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Canada to ban foreigners from buying homes

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Re: Canada to ban foreigners from buying homes

#571

Post by chaostheory »

ethbr0 wrote: post #118
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…

As someone who recently bid in a hot property market, I'm a huge fan of common sense bans and unwaivable rights. In a competitive market, filled with buyers of questionable sophistication, i.e. residential real estate, everyone gets to the bottom of maximally-waived, minimal-safeguards pretty quickly to make a competitive offer. And ultimately, that isn't good for anyone, sellers included. Better to explicitly prohib…

How bad are the bidding wars ie how much over listed price do houses tend to sell for?

Re: Canada to ban foreigners from buying homes

#572

Post by TuringNYC »

crooked-v wrote: post #534
kbenson wrote: post #520

Earlier quoted context omitted.

> You're fighting scarcity. No, they're fighting market inefficiency. A free market requires accurate and timely information to be efficient. This is literally people putting constraints on the market for what they are selling so the information is not available to one side, and the price is inflated. A rational actor should walk away from a system like this, but if that's all that's available around you because of s…

All the market efficiency in the world won't stop the continual increase in prices from bad zoning and missing middle housing.

>> All the market efficiency in the world won't stop the continual increase in prices from bad zoning and missing middle housing.

I disagree. Depending on the jurisdiction (in the US), part of the issue is the 10% net loss you end up with. 5-6% on the agent fee(s), another 1% on "mansion tax", in NYS/NYC there is a 1% and 1% transfer tax and 1/2% mortgage tax. Different jurisdictions are less (or more). Throw in more for the lawyer and you're down 10% on the sale. The sales agent fee seem fair for tough markets but even 1% sales agent fees seem preposterous given the market. If the house flips in 1 day, how is that worth 5 or 6%? These days people are negotiating that down to 4% but even that is preposterous given the market.

The problem with the extra 5 or 6% agent fees is: that people dont want to buy/sell as much, because you're effectively losing 20-30% of your 20% down equity on the sale (you'll lose more on the buy with the the 1-2% Title Insurance.) Effectively, you're losing half your 20% down equity.

Of course then...even if sellers want to sell, they dont because they need to bypass the frictional hurdles. Because if you sell and host half your 20% down equity, how the heck do you buy the next home?

Re: Canada to ban foreigners from buying homes

#573

Post by CountSessine »

kbenson wrote: post #538
crooked-v wrote: post #534

Earlier quoted context omitted.

All the market efficiency in the world won't stop the continual increase in prices from bad zoning and missing middle housing.

You pick your battles, as perfect is the enemy of good. That other problems exist is not a valid reason to prevent fixing something if that fix actually helps in some way.

That other problems exist is not a valid reason to prevent fixing something if that fix actually helps in some way

That scarcity exists is the whole reason we're focusing on foreign buyers in 2022. And blind-bidding in 2021. And investors in 2019. And money-laundering in 2018. And Chinese money in 2017. All of these things should be addressed, but every one of them has provided political cover for the real reason that housing is so expensive in popular cities, which is scarcity.

None of these things will matter one whit to housing affordability. "Helps in some way" is fine as long as we understand that it has nothing to do with high housing prices. "Helps in some way" is fine as long as we measure our claims and admit that this is about basic fairness and respect for the law. "Helps in some way" is alright except that "helps in some way" has been sold for the last 6 years, politically, as, "this is the reason you can't buy a home! Surely it has nothing to do with NIMBYism and our suburbs! Please don't ask me, as your elected representative, to take on suburban voters and start talking about housing equity as it relates to affordability!"

Every one of these things should be dealt with. Canada should probably have anti-racketeering laws. Real-estate boards should have less power and should be compelled to publicize their sales data. Etc, etc, ...

Just quit the bullsh*t about this being about addressing housing affordability.

Re: Canada to ban foreigners from buying homes

#574

Post by woah »

kbenson wrote: post #520
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…

> You're fighting scarcity. No, they're fighting market inefficiency. A free market requires accurate and timely information to be efficient. This is literally people putting constraints on the market for what they are selling so the information is not available to one side, and the price is inflated. A rational actor should walk away from a system like this, but if that's all that's available around you because of s…

These kind of little tweaks to symptoms of the housing shortage are ultimately useless band aids. After a decade of stopping foreigners and corporations from buying houses, slapping the wrists of landlords who have vacant units, and mandating that the bidding process is emotionally nurturing, house prices will still be higher if there is more demand than supply.

In a world where there was enough housing supply, you would just walk away from a blind bidding auction since it's a pain, and buy a bigger house for cheaper across the street.

Re: Canada to ban foreigners from buying homes

#575

Post by Gigachad »

thrwy_ywrht wrote: post #108

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.

