51–60 of 73 posts
Foreign ownership of houses comprises only small % of the housing market [1]. The measures promised (but all political parties, not just Trudeau) have been applied in New Zealand and their housing market still remain white hot. The root cause is low supply of houses in Canada, the red tape around land / property development keeps construction of housing slow and costly. [1] https://www150.statcan.gc.ca/n1/pub/11-626-…
Earlier quoted context omitted.
It has been an issue in the Canadian market for 20 years now and has had a material impact on housing prices in certain big markets.
I understand that this is the narrative, but show me what markets specifically. Even if ownership is 10%. That means 90% of homes that are bought and sold are NOT to foreigners. The fact is that inflation has eroded away the value of $$ and houses that should cost $50,000 now cost $700k.
There's a particular problem with that hypothesis:
> Over the past 5 years, single-family home prices are up 150% in London-St. Thomas [Ontario], but down in Regina. They've barely budged in Edmonton. Monetary policy provides no explanation for that phenomenon.
* https://twitter.com/MikePMoffatt/status/1430892821968392198
Meanwhile, when you increase the population, but do not have a corresponding increase in supply:
* https://mikepmoffatt.medium.com/ontarians-on-the-move-2021-e...
There's no need to get into hard money, gold bug tropes about asset prices when supply and demand effects can explain regional price rises.
Foreign ownership of houses comprises only small % of the housing market [1]. The measures promised (but all political parties, not just Trudeau) have been applied in New Zealand and their housing market still remain white hot. The root cause is low supply of houses in Canada, the red tape around land / property development keeps construction of housing slow and costly. [1] https://www150.statcan.gc.ca/n1/pub/11-626-…
So a key part of the picture this kind of argument misses out is that price appreciation is primarily an effect of *marginal* demand and supply, not inventory. To put it another way as long as there's even a little bit of demand exceeding supply, prices will go up till sufficient marginal buyers drop out of the market. A very small imbalance is enough to push prices up. To begin appreciating how and why this happens, you may want to analyze a granular item level time series dataset of a market or auction (I once looked deep into a course auction at my alma matter) - it's quite eye opening.
In this case, there's presumably fairly price in-elastic foreign buyers and/or corporate structures like REITs buying into the residential buying market. Note that at any time, the entire market is never at play as most families wouldn't want to sell and move or change their lives - personal risk plays a factor - if we sell now & prices keep rising, how will we afford a house in the future etc. So prices keep rising.
Note that interestingly housing market is asymmetric in the sense that prices don't fall quite as much when marginal supply out-strips demand. Potential sellers who occupy their own houses generally prefer to stay in their homes and simply go out of the market. That's why prices drop in a big way only during major economic crises when people lose jobs, are unable to fund their mortgage and are forced to sell or let the banks foreclose.
In terms of fixes, creating additional supply by easing restrictions will definitely help. An additional way would be to disallow or disincentivize non-resident ownership. Eg. By banning price inelastic absentee overseas owners and investment companies from residential properties, taxing second and third home purchases by individuals with high duties etc but the key thing is to codify regulation at the "intent" level rather than at execution level so parties exploiting loopholes can be prosecuted and enforcing them.
Earlier quoted context omitted.
Any data to back that up ("significant effects on prices")? Otherwise it may just be news-hyped outrage mongering.
Don’t need data to prove basic economics at this point. The question left is, does it happen with enough frequency to be a major factor? I’m not that familiar with the market in Vancouver, however they did pass a law regarding vacancy I believe. Perhaps a local could chime in on efficacy.
The Vancouver specific reaction has been the "Empty Homes Tax" https://vancouver.ca/home-property-development/empty-homes-t...
And according to Vancouver again, while the tax did cause a drop in empty houses declared, in every neighborhood except West End they represent less than 1% of total housing supply )https://vancouver.ca/news-calendar/more-vancouver-homes-occu...) and in most cases less than 0.5% of housing supply.
So while this may be an issue, it doesn't appear to be the issue and it seems that the basic economics here suggest that the issue in Vancouver was not limited to foreign investment. It would appear that in the Vancouver case, this ban on foreign homes would in fact be ineffective since it represents such a small share of housing.
Earlier quoted context omitted.
Not entirely. In NZ, people really favor single family homes near or in big cities. That just doesn't scale because of finite land. Nobody wants to settle for a duplex or worse, an apartment. Perhaps eventually prices for those high density homes will be stable and single-family-home owners will be super rich.
Well yes, there’s always been more desirable properties. Location, location, location, and now especially? SFH.
Earlier quoted context omitted.
If that’s the case, with enough housing supply prices would be stable. Both can’t be true however.
Not entirely. In NZ, people really favor single family homes near or in big cities. That just doesn't scale because of finite land. Nobody wants to settle for a duplex or worse, an apartment. Perhaps eventually prices for those high density homes will be stable and single-family-home owners will be super rich.
Foreign ownership of houses comprises only small % of the housing market [1]. The measures promised (but all political parties, not just Trudeau) have been applied in New Zealand and their housing market still remain white hot. The root cause is low supply of houses in Canada, the red tape around land / property development keeps construction of housing slow and costly. [1] https://www150.statcan.gc.ca/n1/pub/11-626-…
Foreign ownership of houses comprises only small % of the housing market [1]. The measures promised (but all political parties, not just Trudeau) have been applied in New Zealand and their housing market still remain white hot. The root cause is low supply of houses in Canada, the red tape around land / property development keeps construction of housing slow and costly. [1] https://www150.statcan.gc.ca/n1/pub/11-626-…
The housing discourse has long since reached the point of satire: Canada will try absolutely anything to lower the price of housing except build more housing: https://www.mcsweeneys.net/articles/i-will-do-anything-to-en... . Meanwhile, https://www.worksinprogress.co/issue/the-housing-theory-of-e...
Immigration is likely a much larger driver of housing price increases than foreign ownership. Canada admits 300k immigrants per year, 2/3 of those are economic/skilled entrants who will be looking to buy property 3-5 years after arrival.
yelp is shifting their engineering office to canada for the cheap talent and friendly immigration laws.