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Canada to ban foreigners from buying homes

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Re: Canada to ban foreigners from buying homes

#81

Post by alan-hn »

WestCoastJustin wrote: post #72
ClumsyPilot wrote: post #43

Earlier quoted context omitted.

"Canadian economy is almost entirely dependent on real estate" This is a myth, real estate makes no contribution to (ironically) the Real Economy. Think about it, if rents in London double, then the % of GDP in real estate doubles! Everyone's life has just gotten worse because they have to earn money elsewhere and pump it into real estate whether they like it or not. The greater is your housing shortage, the more the…

Currently, more than 10 per cent of Canada’s GDP is derived from residential real estate activity: renovations, ownership transfer costs and real estate commissions. [1] [1] https://nationalpost.com/news/canada/canadas-unhinged-housin...

Is 10% == "almost entirely"?

Re: Canada to ban foreigners from buying homes

#82

Post by bryanlarsen »

notsrg wrote: post #44
woah wrote: post #31

Earlier quoted context omitted.

> massive investments made by hedge funds, private capital, REITs which does not appear to be addressed at all? If corporations buying houses was actually affecting the purchase market prices, then we'd see an equal effect on rental prices going down. A corporation can't live in a house, so they'd be renting it out. If these evvvill corporations were keeping houses vacant just to screw over regular hard working folks…

In Toronto alone ~40% of new homes being built are being scooped up by investors that obviously have more cash on hand to pay above asking price. With interest rates so low and demand so high, why would they not be driving up the price? It works in their favor.

Given that pretty much everybody in Toronto rents because nobody can afford to buy, it's pretty circular. If they weren't buying to rent them out, then the people who can't afford to buy would have nothing to rent.

Re: Canada to ban foreigners from buying homes

#84

Post by yonaguska »

WestCoastJustin wrote: post #72
ClumsyPilot wrote: post #43

Earlier quoted context omitted.

"Canadian economy is almost entirely dependent on real estate" This is a myth, real estate makes no contribution to (ironically) the Real Economy. Think about it, if rents in London double, then the % of GDP in real estate doubles! Everyone's life has just gotten worse because they have to earn money elsewhere and pump it into real estate whether they like it or not. The greater is your housing shortage, the more the…

Currently, more than 10 per cent of Canada’s GDP is derived from residential real estate activity: renovations, ownership transfer costs and real estate commissions. [1] [1] https://nationalpost.com/news/canada/canadas-unhinged-housin...

Renovations are actually a tangible benefit, while ownership transfer costs and real estate fees are more of an indicator of high liquidity, but they don't actually provide value for people seeking housing.

Re: Canada to ban foreigners from buying homes

#86

Post by paulgb »

> Freeland will introduce legislation that allows Canadians under the age of 40 to save as much as C$40,000 ($31,900) for a home downpayment within a new tax-exempt vehicle, the person said.

I'm not an economist but this seems pretty dumb? To the extent that it helps someone afford a home that they can save tax-free for it, the same is true of some of the people they're bidding against, driving up the price they ultimately pay for it. The government is just transferring their own future tax revenue to people who own homes, not people in the market for them.

It seems that governments have a reflex of dealing with a supply crisis by showering money on the demand side (see also: gas tax decreases, higher education subsidies, etc.), which just drives up prices further.

Re: Canada to ban foreigners from buying homes

#87

Post by neonate »

msie wrote: post #69
stephenhuey wrote: post #12

I’m mostly familiar with Vancouver since my wife has relatives there. About half a dozen years ago they imposed a 15% tax on foreign real estate investors. I heard 2015 figures suggesting foreign Chinese investors accounted for one third of the $29 billion market in 2015. Vancouver real estate prices had been rising a lot for a long time but I think they felt the foreign investors exacerbated the problem for locals,…

Well it's complicated. Foreign investors would be buying mansions that locals couldn't afford anyways. And the locals are just bidding against themselves for the cheaper stuff armed with low interest rates and bank of Ma and Pa. My statistic says that only 20% of RE is foreign owned.

20% is a lot in a tight market.

Re: Canada to ban foreigners from buying homes

#88

Post by boplicity »

> During last year’s election campaign, Trudeau’s party also proposed a ban on “blind bidding” for houses -- the prevailing system by which offers are kept secret when someone is auctioning a home.

This is such a huge deal. Anyone who has had to go through the process of buying a home through a bidding war knows how unfair and one-sided this process is. It take a high-pressure emotional situation, and gives all of the information to one side (the sellers), while leaving the buyer stuck guessing at what the real price for the house is supposed to be. An absolutely horrible process that should be banned. Banning this is such a simple reform. I sincerely hope it happens, though I doubt it it will.

Re: Canada to ban foreigners from buying homes

#89

Post by appleiigs »

bryanlarsen wrote: post #73
incomingpain wrote: post #61

The data is public, less than 5% of homes are going to foreigners. Don't see how they even accomplish banning foreigners when there are free trade and free investment agreements. The problem is that bonds have negative yields. Retirement funds are forced into buying real estate, because housing is a safe investment right? The federal government knows this and knows they can't do anything. If they targeted retirement…

Price is set at the margin, especially in such an inelastic market as housing. "supply 100, demand 99, price goes down. Supply 100, deman 101, price goes up." 5% isn't a lot, but it could have a disproportionate impact. Housing isn't a federal responsibility, so the provinces are more to blame for the crisis. Ontario just totally whiffed implementing a report on how to reduce housing costs, so I expect the problem to…

I was about to post the same comment: price is set at the margin.

Also, if you look at the 5% in different ways, it becomes more significant. In your neighbourhood across Canada, 1 in 20 of the houses is owned by a foreigner. Now if you concentrate that in to Vancouver and Toronto... lets say 1 in 10 is owned by a foreigner... really starting to have an impact.

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