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Canada to ban foreigners from buying homes

bloomberg.com

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Re: Canada to ban foreigners from buying homes

#161

Post by johndfsgdgdfg »

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,…

I live in Canada. In Canada foreign investment is a massive problem. This is NOT the only problem. But it is a big part of the problem.

And arguably housing crisis in Canada started with foreign investment. Now domestic players and instituitional investors are also involved in housing market. Together there are enough parties involved not to let housing prices go down.

Re: Canada to ban foreigners from buying homes

#163

Post by macspoofing »

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 such a huge deal.

Is it though? I chatted with someone from Australia which has open bidding and you know what .. houses still went way over reserve. At the end of the day, if you have 20+ offers on a house, you're not getting that house without destroying your budget, no matter how you set up the bid system.

The common sense change I wanted to see implemented was to prevent the waiving of a home inspection as a condition of purchase.

Re: Canada to ban foreigners from buying homes

#164

Post by joshlemer »

We need to end or put limits on the Primary Residence Capital Gains Tax Exemption which is uncapped in Canada, unlike the cap of 200k in USA. It is unfair to renters and it is leading to insane housing prices.

It is unfair to renters because renters do not have an equivalent 100%, completely unlimited tax-free investment vehicle. We have Tax-Free Savings Accounts, limited to ~$5k contribution per year, and we have RRSP's with max contributions scaled to income, but homeowners have access to all those things too, and they are limited. Homeowners can take advantage of TFSA, RRSP, and then shove all of their remaining savings into maxing out their home purchase and enjoy all of their gains completely tax free. Renters have to start paying capital gains at an inclusion rate of 50% once they max out TFSA/RRSP.

This system is completely unfair and places a higher tax burden on renters who are, on average, less wealthy than homeowners. It encourages us to spend more than we should be on housing just to get around taxes, and discourages investing in actual productive things like innovation/companies.

Re: Canada to ban foreigners from buying homes

#165

Post by Ensorceled »

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.

If developers are building "mansions" entirely for a foreign market, that is a very bad for local housing. It means that those houses actually purely speculation vehicles.

Also, "only" 20%? That's a massive number for housing.

Re: Canada to ban foreigners from buying homes

#166

Post by empressplay »

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.

Actually no, because you still need a place to live. So it doesn't really matter if your home is worth $!M or $100K because it would cost you the same to move somewhere else. As such reducing home prices across the board isn't that problematic, because there's no loss in 'value'. You can still sell your apartment in Vancouver and buy a 5-bedroom in Saskatoon.

The issue becomes people with existing outstanding mortgages. If we considerably reduce house values, would outstanding mortgages need to be reduced pro-rata? Who would 'eat' that cost? The government? The bank?

Re: Canada to ban foreigners from buying homes

#167

Post by slothtrop »

jimmydeans wrote: post #120

No one wants to talk about the elephant in the room. Canada has 'housing' but no one wants to live in anything other than a detached house close to the city. Lots of condos, semi-detached, and townhouse, however no one wants them because you have to have a detached home to have made it in life. I can't remember in my twenties obsessively wanting a detached house. GenX is buying up all the houses after selling their c…

> however no one wants them

This is completely made up. Look at the prices they fetch. If you build it, they will come; zoning heavily restricts the level of mixed development, hence you mostly see detached homes or very large condo buildings with little in between like triplexes. There's a reason Montreal has generally been more affordable for years than other large Canadian cities (population notwithstanding).

Re: Canada to ban foreigners from buying homes

#168

Post by ars »

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.

Just like building roads can't reduce traffic, building houses can't either. It will just cause induced demand as more people will go to that area to live. Instead we should encourage people to carpool - live as roommates, or have small apartments, instead of each person getting their own single family home.

/s (sort of)

Re: Canada to ban foreigners from buying homes

#169

Post by dragonwriter »

_aavaa_ wrote: post #162

"Some believe that secret bidding forces each potential buyer to offer as much as they can." ... Isn't that the whole point of an auction. Offer as much money as you can to get an thing that's worth that amount of money?

A standard auction finds (approximately) the minimum price that no one else is willing to beat, a secret bid auction finds the highest price anyone is willing to pay. The latter is better for sellers, the former is better for buyers.

Re: Canada to ban foreigners from buying homes

#170

Post by tomatowurst »

seanmcdirmid wrote: post #147
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,…

> I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” There is truth, however. The Wenzhou house wife property speculator trope has some basis in reality, and Chinese markets are already rife with massive speculation that has seeped into foreign markets popular for Chinese emigration (Toronto, Vancouver, and to a much lesser extent NYC and west cost American cities). You don't…

There is a huge crowd of local Canadian landlords that own or seek to own more than one property. This is the group that benefits from the narrative that Asian foreigners are buying up the local estate.

The really affluent immigrant groups aren't buying multiple properties, they already have a great deal of income, and their properties are well outside most of what HN can afford and do not impact the condo market which is the most competitive, accessible and volatile.

They already taxed and stopped foreign buyers but the home prices in Vancouver keep going up as sales amongst local Canadians make up most of the volume.

Now they announce this virtue signaling to appease the other Canadians who can't afford homes but the problem will not change.

In fact, without outside capital constantly coming in, the Vancouver real estate market is not sustainable. It literally is just another game of musical chairs, it is the news of some Chinese communist elite member buying a mansion in West Vancouver that gets local Canadians eager to own properties.

I'm no stranger to the anti-asian sentiments in Vancouver, just head over to r/vancouver to see people regularly blame Asians for the fact that they can't afford to live there. In fact in the 80s, they blamed Japanese, 90s they blamed Hong Kongers, 2000s they blame Taiwan, Mainlanders.

It's really disgusting to see the blatant racism against one group that is normalized but not for others. It literally is the same attitude that people with anti-semitic views constantly deride Jews of their financial success that largely came out of merit.

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