Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Canada bans foreign home buyers for two years

axios.com

Post reply on HN
Print view View original

121–130 of 1001 posts

Re: Canada bans foreign home buyers for two years

#121

Post by dagurp »

koolba wrote: post #115
pards wrote: post #98

I'm a homeowner in Toronto and I don't think this will help. They've eliminated a small number of buyers from the market but have added other incentives like a first home buyers tax credit that will only fuel the fire - Australia tried this with tragic results. >> working with provinces and territories to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding. Blind…

> IMHO blind bidding is an unethical practice that should be outlawed regardless of its impact on housing prices. Why? There’s no special virtue ascribed to the purchaser v.s. the seller. Nothing stops the purchasers from standing in front of the property and publicly announcing their bids (outside of game theory). If they’re bidding less than they are willing to pay, then de facto they’re low balling the seller. The…

It will inflate housing prices

Re: Canada bans foreign home buyers for two years

#122

Post by refurb »

libertine wrote: post #62
user3939382 wrote: post #53

Related, I’m concerned about the trend of megacorporations gobbling up single-family homes which appears to be happening in the US and Canada. I wonder if it’s possible to construct a law that would limit corporate ability to acquire these assets while making it possible for families to do so. Unfortunately, even if there is, politicians at least in DC seem to have zero motivation to solve political problems unless t…

This is one of those things that a proper tax structure would do wonders - those who hoard housing should get a kick from a exponential tax. Like, what value are those corporations bringing to people, to the market, and to a country by hoarding houses other than controlling the renting market for some areas? How is that a good thing?

Presumably they are buying up houses to rent. If they buy too many they can’t rent them out, they lose money.

I’m not convinced it’s a problem.

Again, all roads point back to supply. Build enough homes and the issue is moot.

Re: Canada bans foreign home buyers for two years

#123

Post by hkt »

aww_dang wrote: post #3
mytailorisrich wrote: post #2

According to the government's announcement linked to in the article, the actual proposal is subtly but importantly different: " imposing a two-year ban on foreign capital coming into Canada to buy residential real estate ".

There are countries which prohibit foreign ownership of real estate. However capital controls typically prevent money from leaving, rather than entering. It will be interesting to see how this trend plays out.

Interesting indeed - to have gone from a capital starved era that led to the fetishisation of direct foreign investment to an era where there's so much capital seeking returns that it gets turned away. A strange inversion if ever there was one.

Re: Canada bans foreign home buyers for two years

#124

Post by quickthrowman »

sbarre wrote: post #56
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.

The root cause in Canada is that a lot of the older generation, existing home owners, have put their investments in buying second or third homes as income properties, and for a lot of Canadians (I read that 1/3 of Canadian home owners have one or more additional properties) that's the nest egg now. For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home p…

> For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home purchase by using the HELOC for the downpayment, and a mortgage for the rest. Banks hate this, but it's legal.

Banks don’t care, they just sell the loan. If they cared, they wouldn’t write the loan! Cmon now.

Re: Canada bans foreign home buyers for two years

#125

Post by quickthrowman »

sbarre wrote: post #105
stephencanon wrote: post #92

Earlier quoted context omitted.

> For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home purchase by using the HELOC for the downpayment, and a mortgage for the rest. Banks hate this, but it's legal. If banks actually hated it, they would simply not write the loan. Why do you think they hate it?

Because it increases the risk of default. I say "banks hate this" as unsubtle shorthand here. Obviously they don't hate it enough to refuse people additional mortgages (it's all secured by tangible assets at the end of the day) but they certainly aren't as happy about it as if people had a 20% downpayment in cash rather than pulling it from a line of credit.

> Because it increases the risk of default.

For who? Banks don’t hold mortgages on their books, they sell them to investors. I don’t think you understand how modern finance works.

Re: Canada bans foreign home buyers for two years

#126

Post by hkt »

3qz wrote: post #120
koolba wrote: post #115

Earlier quoted context omitted.

> IMHO blind bidding is an unethical practice that should be outlawed regardless of its impact on housing prices. Why? There’s no special virtue ascribed to the purchaser v.s. the seller. Nothing stops the purchasers from standing in front of the property and publicly announcing their bids (outside of game theory). If they’re bidding less than they are willing to pay, then de facto they’re low balling the seller. The…

The real estate agents operate as a cartel and wouldn’t accept offers this way.

