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Canada bans foreign home buyers for two years

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Re: Canada bans foreign home buyers for two years

#131

Post by foldor »

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…

The theory of that, and the reality of it are two different things. As someone who has been on both sides of this in Ontario, I can tell you for a fact that blind bidding results in people over paying, and never knowing by how much. The stress of buying a home in the GTA has lead people to stretch their budgets beyond reasonable limits, and realtors have only made it worse now. In recent years it's started to become normal for the list price to purposefully not reflect reality, causing the true sale price of a house to be left up to the buyers, and after probably losing dozens of bids, people get desperate and throw everything they can, which ends up in homes that regularly go over over $100k over asking.

When I sold my house, I had three bids, and the highest bidder payed over $30k higher than the second place. It was still over $100k over asking, with no conditions. That's just the reality of things right now, and it's not the sign of a healthy market for something as critical as housing. People are desperate, and it's getting worse.

Re: Canada bans foreign home buyers for two years

#132

Post by jollybean »

tici_88 wrote: post #34

Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measure will do nothing to stop this practice. The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and ev…

Most foreign buyers are not billionaires, that said, the foreign buyer loophole seems bad.

Re: Canada bans foreign home buyers for two years

#133

Post by willnonya »

dagurp wrote: post #121
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…

It will inflate housing prices

Blind bidding doesnt 'inflate housing prices'. the marketplace competition does. itnis neoyher unethical or the rooy of any problem. its the latest boogeyman in a world that seeks to turn other peoples property into public commodities.

Re: Canada bans foreign home buyers for two years

#134

Post by grasseh »

hkt wrote: post #126
3qz wrote: post #120

Earlier quoted context omitted.

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.

That's exactly how it works in Canada too. Both estate agents split a % of the sale value. That's fine on the seller's side, IMO. But on the buyer's side, it's a silly conflict of interest.

Re: Canada bans foreign home buyers for two years

#135

Post by stevesimmons »

hallway_monitor wrote: post #110
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…

I saw an Australian sitcom where the house went up for auction. It was a proper live auction where everyone showed up to bid on the house. I was flabbergasted as I had no idea things were done in any other way than blind bidding as that is how it is always done here in the US.

In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent stands on the front step, acting as the auctioneer, using the rolled up "Section 32" document like a gavel.

Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call.

Just before declaring it sold, the agent normally stops, goes inside to consult with the vendor, and if the price is above their reserve price, goes back outside and says "the house is now on the market".

Now the auction gets serious...

Usually another couple of bidders reveal themselves at this stage. The increments can drop to $1k. If there is a battle between the last two or three bidders, the final price can go up another $50-100k or so. Eventually the final bid is locked in with a final call of "going once, going twice, going three times, to the man in the blue shirt."

The winning bidder goes inside with the estate agent, hands over a cheque for 10% of the purchase price, signs the contract part of the Section 32 statement, and is then committed to pay the balance in 60 or 90 days. Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out.

I bought my house like this, and sold it again 20 years later the same way.

It's a totally predictable, well regulated, very transparent process. The weekend auction results are all published on Monday morning, both for every house, and the aggregate "clearance rates" for sold versus "passed in".

This is so unlike UK, where each sale has a chain of buyers, all "subject to finance", and no certainty or speed!

Re: Canada bans foreign home buyers for two years

#136

Post by randomdata »

iefbr14 wrote: post #4

So why don't they build more homes?

Where? The farmland boom, which began in 2007, has priced residential sprawl out of the market. That's why the urban areas on arable land have been feeling more and more heat in the city limits, not being able to affordably grow like they once were able to.

There are plenty of markets in Canada where the price of homes have been on the decline for the last decade, namely where agriculture is nowhere to be found, but for someone reason people don't want to live in those places.

Re: Canada bans foreign home buyers for two years

#137

Post by kasey_junk »

abdullahkhalids wrote: post #28
988747 wrote: post #16

Earlier quoted context omitted.

>> being an asset in a wealthy person’s portfolio Why wouldn't that wealthy person rent the property out and get better ROI? Keeping it empty does not make sense to me.

Because they can make a far greater profit by selling the property at a moment's notice, than say renting it out for an year. I mean, a place where your rental profit is 3k/month, might sell for 100k more than you bought it for, to the next wealthy person who thinks they can make another 100k profit by holding and selling after an year.

Doesn’t that imply that renters are getting extremely good deals?

Is that something you want to change with governmental policy?

Re: Canada bans foreign home buyers for two years

#138

Post by powellzer »

pards wrote: post #100
joelthelion wrote: post #97

Earlier quoted context omitted.

Could a better thought out measure achieve the same goals? How would you do it? I feel a strong tax on houses you don't personally live in (because you rent them or because you're a company) could be efficient, but I'd love to hear other people's take on the subject.

The sale of investment properties is already subject to capital gains tax.

Which is an incentive to not sell and instead take out a low interest loan using the properties as collateral. Many cities do have a Homestead exemption which reduces the real estate tax for primary residences.

Re: Canada bans foreign home buyers for two years

#139

Post by nameisname »

hkt wrote: post #126
3qz wrote: post #120

Earlier quoted context omitted.

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.

This is how it works in Canada and it's absolutely toxic. I have seen Realtors push people up on price when they're the highest bid.

Re: Canada bans foreign home buyers for two years

#140

Post by hotpotamus »

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)

I would guess that tomrod owns 9 houses.
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