Canada to ban foreigners from buying homes • Hacker News Board

Re: Canada to ban foreigners from buying homes

#711

Post by chii » Fri, Apr 08, 2022, 7:02 AM UTC

llbeansandrice wrote: post #378

dionidium wrote: post #257

Earlier quoted context omitted.

Yes, but one thing causes the other and it's not in the causal direction people intuitively think. Foreign speculators and investment firms like Blackrock are only entering the SFH market because supply constraints mean ever-higher prices. It's not like nobody thought to buy up houses 40 years ago. You don't have to be a genius to think of it. I can remember being a teenager and thinking, why don't big firms buy up a…

I'm not contending that supply isn't the real issue, just that there's no way you're going to be able to change the culture around individual home ownership, nimbyism, and zoning laws on any reasonable time-frame. A better current solution that likely has wide-spread support would be to limit the demand rather than throw more money into the demand side. Limiting large investors does not solve the problem, but it coul…

> A better current solution that likely has wide-spread support would be to limit the demand rather than throw more money into the demand side.

black markets spring up to serve demand when there's law and regulation that tries to prohibit such demand. I don't see how making the real estate market this way is gonna get it better.

The only way to make prices drop is to increase supply. trying to tax a fringe group, or to penalize investors etc, is not going to do well at all. And doing so will also dry up investment for growing supply.

> help alleviate some acute symptoms.

A short term symptom abatement, if it even does abate anything, is not going to make any difference tbh. Concentrate on solving the fundamental issue - lack of supply due to various interest groups resisting supply growth.

Re: Canada to ban foreigners from buying homes

#712

Post by chii » Fri, Apr 08, 2022, 7:09 AM UTC

rapind wrote: post #646

imtringued wrote: post #481

Earlier quoted context omitted.

It's the real estate equivalent of blaming immigrants for stealing jobs.

Not even remotely. Immigrants can buy a home. This is about foreign ownership (not a primary residence). Foreign ownership is just one problem though, and IMO a smaller one than both cheap debt and lack of supply.

Which is exactly the point of the parent post - blaming joblessness on immigrants stealing jobs is the same as blaming foreign ownership for making property too expensive for the ordinary citizens to buy!

Both are incorrect in the same way, and incite an emotional response of hating some "other" for causing the problem at hand!

Re: Canada to ban foreigners from buying homes

#713

Post by YokoZar » Fri, Apr 08, 2022, 7:10 AM UTC

lotsofpulp wrote: post #582

TrappinDatRust wrote: post #578

Earlier quoted context omitted.

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 s…

Are public stocks and bonds bought and sold with blind bidding?

Stocks and bonds are traded something on the order of 1 million times more frequently than a given house, making price discovery much more transparent even without an open bidding process.

Re: Canada to ban foreigners from buying homes

#714

Post by chii » Fri, Apr 08, 2022, 7:15 AM UTC

jachee wrote: post #117

lucidguppy wrote: post #30

Earlier quoted context omitted.

Its zoning and nimbyism.

It’s treating basic human needs as financial instruments.

Plenty of basic human needs are financialized - crops and water and electricity - and they don't have any problems.

Why is financializing land and real estate a cause for the problem?

I argue it's not financializing, but the lack of allowance for production of more, when the price signals a demand for more.

When crop prices are high, farmers grow more, or make use of more land to grow. Ditto with electricity or water. Why isn't more land opened up for development, when price of real estate is high?

Re: Canada to ban foreigners from buying homes

#715

Post by CamperBob2 » Fri, Apr 08, 2022, 7:20 AM UTC

dijit wrote: post #563

exfascist wrote: post #496

Earlier quoted context omitted.

I think you should read my comment a little more carefully. 1 and 2 are due to serious physical and economic constraints that are very unlikely to change and apply to all but the absolute most dense areas. Remember, this is in DC. It's unusually dense and is supposed to be the best we have. 3 and 4 are additionally due to cultural, historical, and demographic problems that are becoming worse rather than better and th…

It is. But the problem is that the US is about 80-100 years behind Europe in this. Personal economies are literally built on the idea of driving, it will be painful to solve that, but unfortunately it’s necessary to solve it otherwise you end up losing enormous amounts of your life to traffic and the infrastructure cost grows exponentially.

America is simply too big for public transit to replace cars to any great extent.

There's an old cliche that goes something like, "In America, people think 100 years is a long time. In Europe, people think 100 kilometers is a long distance." It's pretty much spot on.

Re: Canada to ban foreigners from buying homes

#716

Post by tempestn » Fri, Apr 08, 2022, 7:26 AM UTC

msie wrote: post #78

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…

It's amazing to me how some people are so entrenched in believing that foreigners are to blame that they will perform such mental gymnastics. The Myth of 1.3 Million Vacant Investor Homes in Canada: https://www.youtube.com/watch?v=evYOhpjMql0&t=6s

That's a great video, and I agree with the points made - essentially that affordability is mostly a supply problem. That said, I don't think your parent was blaming foreigners, but just noting that even if foreign buyers made up a small percentage of the total, reducing that demand could still impact prices.

Re: Canada to ban foreigners from buying homes

#717

Post by tempestn » Fri, Apr 08, 2022, 7:30 AM UTC

JoshTriplett wrote: post #114

dsnr wrote: post #25

Earlier quoted context omitted.

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.

Investors in real estate make money by either selling or renting; either way, more homes still means lower prices. Keep providing more supply until it meets demand.

Right. Every new property bought by an investor is another rental property. As these are added, it will reduce rents, which makes renting more attractive compared to owning, as well as making rental properties less attractive to investors. On the margin these will reduce demand for properties to purchase, bringing down prices.

Re: Canada to ban foreigners from buying homes

#718

Post by tempestn » Fri, Apr 08, 2022, 7:36 AM UTC

seanc wrote: post #326

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…

You don't pay increasing property tax as the value appreciates. Property taxes on average increase with inflation, not with house prices. Only if your property appreciates more quickly than others do you end up paying more.

Re: Canada to ban foreigners from buying homes

#719

Post by LAC-Tech » Fri, Apr 08, 2022, 7:39 AM UTC

philliphaydon wrote: post #651

LAC-Tech wrote: post #650

Earlier quoted context omitted.

I'm not talking about what the justifications are. I'm talking about how the media decided it was a 'foreign buyer ban' despite very obviously not being one.

I don’t see how it’s not? Just because 2 countries couldn’t be included in the ban due to trade agreements doesn’t change the fact people can no longer go on a website and buy a house in nz without ever setting foot in the country.

I guess it depends on what your definition of foreign is. For me, clearing customs doesn't make you a local.

My wife is a permanent resident, FWIW.

Re: Canada to ban foreigners from buying homes

#720

Post by tempestn » Fri, Apr 08, 2022, 7:40 AM UTC

joshlemer wrote: post #408

dfas23 wrote: post #405

Earlier quoted context omitted.

This is terrible, people would just never sell their homes.

Real estate investors have to pay capital gains on properties they sell, do they never sell their properties?

That's not comparable. RE investors are buying with the intention of selling and realizing an after-tax profit. For most individual homeowners if they're selling, it's to buy another property. Say you own a $1M home, and when you sell you're going to face $100k in taxes based on the gains to date. Now if you're considering moving you can only afford a $900k home instead. That would present a disincentive to moving.