With home prices in Canada surging even as incomes plateau, the ensuing affordability crisis has led some in the industry to think that it’s high time policy makers step in to cool the market.
Among them is David Larock, an independent full-time mortgage broker. In a recent blog post, Larock outlined some recommendations that policy makers can undertake to address the affordability crisis.
Read more: RBC’s Hogue: Policy interventions against market overheating needed now
Among Larock’s recommendations is a tax on buyers who “flip houses over short periods and rely on those profits for their primary source of income.”
“In such cases, it seems only fair that their regular incomes should be taxed the same as any other income,” said Larock.
He also advocated for a national non-resident and/or vacancy tax, saying that it “seems incongruous that properties should sit empty when the demand for housing is running so far ahead of supply.”
Additionally, Larock said that he agreed with those “who think we should do away with our blind-bidding process, which can often cause buyers to needlessly overpay for the most expensive asset most families will ever own.”
“I also see the logic in raising the down payment requirements for investors who are purchasing multiple investment properties, thereby reducing their incremental borrowing capacity,” he said.
“For now, here’s hoping that our macro-prudential policy makers come up with changes to help curb speculation, increase occupancy rates, reduce fraud, and raise taxes where appropriate,” said Larock. “They’ve still got time. But if they dither, or get it wrong, market forces will at some point find another way to address the imbalances.”