Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[YOWetal]

Originally Posted by niwell

Another point would be that the US also has more affordable secondary markets where one without the skills to make it in NYC can live fairly well. We've seen a couple of these in Canada shift from "affordable" to distinctly... not. And a place Halifax isn't exactly Philadelphia or Chicago.

I've crunched the numbers based on the careers of my wife and I - even with her salary bonus to move to NYC it wouldn't work. But somewhere like Chicago could become *very* attractive. It's a moot point since we aren't moving, but there really isn't anywhere else in Canada that would offer the same cost benefits vs. salaries for us. Similarly our friends in the music industry are kinda stuck here.

Yes these are certainly factors to some extent. My point is this problem is solvable and the arugements that "we are a world class city and these cities are unaffordable for all but the rich" just isn't true. Australia has the same issue but any other example is a tiny island with a non democratic system like Singapore or Hong Kong or has so much money sloshing around like San Francisco. Otherwise the formula isn't complicated. Allow development, build transport and middle class people can buy houses. Yes they will have to save and sacrifice which is why in 2011 many didn't buy houses despite things being much more affordable but now the door is closed.

[lio45]

Originally Posted by Build.It

1. Requesting this thread be renamed "The Great Canadian Housing Bubble" - to keep with SSP thread naming culture.

Would “The Great Canadian Scheme of Great Canadian Enrichment” work for you? It would be my choice

[P'tit Renard]

Originally Posted by niwell

A quick look at Zillow shows that most houses in Montclair are going for well over $1M with the median sales price right around that, so I'm not sure that the statement about lack of bidding wars is correct either. NYC has higher salaries for the types of jobs a professional Canadian expat might be able to land (though not all jobs - my industry actually pays less), but the median household income of Essex County NJ is $73kUSD compared to $107k CDN for Durham Region - Montclair itself is probably higher though.

Montclair township's median household income is significantly higher at $176k USD. Bay Ridge I doubt is materially above the Durham average.
https://www.point2homes.com/US/Neigh...ographics.html

Especially in the FIRE and tech space, it's really hard to land lower salaries in NYC versus Toronto. If one ends up with a lower salary, the recruiter may be malicious/predatory. The salary gap between Dallas and Toronto is already quite ridiculous at this point, and NYC gets another COLA bump from Dallas' high base.

[P'tit Renard]

Originally Posted by Build.It

4. Toronto is still an upper tier city, with tons of opportunity. I think this gets forgotten amidst all the negativity on this forum. But to make it here these days you have to work harder than ever before. We are most certainly not New York (not by a longshot). However the reward is still there though for those that make it, and now stupidly expensive housing is something we have to put up with in the process of making a name for ourselves. For those that aren't that ambitious and just want a job so they can live, you're better off in Ottawa or Edmonton - the GTA is no longer for you.

Tons of opportunity is an exaggeration to be honest. It's easier to find opportunities and move up your career in Texas (Dallas, Austin, even Houston to some extent), Chicago, Seattle or Atlanta, and they're not even the superstar cities of NYC, Bay Area or LA.

[hipster duck]

Before anyone comes at me, I will state, unequivocally, that Canada's housing crisis is very bad, worse than the United States, and getting worse.

That said, moving to NYC (or any comparable American city) from Toronto is not all upside, and - as niwell points out - despite all the supposed advantages of landing a job in NYC vs. Toronto, very few Torontonians will make the effort to do this.

Cost of living is getting worse in the US too. There are a lot of hidden costs to housing that we don't have here. Someone pointed out that that Montclair home comes with a USD 18,000 property tax bill. That's an extra $1,500/month in added housing costs that you can't deduct in any way, shape or form. In an equivalent Toronto-area home (an upper middle class suburb 1 hour out with a decent downtown would be like Burlington), the property tax for a home like that would be maybe CAD 6,000. Even if salaries/sticker prices are the same in nominal terms (Toronto salary of CAD 100,000 = NYC salary of USD 100,000), that's still an extra $1,000 a month more in property taxes in Montclair.

