Why won’t Trudeau stop real estate scammers? Gary Mason

2017/09/23 Leave a comment

Builds on earlier article by Douglas Todd (Todd: Tax avoidance behind Metro’s disconnect between housing, income):

Prime Minister Justin Trudeau is getting a rough ride for going after doctors and small-business types allegedly exploiting the tax system to their benefit.

Perhaps Mr. Trudeau would get more brownie points pursuing those gaming the real estate sector, people who are leaving a far more critical problem in their wake than anyone sprinkling income to pay a few less dollars in tax.

The latest census information underscored once again the inexplicable divide that exists between average incomes in certain parts of the country and house prices. The median total income for households in Metro Vancouver, for instance, was $72,662 in 2015 – 15th in the country. In the city of Vancouver, it falls to $65,327 – an area in which the average house price is $1.4-million. In neighbouring Richmond, B.C., the average house price is over $1-million and the median total income is a paltry $65,241.

Only when you go further out into the burbs, where house prices are lower, do incomes begin to rise. In Surrey, for instance, the average home price is $764,000 and median total income was $77,494 in 2015, according to the recent census.

In a place such as Calgary, median household income was just under $100,000 and average house price around $460,000 – so there isn’t nearly the disconnect that you see in Vancouver or Greater Toronto, where the average home costs just over $750,000 and median household income was $78,373.

In Metro Vancouver, some of the most expensive areas for housing – Vancouver, Burnaby and Richmond – claim some of the highest poverty rates.

Richard Wozny, a real estate analyst with Site Economics, has delved into the numbers in Metro Vancouver. He says that in the world of economics there is something called the median multiple, which is the ratio of income to average house price. So, if you earn $100,000 and the average house price in the city in which you live is $200,000, than the ratio is two to one, or simply two.

A median multiple of three or under is considered affordable; five and over is considered seriously unaffordable. Hong Kong, one of the most expensive housing markets in the world, had a multiple of 19 in 2015, according to a Demographia study. Australia’s Sydney, another city with extreme house prices, had a multiple of 12.

Metro Vancouver’s median multiple exceeds 20, with some municipalities such as the city of Vancouver and West Vancouver in the high 30s. And yet, the median household incomes in some of those same ultra-expensive neighbourhoods fall below the regional average. How do you explain that?

Mr. Wozny says even factoring in the likely percentage of retirees in some of these areas, the numbers make no sense. More likely, some of those buying homes for $1-million, $2-million or $3-million are not reporting their full incomes. We know that, in some cases, wealthy offshore investors are using trusts and numbered companies as well as spouses and children to buy homes while reporting little annual income.

Meantime, people in the “outer burbs” living in homes of less value are reporting more. In other words, there are people of moderate income living in Metro Vancouver who are, through their taxes, paying a greater share of the costs of the regional services and infrastructure that others, making far more income, also enjoy.

Canada has become an Eden for money launderers and tax evaders, allowing many to freeload off of others who can ill afford it. It was disclosed this weekthat since 2015, the Canada Revenue Agency has identified hundreds of millions in taxes owing in real estate transactions. Yet only three cases nationwide have been referred for criminal prosecution.

Mr. Wozny looks at a city like Seattle that has a higher median household income than Vancouver and lower average house prices. He believes part of the reason for that is because the United States has tougher regulations, including taxing worldwide incomes. This helps prevent offshore opportunists from scamming the tax system and pillaging the real estate market to the detriment of honest, hard-working Americans.

It’s ironic that the proposed tax changes that are causing Mr. Trudeau so much grief are supposed to benefit the middle class, that fuzzy demographic the Prime Minister loves to defend.

Yet, that same middle class in parts of this country are getting absolutely hosed by some who are helping to drive up housing prices, reaping the financial rewards from it, but not paying the same costs as everyone else.

It’s not fair. And the government needs to do something about it.

Source: Why won’t Trudeau stop real estate scammers? – The Globe and Mail

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New Orleans mayor delivered the reality check America needs: Gary Mason

2017/06/08 Leave a comment

Mason on Mitch Landrieu, the mayor of New Orleans, and his political courage in arguing for and  taking down Confederate statues:

While far from a household name in the United States, I remember thinking at the time Mr. Landrieu was someone whose political horizon could one day stretch all the way to Washington – although he poo-pooed having any grander ambitions than the job he had.

Recently, however, the New Orleans’s mayor may have unwittingly (or wittingly) launched the journey that could one day take him to the White House. In a stunningly eloquent speech defending the city’s decision to remove four statues honouring Confederate generals and soldiers, Mr. Landrieu reminded Americans why words continue to matter.

