The World's Worst Market-Timer
By Tyler Durden
Authored by Kevin Muir via The Macro Tourist blog,
Today’s post is about the recent Canadian government measures to cool the scorching Toronto housing bubble, but the lesson about government ineptitude will be universal, and I am confident, shared by everyone.
By now, most non-Canadians have heard of Toronto’s out of control housing market, but probably won’t know too much about the specifics. I tried to think up a good way to show the magnitude of the rise, so I made up a chart comparing Toronto’s house index to another housing market widely known to be insane. Fueled by the latest tech boom, San Francisco has experienced a breathtakingly stupid price rise over the past few years.
Well, here are the two cities side by side:
Yup, Toronto housing price appreciation has even outpaced San Francisco! It’s a gong show here in Toronto, no doubt about it.
Last year when Vancouver was facing the same sort of runaway price rise, their government instituted a 15% foreign buyers tax. Like true bureaucrats, they did not think about grandfathering in existing sales that had not yet settled, and instead slapped an out of the blue tax on foreign capital. Not surprisingly, foreigners decided there might be better