Comment 33324

By A Smith (anonymous) | Posted September 09, 2009 at 22:33:49

Quebec City has very low property values, even lower than Hamilton. Therefore, while it may be a great place for tourists, it isn't doing a good job attracting people to buy homes.

A city that does a great job attracting residents is Toronto. Curiously enough, within Ontario, Toronto gives home buyers the best deal on property taxes. Whereas a home buyer in Hamilton pays $4762.80 on a $300,000 investment, Toronto only charges $2,564.40.

If Hamilton set a goal of matching Toronto's tax rates for residential properties, this would increase homeowner's after tax return on investment, which would mean more money in their pocket. When you consider that home prices in Toronto have risen on average 2.34% (after inflation) since 1995 ( ) and 0.85% has been taken away through taxation, this leaves a real return of 1.49%.

In contrast, if you assume that Hamilton home values rise as much as Toronto, which is doubtful, this would still mean that homeowners earn a return on investment of only 0.75% (2.35%-1.588%), only HALF as much as Toronto homeowners.

Therefore, if Hamilton wants to increase it's attractiveness to investors, which is anyone who buys a house, how can it do this if it only gives returns on investment, half that of Toronto? Most people don't want to lose money, yet that is what they face if they choose to buy in Hamilton, rather than Toronto.

I understand most people don't like numbers and would rather talk about big ideas to transform Hamilton, but numbers matter. People invest based on numbers and more importantly, banks loan money based on numbers. If Hamilton starts playing the game, increases investor's ROI, this will guarantee more investment and higher property values for all Hamilton homeowners.

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