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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

#241

Post by tomrod »

Wohlf wrote: post #161
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.

Pretty sure this would just drive up rental costs.

In a partial equilibrium I could see this, due to management company inefficiencies to scale for small clients versus massive corporate clients. But it would likely be offset by general equilibrium factors pushing down housing prices (demand limiting) which translates to decreased rental pricing (as well as potential for limiting rental supply).

I'm not sure how it would qualitatively affect the builder's market.

Re: Canada bans foreign home buyers for two years

#242

Post by waqf »

dale_glass wrote: post #114
hrdwdmrbl wrote: post #90

Earlier quoted context omitted.

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 th…

You can't have enough supply of housing, because for housing location matters a lot. There's only so much room in the center of the capital, and making more costs a titanic amount of effort. Even that runs out eventually, as you can only build so high. Otherwise, why would we be having a problem? Move to Serbia and buy an apartment for $40K.

Serious question, what should I consider before moving to Serbia and buying an apartment for $40k?

Re: Canada bans foreign home buyers for two years

#243

Post by cmrdporcupine »

Canada has more housing supply per-capita than the US and many other western countries, but housing prices that are multiples higher (when adjusted for household income).

Many analysts have pointed out that Canada in general does not have a housing supply problem. Or not a particularly bad one.

What we have is a more generalized housing market problem: bad or badly regulated realtor practices, excessively low interest rates, and excessive speculative investment.

Foreign investment does not appear to be the cause, but it's a nice strawman if you want to win elections.

Re: Canada bans foreign home buyers for two years

#244

Post by fratlas »

stevesimmons wrote: post #135
hallway_monitor wrote: post #110

Earlier quoted context omitted.

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 befor…

A designed process, very efficient at extracting the maximum price out of a stressful situation. It's a sad state of affairs in Australia right now.

Re: Canada bans foreign home buyers for two years

#245

Post by asdfasgasdgasdg »

bko wrote: post #217
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…

The question is why does something like blind bidding exist in real estate? It could exist in all sorts of places but doesn't. Imagine blind bidding when interviewing for a job. Write down the number you'd be willing to do the job for. Someone came in with a lower number, please resubmit. These weird market distortions in real estate have underlying causes. A lot of them are based off patchwork rules and regulations…

The revenue equivalence theorem for auctions suggests it doesn't matter that much. Now, empirical testing has shown violations of this theorem, but the magnitude of the violations are not so huge as to really move the needle. Someone might be paying 10% more in a sealed bid first price auction than they otherwise would, but it's unlikely that it's more than that, and it may be a good deal less or none at all.

No matter how you transact, of the good is too scarce compared to demand, the price is going to be high. We've seen skyrocketing prices in the US too and we don't use a sealed bid first price auction for the transfer of houses.

Re: Canada bans foreign home buyers for two years

#246

Post by to11mtm »

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…

PARTS of blind bidding make sense, from an unfortunate necessity standpoint.

The primary scenario that comes to mind is where the neighborhood finds out Joe Outsider is the leading bidder, and they -really- don't like him for a reason they shouldn't. Blind/sealed bids help prevent Joe from getting specifically targeted for being outbid. (To an extent.)

I'd love for a better solution to exist though.

Re: Canada bans foreign home buyers for two years

#248

Post by pembrook »

sofixa wrote: post #208
pembrook wrote: post #130

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…

> 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 problem with making generalisations is that you're often wrong. The French real estate market has problems, with prices rising in s…

In the case of Paris, it could also just be that the population of metro-Paris isn't actually growing much.

Toronto's population is growing at double the rate of Paris. And London, Stockholm, and Sydney's populations are growing even faster than Toronto.

No surprise that faster growing populations lead to worse housing supply issues.

Re: Canada bans foreign home buyers for two years

#249

Post by fennecfoxen »

cehrlich wrote: post #174
fennecfoxen wrote: post #144

Earlier quoted context omitted.

They are translating between a lump sum and an income stream. They are making a six-figure asset available for the low four figures a month, without someone needing to bring six figures of money, or five to six figures of down payment and closing costs and five times as much debt. If the six figure asset actually falls 50% in value, the tenant is not stuck and does not lose a penny. In short, they’re offering homes t…

You say this as though it wasn’t possible to rent before everything got bought out by corporations

You may notice that the US population has grown, and continues to grow, and the abstract group comprised of "people who rent homes" continue to grow, and to need more to rent. Corporations happen to be the ones filling this need now. Of course there is nothing that says they have to, or that it has to be corporations, nor is there any special noble virtue that we should ascribe to them beyond that of a prudent investment, nor is there some special reward beyond what they can earn in commerce. It is also possible that significant new construction, falling home prices, or general prosperity could make members of the group of renters leave the group, in favor of ownership.

Renting something bought by an individual (or a very small corporation) was possible and remains possible. But if there was enough of this happening, the corporations who rent might have serious difficulty finding a profit.

It is worth noting that, in a major shift, major home builders expect 50% of their business will soon be in built-to-rent neighborhoods, up from something like 6% today. This is an illustration of how prices are a signal used across the economy to determine what gets done. (Taylor Morrison Home's numbers, from this recent article: https://www.wsj.com/articles/built-to-rent-suburbs-are-poise... )

I refer to the US because it is closer to me. I understand that Canada experiences similar trends.

Re: Canada bans foreign home buyers for two years

#250

Post by domlebo70 »

michaelje wrote: post #154
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…

>> Australia tried this with tragic results Australian living in Canada here - unsure what the tragic results were? It’s helped a number of my friends buy their first home - with a small (~$10k) credit /reduced stamp duties and taxes on the first home owned and lived in (ie not an investment). Negative gearing has been far more impactful in increasing the cost of housing, with people buying multiple homes for investm…

It artificially drives prices up. This is not a good thing for housing
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