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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
#332Earlier quoted context omitted.
We don't have implementation of the bill yet, just the budget line. Obviously the government knows about this problem, so if they take measures to prevent it, then we'll know they are actually serious. Note that a corporation is not consequence free. An owner occupied home pays no tax on capital gains. A corporation owned one is double taxed.
The typical workaround in UK is that instead of selling the house, the corporation that directly or or directly owns it is sold instead, usually on a tax haven.
> The typical workaround in UK is that instead of selling the house, the corporation that directly or or directly owns it is sold instead, usually on a tax haven.
Couldn't that be addressed by regulating based on the beneficiary owners, rather than whatever legal entity is the technical owner, and having onerous penalties (e.g. forfeiture) if the beneficiary owner is misreported or obscured?
Re: Canada bans foreign home buyers for two years
#333Earlier quoted context omitted.
Why should investment properties be taxed worse than say, stocks? If property is expensive, it means there's a demand for it. The price is a good signal that the area needs more properties built. It's only the gov't (local gov't perhaps, or NIMBYs) that are stopping it from happening. Raising taxes isn't going to fix the problem. It only forces existing investors who are on the margins to get pushed out.
> Why should investment properties be taxed worse than say, stocks Because they are a fundamental human need, and in limited supply. Good land is fundamentally limited. You can't build more of it.
It is not a fundamental human need to live in a super cute townhome in a hot walkable neighborhood near lots of other people you’d like to socialize with. If you want free housing, it’s out there, just not where you want it.
Re: Canada bans foreign home buyers for two years
#334Earlier quoted context omitted.
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…
This is wrong on a few levels. 1) as someone who has been on the ground as well, I’ve lost a few offers because I was worried about over paying. On multiple occasions, after seeing what it sold for we thought “damn, we woulda paid another $25K on top to get it had we known.” 2) Canadian banks has a very conservative “stress test” for securing mortgages. This includes qualifying at much higher rates then is being offe…
Seems like you're not talking about over paying, but rather out-bidding someone. It seems like maybe a first offer should establish a baseline price, and everything subsequent should be transparent, or perhaps have a blind expiry on it, so you'd know if your offer was declined before an offer has been accepted
Re: Canada bans foreign home buyers for two years
#335No post body was provided.
Re: Canada bans foreign home buyers for two years
#336Earlier quoted context omitted.
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 invest…
> 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.
"People who rent homes" aren't some special type of consumer that isn't interested in buying a home. While there are situations where renting is preferable even if it's possible to buy, many renters only rent because it's not possible for them to buy a home. Any potential benefits to renting are generally outweighed by the fact that you're not building any equity, and have limited control over the place they live.
Massive corporate landlords aren't providing a service to meet a demand. They're actively creating demand by driving up the cost of home ownership, and limiting the amount of properties available to buy. A potential homeowner has no chance of competing with a massive corporation when buying a home.
Obviously there's a huge amount of factors that got us here. Housing is hugely complicated, and no single group is responsible. But corporate landlords are one of the factors making the North American housing market worse, and are one of the things we need to address if we're ever going to decrease the cost of living in this country.
Re: Canada bans foreign home buyers for two years
#337Earlier quoted context omitted.
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?
Hypothetical example: Tax it 100,000,000%. Turn a $1 house into a $1,000,000 house. Do you think they'd still want it? That's the power of taxation to change behaviour. (of course a real tax can be whatever is needed to "get the job done", it doesn't need to be ridiculous). If you don't want empty houses, tax empty houses (though as a distracting aside, the idea that empty houses is a big problem has also been fairly…
Other than an ideological argument of preferring taxes over outright bans, I feel like the effect is the same. If foreign investors are indeed the ones pushing price up orders of magnitude above inflation, they clearly don't care about prices increasing tenfold. So it seems the tax would have to be insanely huge to actually achieve the same effect.
And honest question: why do we want foreign investors buying homes anyway? I understand buying commercial locations, but not residences.
Re: Canada bans foreign home buyers for two years
#338Related, 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?
They rent out homes to people who cant or dont want to buy presumably.
There's also the matter of new developments.
Re: Canada bans foreign home buyers for two years
#339Earlier quoted context omitted.
> Canadian banks has a very conservative “stress test” ... Therefore it isn’t possible to “stretch yourself beyond any reasonable limits” “stretch yourself beyond any reasonable limits” means that you may not be able to pay your mortgage, it doesn't mean the bank won't offer it to you.
The bank won't offer if you can't pay, at least in the US these days. But we have 30 year fixed mortgages, I think Canada is shorter
The norm in Canada is 30 year term, with a variable rate. It's the second part that can really get you...
Re: Canada bans foreign home buyers for two years
#340I'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…
> Imagine blind bidding when interviewing for a job. Write down the number you'd be willing to do the job for.
You've got that relationship backwards. The person doing the job is the seller. They are the ones taking bids.
The employer – the buyer – is indeed blind. They don't know who else you are talking to and how much they are offering. If you can convince the employer that the other employer down the street has given you a better offer, they just might up their offer, and you stand to gain a higher income out of it.
So, yes, employment is a great example of where blind bidding is common.