There are other costs of living in America that we don't see. The frequent rebuttal to anyone mentioning that Americans either pay huge health insurance co-pays or are chained to their existing job because of healthcare is that Canada's public healthcare is decrepit and getting worse. That's a fair criticism, except that the demographic that is most likely to move from Canada to the United States are people in their late twenties who almost never go to the hospital in Canada, but are still stuck paying American health insurance premiums if they get a job in the US. Once you get the butt end of the Canadian healthcare system, you're probably too old to consider moving to the US for professional reasons.

[lio45]

Originally Posted by hipster duck

There are a lot of hidden costs to housing that we don't have here. Someone pointed out that that Montclair home comes with a USD 18,000 property tax bill. That's an extra $1,500/month in added housing costs that you can't deduct in any way, shape or form. In an equivalent Toronto-area home (an upper middle class suburb 1 hour out with a decent downtown would be like Burlington), the property tax for a home like that would be maybe CAD 6,000. Even if salaries/sticker prices are the same in nominal terms (Toronto salary of CAD 100,000 = NYC salary of USD 100,000), that's still an extra $1,000 a month more in property taxes in Montclair.

This is very smart on the part of the Americans, because the specuvestor multimillionaire who reports zero taxable income and receives the GST credit for low income people and other such goodies, is at least forced to contribute $25k CAD of his money to the public coffers per year in the US…

Property taxes are among the only taxes that multimillionaires with creative accountants just cannot evade. When you make them low (like in Vancouver), you’re just inviting unproductive land use and speculation.

No one would buy that Montclair house and leave it empty while hoping it gains value every year… those high property taxes ensure it serves as housing, not as a brick-and-mortar bitcoin like Canadian real estate.

[P'tit Renard]

Originally Posted by hipster duck

Cost of living is getting worse in the US too. There are a lot of hidden costs to housing that we don't have here. Someone pointed out that that Montclair home comes with a USD 18,000 property tax bill. That's an extra $1,500/month in added housing costs that you can't deduct in any way, shape or form. In an equivalent Toronto-area home (an upper middle class suburb 1 hour out with a decent downtown would be like Burlington), the property tax for a home like that would be maybe CAD 6,000. Even if salaries/sticker prices are the same in nominal terms (Toronto salary of CAD 100,000 = NYC salary of USD 100,000), that's still an extra $1,000 a month more in property taxes in Montclair.

Property taxes are artificially low though in the GTA, that's why we have such a serious housing crisis exacerbated by terrible taxation policies. In the GTA, new homebuyers are unduly burdened with excessive development charges to make up the shortfall of artificially low receipts from property tax. Another example of young Torontonians shouldering the costs for the Boomers.

Instead of sticker shock, what property owners in Montclair is paying is the fair value of city services, and isn't subsidised by astronomical property development charges.


Excessive development charges and taxes, coupled with restrictive zoning keeps jacking up the cost of new builds in the GTA:

[YOWetal]

Originally Posted by hipster duck

Before anyone comes at me, I will state, unequivocally, that Canada's housing crisis is very bad, worse than the United States, and getting worse.

That said, moving to NYC (or any comparable American city) from Toronto is not all upside, and - as niwell points out - despite all the supposed advantages of landing a job in NYC vs. Toronto, very few Torontonians will make the effort to do this.

Cost of living is getting worse in the US too. There are a lot of hidden costs to housing that we don't have here. Someone pointed out that that Montclair home comes with a USD 18,000 property tax bill. That's an extra $1,500/month in added housing costs that you can't deduct in any way, shape or form. In an equivalent Toronto-area home (an upper middle class suburb 1 hour out with a decent downtown would be like Burlington), the property tax for a home like that would be maybe CAD 6,000. Even if salaries/sticker prices are the same in nominal terms (Toronto salary of CAD 100,000 = NYC salary of USD 100,000), that's still an extra $1,000 a month more in property taxes in Montclair.