It was the kind of soaring oratory that became the foundation of Barack Obama’s historic rise to power. And against the backdrop of the current administration, and the monosyllabic shallowness of President Donald Trump, it stood out even more.

In one memorable line, Mr. Landrieu undermined the notion that statues such as the one glorifying the racist Civil War general Robert E. Lee were necessary to recognize the country’s history. Said Mr. Landrieu: “There are no slave-ship monuments, no prominent markers on public land to remember the lynchings or the slave blocks. …”

He went on: “These statues are not just stone and metal. They are not just innocent remembrances of benign history. These monuments purposefully celebrate a fictional, sanitized Confederacy; ignoring the death, ignoring enslavement and the terror that it actually stood for.”

Taking these statues down was not an easy thing to do in a southern city such as New Orleans, where racism remains entrenched. Many residents thought the mayor needed to be worrying more about murder and less about monuments. But he felt it was time the South confronted a deeply painful issue. He thought about what a black mother would tell a young daughter who asked about the metal sculptures and what these men had done to be exalted in this manner.

“Can you look into that young girl’s eyes and convince her that Robert E. Lee is there to encourage her?” he said in his speech. “Do you think she will feel inspired and hopeful by that story?”

It was brilliant.

In the last month, Mr. Landrieu was mentioned in The New York Times as a possible contender for the Democratic presidential nomination for 2020 – along with the names of many others. But even if this speech doesn’t take him any further than the mayor’s office, it was important.

It was important because it was an exemplary example of a politician taking on a tough issue, knowing the solution will create upset and anguish. But also, elegantly explaining the rationale behind his decision.

Source: New Orleans mayor delivered the reality check America needs – The Globe and Mail

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Donald Trump could happen in Canada. It’s already begun. – Macleans.ca

2016/11/19 Leave a comment

Some good analysis and questions regarding the resilience of Canadian politics to Trump-style politics, focussing on the ugliness in the Alberta PC leadership campaign and the Leitch/Blaney campaign approaches.

Starting with Charlie Gillis:

The question, say experts, is whether support for such ideas could galvanize into a Trump-style movement. Ice-breakers like Blaney and Leitch are exploiting the same rural-urban cultural divide that Trump did in the U.S., acknowledges Clark Banack, a Brock University political scientist who studies populist movements. But the kind of anti-elitist discontent that moves votes is seldom seen in Canada outside the West, Banack notes, and when it arises elsewhere, it tends to be short-lived. “We have sporadic examples of people emerging for a short time around a specific issue,” he says, citing Rob Ford’s rise to the Toronto mayoralty on the strength of working-class, suburban anger. “But overall, Canadian political culture is less susceptible to populism than American political culture.”

Another mitigating factor: the relative absence in Canada of a dispossessed working class in a mood to punish its leaders. David Green, a professor at the University of British Columbia’s Vancouver School of Economics, believes Trump’s support base of white men with no college degree would be hard to replicate in this country because the commodities boom sustained Canada’s blue-collar workers, even as the financial crisis crushed the dreams of their counterparts in other countries. Between 2003 and 2015, he notes in a forthcoming paper, mean hourly wages for Americans with a high school education or less fell by six per cent; for the same demographic in Canada, they climbed eight per cent. The effect, he says, was to slow the growth of the economic gap that has fed voter rage in the U.S., the U.K. and parts of Europe. Last year, our top 10 per cent of earners made 8.6 times on average what the bottom 10 per cent pulled in—a ratio that, while high, falls beneath the OECD average and far below the U.S. ratio of 19 to one.

But all that could change, Green warns, if oil prices remain low—especially if the housing market weakens at the same time. The country’s residential construction boom, he notes, has maintained job centres around the country’s large cities, putting more than a few displaced oil patch employees to work. “What do you do with that set of less-than-university-educated guys—the demographic that switched over to Trump?” Green asks. “That’s a potentially worrying connection.”

More so, agrees Banack, if you have a high-minded central government that overlooks their misfortune while pursuing its own pre-occupations. Running against Ottawa, he notes, is a time-tested stratagem for populist movements in Canada, and these days, few national governments are more closely identified with the globalist program of trade, labour mobility and climate-change action than Justin Trudeau’s Liberals. Something like Trudeau’s promised national carbon tax, which will be felt keenly in the West, could be enough to trigger a populist insurgency in Alberta, he says, though it’s safe to assume the federal Conservative party would do everything it could to stop such a movement, given the outcome of the Reform party experiment: “Another vote split, and you could forget about a Conservative federal government for another 10 or 15 years.”

