Presale investors
4) Presale buyers, overseas
5) Buyers (to live)
6) Buyers (to profit)

#4 and 6 are taken care of with other taxes. If you think a tax would impact #1 and 2 as much as #3 and 6, do you have a better solution?

[whatnext]

Originally Posted by chowhou

....What do you think REIT's do...? Also I don't care what the individual wants to do, I'm just here to loudly and proudly declare in our housing crisis we need policies that promote supply, not hinder it. It's all well and good to want to hit people you don't like with a tax, but I do not want it to come at the expense of the rest of us.

Now you're just extending your valid example out a bit far. In general, REITs are looking for a longer term income stream than flippers although I'm sure you could find some flips.

As to supply, as I've said before the city should be using the Rental Only zoning much more heavily. We get more housing without any need for flippers.

[Migrant_Coconut]

Pretty hard to speculate on a rental, that's for sure.

[chowhou]

Originally Posted by Migrant_Coconut

Perhaps you'd like to stop mixing flippers with investors, then?

How about we break down the different stages:

1) Pre-construction investors
2) Mid-construction investors
3) Presale investors
4) Presale buyers, overseas
5) Buyers (to live)
6) Buyers (to profit)

#4 and 6 are taken care of with other taxes. If you think a tax would impact #1 and 2 as much as #3 and 6, do you have a better solution?

I am mixing flippers with investors because the BC government is mixing flippers with investors. Don't pin this on me!

If I didn't make it clear I don't think this is a problem that needs a solution, especially if the solution causes its own problems. Once again, I've not seen any convincing argument that #3 and #6 cause any societal issues, but it's pretty well established that disincentivizing #1, #2, and #3 all diminish the viability of supply.

I wonder if you all would be against tax incentives for building development? Are we against Metro Vancouver imposing additional DCCs on new building developments? Are we against Vancouver imposing density fees on multiplexes? I dunno, it feels like because this tax is called the "anti-bad person" tax, we're suddenly on board with this without critically thinking about what it really entails.

[Migrant_Coconut]

Originally Posted by chowhou

I am mixing flippers with investors because the BC government is mixing flippers with investors. Don't pin this on me!

No they aren't.

[chowhou]

Originally Posted by Migrant_Coconut

No they aren't.

You're making it super tempting for me to just say, "Yes they are!!"

I mean, if you haven't noticed by now that both are caught up in this policy then I guess I'm completely wasting my time here.

Since I don't want this to be a complete waste of time, can you explain to me who the type of person is that buys and sells a presale assignment? Is it a flipper or an investor? The policy doesn't seem to indicate to me which one they are.

[Migrant_Coconut]

Originally Posted by chowhou

...I mean, if you haven't noticed by now that both are caught up in this policy then I guess I'm completely wasting my time here.

Since I don't want this to be a complete waste of time, can you explain to me who the type of person is that buys and sells a presale assignment? Is it a flipper or an investor? The policy doesn't seem to indicate to me which one they are.

Perhaps.

Depends on the intent of the assignment.

[chowhou]

Originally Posted by Migrant_Coconut

Perhaps.

Depends on the intent of the assignment.

The policy doesn't discriminate based on intent though, it treats them the same way. In fact, I believe there was something you linked beforehand about the lack of discrimination being an intentional quality so the CRA doesn't have to do the legwork.

[Migrant_Coconut]

Originally Posted by chowhou

The policy doesn't discriminate based on intent though, it treats them the same way. In fact, I believe there was something you linked beforehand about the lack of discrimination being an intentional quality so the CRA doesn't have to do the legwork.

Which is where exemptions come in, like how they grandfathered vacation homes and non-citizen/PR residents out of the EHT.

[chowhou]

Originally Posted by Migrant_Coconut

Which is where exemptions come in, like how they grandfathered vacation homes and non-citizen/PR residents out of the EHT.

Remains to be seen to me if these buyers are exempt or not. The BC government hasn't made that clear yet (and may intentionally keep that vague).

The purpose of this tax is to support housing supply, not impede it. Exemptions will be provided for those who add to the housing supply or engage in construction and real estate development.

"Add to the housing supply", do investors add to the housing supply when they buy presales?

[Migrant_Coconut]

Like I mentioned, this administration's given exemptions before. There's reason to believe they'll do so again.

[whatnext]

Originally Posted by chowhou

Remains to be seen to me if these buyers are exempt or not. The BC government hasn't made that clear yet (and may intentionally keep that vague).
…?

Of course they’re keeping it vague because it’s designed to look like they’re doing something about the problem rather than actually addressing it. Which is the problem with a lot of these provincial and federal policies.

[WarrenC12]

Originally Posted by Migrant_Coconut

If a building is 95% sold before it even gets to market, that's not "equal" opportunity, nor added supply.

It shows that demand is outstripping supply, and will encourage new supply to enter the market. This ain't rocket science.

"Flippers" and others aren't hoarding empty housing stock.

[whatnext]

Originally Posted by WarrenC12

It shows that demand is outstripping supply, and will encourage new supply to enter the market. This ain't rocket science.

"Flippers" and others aren't hoarding empty housing stock.

Who said anything about hoarding? They’re just driving the cost of housing up.

[Migrant_Coconut]

Originally Posted by WarrenC12

It shows that demand is outstripping supply, and will encourage new supply to enter the market. This ain't rocket science.

If the general market only gets 5% of new supply, building to affordability is going to take ~20x longer than it has to (mathematically speaking). That ain't rocket science either.

[chowhou]

Originally Posted by Migrant_Coconut

If the general market only gets 5% of new supply, building to affordability is going to take ~20x longer than it has to (mathematically speaking). That ain't rocket science either.

The general market gets 100% of new supply, it's just that the initial ownership is first come first serve. As Warren said, these "flippers" are not hoarding empty housing stock. This is not rocket science.

[Changing City]

Originally Posted by WarrenC12

It shows that demand is outstripping supply, and will encourage new supply to enter the market. This ain't rocket science.

"Flippers" and others aren't hoarding empty housing stock.

Maybe I'm being particularly dense, but if a proportion of condos offered for sale are 'bought' by speculators with the intent to flip them to some other potential buyer in under 2 years, how does that encourage any new supply? They're just getting into the market and putting a deposit down, and gambling on being to pass that assignment on for more. If they're successful, then the price has risen, but whoever buys from them would otherwise have presumably bought a different unit.

All the flippers presence does is tend to raise prices, but in terms of total ownership in the market it's a zero sum game. There aren't any more owners in the market at the end of the day. In fact, if prices have been squeezed upwards it might mean fewer people are able to enter the market, (or those that do are paying more than they should be, given their resources). The flippers are relying on FOMO to drive the market up, and they're hoping to grab a bit of that increase. In some cases, they're 'friends and family' purchasers - which I've always thought of as being like insider trading, if they're just buying to flip before completion.

Investor purchasers, hoping to see an increase in value, are different, because (with empty homes taxes) they'll probably hold the property for more than 2 years, and almost certainly rent it out. But they're not impacted by the new tax.

[Migrant_Coconut]

Originally Posted by chowhou

The general market gets 100% of new supply, it's just that the initial ownership is first come first serve. As Warren said, these "flippers" are not hoarding empty housing stock. This is not rocket science.

And the ones benefiting from first come, first serve are the ones wanting to get rich, not the ones wanting a home; the latter end up with the table scraps. Short-term trading raises the value of a good/stock/etc when it would otherwise naturally decrease. This is not rocket science.