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Comment by bettercallsalad | Hacker News Reader

In Canada, specifically Toronto, an average single family house in 2014 used to cost 400K. Now it’s 1.2M. Wages haven’t gone up, quality of healthcare and other services such as public transport have gone down. Meanwhile, taxes have gone up.

I always laugh at how politicians and media ignite the culture war as if it’s not all part of the design. Keep everyone distracted over things that don’t ultimately matter while a very small segment of the society essentially plunders and loots the wealth and already asset owning and well connected part of society keeps owning bigger and bigger share of the pie. Under the surface, the entire last decade since GFC has been a class war waged by the elites. Upward mobility is dead and with it the whole “American dream” or “Canadian Dream” or “immigrant dream”. Welcome to the age of generational wealth and wealth transfer much like Europe a century ago.

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> Welcome to the age of generational wealth and wealth transfer much like Europe a century ago.

This inevitably happens as a society grows to the point where it values stability and maintenance over freedom and growth. The chaotic nature of individual liberty encourages both creation and creative destruction, which makes wealth change hands often. When government steps in to save the people from themselves, you get stasis, and it becomes increasingly harder to make your own lot in life, whether upwards or downwards.

> Upward mobility is dead

At least in the US, this still isn't nearly as true as a lot of people think it is. Sure, someone on their first job isn't going to be able to afford a house in any one of the most desirable cities in the world (let alone the country); but in vast areas of "flyover country", people make a living, buy homes with yards, and raise children.

This trend is starting to reverse. Most suburban areas in the US are being assaulted by investment firms.

1) Be investment firm

2) buy houses

3) lobby govt for more immigrants saying "diversity is our strength"

4) Hire PR firms to say "diversity is our strength"

5) Immigrants need to live somewhere so housing prices go up because of demand

6) Profit

Immigration is not a significant (or at least not top three in significance) factor in the housing crisis. If you believe it is then please cite the data.

No. Please site the data where supply and demand works everywhere else but not when it comes to immigration.

Supply and demand does _not_ work everywhere else. That is a highschool-level interpretation of the astrology we call economics. Complex systems in reality are not defined by two simple lines on a graph.

If you use Google there is plenty of research disproving you from Canadian sources that pander to both Liberal and Conservative readership.

Economics is astrology partly because people like you believe everything at face value. Why on earth would " canadian sources" i.e. PR firms for big business shoot themselves in the foot by letting everyone know that the cheap labor they love is partly a cause of the housing crisis?

I'll give you the benefit of the doubt, like the saying goes "the road to ruin is paved in good intentions".

Immigration is far from the biggest factor. Step 3 should be: lobby the government to prohibit new housing construction (aka competition) in in-demand locations

I don't want my forests and open land being used to make high density housing for more people.

High density is not built on open land.

It is where I live. All the farms in my county have been replaced by almost barrack's style townhomes. Its dystopian.

Townhomes are not high density, think mid to high rise buildings. Several stories with shops on the first floor.

The “missing middle” is what we should be building.

Does building the "missing middle" still mean paving what was once forests and making farms into town houses? If it is (which it is) then I'm all against it.

The easiest policy decision to fix this would be to stop making housing such a guaranteed (literally, in many cases) investment. Big firms will chase their yields elsewhere if home prices were allowed to go down or even be stagnant for a long time.

And while we're at it, let's implement a Georgist land value tax, so that gains in the value of the land itself, which nobody affects directly in a vacuum, does not inure to the landowner, be it BlackRock, The Rock, or your average Joe.

But a third of all Americans own homes[0], and I guess by now everyone is used to having the full faith and credit of the United States government be a tailwind to their own labor-free enrichment.

[0]: https://fred.stlouisfed.org/series/RHORUSQ156N

Wouldn't landlords simply pass on any tax on the land to their tenants?

Yes, but that's true of any kind of tax, including traditional property taxes. Landlords are already charging the most the market will bear (including passing on any and all taxes), and similarly tenants are already offering the least amount of rent the market will bear.

