kspaans

#paid | https://hastagpaid.com/ | Senior Software Engineer | REMOTE CAN, USA

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I believe Stripe and/or has the same issue. One of the roasters I like to buy from in Toronto has beans from Cuba, but can't sell them online.

How does this work? The $2m valuation would be based on income from current tenants, would it not? Most rent control laws, and especially not the one in Oregon, don't retroactively change rents charged to current tenants.

That is unless the $2m valuation is based on a speculative estimate of how much rents will go up in the near future?

Yup, this is how "rent stabilization" works in Ontario, Canada. When a tenant has a lease, rent increases are capped to a rate set by the government. When a tenant leaves, there is "rent decontrol" and the landlord can charge whatever the market will bear for the next tenant. Similarly newly built units for rent get market rates. No one dictates what a landlord can charge, only how much they can increase rents for existing tenants.

Of course this does lead to shenanigans to get old tenants out, but it's not rent control in the sense that all rents are everywhere anytime are set by the government.

Here is Scarborough, an eastern suburb (with the suburban neighbourhoods you'd expect) in the City of Toronto.

Incidents in Scarborough have accounted for more than 46 per cent (or 19 of 41) of pedestrian deaths this year, despite the eastern borough containing just 23 per cent of the city’s population and about 26 per cent of its road kilometrage.

https://www.thestar.com/news/gta/2018/12/07/toronto-appears-...

Older buildings should sell for less, to compensate for this risk. If the mortgage payments eat up too much of the rental income then the owner overpaid, and should sell at a price that's more appropriate for the risk associated with the building.

That may be because you're competing against other owners who bought their houses for peanuts (relatively speaking) and thanks to Prop 13 also pay peanuts in property tax. They can depress market rents (below purchase prices) because for them rents are mostly profit. Even people who bought 5 or 10 years ago at previous prices can rent for less than you but keep the same margins.

The stormwater surcharge also help to nudge people whose property may contribute to excess runoff: large driveways, paved yards, larger houses, etc. This is currently a big problem in Toronto where flooding often occurs downtown (closer to the lake) during and after storms, largely due to houses further out and in the suburbs that have paved their front and back yards to make driveways.

Absolutely false. Land costs, permitting costs, zoning, permitting, etc all add up to the final cost of built housing. Developers build what's profitable, that's true, but they aren't twirling their moustaches and charging 3x premiums.

That's how Canada does inheritance tax: "deemed disposition". There is no inheritance tax per se, but when you die you're assets are assumed to be sold at current market value and trigger the appropriate taxes.

As you've alluded to, location is a factor. Specifically: the cost of land. Regardless of the price of building each square foot of housing, rising land values inflates the total cost of buying land to put that housing on. This is partially due to population growth. But it's almost entirely a self-inflicted problem. That problem is zoning.

If a slice of land can only be used to build a home for one family, and that slice of land is near things people want, it drives up the price of housing. If you were able to build a multiplex or condo tower on that land, the land would probably cost even more, but spread over more dense housing the price of land per square foot of housing would be much lower than for the single family home.

A second problem that's harder to address than waving a city planner's wand is infrastructure. Density requires transit (roads or otherwise), electricity, schools, sewers, water, etc. If municipalities don't plan for that it makes growing hard.

We've got a (mostly) Toronto-based (with worldwide representation too) Slack community if you'd like to join: https://techmasters.chat/

We have many candid discussions about career opportunities and political issues in the city.

Disclosure: I'm an admin there.

Yeah I hope we can eventually find a way to price these kinds of things more accurately. Like a sibling comment says: price in the externalities of low-density living and let those who want to pay them pay them, or else increase the density of the area.

In your case it's sounds like you're paying it to some extent: longer and/or more expensive commute.

The problem is that due to the way most property taxes and house prices work those people are getting a free ride off of the prosperity of the city: a tragedy of the commons.

Assuming this quiet neighbourhood is near an urban area with nice jobs/schools/amenities etc, the value of the 'hood is created by the network effects of the city. Growth of the city means growth in the value of that 'hood. The people living there usually aren't doing a lot to increase the value of their properties. But as property assessments lag market values, or the way taxes are structures, those owners can see flat costs for their housing while their values rise. Meanwhile by refusing to add density to their neighbourhood they are driving up the costs for others. When they eventually sell or move they get all of the gains in property value all the while having very low carrying costs.

If they wanted a quiet neighbourhood they could move to a smaller town or further out from the city centre, but I don't think they do. If the market were better organized then their behaviour would be dampened by higher taxes as their property values rise. Owners would then have an economic choice: resist density in your 'hood and pay more for that privilege, move somewhere cheaper, or allow more density which will keep costs flat.

It's inevitable that land prices in urban areas will go up as populations grow. That doesn't mean that the price of housing has to grow too. You could build more density (build up, build smaller units) to keep rents and prices stable.

Fair point, but people tend to demand less space right? Is the average-sized rental affordable for the average income in the city? I've heard the relative affordability is better than most of the Western world.

One thing you still need to consider is infrastructure like water, sewer, schools, hospitals, etc. I agree it should be easier (and thus cheaper) for landowners to build what's profitable, but there needs to be a feedback mechanism so that the things necessary for people (apart from housing) is available for them.

One component of the problem is that "housing" isn't a free market. More specifically, if you buy a plot of land in nearly any city or town, you aren't free to build whatever you want (e.g. building a duplex or small apartment building). The housing supply is centrally controlled by the local (and possibly other levels of) government, via zoning rules and building codes. Property owners tend to vote more than renters or future residents, so they generally vote for a more controlled supply of property which helps to keep prices on an upwards trend.

What seems to help with this Japan is that zoning and building codes are top down from the highest level of government, so they can adjust supply according to flows of people. E.g. Tokyo builds as many units of housing as people who move into the city. (Among other differences.)

TELUS digital is hiring! https://labs.telus.com/careers

I studied at UWaterloo and had many internships from 2007-2010 for which I forget the pay I was making, but I remember all of my full-time amounts (I started with around 2 years of work experience):

2012-2013: RIM/Blackberry in Waterloo, Canada: CAD 70,000, no bonus or stock, 15 days of vacation or so, 40h per week, software developer

2014-2016: YourGolfTravel in London, UK: GBP 41,000 first year, GBP 43,000 second year, no bonus or stock, 20 days vacation or so, 40h per week, software developer

2016-2017: Green Chef in Mountain View, California: USD 125,000 first year, USD 135,000 when I got promoted to team lead in mid 2017, $8k worth of stock options (post round B I believe, ~0.04%), "unlimited vacation", really crap health insurance, 40h per week with some long days from being on-call with time-off-in-lieu given, software developer

2017-present: software developer & architect at TELUS digital in Toronto, Canada, for not less than I was paid in the US

This is where multi-nationals like Amex come in handy. I'm Canadian and got my first Amex while living in the UK. Later when I moved to the US I was able to bring my Amex history with me and get an Amex there with no issues.

Possibly what the grandparent was thinking of is land values. If a neighbourhood is rezoned to allow more density, one would be able to build a duplex or low-rise condo/apartment building where there used to be a single family home. This makes the underlying land more valuable, while probably also making the per-square-foot cost of housing go down. I also suspect as more SFHs get turned into more dense housing, the scarcity of SFHs would make their value jump up as well. One thing that could counteract this would be if property value assessments rose enough such that it became very expensive to own a SFH on land zoned for density, which would encourage most owners to turn them into more dense housing. Though possible one house in a 'hood of low-rise buildings would be less desirable and would only be sold as a teardown. Either way I figure more density would overall be a windfall for landowners (read: homeowners) even as housing prices drop.

Make 10 other people 2X as productive!

You're right, interpreting whether a given price-to-rent ratio is overvalued or not is subjective, but calculating that ratio is (mostly) objective and can make for an apples-to-apples comparison between different locations.

And minus interest expenses on the mortgage.

Yup, probably the simplest objective metric to calculate is price-to-income ratio as a measure of "overvalued" in a given location.

I'm also a fan of LVT, and have only ever found one reasonable rebuttal (at least from the perspective of municipal financing in Canada): https://seekingalpha.com/article/4176102-principles-canadian...

One way to do this is to modify property tax into a Land Value Tax that's only accessed against land values, rather than land + buildings. This means property owners aren't "punished" for improving their buildings or building larger ones.

But this can also be achieved in current property tax regimes by upzoning to allow more density. This will raise the value of the land (because it's now possible to build more density on it), which once reassessed, will also raise the property taxes.

It's the land underneath that appreciates, not the structure of the house on top of the land.

Don't forget to look North. The housing bubble in Canada never popped in the first place.