Canada to ban foreigners from buying homes • Hacker News Board

Re: Canada to ban foreigners from buying homes

#321

Post by Valgrim » Thu, Apr 07, 2022, 7:29 PM UTC

AzzieElbab wrote: post #284

LimaBearz wrote: post #212

Earlier quoted context omitted.

Is it so far fetched to assume some realtors may be juicing the bidding to increase their own commission and to make their firm more uhh "prestigious" by being able to drive up the price for their own marketing purposes further down the line. Likewise if you dont know who you're bidding against, how do you even know the bidder is even real (foreign or not)? Transparency is good thing. While there may be some "scarcit…

Lets see. Assume I am a realtor, I earn outrageous commissions of 2.5%. Does it make sense for me to jack up price of 1M condo by say 15% above the market and spend a month trying to sell it or to lower the price by 10% below and possibly sell two similar properties in the same month?

But every house that is on the market IS being sold, even at outrageous price, because buyers don't believe the price hike will slow down anytime soon (why would they? this segment of the market is guaranteed to be protected by any government who wishes to get re-elected)

So you, the realtor, will sell every house you got anyway, so why not bump the price while you're at it?

Re: Canada to ban foreigners from buying homes

#322

Post by nemo44x » Thu, Apr 07, 2022, 7:30 PM UTC

macspoofing wrote: post #297

gregable wrote: post #223

Earlier quoted context omitted.

I'm not sure why "amount over reserve / list" is a meaningful metric. It's clear that in a lot of cases the list prices are intentionally below market to attract more bidders and produce the appearance of more competition at open houses and the like. It's a very manipulated and manipulable metric.

>I'm not sure why "amount over reserve / list" is a meaningful metric. It's not. The salient part is that the current market is crazy and there is a large number of bids on any given house. >It's clear that in a lot of cases the list prices are intentionally below market to attract more bidders and produce the appearance of more competition at open houses and the like. Yes, list prices are intentionally below market…

> Yes, list prices are intentionally below market but you know what ... houses are going for crazy amounts because we are in some sort of a bubble

Why? The last 40 years interest rates have continued to decline and inflationary pressures have hurt the value of every currency. What reason is there to believe this won't continue indefinitely (low interest + ~2% y/y inflation) and that the market is simply pricing things well?

Clearly all these homes are being bought so it would appear people have the money.

Re: Canada to ban foreigners from buying homes

#323

Post by CountSessine » Thu, Apr 07, 2022, 7:30 PM UTC

ch4s3 wrote: post #261

CountSessine wrote: post #174

Earlier quoted context omitted.

You're fighting scarcity. You still won't win the bidding war - it just won't be as one-sided. Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically. While yo…

> Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically. I'm all for building more houses in cities/high demand areas, but doesn't Canada only have a populati…

As a contractarian libertarian, I agree, and in fact I am in favor of open borders. And Canada's age-demographic profile is terrifying, given that the baby-boomers are heading into retirement. We can use as many tax-paying millennials and gen-x'ers as we can get.

Perhaps you and I should get together and we can explain to a group of detached-house-owning baby-boomers/empty-nesters why liberalizing or eliminating zoning laws would lead to optimal land utility and that they should be ok with allowing row-houses in their neighborhood. And that would be an interesting conversation.

Re: Canada to ban foreigners from buying homes

#324

Post by ericmay » Thu, Apr 07, 2022, 7:31 PM UTC

techsupporter wrote: post #309

edgyquant wrote: post #295

Earlier quoted context omitted.

Can they not move to nearby cities and commute?

No, that's what the person you replied to mean when they wrote: > hitting the limits of sprawl (congested highway commute time) There's only so far you can bus, train, drive, bike, walk, seaplane, helicopter, hyperloop, or transporter in to go to work. Canadian cities are, just like cities in the US, hitting this limit rather aggressively. In cities where sprawl isn't physically prohibitive, like Calgary or Toronto,…

> I know someone who commutes from Kitchener to Toronto on GO, so they don't even have to put up with driving, and they're debating moving back home to Winnipeg for a 40% salary cut just to not have to put up with it any more.

Isn't this a good thing in some ways or maybe many/all ways? Now wealth is less concentrated in one or a few locations. Every dollar not spent commuting is a dollar spent at a local coffee shop, or money that goes into the tax base of the other city.

Re: Canada to ban foreigners from buying homes

#325

Post by manbackharry » Thu, Apr 07, 2022, 7:32 PM UTC

Ensorceled wrote: post #142

AzzieElbab wrote: post #121

Earlier quoted context omitted.

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.

We are at the point where foreign and Canadian speculation in housing is making housing totally unaffordable for the vast majority of Canadians. In a country of less than 40 million, it's pretty easy to swamp our markets. We need to take speculation out of the marketplace. I'd also like to see a ban on corporations purchasing private homes and significant tax increases on non principle residences.

