With home prices in Canada’s most expensive market going up at a dizzying pace, a Vancouver-based think-tank is proposing a new tax on homes valued at over $1 million to help bridge the affordability gap.
Although Canada’s housing market went ice cold when the pandemic began in March 2020, it soon came roaring back and spent much of 2021 on fire. Average prices across the country rose to their highest level on record at more than $720,000 in November, and despite those high prices, the year smashed the annual sales record, too, with more than 630,000 homes changing hands.
The torrid pace has prompted fears of a painful comeuppance if the market goes off the rails, but so far none of the targeted solutions suggested so far — from taxes on vacant homes, flippers and foreign investors to an end to blind bidding — have managed to slow the runaway freight train where they’ve been tried.
New numbers this week from Canada’s two most expensive housing markets, Toronto and Vancouver, show those market pushing further into the stratosphere.
The benchmark price for all types of housing in the GTA hit $1,208,000 last month, up by 31 per cent compared to a year earlier. Vancouver’s pace of increase was less torrid at 17 per cent but the overall figure was higher, at $1,230,200, across the region. Both figures are getting close to double the national average.
In both markets, single family homes for under $1 million are becoming unheard of, which is why Vancouver based think-tank Generation Squeeze used that figure as a baseline for an eyebrow-raising proposal this week: a new tax on homes worth $1 million and up.
The group is pitching a progressive tax that would kick in on homes valued at more than $1 million, and get progressively larger on homes valued at $3 million and above. The group proposing it runs out of the University of British Columbia, but received some funding from Canada’s federal housing agency the Canada Mortgage and Housing Corporation.
Though the tax would be calculated annually, it would be deferred until the home is sold, so it would function similar to a land transfer tax that many provinces and municipalities already levy.
Paul Kershaw, a professor at the University of British Columbia who is one of the group’s founders, says more than 90 per cent of Canadians wouldn’t pay a single penny to the tax since it would only apply to those on the very top of the real estate ladder, most of whom are sitting on massive windfalls of currently non-taxable gains.
While policy makers spend a lot of time talking about how they want to crack down on various offshore tax shelters, “we have a home ownership tax shelter that motivates us to bank on rising home prices to gain wealth,” he said in an interview. “It’s time to protect real shelters and not tax shelters.”
Starting at 0.2 per cent on homes valued at $1 million and sliding all the way to more than 1 per cent on homes worth more than $3 million, Kershaw estimates it could bring in roughly $5 billion a year — funds that could be used to support purpose-built rentals and other initiatives designed to discourage speculation. Only the portion of a home’s value above a threshold would be taxed at that level, so on a $1.2 million home the tax would apply to $200,000 of the value.
“If you have a $1.2 million home, we’re talking about an extra $400 per year, and you wouldn’t need to pay until the sale,” he said. A $2 million home — enough to rank a homeowner among the top two per cent of the country, in terms of housing wealth, he notes — would accrue a tax of about $3,500 annually.
Even on the highest end, a home worth more than $3 million would see an annual tax of about $13,500. That’s roughly the same amount that someone earning $60,000 a year from their salary would pay in regular income taxes, Kershaw notes, which is why the proposed tax bill is “a very modest number but larger policy signal,” he said.
Prospective home buyer Isabel Serrano says even though she and her husband have steady incomes, there’s only so high they can go in terms of buying a home to live in. (Credit: Mark Boschler/CBC) 0:53
Not everyone is convinced the plan would be effective, or even workable, however. Ryerson University professor Murtaza Haider is among those who thinks Canada’s housing market is out of whack and in need of fixing, but he doesn’t think adding new taxes on existing owners is the way to do it.
“It’s one of those measures that we call demand-busting measures,” he said in an interview. He says the most effective way to address the imbalance in the market isn’t to try to suppress demand, but rather by building more housing to satisfy that need without encouraging bidding wars for what little housing is available.
“If we don’t address the real problem, that is construction of new housing, and we continue to build or under build, as we have done so in the last five decades, then the problem will remain,” he said.
Murtaza Haider, professor of real estate management at Ryerson University, says efforts to target the demand side of the market will be less effective than addressing supply issues. (Katerina Georgieva/CBC)
That jibes with the view of those in the business of selling homes, who have long complained that Canada is not building enough housing to keep up with population growth.
“History has shown that demand-side policies, such as additional taxation on principal residences, foreign buyers, and small-scale investors, have not been sustainable long-term solutions to housing affordability or supply constraints,” chief market analyst Jason Mercer with the Toronto Real Estate Board said. “The only sustainable way to moderate price growth will be to bring on more supply.”
Jane Londerville, who taught real estate finance at the University of Guelph for years before retiring in 2018, is also skeptical of the idea. Instead of helping to fix the affordability problem, it could just encourage owners of single family homes to stay where they are, making the supply problem worse.
She imagines a theoretical empty nester considering selling their home once their children have grown up and moved out. When faced with this new tax five-figure tax bill, that person may say “I’ll just stay in this house — it’s got four bedrooms in it, even though I’m living here by myself,” she said in an interview. “There’s some impacts we need to think about before we say, ‘Oh, this is a great idea.'”
She also worries about what adding a surtax to owners of multiple-unit properties would do to the rental market in particular. “They’d have to charge more rent in order to break even,” she said in an interview. “Is that what we want to do?”
Toronto and Vancouver targeted
Haider notes that while the measure is clearly trying to target overheated markets in Toronto and Vancouver, it would do little to help fix affordability in parts of the country where $1 million homes are unheard of. “The unintended consequences of such taxes and measures could be significant,” he said.
During last year’s federal election, the governing Liberals floated a number of ideas aimed at housing affordability, but none of them amounted to anything similar to the tax that Kershaw’s group is proposing.
