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Comment by shostack | Hacker News Reader

Any thinking around the expected impact from locals who bought despite the prices? Sounds like they could be royally screwed if prices plummet as a result.

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I think the logic is that if you're a local, the primary purpose of the residence is for living, not speculation. If prices drop your illiquid asset # drops, but you still have a place to live and you're going to pay less property tax. Of course, people could end up underwater, but that's all dependent on how crazy a mortgage they were able to get (I think there is less craziness here than there was in the run up to 2008 amurica).

Yes, some people will get screwed. Hopefully this will result in less locals being screwed than if nothing was done.

Given that current prices were completely out of whack, and that the govt kept warning that something will be done ... people who bought at the peak deserve what they got. I've been sitting on the fence (since the math didn't make sense) for years. All we got for being prudent was annual moves and seeing other people's homes paying them more than a 1%er's yearly salary. I welcome this move by BC. Ontario needs this stat for the GTA. We also need to tax the gains from home sales. The situation has gotten so bad, young people are leaving in disgust.

I just bought a 450K house in Victoria knowing I'll take a haircut. The problem with timing the market is it simply hasn't crashed and I'm out of time - it's time to start a family.

You didn't need to purchase a house to do that. You can rent houses in victoria. Buying a house doesn't mean you'll keep it if economic bad times hit.

450K for a house seems cheap. In the GTA, you won't even get a townhouse for that much. A townhome (with monthly fees) probably goes for over 650K :'( I don't understand it.

If locals didn't overstrech financially to buy something they can barely afford, they should be able to weather the storm. If they blissfully took on massive mortgages in a highly overvalued market, well, I think they might get the short end of the stick. I don't think governments should provide safety net for foolishly risky behaviour.

I don't think prices will go down as a result. For dirty / at-risk money pouring in from overseas, the 15% tax is just the cost of doing business, and that's assuming they don't find a way around it like using a Canadian proxy buyer or shell corporation. If someone is buying a 50-year-old teardown with asbestos and mildew for $3 million, do you think they care if it becomes $3.45 million with the new tax? They just need to get the money the hell out of Dodge (China).

What the tax can achieve though, is build up a stockpile of money for the government to address the affordability problems by improving mass transit, building affordable housing, etc. This is the realistic best-case outcome. Prices are not going down.

>I don't think prices will go down as a result.

of course not. How would adding new tax may result in lower prices in under-supplied market? If a person buys something for 2.3M instead of 2M it is higher price for that person (it doesn't matter who those money were consumed by). That person to make profit will be using the 2.3M as base to make selling decision, calculate profit, etc. Thus it will drive prices up.

Only in oversupplied(buyer's) market such tax may have resulted in lower prices by deterring buyers and thus decreasing liquidity.

Ultimately that has to happen. Housing prices that high (and rising) are a dumb intergenerational transfer of wealth from the young to the old.

When a bubble goes on there is always someone who gets screwed in the end. I don't think there is a way around it.

Well the bubble( if it is a bubble) has to pop sooner or later. Better sooner than later.

Sooner than later?

http://business.financialpost.com/news/economy/is-canadas-ho... Is Canada’s housing bubble about to burst? May 20, 2010 2:46 PM ET

And let's not forget this blog post gloating in 2008 October the Vancouver housing bubble finally has burst... http://www.investingintelligently.com/2008/10/24/global-tv-s... In 2004 (!) http://www2.jurock.com/articles/columnist.asp?id=3723 is it a bubble?

Better sooner than later...starting...NOW...NOW...now?

"The market can stay irrational longer than you can stay solvent" -Keynes

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