Canada to ban foreigners from buying homes • Hacker News Board

Re: Canada to ban foreigners from buying homes

#101

Post by richbell » Thu, Apr 07, 2022, 5:26 PM UTC

boplicity wrote: post #88

> 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 th…

I think that blind bidding is a bit of a scape-goat here: the problem isn't that the bidding process is blind per se, it's the complete lack of transparency. Once a house is sold, the price that it sold for AND all bids should be made a matter of public record — accessible without having to pay a ridiculous amount of money to view.

Not to mention the ridiculous commission fees for realtors, and their well-known practice of "steering" people away from homes with lower commission or prices. A practice that is technically illegal, but not enforced.

Re: Canada to ban foreigners from buying homes

#102

Post by __turbobrew__ » Thu, Apr 07, 2022, 5:26 PM UTC

beebmam wrote: post #47

Why can't we increase property taxes for businesses that own homes? And, for individuals who own more than, let's say, two homes?

This is how Singapore addressed the housing crisis and I think it would be a great idea for Canada to follow suit. It levels the playing field between the 30 year old couple looking to start a family and massive REITs/corporations with billions in capital.

Re: Canada to ban foreigners from buying homes

#103

Post by robonerd » Thu, Apr 07, 2022, 5:28 PM UTC

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.

> Foreign investors would be buying mansions that locals couldn't afford anyways.

If nobody is around to buy that mansion, it would eventually be sold to a developer who either turns it into apartments, or tears it down and builds an apartment building there. I've seen this happen numerous times in my neighborhood.

Also 20% is huge.

Re: Canada to ban foreigners from buying homes

#104

Post by thrwy_ywrht » Thu, Apr 07, 2022, 5:28 PM UTC

dsnr wrote: post #25

mperham wrote: post #20

Liberal governments will do everything but the one thing that will solve the problem: make it much, much easier to actually build more housing. Everything else is just pointless busywork.

This is not really guaranteed to solve the problem. It will only be a part of the solution. In many countries, including Europe, new properties are quickly snatched by investment companies that have much easier access to capital than private individuals and can easily afford to pay above market prices. People shouldn’t really have to compete with companies or “investors” on the housing market.

>In many countries, including Europe, new properties are quickly snatched by investment

Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.

Re: Canada to ban foreigners from buying homes

#105

Post by kevinventullo » Thu, Apr 07, 2022, 5:28 PM UTC

bogota wrote: post #80

the_optimist wrote: post #34

Do this in the US too, please. Also farmland.

How about we just make it easier to build more houses on the vast amount of land we have in the US? Do you have data that makes you think banning foreign buyers would actually make a significant impact? I haven’t seen any indications that this is the case in the city I live in.

Housing in the US is already relatively cheap outside of coastal urban centers, there’s just far less demand.

Re: Canada to ban foreigners from buying homes

#106

Post by prlambert » Thu, Apr 07, 2022, 5:28 PM UTC

paulgb wrote: post #86

> 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 ulti…

I don't think that's totally right. The idea is to give Canadians a leg up vs. foreign buyers (once the immediate 2 year foreign buyer ban expires, I assume). If your operating model is that foreign bidders are driving up the price and winning the marginal bid, then this is effectively a subsidy to allow Canadians to compete with the foreigners. Yes it will drive prices a bit higher and thus transfer more wealth to sellers. But the mix should be different, with more ownership ending up with Canadian purchasers than foreign ones (vs. today).

Re: Canada to ban foreigners from buying homes

#107

Post by raajg » Thu, Apr 07, 2022, 5:28 PM UTC

The housing market in Toronto is a hot mess at the moment. When I told my friends in US that even for renting a condo, I had to put an offer that was more than the asked monthly rent they were surprised and wouldn't believe me!

The excessive imbalance in demand Vs supply also means that the owners have > 10 offers for each house and the prospective buyers/renters are just putting blind offers in the hope that their offer is more than most of the other offers.

Re: Canada to ban foreigners from buying homes

#108

Post by thrwy_ywrht » Thu, Apr 07, 2022, 5:29 PM UTC

I know HN is not the place for glibness, but literally: just build more homes. Everything else is rearranging deck chairs on the Titanic. Zoning reform is the answer.

Re: Canada to ban foreigners from buying homes

#109

Post by Maximus9000 » Thu, Apr 07, 2022, 5:29 PM UTC

paulgb wrote: post #86

> 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 ulti…

> the same is true of some of the people they're bidding against

I think you're assuming that everyone bidding will be a first time home buyer under 40 years old. While that may be the bulk of buyers, there are also many investors also in the mix who are buying up houses to rent/flip them.

Re: Canada to ban foreigners from buying homes

#110

Post by pseudo0 » Thu, Apr 07, 2022, 5:30 PM UTC

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…

The bigger issue is the multitude of exceptions. A ban on foreign buyers except for permanent residents, students, and recreational properties isn't much of a ban at all. Canadian permanent residency is incredibly easy to obtain, and students are frequently used as straw purchasers for their foreign parents (just look at the number of UBC students who own multimillion dollar homes despite having zero income). It also doesn't address foreign citizens buying through Canadian shell companies, a strategy used in Vancouver to avoid their foreign buyer tax.