Your world is about to get more expensive, but not in the ways you may think.
The recent headline reads: “Nearly $90B in equity wiped off Lower Mainland home values in past year.”
This report is on the Lower Mainland market – however, we are witnessing a similar, if not as dramatic, impact in many cities across Canada.
Most of this financial loss is occurring to the net worth of hardworking (and shrinking) middle-class Canadians, due to federal and provincial governments looking for votes via high-profile policy changes.
This will be painful to many, for sure. But let’s extrapolate this loss of assessed value just a bit further.
As costs increase for schools and city operations, and citizens demand more from their local cities and school boards, these federal and provincial policy changes have effectively driven down the major source of the funds to pay for these key services – property taxes.
Lower assessed values = lower property tax revenues = service cuts or higher tax rate increases.
This is how federal and provincial governments have offloaded financial pain onto cities and municipalities at no direct fiscal or optical cost to those higher level governments.
Provincial and federal governments receive all the applause (votes and good ratings) while the municipal governments take all the pain (future voter anger).
Neither of which serve the citizens, whom the federal and provincial governments are supposed to be serving.
This is just the beginning of the pain these policy changes will foist onto the citizens (voters) as well as municipal officials – without any direct pain felt by the higher levels of government.
The ripple effect will be huge throughout the country.
If you think that gasoline and food price increases are hurting your pocketbook, just wait to see the financial pain these housing policies will bring on all aspects of your life.
Don R Campbell is senior analyst at Real Estate Investment Network