There are other costs of living in America that we don't see. The frequent rebuttal to anyone mentioning that Americans either pay huge health insurance co-pays or are chained to their existing job because of healthcare is that Canada's public healthcare is decrepit and getting worse. That's a fair criticism, except that the demographic that is most likely to move from Canada to the United States are people in their late twenties who almost never go to the hospital in Canada, but are still stuck paying American health insurance premiums if they get a job in the US. Once you get the butt end of the Canadian healthcare system, you're probably too old to consider moving to the US for professional reasons.

There are for sure lots of pros and cons. The Property tax thing is a tradeoff against income taxes. So a couple each making $125k in Ontario pays $60k in income tax vs $50k in New Jeresy. Some of that is just lower US taxes but some is a preference for property tax vs income.

Health insurance. Crime. Guns.

All of that good reasons to stay in Toronto in many professions but my point is not Canada sucks move to the US it is even the financial capital of the world has ground based housing a nurse and cop can afford so we can too.

[whatnext]

Originally Posted by P'tit Renard

Property taxes are artificially low though in the GTA, that's why we have such a serious housing crisis exacerbated by terrible taxation policies. In the GTA, new homebuyers are unduly burdened with excessive development charges to make up the shortfall of artificially low receipts from property tax. Another example of young Torontonians shouldering the costs for the Boomers.

Instead of sticker shock, what property owners in Montclair is paying is the fair value of city services, and isn't subsidised by astronomical property development charges.


Excessive development charges and taxes, coupled with restrictive zoning keeps jacking up the cost of new builds in the GTA:

The problem is compared to the USA our federal and provincial taxes are much higher than in the USA. There isn't room for cities to tax at higher rates.

[Truenorth00]

Originally Posted by hipster duck

That said, moving to NYC (or any comparable American city) from Toronto is not all upside, and - as niwell points out - despite all the supposed advantages of landing a job in NYC vs. Toronto, very few Torontonians will make the effort to do this.

Mostly because it's really difficult for all but the most talented to immigrate to the US (unlike our immigration system). If we had Schengen like movement rights with the US, Canada would see massive brain drain well down the talent pyramid.

We see this in sectors where American industry is happy to take our talent. In the past, Canadian tech CEOs have demanded that American companies should be made to pay for our top talent or that we should legislate a mandatory period of work in Canada for our top grads. Such was the level of desperation.

[Innsertnamehere]

It's not hard at all to work in the US as a skilled Canadian worker. You can literally show up at the border with a job offer and get a work visa.

Getting permanent residency is a whole other challenge though and you can only stay as long as you have a sponsoring employer.

[Truenorth00]

Originally Posted by Innsertnamehere

It's not hard at all to work in the US as a skilled Canadian worker. You can literally show up at the border with a job offer and get a work visa.

Getting permanent residency is a whole other challenge though and you can only stay as long as you have a sponsoring employer.

That's the part that deters a lot of people. And companies are only really likely to go out of their way, for the most talented individuals.

[hipster duck]

Originally Posted by P'tit Renard

Property taxes are artificially low though in the GTA, that's why we have such a serious housing crisis exacerbated by terrible taxation policies. In the GTA, new homebuyers are unduly burdened with excessive development charges to make up the shortfall of artificially low receipts from property tax. Another example of young Torontonians shouldering the costs for the Boomers.

Instead of sticker shock, what property owners in Montclair is paying is the fair value of city services, and isn't subsidised by astronomical property development charges.

No, what property tax primarily pays for in Montclair is public schools. I don't think that the average Montclair resident gets 3X better parks, roads, police and fire protection from that property tax difference than their equivalent in, say, Oakville or Aurora. I think that, despite higher property taxes, most American cities (especially suburbs) are staring at the barrel of a gun when it comes to infrastructure and service upkeep - possibly more than their Canadian counterparts.

Part of the reason why Americans have lower or even no state income taxes is because a lot of services that are paid for by provincial income taxes in Canada are paid for by municipal property taxes or sales taxes in the US. I actually don't think this is optimal, either, because in education, especially, you can have school districts in rich cities that are excellent and school districts in poorer, especially inner cities that are disastrous. Some poorer American municipalities are so screwed in terms of where they can generate revenue that they resort to charging fines and fees for misdemeanors on their lower class citizens. This is partly what led to the situation in Ferguson, MO.

