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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

#371

Post by belval »

s1artibartfast wrote: post #313
ranit wrote: post #237

Earlier 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

In a sense you are both right, you just don't set the threshold at the same place.

The bank will look at how much you earn and how much you owe and say "We can pre-approve you for $X at Y%". They consider that you can pay that rate and they are most likely right.

Now if you do take $X, you have effectively leveraged your entire earnings, which for most people is a pretty bad idea because stuff happens and you can end up with a mortgage you can't pay because turns out you also want a car.

That being said (at least in Canada), your broker won't really let you take the full bank offers, or at least they don't expect you to do it.

Re: Canada bans foreign home buyers for two years

#372

Post by otterley »

asdfasgasdgasdg wrote: post #329
otterley wrote: post #299

Earlier quoted context omitted.

A 10% difference translates to a lot of money for a middle class homebuyer. That’s often enough to buy a new car.

Yes that's obvious. Surely it's equally obvious that 10%, as an upper bound on the contribution of sealed bids to the problem, is not the main issue?

I would refrain from using the word “obvious” since many things we believe to obvious are non-obvious to others. Better to explain your point clearly and with greater detail.

The point I was making is that it’s too easy for us not to consider the implications to average or poor people of the proposals we make. It’s not that it’s the main point, but we also must not trivialize errors.

Re: Canada bans foreign home buyers for two years

#373

Post by freeone3000 »

kasey_junk wrote: post #137
abdullahkhalids wrote: post #28

Earlier quoted context omitted.

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?

Not really. Rents in my current area are in line with my mortgage. So perhaps they're getting better deals than if they had to sell a house and buy a new one every year, but, it's a much worse deal than if they were able to buy a condo and live in it.

Re: Canada bans foreign home buyers for two years

#374

Post by alistairSH »

fratlas wrote: post #363
alistairSH wrote: post #281

Earlier quoted context omitted.

But it's an open process. That it's close to optimal efficiency isn't a bad thing. Imagine the same level of stress, but you have to guess what the other buyers are bidding. Do you bid low and hope everybody else does? Bid high, but risk overpaying?

There are new systems to bid online, and over the course of a week. Much less stressful, no emotion and heat of the moment bidding. Nothing wrong with open bidding, all about the techniques used in person.

That still suffers from the stress at the end of the week.

Say an auction closes at 5pm Friday... I bod $500k on Wednesday. Somebody bids $501 Friday 4:50. I bid 502... they 503, right up to the last moment.

And if the site is like some online car auctions, any activity in the last 5 minutes extends the auction by another 5 minutes. So, 504... 505... and on up until somebody walks away.

A home purchase is the largest single thing most people will ever buy. It's going to be emotional, even if the buyer manages to stay calm.

Re: Canada bans foreign home buyers for two years

#375

Post by vel0city »

joejerryronnie wrote: post #343
vel0city wrote: post #320

Earlier quoted context omitted.

You're missing a big point of buying with a fixed mortgage though -- its partially a hedge against housing cost inflation. Sure, property taxes will go up as property values increase, but taxes aren't really that large of the total housing cost of my home. Taxes could double and it still wouldn't be the majority of the cost of my house. Most of my monthly cost of my house is P&I, values that won't go up. My mortgage,…

But you’re sacrificing the flexibility of renting. While I agree the benefits of home ownership far outweigh long term renting, there are some trade-offs.

Absolutely. I'm not trying to point to buying a house as the answer for everyone. If you're not planning to stay in the area for at least a few years, chances are you'll be better served by renting. Everyone needs to do their own math on what they're wanting in life, there's no one-size-fits-all when it comes to housing.

Re: Canada bans foreign home buyers for two years

#376

Post by Fire-Dragon-DoL »

boplicity wrote: post #195
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 live in Toronto as well. We make a good income, have large savings for a down payment, and recently thought about buying a house. It's depressing. So, I decided to look at the City Plan -- to see what the actual plan is for addressing the housing cost crisis in Toronto. Not surprisingly, the real problem became very clear to me, almost immediately. The problem is not blind bidding. The problem is not foreign buyers…

In Vancouver the city plan shows no more single detached houses anywhere. Everything is at least a few stories high

Re: Canada bans foreign home buyers for two years

#377

Post by throwawaycities »

Ekaros wrote: post #284
throwawaycities wrote: post #252

Earlier quoted context omitted.

Do you have data on how often neighborhoods come together as a collective and pool their money to bid on a property, not with the intent of actually purchasing but just to drive up the price because they don’t like the prospective buyer?

And aren't bids binding? They either have to buy, pay some penalty and still have the buyer get the house...

I suppose it depends on the jurisdiction, but I would think it makes sense to protect both potential buyers and sellers, that an earnest money deposit would be required for a winning bid subject to forfeiture.

Re: Canada bans foreign home buyers for two years

#378

Post by throwaway894345 »

Pet_Ant wrote: post #367
throwaway894345 wrote: post #362

Earlier quoted context omitted.

What's stopping Canada from increasing its housing stock? Surely Canada has plenty of space for its 30M citizens, right? (Yes, I understand that much of the territory is uninhabitable, but even still...).

Sorry, but if we want to address climate change and protect the environment, then we need to do this without sprawling outwards.

Increasing housing stock doesn't imply sprawling outwards (e.g., replace a detached house with an apartment/condo complex), and anyway housing stock is probably a negligible contributor to climate change and habitat destruction (presumably forestry, agriculture, heavy industry, fossil fuel energy, etc are far larger culprits).

Re: Canada bans foreign home buyers for two years

#379

Post by TomVDB »

alistairSH wrote: post #272
jejeyyy77 wrote: post #238

Earlier quoted context omitted.

I disagree. IMO, blind bidding is suppressing prices not inflating them. Here’s why, as someone who has been on the ground and lost a few offers because we didn’t want to overbid. After the sold price was released, on multiple occasions we thought “damn! we’d have our that and $25K on top to get it had we known”. In a blind bidding system, you bid what you think the house is worth. In an open bidding system you start…

You say that, but the fact you didn't bid $25k+ initially tells us otherwise, no? Here in DC metro, people are massively over-bidding (relative to list price) because they've already bid/lost 5-10 homes in the last few months. So, they go in strong, $100-$150k over on a $600k list price isn't uncommon right now.

Why this focus on list price?

In a hot market with little supply, a list price is a marketing tool to get people into the door, and for a selling realtor to be able to brag about how good they are.

That’s it. It has been like that for years. It doesn’t make sense to post a list price that is too high or accurate (unless you don’t want the hassle to deal with multiple bidders.)

1500 sqft houses in my formerly middle class SV neighborhood are listed at $2.5M and sell for $3.5M within a week. Everybody knows that this $2.5M is imaginary. If you want to know what a house will really sell for, just look at the sales of the past 2 months. It’s a much better indicator.

Re: Canada bans foreign home buyers for two years

#380

Post by jackling »

DocTomoe wrote: post #182
throw0101a wrote: post #112

Earlier quoted context omitted.

> Foreign investors simply don't belong in that space at all. How much is this a problem? Further, this does not (IIRC) apply to folks to have permanent residence status or folks here on things like student visas. So how many never-set-foot-in-Canada people are buying properties?

I would not try to immigrate into a country in which I don't have a place to live, so this essentially is an anti-immigration, "Canada for the Canadians, Foreigners out" policy in my book.

Is it really? I would imagine that many immigrants don't buy homes outright before immigrating. Most immigrants I know rent out the first few years and start saving.
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