In a statement to the Canadian Press this week, the government made it clear that it still has no appetite for any new taxes on owners. “The federal government has clearly stated several times that we will not be introducing a tax on the equity of primary residences in Canada,” the Department of Housing said.
Most job search advice is cookie-cutter. The advice you’re following is almost certainly the same advice other job seekers follow, making you just another candidate following the same script.
In today’s hyper-competitive job market, standing out is critical, a challenge most job seekers struggle with. Instead of relying on generic questions recommended by self-proclaimed career coaches, which often lead to a forgettable interview, ask unique, thought-provoking questions that’ll spark engaging conversations and leave a lasting impression.
Your level of interest in the company and the role.
Contributing to your employer’s success is essential.
You desire a cultural fit.
Here are the top four questions experts recommend candidates ask; hence, they’ve become cliché questions you should avoid asking:
“What are the key responsibilities of this position?”
Most likely, the job description answers this question. Therefore, asking this question indicates you didn’t read the job description. If you require clarification, ask, “How many outbound calls will I be required to make daily?” “What will be my monthly revenue target?”
“What does a typical day look like?”
Although it’s important to understand day-to-day expectations, this question tends to elicit vague responses and rarely leads to a deeper conversation. Don’t focus on what your day will look like; instead, focus on being clear on the results you need to deliver. Nobody I know has ever been fired for not following a “typical day.” However, I know several people who were fired for failing to meet expectations. Before accepting a job offer, ensure you’re capable of meeting the employer’s expectations.
“How would you describe the company culture?”
Asking this question screams, “I read somewhere to ask this question.” There are much better ways to research a company’s culture, such as speaking to current and former employees, reading online reviews and news articles. Furthermore, since your interviewer works for the company, they’re presumably comfortable with the culture. Do you expect your interviewer to give you the brutal truth? “Be careful of Craig; get on his bad side, and he’ll make your life miserable.” “Bob is close to retirement. I give him lots of slack, which the rest of the team needs to pick up.”
Truism: No matter how much due diligence you do, only when you start working for the employer will you experience and, therefore, know their culture firsthand.
“What opportunities are there for professional development?”
When asked this question, I immediately think the candidate cares more about gaining than contributing, a showstopper. Managing your career is your responsibility, not your employer’s.
Cliché questions don’t impress hiring managers, nor will they differentiate you from your competition. To transform your interaction with your interviewer from a Q&A session into a dynamic discussion, ask unique, insightful questions.
Here are my four go-to questions—I have many more—to accomplish this:
“Describe your management style. How will you manage me?”
This question gives your interviewer the opportunity to talk about themselves, which we all love doing. As well, being in sync with my boss is extremely important to me. The management style of who’ll be my boss is a determining factor in whether or not I’ll accept the job.
“What is the one thing I should never do that’ll piss you off and possibly damage our working relationship beyond repair?”
This question also allows me to determine whether I and my to-be boss would be in sync. Sometimes I ask, “What are your pet peeves?”
“When I join the team, what would be the most important contribution you’d want to see from me in the first six months?”
Setting myself up for failure is the last thing I want. As I mentioned, focus on the results you need to produce and timelines. How realistic are the expectations? It’s never about the question; it’s about what you want to know. It’s important to know whether you’ll be able to meet or even exceed your new boss’s expectations.
“If I wanted to sell you on an idea or suggestion, what do you need to know?”
Years ago, a candidate asked me this question. I was impressed he wasn’t looking just to put in time; he was looking for how he could be a contributing employee. Every time I ask this question, it leads to an in-depth discussion.
Other questions I’ve asked:
“What keeps you up at night?”
“If you were to leave this company, who would follow?”
“How do you handle an employee making a mistake?”
“If you were to give a Ted Talk, what topic would you talk about?”
“What are three highly valued skills at [company] that I should master to advance?”
“What are the informal expectations of the role?”
“What is one misconception people have about you [or the company]?”
Your questions reveal a great deal about your motivations, drive to make a meaningful impact on the business, and a chance to morph the questioning into a conversation. Cliché questions don’t lead to meaningful discussions, whereas unique, thought-provoking questions do and, in turn, make you memorable.
Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.
CALGARY – Canadian Natural Resources Ltd. reported a third-quarter profit of $2.27 billion, down from $2.34 billion in the same quarter last year.
The company says the profit amounted to $1.06 per diluted share for the quarter that ended Sept. 30 compared with $1.06 per diluted share a year earlier.
Product sales totalled $10.40 billion, down from $11.76 billion in the same quarter last year.
Daily production for the quarter averaged 1,363,086 barrels of oil equivalent per day, down from 1,393,614 a year ago.
On an adjusted basis, Canadian Natural says it earned 97 cents per diluted share for the quarter, down from an adjusted profit of $1.30 per diluted share in the same quarter last year.
The average analyst estimate had been for a profit of 90 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Oct. 31, 2024.
CALGARY – Cenovus Energy Inc. reported its third-quarter profit fell compared with a year as its revenue edged lower.
The company says it earned $820 million or 42 cents per diluted share for the quarter ended Sept. 30, down from $1.86 billion or 97 cents per diluted share a year earlier.
Revenue for the quarter totalled $14.25 billion, down from $14.58 billion in the same quarter last year.
Total upstream production in the quarter amounted to 771,300 barrels of oil equivalent per day, down from 797,000 a year earlier.
Total downstream throughput was 642,900 barrels per day compared with 664,300 in the same quarter last year.
On an adjusted basis, Cenovus says its funds flow amounted to $1.05 per diluted share in its latest quarter, down from adjusted funds flow of $1.81 per diluted share a year earlier.
This report by The Canadian Press was first published Oct. 31, 2024.
