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This part particularly surprised me, as it flies in the face of a lot of confident-sounding opinions voiced here. > For example, proponents of the “supply-side

by jbm 3y ago

This part particularly surprised me, as it flies in the face of a lot of confident-sounding opinions voiced here. > For example, proponents of the “supply-side” argument frequently point to low vacancy rates as an indication that supply is low, which drives rents higher. During the COVID-19 pandemic, the national vacancy rate went up from 2 percent to 3.2 percent, a 60 percent increase. What happened to rents? They, too, went up, by 3.6 percent. In Toronto, vacancy rates more than doubled between October 2019 (1.5 percent) and October 2020 (3.4 percent). What happened to the average rent in the city? It rose by 4.7 percent. A Canada Mortgage and Housing Corporation report explained that, in hot markets like Toronto and Montreal, landlords chose to wait longer to fill vacancies or offered one-time rent discounts instead of lowering rents. In 2021, a prominent housing expert, Steve Pomeroy, demonstrated that “between 2006 and 2016, Canada added 1.636 million households and built 1.919 million new homes . . . almost 30,000 extra homes were constructed each year compared to the increase in the number of households.” And yet housing prices and rents went up at a breakneck speed during those years. Neither Pomeroy nor I contend that Canada has enough housing or that additional supply would not be beneficial. The point is that supply alone will not solve the problem.

lotsofpulp 3y ago
Supply has to be in the desired location, and it has to be brought into the market if empty. If property taxes are too low such that many can afford to have multiple houses, then that will result in in insufficient supply in the market, even though it exists.
- jbm 3y ago
  WRT the tax point, I've heard this previously, but it doesn't make sense to me yet. For example, a person who owns multiple properties would be in a better place to absorb tax hikes by simply passing them along to renters. It would be the single family that ends up the most affected by this. Moreover, I agree with the person who said "property tax is not a sin tax". The income received would not be invested to help the common person. For example, my municipality would most likely spend the additional money on sports teams, which I firmly oppose, but is something supported by rich interests in the city.
  - lotsofpulp 3y ago
    Other taxed can be reduced if property taxes are increased. And costs do not simply get passed on. If that were true, then no businesses would fail and everyone would enjoy a minimum profit margin. Low property taxes means higher profits for landlords, which means more incentive to hold onto extra properties. Higher property (specifically land value) taxes means the land has to be used more productively to earn a return. Instead of a single family house on a 10k sq ft lot, there would be 3 townhouses, condos, etc. There would also be more incentive for landlords to lower the rent more quickly in response to the market. Right now, lots of “space” sits empty, while income tax from people who work pay for the police and courts to keep that space “secure” for landlords. It is a massive subsidy from workers to non workers.

by jbm 3y ago

lotsofpulp 3y ago

Supply has to be in the desired location, and it has to be brought into the market if empty. If property taxes are too low such that many can afford to have multiple houses, then that will result in in insufficient supply in the market, even though it exists.

jbm 3y ago
WRT the tax point, I've heard this previously, but it doesn't make sense to me yet. For example, a person who owns multiple properties would be in a better place to absorb tax hikes by simply passing them along to renters. It would be the single family that ends up the most affected by this. Moreover, I agree with the person who said "property tax is not a sin tax". The income received would not be invested to help the common person. For example, my municipality would most likely spend the additional money on sports teams, which I firmly oppose, but is something supported by rich interests in the city.
- lotsofpulp 3y ago
  Other taxed can be reduced if property taxes are increased. And costs do not simply get passed on. If that were true, then no businesses would fail and everyone would enjoy a minimum profit margin. Low property taxes means higher profits for landlords, which means more incentive to hold onto extra properties. Higher property (specifically land value) taxes means the land has to be used more productively to earn a return. Instead of a single family house on a 10k sq ft lot, there would be 3 townhouses, condos, etc. There would also be more incentive for landlords to lower the rent more quickly in response to the market. Right now, lots of “space” sits empty, while income tax from people who work pay for the police and courts to keep that space “secure” for landlords. It is a massive subsidy from workers to non workers.