More importantly for a Georgist LVT scheme vs. regular property taxes is that with the former, you're only taxed on the unimproved value of the land, vs. the value of the lot plus the improvement (i.e. housing) on it. It's arguably the most economically efficient as well as the most socially just form of taxation, as that which is taxed is the thing that nobody created or made valuable.

No.

Tenants always pay for the land value. If a new train station opens up and the costs of an apartment have not changed, you better believe the landlord will raise prices given the raised demand from the new value associated from the train station. The monthly payment that a tenant pays has nothing to do with costs.

The effect whereby taxes are passed on happen because when you tax something you get less of it, and with less of it it moves along the supply and demand curve and so prices rise. Since the supply of land is fixed, this does not happen with land taxes.

The question then becomes do you pay the value to the landlord, or do you pay it to the community?

> The question then becomes do you pay the value to the landlord, or do you pay it to the community?

This is the precise point, and thank you for elucidating it. With an LVT, the value of a highly-desirable piece of land inures to the community as a whole, and not whoever holds the title to that land. If the landowner wishes to come out ahead of this taxation, they are forced to improve it, whether in the form of tilling the soil, mining the minerals, or (most relevantly to our discussion) building a house or apartments on it.

As a side effect, it prevents the absurdities you see in many North American cities where there's a huge surface parking lot smack dab in the middle of a dense downtown area.

> In Canada, specifically Toronto, an average single family house in 2014 used to cost 400K. Now it’s 1.2M. Wages haven’t gone up, quality of healthcare and other services such as public transport have gone down. Meanwhile, taxes have gone up.

What's the cause, specifically? I recall reading somewhere that the current Canadian government is pursuing a "Maximum Canada" policy to grow the population through immigration, but they're not building the housing required to meet the increased demand.

If that's the cause, it's seems like it would be pretty oppressive to do what the OP is advocating for: increasing property taxes. It seems like it would just lead to people losing their homes: government policy causes home prices to rise out-of-control, then the less well-off get kicked out of their once-affordable homes because they can no-longer afford the tax bill.

> What's the cause, specifically?

Home price gains that have far outstripped inflation or the average wage all have the same cause wherever it happens in any developed country. It's entirely self-inflicted, on one end by policies that favor home ownership by privileging it above other kinds of assets (mortgage interest deduction, etc.), and on the other by policies that deter simply building more, whether to fight gentrification, preserve the character of the neighborhood, or reduce environmental impact.

Having the average home price triple in a single decade is such a massive and rapid level of appreciation that I don't think you can reasonably attribute it to "the same cause wherever it happens in any developed country." There's going to be some unusual policy or economic situation driving it. The things you mention are only exacerbating factors that cause the effects to show up in home prices, rather than in some other metric.

So, what specifically is happening in Toronto that's driving this (e.g. causing demand to go up, up, up)?

Edit: I think I found the article I was referring to earlier: https://www.noahpinion.blog/p/maximum-canada-is-happening. It says Canada's population has increased by 15% over the last decade (35 million -> 40 million). Apparently Canada has one of the fastest population growth rates in the world, all from immigration since it's birth-rate is sub-replacement. US population only increased 7.5% over the same period.

> It says Canada's population has increased by 15% over the last decade (35 million -> 40 million).

Canada is a developed country with a lot of natural resources; by a lot of metrics, it is one of the top 10 countries with the most natural resources per capita. It should easily be able to increase its housing stock by 1.5% a year at at a national level.

It looks like Greater Toronto went from 5.7 million in 2013 to 6.4 million, ten years later in 2023[0], for a slightly lower rate of growth than the nation as a whole. A cursory search didn't reveal any sources for the number of dwelling units in the GTA over the same time period; but I'm willing to bet that if you combined that plus the expansion in the supply of Canadian dollars, you'll explain most of that growth in home prices.

The money supply in Canada alone more than doubled in the past 10 years[1] vs. the 15% growth in population; so all else equal, you'd expect houses to transact for roughly 74% more CAD in 2023 than in 2013. The Toronto housing price index went from 154.36 in July 2013 to 360.78 this past July, at a 134% growth over the same time period. Most of that difference may be explained by a lack of building in Toronto. I'm sure some of it is other socioeconomic factors (increasing centralization of wealth in cities, etc.), but I don't think any of them are particularly unique to Canada.

If anything else, due to its abundance of open land (granted, not all of it is economically valuable) as well as its natural resource advantages, Canada should be much better suited than other developed countries to be able to handle its housing challenges. The fact that it's not is mostly due to policy choice, which I posit are choices similar to those made in other developed countries.

[0]: https://www.macrotrends.net/cities/20402/toronto/population

[1]: https://fred.stlouisfed.org/series/MABMM301CAM189S

[2]: https://housepriceindex.ca/#chart_change=on_toronto

> due to its abundance of open land (granted, not all of it is economically valuable)

haha yes the latter statement a very important inclusion.

Despite being the second largest country in the world there's very little viable, good land in Canada and a housing crunch was inevitable.

Enormous swathes of Canada are sheer mountain, muskeg, and tundra. Lots of nice flat parts that are dramatically more important for feeding the world purposes than McMansion development.

All the good places to build are where the cities currently are, and they're running out of land. The era of razing a forest at the margins and building more suburban strip malls is over.

There are a multitude of reasons for high housing, but the strongest one is general anti-housing policies for decades, governments being completely asleep at the wheel and running into the end of easy suburban sprawl which has resulted in a game of musical chairs as people realize the era of the single family home is coming to a close.

We're at the inflection point where new development must come through redevelopment and intensification instead of greenfield development. Other places (ie. Europe!) got here decades and centuries ago, but Canada is still in the denial stage.

> there's very little viable, good land in Canada

Canada's economy is 70% services (meaning, to varying degrees detached from the land) and as of May 2023, one in five Canadian workers were still working from home[0]. Surely some of those people could stand to build a city in the tundra ;-)

Hailing from a country that is literally 1/100 the size of Canada yet is much more populous, I find arguments that Canada is out of land uncompelling. You are right, of course, that it could build up vertically a lot more than it has so far.

[0]: https://www.benefitscanada.com/news/bencan/percentage-of-can...

Wages haven't gone up since 72. That wealth that should have been there due to a well paying job is now coming from your house appreciating. No one wants their largest investment to depreciate so to keep everyone happy, more demand is created through immigrants thus building a price floor. The american association of realtors is very up front about this, you can find many articles where they talk about immigrants boosting real estate prices and its by quite alot.

It's called the Century Initiative to try to grow Canada's population to 100M by 2100:

https://www.centuryinitiative.ca/why-100m

Canada recently passed 40M this year:

https://www.statcan.gc.ca/en/subjects-start/population_and_d...

What if the solution is for people who can’t afford to live there to move to a city where they can afford?

Well goodluck finding a job in Saskatchewan or Manitoba or uninhabitable upper North. Unless you work for oil and gas but oh wait those industries are now also struggling and along with them the jobs they would bring are also dying.

In smaller towns in Canada the rent for a 500 sq ft apartment is over $2000/month. And there is the question of jobs in these places that people supposedly can "afford".

> Keep everyone distracted over things that don’t ultimately matter while a very small segment of the society essentially plunders and loots the wealth and already asset owning and well connected part of society keeps owning bigger and bigger share of the pie.

I buy a house. The government pegs interest rates near zero. I realize I can buy a much more expensive house for a similar monthly payment. I buy a more expensive house. Millions of others respond to the same incentives. Prices rise. Somewhere a leftist sheiks, "stop plundering me bro!"

> Upward mobility is dead and with it the whole “American dream” or “Canadian Dream” or “immigrant dream”.

This is nonsense. The home ownership rate is above the historical average and trending up.[0] Median household income is up ~50% since 1970.[1] The only possible way to argue that the 'American dream' is dead is to cherry pick data and/or hot-swap the actual American dream (of building a reasonably prosperous, middle-class life for yourself and your family) for some handwavy progressive analog.

[0] https://fred.stlouisfed.org/series/RHORUSQ156N [1] https://www.pewresearch.org/social-trends/2020/01/09/trends-...

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