Taxing home equity would be ‘political suicide’, says real estate group CEO


The CEO of the Canadian Real Estate Association (CREA) told the Senate Finance Committee on Dec. 6 that a tax on home equity would have dire political consequences for the ruling party.

According to Blacklock’s Reporter, CREA CEO Michael Bourque said:

“Whoever suggests it will probably preside over your political funeral.”

The Canadian Housing Authority recently funded a report examining the topic, even though the liberal government said it had no interest in taxing major home sales.

Canadian Mortgage Corporation (CHMC) paid $450,000 to Generation Squeeze, which proposed targeting residential properties in a report released in January 2022.

Burke told the commission that many Canadians depended on stocks to pay for housing for their retirement income.

“Most Canadians make assumptions about retirement based on the value of their home,” Burke said. “That’s why they can afford to sell their homes and move to nursing homes and nursing homes.”

house price capping

Generation Squeeze is led by Professor Paul Kershaw of the University of British Columbia, who testified before a Senate committee on December 6.

He told senators that the government should cap housing prices to address affordability issues.

“We need to recommit as a society and get the Canadian government to say, ‘The goal of the future housing system is to keep house prices from rising any further,'” Kershaw said.

A report he produced for CMHC titled “Intergenerational Wealth and Housing Inequality Matters” proposed taxing home equity at $5.8 billion a year.

He said it was unfair to see a Fredericton widow slower to value her property than a Vancouver widow.

“Think of Fredericton’s widow. Her income is meager and her house hasn’t appreciated much,” Kershaw said. “Now think about the same income of a widow in Vancouver.”

Kershaw called for a “tough strategy” that could stall home prices indefinitely or allow them to slowly decline to catch up with earnings.

government stimulus

Some of the economic stimulus provided by the federal government during the pandemic ended up in real estate, which helped boost demand and hit record home prices seen in recent months.

Peter Routledge, executive director of the Office of the Superintendent of Financial Institutions (OSFI), said at a Finance Committee meeting in January that the billions of dollars the government had given banks to provide mortgage relief to Canadians. Some said they ended up investing in real estate.

“Is credit offered to people looking to invest in homes, perhaps second homes or buying homes to flip? The honest answer is yes. We provide credit,” he said.

Excessive demand has contributed to higher inflation, which has led to central bank tightening and higher mortgage rates.

This has caused the housing market to slow down and prices to fall.

CREA announced in November that the national average price fell 9.9% year-on-year in October.

But Sean Cathcart, senior economist at CREA, said the slowdown could come to an end as national home sales rose 1.3% month-on-month in October.

“Sales actually surged through September and October, with monthly price declines falling for the fourth month in a row,” said Cathcart. statement.

Various financial institutions are predicting that house prices will plummet in the coming months.

TD bank forecasta drop At 20-25% of its 2022 peak price, Desjardins Also forecast a 25% decline from its peak in February last year.

Noe Chartier

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Noé Chartier is a reporter for the Epoch Times based in Montreal. Twitter: @NChartierET Gettr: @nchartieret