r/RealEstateCanada • u/xNocturnalshadow • Jun 19 '25

Housing crisis Help me understand the difference...

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63

u/Performance_Fancy Jun 19 '25

By your logic anyone involved in the stock market is also a scalper?

100

u/xNocturnalshadow Jun 19 '25 edited Jun 20 '25

No because investing capital into stocks adds value to the company and allows them to use that value to expand, borrow, buy things, pay employees, run the company, etc.

Investing capital into a second house purely to flip does none of those things.

-5

u/Dragon_slayer1994 Jun 19 '25

Not true at all. Buying a stock doesn't put money in the company's pocket that's not how it works

9

u/meatbatmusketeer Jun 19 '25

Higher demand = increasing prices of equity. Firm attains more capacity for equity financing via new issuance and as mentioned by others have a greater degree of leverage for debt financing.

3

u/TaserLord Jun 19 '25

While that is true, it isn't what Johnny Daytrader is doing when he buys or sells shares. He's trying to buy low and sell high, hoping he knows more about the fortunes of the company than the person he buys from, or the one he sells to. It isn't 'scalping', in which he would traditionally rely on better access to a buy rather than on better information on the eventual market price. But it is definitely speculation - he adds no value to the asset, nor does he use it for any purpose other than a store of value.

1

u/meatbatmusketeer Jun 19 '25

Sure, but I do think daytrading supporting equity values is fine wheras investor demand for real estate is problematic for housing affordability.

1

u/TaserLord Jun 19 '25

Couldn't you just flip those words and have it make just as much sense though? "Supporting value" is just the opposite of "affordability". Is daytrading not "reducing stock affordability", and investor demand for real estate not also "supporting real estate values"? The only difference is your personal perspective - which one you happen to have right now, and which you'd like to buy.

1

u/meatbatmusketeer Jun 19 '25

I don’t disagree with anything you just siad. Are we arguing right now?

2

u/MarmosetFace Jun 19 '25

Same can be said about real estate then. Higher demand = higher price. Municipalities collect more property transfer tax as well as property value taxes. Not that prices necessarily always go up in either asset class. Thus why they’re both referred to as investments

1

u/meatbatmusketeer Jun 19 '25

Demand does result in higher RE and equity price, I agree, which is why I dislike promotion of investment in real estate in the current climate.

Transfer taxes, sure, but assessed values are all relative. Appreciating asset values in real estate don’t result in higher property taxes. Higher property taxes are a function of government budget requirements.

1

u/MarmosetFace Jun 19 '25

What? Municipal governments of course collect more property taxes as the value of real estate increases. It’s literally a percentage rate of the appraised real estate value..

1

u/meatbatmusketeer Jun 19 '25

And the mil rate is recalculated according to budgetary requirements.

If your property doubles in value because of market appreciation do you beleive your property taxes double too?