Your last line is pretty much my exact opinion. I'm an idiot, but I struggle to see how significant taxes (and I mean SIGNIFICANT - something like having all rental income and cap gains on secondary residences taxed at the highest rate ~54%) in these cases wouldn't have extremely broad appeal. Make the sector unappealing as an investment class and you should stop seeing unfettered speculation. The idea of housing being an investment in general is warped.

The principal residence tax exemption is also a joke but I also understand it's political suicide to try and get rid of it and at this point, since so many people have their life savings tied up in real estate, you'd probably be causing more problems by removing it.

Re: Canada to ban foreigners from buying homes

#326

Post by seanc » Thu, Apr 07, 2022, 7:32 PM UTC

joshlemer wrote: post #164

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 RR…

In exchange we get population mobility; without this tax break homeowners would be very reluctant to ever sell their house and move someplace else. Also, housing capital gain isn't completely tax free; we all pay increasing amounts of property tax as the value appreciates. Although those taxes are baked into rents so maybe that's a wash depending on one's point of view.

Policy is hard and unintended consequences are around every corner. For example, I could see an argument for changing the scheme to a special rebate. So you pay your capital gain tax when you sell your primary residence but then get it all refunded when you buy another one. But then this scheme would wind up dinging senior citizens with a massive tax hit just when they're trying to put together cash for some end-of-life care.

Re: Canada to ban foreigners from buying homes

#327

Post by lupire » Thu, Apr 07, 2022, 7:32 PM UTC

richbell wrote: post #101

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 pract…

Bidding is a total red herring. Bid what you value the property. Go low if you have patience. If you aren't the best bid, look somewhere else.

Steering is a problem.

Re: Canada to ban foreigners from buying homes

#328

Post by 52-6F-62 » Thu, Apr 07, 2022, 7:32 PM UTC

michael1999 wrote: post #282

ch4s3 wrote: post #261

Earlier quoted context omitted.

> Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically. I'm all for building more houses in cities/high demand areas, but doesn't Canada only have a populati…

Canada is a big country. But immigration goes where the jobs are, and those are concentrated in 3-5 large cities which are hitting the limits of sprawl (congested highway commute time) and geography (water and mountains). Densification is unpopular with existing municipal voters, and bankrupting CPP would be unpopular with federal voters.

Densification is absolutely not unpopular with municipal voters!

My current city, Hamilton, is currently fighting with the Ontario government over this matter. The mayor is a regular feature on the local news and speaks to that often.

Their major push is for more density and resources for urban development. The provincial government has pushed for developing in Ontario's green belt and watershed instead. They've faced massive backlash over that to the point where they had to capitulate in some cases.

The current provincial government is the one pushing for downtown to be filled with parking lots and low-density housing developed outward. They're also responsible for nixing various transit and green power initiatives in favour of highway expansion. It's infuriating.

Re: Canada to ban foreigners from buying homes

#329

Post by Spivak » Thu, Apr 07, 2022, 7:33 PM UTC

jackyinger wrote: post #185

richbell wrote: post #101

Earlier quoted context omitted.

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 pract…

The lack of transparency makes these deals ripe for fraud. I have heard anecdotes from people I trust of their realtor offering to generate a fake offer (by soliciting one from a third party) to drive up the escalation clause. Where there is money and little oversight there is bound to be fraud. It grinds my gears to think about this because I bought a house and the escalation clause went to the maximum. Now do you t…

Escalation clauses are dumb anyway. If you tell me “I’m willing to pay you up to 100k for your house” then my offer just became $100k.

Re: Canada to ban foreigners from buying homes

#330

Post by qball » Thu, Apr 07, 2022, 7:34 PM UTC

edgyquant wrote: post #295

michael1999 wrote: post #282

Earlier quoted context omitted.

Canada is a big country. But immigration goes where the jobs are, and those are concentrated in 3-5 large cities which are hitting the limits of sprawl (congested highway commute time) and geography (water and mountains). Densification is unpopular with existing municipal voters, and bankrupting CPP would be unpopular with federal voters.

Can they not move to nearby cities and commute?

Well, they thought of that; it's just as expensive out there too.

If you want a house and a job in this country, you have to go to Alberta, Saskatchewan, or Manitoba. BC has no land and is either mountain or agricultural land reserve (the second-largest city in the province has massive fields in the middle of it; average single family home price $1M). ON and QC are similarly boxed in for land (the Canadian Shield is very difficult to build on, and if you don't know French the only part of Quebec you can really go to is the Montreal area), and the Maritime provinces have land but no work.

The important thing to remember is that, unlike the US, the vast majority of Canadian land is much more difficult to inhabit- 90% of the population lives within 100 miles of the border, because that's where the good land ends.