A Toronto economic analyst and former politician has blamed governments and "our own house horniness"—and not foreign investors—for sky-high Canadian home prices.
"There’s simply no data showing foreign guys caused houses to go ballistic, and overwhelming evidence Canadians have done this themselves (with the help of politicians)," wrote Garth Turner on his blog, The Greater Fool. "Even the latest Van stats reveal locals and foreigners spent an identical amount per purchase, and Canadians outnumbered them by nine-to-one. Case closed."
Turner, a former Conservative and Liberal MP, acknowledges that most readers of his blog are "on the side of stiffing the out-of-country buyers". But he points the finger at public officials for pushing homeownership through some risky means.
"In fact for decades, there’ve been strong pro-real estate measures enacted by every successive group of politicians, leading us directly to now—when the average family can no longer afford the average home," Turner writes. "Artificially-low borrowing rates, government-backed mortgage insurance, legislated 5% down payments, RRSP homebuyer loans, first-timers grants, property tax rebates, land transfer tax exemptions—the list of interventions is endless. So now crap houses cost a million. Good job, government."
Furthermore, Turner maintained that the housing market is teetering "even as most people are completely blind to the risks". And he pointed out that lawyers, realtors, accountants, and advisors are already figuring out ways to avoid the new "head tax" on foreign investment. He predicted it will only result in the creation of a "bloated bureaucracy which may cost more than it collects".
Turner is an investment advisor, former journalist, and author of 14 books, including Greater Fool: The Troubled Future of Real Estate.
Meanwhile, Canada Mortgage and Housing Corp. issued a report this week saying "overvaluation and overbuilding remain the most prevalent problematic conditions observed in 15 centres" in Canada.
"Strong evidence of problematic conditions is seen in Vancouver, Toronto, Calgary, Saskatoon and Regina," the report stated. "In Toronto and Vancouver, this is due to the combination of price acceleration and overvaluation. In Calgary, Saskatoon and Regina, this is due to the combination of overvaluation and overbuilding."