I don't know how it works in Canada, but in the UK the incentive is that most estate agents take a % of the sale value. They have every reason to push house prices higher. Cartel or no cartel, it is very harmful.

Re: Canada bans foreign home buyers for two years

#127

Post by Cthulhu_ »

libertine wrote: post #62
user3939382 wrote: post #53

Related, I’m concerned about the trend of megacorporations gobbling up single-family homes which appears to be happening in the US and Canada. I wonder if it’s possible to construct a law that would limit corporate ability to acquire these assets while making it possible for families to do so. Unfortunately, even if there is, politicians at least in DC seem to have zero motivation to solve political problems unless t…

This is one of those things that a proper tax structure would do wonders - those who hoard housing should get a kick from a exponential tax. Like, what value are those corporations bringing to people, to the market, and to a country by hoarding houses other than controlling the renting market for some areas? How is that a good thing?

> those who hoard housing should get a kick from a exponential tax.

Yes, but at the same time it should not be possible for them to pass those costs on to people renting the house; rents should be fixed, or based on things like floor space and amenities.

But personally I think everyone should have a way in to the housing market. Renting is throwing away money; it goes into someone else's pocket and it's gone. When you buy a house you pay off a mortgage on the one hand, and (in today's economy) your property appreciates in value. Combine that with the issue that over here, a mortgage is cheaper than rent, and you can see how it's a huge issue.

I've spent something like €50.000 in rent before I finally bought a house; part of that was because I didn't want any longer term commitments, part was because I couldn't afford a house because even then the price of housing was going up sharply already. That's a lot of money that I'll never see again.

Re: Canada bans foreign home buyers for two years

#128

Post by jollybean »

pards wrote: post #98

I'm a homeowner in Toronto and I don't think this will help. They've eliminated a small number of buyers from the market but have added other incentives like a first home buyers tax credit that will only fuel the fire - Australia tried this with tragic results. >> working with provinces and territories to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding. Blind…

Actually you're not quite right.

1) 'Foreign Buyers' are price insensitive. In a market without much rational pricing, it's the 'confident signals' that set the price.

i.e. 'Foreign Buyer' comes in and buys for 5% 'above asking' on Street A. What happens then, is all the other houses on that Street set their prices a big higher, and hold. Other buyers see that sale, and it 'validates' the price for everyone else. More sales on that street, set the pace for sales in the area. etc..

Everyone is 'following' the confident bidders.

2) 'Blind Bidding' just favours the seller.

Buyers will only ever bid what they are willing to pay - not more.

It's just a form of auction, that's it. It's not unethical.

3) Low interest rates

4) Way too much migration

There is actually already enough construction. The notion that a city should expand it's services and population at break neck pace to accommodate the world's population is crazy. It's a 20th century 'body count' growth delusion strategy.

Re: Canada bans foreign home buyers for two years

#129

Post by randomdata »

kucukkanat wrote: post #109

We need this so bad in the Netherlands right now! Listing price of a house in Amsterdam 525K, bidding price 641K, someone else with 660K comes and takes it away. Cries in pain after 10th bidding war lost :(

I don't know about the Netherlands, but in Canada, where you see the same scenario play out regularly, it's common to underprice the listing to attract attention (it's an advertisement, after all). The home is selling for fair market value. It's the listing that is misleading.

Re: Canada bans foreign home buyers for two years

#130

Post by pembrook »

A quick look at the data suggests only about 2% of properties in Toronto and Vancouver are owned by overseas investors. Yes, housing is priced at the margin, but this won't do anything at all to prices over the long term.

I'm sure this will be wildly popular politically, because people LOVE the idea that some foreign boogieman is the reason their children can't afford homes anymore.

It's much easier to outsource your problems to some outside "other" then deal with the much harder task of introspection over the poor housing policy that you and your neighbors have voted for over the last 60 years.

Like all cities in areas with heavy-handed zoning regulations, abuse of historic preservation clauses, and filibuster-style city council meetings blocking new construction...the issue is one of supply.

It's the same problem in literally every developed country on earth right now. The industrious, forward-looking people who originally built the cities during the major growth phase died...and then their kids grew up believing that the way things ended up was somehow divinely ordained. Never to be changed or built upon again.

Post reply on HN