Author Topic: Why are we subsidizing property taxes of millionaires?  (Read 1509 times)

0 Members and 0 Guests are viewing this topic.

Offline kimmy

  • Full Member
  • ***
  • Posts: 4836
  • Location: Kim City BC
I was using the term "bad decision" as a statement of economics rather than morality. Credit cards hide the costs and therefore charge more than they would be able to charge if the cost was in the open. This is bad from an economic perspective.

I believe that most renters are renting because they lack the financial resources to own, not because they lack the information about hidden costs in their rent. (and as I mentioned before, I know that for landlords renting properties like mine in my area, tax is an insignificant amount compared to the rents being charged.)

These activities are called "creating rental properties". People do not have to rent out basements if they do then those are new rental properties that never existed. Investors can and do buy properties for capital gain. They do not have to offer them as rentals. Choosing to offer them as rentals is expanding rental supply.

Scooping up real estate to turn it into rental properties does nothing to increase the supply of housing. Same number number of suites... more rental units, fewer opportunities to own. Buying properties to rent out is extremely profitable, and people are willing to pay high prices because they know the return will be high.  They don't need an extra $570+ subsidy to convince them to rent them out.

Perhaps incentivizing the creation of basement suites is a good idea-- that actually does create new housing.

But giving people further incentive to buy up existing homes as rental properties is counter productive.  It's probably doing at least as much to drive up real estate prices as the hated "foreign investor" who keeps getting blamed for Vancouver home prices. If anything there should probably be barriers, not more incentives.

The prices are not going to be affected by a single building. It takes time for prices to adjust to new supply and a city that encourages people to rent out housing will see lower rents than a city that puts up barriers..

The free market is doing a great job of encouraging people to rent out housing. The profit motive is so persuasive that nobody needs an extra $570+ to convince them.  It's like giving away gold, and then deciding to give people free gas to drive to the mine to collect it too.

Homes are being built as fast as possible. The barrier isn't the lack of profit to be made.

Paris - London - New York - Kim City