It's really a pick your poison option:

America: high property taxes, low income taxes. More efficient housing market, more attractive compensation packages to attract talent, but massive inequalities in services (especially public education) between municipalities.

Canada: low property taxes, high income taxes. More equitable distribution of services, but puts a ceiling on compensation/drives away higher-end talent, and creates an artificial tax shelter in real estate.

[MolsonExport]

From the City Discussions forum:

The International Housing Affordability study performed by Chapman University for Demographia was recently released. It is mostly limited to anglophone markets in highly developed countries or autonomous regions. Affordability was calculated by as a ratio of the median house price and the median household income.

The following countries/regions were included: Australia, Canada, Hong Kong, Ireland, New Zealand, Singapore, United Kingdom, and the United States. The least expensive market was Pittsburgh, and most expensive was Hong Kong. All of the major California metros landed among the 10 least affordable.

https://www.chapman.edu/communicatio...ordability.pdf

[lio45]

Originally Posted by hipster duck

It's really a pick your poison option:

America: high property taxes, low income taxes. [Discouraging the stockpiling of idle real estate, encouraging productivity.]

Canada: low property taxes, high income taxes. [Discouraging high earners from working, rewarding people who sit on empty homes.]

I really don’t see these poisons as close to equivalent.

Canada’s model of having the cost of society funded by the people who work, rather than by the people who own the real estate, is stupid.

[hipster duck]

.

[hipster duck]

Originally Posted by lio45

Originally Posted by "hipster duck"

I really don’t see these poisons as close to equivalent.

Canada’s model of having the cost of society funded by the people who work, rather than by the people who own the real estate, is stupid.

You're deliberately misrepresenting what I said. I thought you were a moderator.

[lio45]

Originally Posted by hipster duck

You're deliberately misrepresenting what I said. I thought you were a mod.

Square brackets are the official and universally accepted way of unambiguously showing and highlighting one’s explanations, clarifications, additions or alterations to a quoted text. No need to be a moderator to be able to do that when quoting another user. (I didn’t go and edit your actual post; I’d never do that, unless something in it breaks forum rules.)

On the topic: you don’t think my conclusions (in brackets) are the correct ones stemming from the facts you were plainly describing in your unaltered original text? (You’d have to disagree that high taxation acts as a disincentive, I have a hard time seeing you try to claim this, it’s a well established principle …)

[P'tit Renard]

Originally Posted by hipster duck

No, what property tax primarily pays for in Montclair is public schools. I don't think that the average Montclair resident gets 3X better parks, roads, police and fire protection from that property tax difference than their equivalent in, say, Oakville or Aurora. I think that, despite higher property taxes, most American cities (especially suburbs) are staring at the barrel of a gun when it comes to infrastructure and service upkeep - possibly more than their Canadian counterparts.

No one's arguing that Montclair is receiving 3x time the services of affluent GTA suburbs. That's a weird tangent to run off to.

But I seriously doubt Montclair's budget is addicted to and padded by LTT residential land transfer tax revenue and residential development charges to the degree GTA cities are. It's a conscientious choice by GTA politicians to saddle younger GTA with disproportionate costs by way of development charges. Ultimately municipal tax revenue has to come from somewhere, and they've decided time and time again to jack up development charges to let them hold the line on property tax increases.

and the fees just keep increasing:

Toronto is in the midst of a housing crisis. So why are the charges passed onto developers set to go up by nearly 50 per cent?
https://www.cp24.com/news/toronto-is...lipId%3D373266

[niwell]

Worth noting that property tax systems vary considerably across the US. California for instance would encourage sitting on RE even more than ours due to assessment caps, even with recent changes to the grandfather clause in property taxes.

I'd prefer development charges be severely limited and municipalities receive funding through the Province to accommodate growth, even if this resulted in higher taxation through other means.