It is a necessary part of life for people to invest in order to save for their retirement but upon investing we develop interests. If people invest say in renewable energy as a consequence they have a greater interest on the success of renewable energy. Such interest could be considered good or bad depending on weather the benefits of renewable energy outweigh the cost.
Similarly when people invest in Real-estate it is good because it encourages development and makes it easier for people to sell their home. However, the consequence is an upward presser on real estate prices. At what point does the cost become too high in terms of inflation and economic stability. By far the greatest cost we pay is for our home and property and it is a legitimate question to ask if we are paying too much.
Real Estate prices are not uncontrollable. The can be controlled by reducing the demand (slowing immigration) or decreasing their value (raising property tax). Such techniques are far better then price control because they don’t create shortage. The problem is that a large number of people have invested in Real-estate under the current scheme and have a strong interest in maintaining the current system.
If things were drastically changed they would feel blind sided as did the owners of income trusts who profited greatly because of government tax loopholes. It is not clear what real-estate taxes should be but it is clear that people pay far more income tax then Real-Estate tax while at the same time cities cry to Ottawa for money to build infrastructure.
The consequence of this is that cities are not investing in the necessary infrastructure to keep living costs under control. For instance a larger transit system can make it possible for people to live further outside the city so that they can live were real-estate prices are lower.
Instead what we have is young people graduating from school who can barely afford their student loans, let alone a car and property. These economic refuges come to cities in search of jobs and pay high rent to the generation that already owns a home. These students are faced with the choice of trying to get a large mortgage which they may not be able to afford or continuing to pay high rent in a real-estate market that shows no signs of cost control.
The reality of today’s economy is those who own land have a significant advantage to those don’t yet they pay the same amount of taxes. Business are allowed to deduct their costs from their taxes but graduates can not deduct the cost of a new home or the payments on the principle of a student loan from their taxes. I question the long terms consequences of such a system in terms of future wealth gaps.
Similarly when people invest in Real-estate it is good because it encourages development and makes it easier for people to sell their home. However, the consequence is an upward presser on real estate prices. At what point does the cost become too high in terms of inflation and economic stability. By far the greatest cost we pay is for our home and property and it is a legitimate question to ask if we are paying too much.
Real Estate prices are not uncontrollable. The can be controlled by reducing the demand (slowing immigration) or decreasing their value (raising property tax). Such techniques are far better then price control because they don’t create shortage. The problem is that a large number of people have invested in Real-estate under the current scheme and have a strong interest in maintaining the current system.
If things were drastically changed they would feel blind sided as did the owners of income trusts who profited greatly because of government tax loopholes. It is not clear what real-estate taxes should be but it is clear that people pay far more income tax then Real-Estate tax while at the same time cities cry to Ottawa for money to build infrastructure.
The consequence of this is that cities are not investing in the necessary infrastructure to keep living costs under control. For instance a larger transit system can make it possible for people to live further outside the city so that they can live were real-estate prices are lower.
Instead what we have is young people graduating from school who can barely afford their student loans, let alone a car and property. These economic refuges come to cities in search of jobs and pay high rent to the generation that already owns a home. These students are faced with the choice of trying to get a large mortgage which they may not be able to afford or continuing to pay high rent in a real-estate market that shows no signs of cost control.
The reality of today’s economy is those who own land have a significant advantage to those don’t yet they pay the same amount of taxes. Business are allowed to deduct their costs from their taxes but graduates can not deduct the cost of a new home or the payments on the principle of a student loan from their taxes. I question the long terms consequences of such a system in terms of future wealth gaps.