Problem is urban sprawl has reached its limit so more homes means more apartments. And millennials accustomed to freestanding houses in suburbs will continue to rent houses and ignore the new apartments while claiming there is still a housing crisis.

Re: Canada to ban foreigners from buying homes

#576

Post by TuringNYC »

CountSessine wrote: post #174
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…

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…

>> illiberal zoning laws

One of the problems is that once people buy into the system, their entire life's savings (plus often 4x more via leverage) is tied up in the house and the price of the house. At that point, most dont want more development, because they lose their life savings if home prices go down.

Each person entering this horrible system is forced to perpetuate it, or lose it all.

Re: Canada to ban foreigners from buying homes

#577

Post by pyuser583 »

cameronh90 wrote: post #487
exfascist wrote: post #461

Earlier quoted context omitted.

So I hate driving and actually moved to DC for work and also partly for the transit. Here's what I found: 1) Taking the metro many places (for example, from my apartment in an urban "luxury" apartment building a couple blocks from the initial station to my boat near the waterfront in downtown DC) doubled the time it took to get there. It was actually faster to drive there even during rush hour where you'll sit motion…

Almost everything you're saying is a symptom of poor investment in public transport. I have no doubt that the car works better for your commute, as is the case for millions of other people. Unfortunately, stick millions of cars on the road and you have a huge bottleneck for growing the commuter belt, which means only houses in a relatively small area are useful, and they get extremely expensive. Historically, and in…

Antisocial behavior on public transit isn’t just a matter of policing and funding.

It’s also a matter of civil liberties.

In California, people have a constitutional right to defecate on the streets.

In was once in a San Francisco bus and watched a young woman of West Asian descent break down in tears because a homeless man was calling her a “sand n***”.

She screamed back at him the Trump was going to put him in a concentration camp. He made some comments about the Muslim faith, and she told she was going to pray he’d die a horrible death.

Some more words were exchanged about Trumps policies towards Muslims and the homeless.

She got off early and walked the rest of the way.

This is all 100% constitutionally protected, or at least, under the policies of subsequent DAs (including Kamala Harris) officially tolerated.

It also makes public transportation unusable.

Re: Canada to ban foreigners from buying homes

#578

Post by TrappinDatRust »

kbenson wrote: post #520
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…

> You're fighting scarcity. No, they're fighting market inefficiency. A free market requires accurate and timely information to be efficient. This is literally people putting constraints on the market for what they are selling so the information is not available to one side, and the price is inflated. A rational actor should walk away from a system like this, but if that's all that's available around you because of s…

but... blind bidding is how everything works. If I was a CapEx manager at Y company, why would i reveal pricing of other bidders? It's a conflict of interest for the other bidders. Even if you were to keep the pricing entity private it's the opposite of efficient because creates this 'bit-wise' incremental bidding that destroys the price. Unless you did some kind of random candle auction, this is easily gamed for a such a high value asset like real-estate.

Re: Canada to ban foreigners from buying homes

#579

Post by TuringNYC »

darkwizard42 wrote: post #338
FerociousTimes wrote: post #319

Earlier quoted context omitted.

To summarize, you argue that it's a supply-side problem and not a demand-side one.

It has always been but people who vote (homeowners) have a vested interest to shape the narrative to be a demand-side problem. The only loss when building more dense housing in urban areas is the existing owners whose views are blocked. Otherwise it seems to generally increase the tax base, support more businesses (when mixed-use housing is built), and increase renter mobility.

>> The only loss when building more dense housing in urban areas is the existing owners whose views are blocked.

It is a lot about more supply (and less price increase, or even decrease). Not about views being blocked. People who own homes feel the need to defend the price of their prized asset, for which they have used their life savings plus leverage. The system is designed to perpetuate itsself

Re: Canada to ban foreigners from buying homes

#580

Post by tlear »

citrusybread wrote: post #480
cameronh90 wrote: post #392

Earlier quoted context omitted.

> 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. Canada's largest urban area is 5.6 million people. London, Paris and Seoul are around double that, NYC is 19 million and Tokyo is 37 million. Why are Canadian cities hitting this limit at such a comparati…

Extreme car dependency. Toronto is suffering from the same problem Dubai has. It suddenly became relevant when sovereignists gained power in Quebec and the business class were worried about Montreal being a liability. So they packed up and went down the 401 to Toronto. It has the infrastructure for a much much smaller city, and one in the North American car-driven style (massive highways, occasional regional rail tha…

It's not only that, it is also zoning laws that mandate massive front lawns, wide roads etc etc. Compare newer suburbs to an old one like Riverdale. Riverdale is at least 3-4 times more dense and it is mostly single family houses.
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