Canada to ban foreigners from buying homes • Hacker News Board

Re: Canada to ban foreigners from buying homes

#131

Post by arcticbull » Thu, Apr 07, 2022, 5:42 PM UTC

AzzieElbab wrote: post #121

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 people are missing the fact that for many Canadians values of their homes represent their live savings. So while homeownership remains high in Canada doing something substantial about re prices would ruin peoples lives.

Yeah, about 70% of Canadians are homeowners (almost 15% higher homeownership rate than in the US). Ideally, they find a way to keep home price growth at/below inflation for a few years rather than actually pulling prices down directly. There's very little appetite for reducing the notional price since that 70% is broadly "most voters."

Re: Canada to ban foreigners from buying homes

#132

Post by davidw » Thu, Apr 07, 2022, 5:44 PM UTC

ameminator wrote: post #77

bogota wrote: post #54

Earlier quoted context omitted.

Or we could have seen this coming a mile away and built more houses and reduced the idiocy of city zoning. But yeah it’s the immigrants fault. Lets reduce immigration while we are facing a labor shortage.

Well, it's not the immigrants' fault - it's the government's fault. At the end of the day, this confluence of circumstances is its responsibility. The combination of low interest rates, no expansive public transport projects, no action on money-laundering, hurdles in supply (as you mentioned) - and yes, expansive immigration policies (Canada had the highest population growth in the G7, mostly due to immigration [0]).…

Here where I live, the people who show up at hearings to stop homes from being built are all wealthy-ish local people. Not immigrants, not some faceless government, not BlackRock, but our neighbors.

Re: Canada to ban foreigners from buying homes

#133

Post by quickthrowman » Thu, Apr 07, 2022, 5:44 PM UTC

woah wrote: post #31

VincentEvans wrote: post #7

I don’t know the specifics on Canadian real estate market and the specifics of the problems there, but based on my understanding of the problems facing your neighbors to the south - I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians) to redirect attention from the much more likely cause - massive investments made by hedge funds,…

> 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…

How on earth would higher home sale prices by corporations bidding housing up push rent down? It has the exact opposite effect, rents go up if a property costs more..

Re: Canada to ban foreigners from buying homes

#134

Post by seanmcdirmid » Thu, Apr 07, 2022, 5:44 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…

Giving individual citizens/permanent residents a one time benefit to buy a house will at least give them an advantage over second home buyers or foreign speculators. It would definitely drive prices up (to be honest, tax exempt $31,900 isn't enough to do much though), but it should be a net win for those that have it vs. those that don't.

A more extreme version of this is the public housing Singapore sells at a subsidy to each citizen (as long as they get married, and there is still a waiting list since supply can't keep up with the benefit).

Re: Canada to ban foreigners from buying homes

#135

Post by trinovantes » Thu, Apr 07, 2022, 5:45 PM UTC

zukzuk wrote: post #45

trinovantes wrote: post #18

Earlier quoted context omitted.

It's fine for demand to go up as long as supply can keep up -- which unfortunately hasn't for decades thanks to NIMBYs https://financialpost.com/news/economy/ontario-alberta-and-m... https://www.livabl.com/2021/05/canada-housing-market-most-un... Look at any satellite or aerial view of Vancouver or Toronto and it's basically all SFH https://www.reddit.com/r/toronto/comments/twj89s/yonge_st_fr...

Everyone's got their pet theory on what's behind Canada's housing crisis. In reality it's probably a combination of different factors. The NIMBY theory is probably part of it, but definitely not the full story. For one, Toronto and Vancouver's population density is on par with major european cities (Toronto is about the same as Berlin, and Vancouver same as London). Arguably most european cities have similar affordab…

I agree NIMBY is definitely not a Canada-exclusive thing. I would say that it's far more prevalent in western countries.

Japan's zoning laws are at the federal level so despite growing population in Tokyo metro, they have comparatively less affordability issues. It's crazy (as a Canadian) to think that Tokyo's central wards have roughly 3x the population and same land area as Toronto but are still able to have sub $1 million detached homes.

Re: Canada to ban foreigners from buying homes

#136

Post by bennysomething » Thu, Apr 07, 2022, 5:45 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…

This is an interesting question, what is worse for buyers, blind or open bids?

Blinds bids prevent bidding wars. They use them in Scotland. Not sure if buyer or seller is better off using them.

Re: Canada to ban foreigners from buying homes

#137

Post by ryan93 » Thu, Apr 07, 2022, 5:45 PM UTC

AzzieElbab wrote: post #121

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 people are missing the fact that for many Canadians values of their homes represent their live savings. So while homeownership remains high in Canada doing something substantial about re prices would ruin peoples lives.

It wouldn’t ruin lives to reduce wealth that was stolen from people unable to buy homes. It would also help their kids. Something lots of modern homeowners don’t give a shit about at all.

Re: Canada to ban foreigners from buying homes

#138

Post by arrosenberg » Thu, Apr 07, 2022, 5:46 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.

That's not complicated, it's a second negative externality. Foreigners buying and not-occupying large amounts of valuable real estates drives up the cost of new housing, with no benefit the city, even if you squint really hard. A lack of new housing means high prices for the existing housing that the locals are "just bidding against themselves" on. It's a practice that should be taxed into oblivion.

Re: Canada to ban foreigners from buying homes

#139

Post by sonicggg » Thu, Apr 07, 2022, 5:46 PM UTC

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…

5% can do a lot of damage considering how prices are set based on "comps", and the fact that a lot of this foreign capital comes from illicit sources, and they are more than willing to pay above market rate to secure the purchase.

Canada has always been a paradise for rich crooks worldwide, and government has always chosen to turn a blind eye.

Re: Canada to ban foreigners from buying homes

#140

Post by davidw » Thu, Apr 07, 2022, 5:47 PM UTC

VincentEvans wrote: post #7

I don’t know the specifics on Canadian real estate market and the specifics of the problems there, but based on my understanding of the problems facing your neighbors to the south - I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians) to redirect attention from the much more likely cause - massive investments made by hedge funds,…

> massive investments made by hedge funds, private capital, REITs

I can't recommend this article enough on that subject:

https://www.vox.com/22524829/wall-street-housing-market-blac...

"The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach."