Canada bans foreign home buyers for two years • Hacker News Board

Re: Canada bans foreign home buyers for two years

#81

Post by pbronez » Tue, Apr 19, 2022, 11:44 AM UTC

doliveira wrote: post #41

eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

Would taxing do anything in this specific case? Foreign investors are already willing to pay millions in a single home just for it to lay empty, from what I read in this thread. Why would some fixed (even if progressive) tax on top of that change the demand?

It should be possible to make home purchases economically irrational for undesirable purchasers. For example, you could impose a draconian property tax on all non-owner occupied residential properties.

Financial investors and money launderers look at homes as illiquid, stable assets. They expect that they can extract their millions with a few week’s time, perhaps with gains from continued inflation. If they lose a significant portion of that value over the duration they hold the asset, it stops making sense.

A punitive tax like this should be pegged to some other “safe” asset. Perhaps a basket of national bonds from the G20. Ensure that taking residential inventory off the market produces a substantially worse return than those other options.

If you don’t want to kill domestic land lords, make it trivial for a citizen to apply for a waiver. Just know that the investor types will be motivated to subvert this system. Strongly recommend you have real jail time penalties for doing so. Financial folks hate real prison.

Re: Canada bans foreign home buyers for two years

#82

Post by hotpotamus » Tue, Apr 19, 2022, 11:44 AM UTC

iefbr14 wrote: post #49

hotpotamus wrote: post #10

Earlier quoted context omitted.

My question for you (and I think about this myself) is how much would someone need to pay you for you to go into home construction?

If I could magically subtract some 50 years from my age I would certainly consider that :)

Yep, given that the world is aging, especially (but not exclusively) in the 1st world, I wonder what the implications for labor are in the future.

Re: Canada bans foreign home buyers for two years

#83

Post by hoseja » Tue, Apr 19, 2022, 11:44 AM UTC

doliveira wrote: post #41

eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

Would taxing do anything in this specific case? Foreign investors are already willing to pay millions in a single home just for it to lay empty, from what I read in this thread. Why would some fixed (even if progressive) tax on top of that change the demand?

If you tax them 100% you can take that money and build equivalent government housing on the next lot over.

Re: Canada bans foreign home buyers for two years

#84

Post by pbronez » Tue, Apr 19, 2022, 11:45 AM UTC

it_citizen wrote: post #31

eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

I am not super familiar with real estate markets. Has the empty house tax helped in any way? Even if it is not the best solution, is there any huge downside to that ban?

I’d be very interested to read an analysis of this. Seems like the best solution to me.

Re: Canada bans foreign home buyers for two years

#85

Post by refurb » Tue, Apr 19, 2022, 11:45 AM UTC

j7ake wrote: post #8

I would have thought that the pandemic and travel restrictions would have effectively “banned foreigners from buying homes” for 2 years. If home prices haven’t fallen during pandemic, then the reason why prices are high is not because of foreigners. The government is trying to point to a scapegoat rather than trying to get to the root cause.

For the hottest market in Canada, Vancouver, the hottest communities had single digit foreign ownership. That doesn't explain why Halifax, Nova Scotia has double in price.

But regardless, not sure why travel restrictions would matter. You don't need to see a house to buy it.

Re: Canada bans foreign home buyers for two years

#86

Post by ryanbrunner » Tue, Apr 19, 2022, 11:45 AM UTC

iefbr14 wrote: post #4

So why don't they build more homes?

Canada has comparable housing supply with many other places that don't have the same skyrocketing unaffordability. Most parties are advocating for increasing supply, but it's definitely not the entirety of the problem (particularly when additional building carries it's own problems like sprawl and destroying farmland / ecological preserves).

Also the federal government doesn't have a ton of jurisdiction into increasing supply, that's largely a provincial concern.

Re: Canada bans foreign home buyers for two years

#87

Post by tomrod » Tue, Apr 19, 2022, 11:45 AM UTC

rch wrote: post #72

tomrod wrote: post #61

Earlier quoted context omitted.

Triple or quadruple property taxes after the 10th purchased residence in the state. Encourage tax breaks through high density development of condos with coop property management firms.

Why not progressively increment after the second? (not mutually exclusive with other measures)

Local small-time property ownership encourages land liquidity (that isn't our current issue, but is an issue). That model currently looks good up to a 4plex.

Re: Canada bans foreign home buyers for two years

#88

Post by sylware » Tue, Apr 19, 2022, 11:45 AM UTC

public housing will probably have to be the major accomodation provider.

Since the economy is a scam, expecting it to house everybody in a decent and sane way is just utopia, no better than communism.

I heard about Singapore (80%?) and Vienna (65%?, Austria), I am unable to check that or find other places: this information is really tough to get. In my country, it is extremely opaque and _very discret_ (secret?) in the fear of massive abuse from foreigners.

Re: Canada bans foreign home buyers for two years

#89

Post by pastacacioepepe » Tue, Apr 19, 2022, 11:46 AM UTC

hrdwdmrbl wrote: post #68

pastacacioepepe wrote: post #50

Earlier quoted context omitted.

Explain how would you tax them effectively then, since they are foreign. Every time I talk about taxing the rich, I'm stormed by people calling me economically illitterate and telling me it's impossible as the rich will always find a loophole. So if you think they can find loopholes on the ban, why couldn't they find loopholes on new taxes? They do already and very effectively.

A % tax on the cost of the property would be pretty simple. Can't buy without paying the tax up front. It's usually the more complicated taxes that have exceptions to rules that are exploitable. It's hard to find exploits in simple rules.

I mean yes but then you'd also hit your population, unless you restrict the tax to non-citizens, but then foreign investors can still use some sort of a front man or other loopholes.

Re: Canada bans foreign home buyers for two years

#90

Post by hrdwdmrbl » Tue, Apr 19, 2022, 11:46 AM UTC

Bilal_io wrote: post #60

krageon wrote: post #40

Earlier quoted context omitted.

It's not about the "economy", it's about people being able to buy a roof over their head. Foreign investors simply don't belong in that space at all.

Exactly, and I honestly wish there were measures to fine owners that have empty homes as well. Many people would disagree with me, but to me it's not about economics. We need a way to fight the idea of hoarding homes, a basic human right, as being an "investment".

If there was enough supply there wouldn't be a problem. No one hoards cars, boats, airplanes or anything else because they think that they can corner the market and raise prices. Housing is only special because not enough is built. It's only possible to "hoard" because every 1 off the market is less for everyone else. A fixed pie. Like bitcoin. If the bitcoin supply was infinite no one would think about collecting them.