Maybe, but experienced political players are no longer sure economic logic and conventional political calculus are in force. Carter, the Alberta strategist, notes that the online communities where so-called “alt-right” voters congregate—Facebook groups, or conspiracy-fuelled sites like Infowars—don’t traffic in that sort of information. In its place: a strain of fanaticism typified by the onslaught that ran Jansen off the PC stage, which Carter believes is sure to spread. “I don’t know if it’s Trump or social media or just belief that they’re correct that gives a sense of permission,” he says. “But this is not normal.”

Gary Mason in the Globe picks up similar themes:

The Premier and her party are now sitting at 14 per cent in the polls. The party receiving the most support in recent public opinion surveys is the Progressive Conservatives, the same entity Mr. Kenney plans to destroy if he wins the leadership. He wants to build a new political organization that Wildrose members will feel comfortable joining as part of an overarching bid to unify conservative forces in the province.

Either way, Alberta seems to be preparing to make an ideological course correction.

There’s little doubt the rise of Donald Trump has emboldened many in the province. One of those would appear to be Derek Fildebrandt, a Wildrose MLA and one of the most powerful conservative voices in Alberta.

He has little patience for the likes of Ms. Jansen and others complaining about online trolls and provocateurs. “Hypersensitive, politically correct, victim-as-virtue culture is creating a leadership class of wimps,” he wrote in a tweet that could have been sent out by The Donald himself. “People are sick of it.”

After Mr. Trump was elected, Mr. Fildebrandt tweeted: “The biggest lesson that we should learn from the election of Trump: smug, condescending political correctness will spark a backlash.”

I’m not sure what is happening in Alberta, but on almost any level it’s not good. Trump-style politics could well be making its way north of the border. At the end of the day, however, society gets the politicians it deserves.

Source: Not so progressive: Trump-style politics seep into Alberta

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Plenty of blame to go round in real estate crisis: Mason

2016/03/26 Leave a comment

The (valid) criticism of governments continues.

But at least, the planned StatsCan study will illustrate the extent to which (mainly Chinese) immigration has contributed to increased housing prices:

The B.C. government recently vowed to crack down on real estate agents involved in nefarious practices such as shadow flipping that help to drive up prices. But this is a small measure that will do absolutely nothing to improve affordability. Its primary purpose is to improve optics: Look, everyone, Premier Christy Clark is finally doing something about this mess. The Premier also asked B.C. Housing to look at the impact of foreign investment in the market.

In this week’s federal budget, meanwhile, $500,000 was set aside to help Statistics Canada determine the best way to collect data on international buyers.

It would be comical if it weren’t so sad.

Others, meanwhile, aren’t waiting. This week, two economists from the National Bank produced a study showing as many as one-third of house purchasers in Metro Vancouver last year were from China. But perhaps the most interesting numbers to be revealed lately concern the impact that the immigrant-investor program – both the one run for years by Ottawa (and terminated in 2014) and another that still exists in Quebec – has had on the real estate madness we are witnessing.

Under the program, immigrants can come to Canada in exchange for $800,000, up front, that serves as a five-year loan to the government. The report, brought to light by Ian Young of the South China Morning Post, reveals how completely porous and unaccountable the immigrant-investor system has been. Truly awful might be another way to describe it.

For example, after 10 years the average annual income tax paid by these millionaire migrant investors is $1,400. That compares with $7,500 for the average Canadian. The report notes that after five years, many of these investors have secured Canadian citizenship and returned to their home country.

Quebec accepts about 1,750 such applications annually. After handing over their $800,000, most move to Vancouver and buy real estate. The vast majority of all who have taken advantage of these programs over the years have ended up in British Columbia (by one estimate, nearly 200,000).

Those who have come to Canada acknowledged to federal researchers that their primary motivation for obtaining citizenship was as a hedge against political or economic upheaval occurring in their home country.

The federal government has known about the impact the investor pipeline was having on things such as real estate and didn’t care. It was more than pleased to sell Canadian citizenship to the wealthy. The B.C. government, meanwhile, is only too happy to take rich immigrants through the investor back door that continues to be provided by Quebec. It doesn’t care that it isn’t seeing any of the loan money that immigrant investors have to pay; it is making tens of millions from the insane escalation in real estate prices these immigrants have set off.

Canadians should be furious that their governments allowed this to happen. Now all that these same governments can do is introduce lame measures that will have no meaningful impact on housing prices, but rather are designed to show that government is on the problem!

Except they’re not. And never have been. And hopefully history will judge them harshly for that.

Source: Plenty of blame to go round in real estate crisis – The Globe and Mail

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