A rising real estate market puts a ‘tax me’ sign on every house in the country

The housing market seems to be awakening, kind of like Godzilla does from time to time.

A disaster movie comparison is apt because resurgent housing is an alarming development. The only clear winners are people who sell homes and mortgages.

A quick run-through of the negative effects of a sudden housing revival:

• The Bank of Canada’s task of lowering interest rates gets a lot more complicated
• Young first-time home buyers would be pushed further out of the market
• Investors would be drawn back into the market
• Homeowner equity rises, which makes houses a more inviting tax target

The first three points are already happening, or on the verge. Over the next year, keep your eye on the tax angle. If real estate is where the money is in our economy, won’t that eventually be where taxation must go as well?

Expectations for the housing market this year were initially modest because of the weight of continuing high interest rates and a slowing economy. But the December resale numbers were surprisingly hot, and early reports for January show more of the same. “Canada’s housing market is on fire again,” Scotia Economics said in a note this week.

The resurgence of the housing market is tied to a decline in fixed-rate mortgage costs from peak levels, strong demand that isn’t being met with construction of new homes and a job market that is slowing but still producing wage gains ahead of inflation.

Hot housing sounds like a rare bit of good news in a world where so much bad stuff is happening. It suggests the economy isn’t as weak as we thought, and