Canada bans foreign home buyers for two years • Hacker News Board

Re: Canada bans foreign home buyers for two years

#541

Post by [deleted] » Tue, Apr 19, 2022, 6:11 PM UTC

raydev wrote: post #520

na85 wrote: post #508

Earlier quoted context omitted.

We do in fact have an affordability crisis in Canada. I bought a home in a small town outside Toronto (too far to be a commuter town) in 2017 for $425000, and sold it in 2020. We're friends with the people that bought it from us and on the same street in that same small town in Ontario, houses are going for $1M+ now. This is not entitled millenials wanting to live in Vancouver. This is the place where things are supp…

Just to add to this, we live in a town of ~50k people about 2 hours out of Toronto, and house prices are up 20% yearly since before COVID. 2-3 bedroom houses, are brushing up against $1million this year. Not as bad as other parts of Canada to be sure, but most people living here have manufacturing jobs or are in the military. I don't see how this is sustainable, since there's nothing for rich people to do here.

[deleted]

Re: Canada bans foreign home buyers for two years

#542

Post by weeksie » Tue, Apr 19, 2022, 6:12 PM UTC

johnnyanmac wrote: post #530

weeksie wrote: post #511

Earlier quoted context omitted.

It'll be interesting in a couple years when prices are still crazy and someone has to come up with an excuse for why. It's amazing to me how resistant people are to the idea that housing is expensive because there aren't enough homes for people to live in. It's always a search for exotic explanations like foreign buyers and mysterious empty apartments.

>how resistant people are to the idea that housing is expensive because there aren't enough homes for people to live in. I imagine there are enough homes in both America and Canada (they are two of the largest countries after all). But it's all about location. Very few can even afford to move out to the middle of nowhere just to own land. And not many people that can are willing to turn their potentially short commut…

There aren't enough homes _where people want to live_ and you solve that buy building more homes _where people want to live_.

But that's difficult because cities have all these veto points. It takes forever to get new construction going, right? Exactly. That's why we aren't building enough, because in the current regulatory environment we can't. That's what people talk about when they talk about NIMBYism as the cause of the housing crisis.

The not so radical solution is to make it easier to build new homes where people want to live.

Re: Canada bans foreign home buyers for two years

#543

Post by skeeter2020 » Tue, Apr 19, 2022, 6:13 PM UTC

folkrav wrote: post #312

bitshiftfaced wrote: post #176

Earlier quoted context omitted.

> Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.

In Canada inspection contingencies only protect the buyer for major problems, and definitely aren't a "get out of jail free" card... I haven't seen anyone be able to back out after inspection in the last handful of years. Hell, we're having trouble even getting an inspection contingency to stick as people are more and more often foregoing that in hopes of getting their bid in.

Only time I ever used this was a wood foundation was found on inspection for a home we conditionally purchased listed as a concrete foundation. There was nothing wrong with it based on the inspection but I wasn't comfortable so we backed out. Every other case we've used the inspection to get concessions on mechanicals and roofs that needed replacing but I don't think we'd get the inspection or price reduction on an offer today.

Re: Canada bans foreign home buyers for two years

#544

Post by [deleted] » Tue, Apr 19, 2022, 6:13 PM UTC

skeeter2020 wrote: post #521

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

>> As it is often the case, politicians go for the headline with the highest electoral ROI They also conveniently target people who can't vote, much like big taxes on out-of-province housing purchases that are very popular within Canada.

[deleted]

Re: Canada bans foreign home buyers for two years

#545

Post by codethief » Tue, Apr 19, 2022, 6:14 PM UTC

> The Canadian government will ban foreign homebuyers for two years, AP reported Monday.

What does "foreign homebuyer" even mean? If I, as a foreigner, register an LLC (or the Canadian equivalent) in Canada, can this LLC then buy real estate or not? What if that LLC is entirely owned by another Canadian LLC which is then maority-owned by me?

Re: Canada bans foreign home buyers for two years

#546

Post by vkou » Tue, Apr 19, 2022, 6:14 PM UTC

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

> The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting, NIMBYism.

You're conspicuously avoiding low interest rates and 30-year mortgages from that list.

When people can borrow against their entire life's earnings to buy a home, the price of a home will trend towards that of a person's entire life's earnings.

Limiting maximum mortgage terms to 9 years would do more to bring down the price of homes than dealing with anything else you've listed.

Re: Canada bans foreign home buyers for two years

#547

Post by mpalczewski » Tue, Apr 19, 2022, 6:14 PM UTC

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

In general I agree, that the root cause tends to be a supply constraint. Even if there were a bunch of people buying up houses, at least in theory that should make rents go down.

However, in places like Vancouver people are buying up property as a place to park money and they remain unoccupied. Policies like additional taxes on unoccupied or secondary residences. Seem like one good way of adding supply.

Re: Canada bans foreign home buyers for two years

#548

Post by munificent » Tue, Apr 19, 2022, 6:15 PM UTC

scld wrote: post #535

johnnyanmac wrote: post #530

Earlier quoted context omitted.

>how resistant people are to the idea that housing is expensive because there aren't enough homes for people to live in. I imagine there are enough homes in both America and Canada (they are two of the largest countries after all). But it's all about location. Very few can even afford to move out to the middle of nowhere just to own land. And not many people that can are willing to turn their potentially short commut…

Yeah, the NIMBY argument that there are "plenty of homes" is like going into a supermarket whose shelves are completely full of only sardines and saying "there is plenty of food".

I think an extension of that analogy is that there are thousands of supermarkets. A few of them are well-stocked while the rest are full of sardines. There are two proposed solutions:

* Let everyone shop at the couple of good supermarkets and hope the supermarket can keep the shelves stocked and deal with the crowds.

* Get those other supermarkets to start stocking stuff other than sardines.

The right answer is probably a blend of those.

Re: Canada bans foreign home buyers for two years

#549

Post by pseudo0 » Tue, Apr 19, 2022, 6:15 PM UTC

throwaway894345 wrote: post #362

manbackharry wrote: post #326

Earlier quoted context omitted.

I'd argue the main cause of this is the REALTORs/real estate boards/MLS system that stonewalls any attempts at making real estate information publicly available precisely because the size of their paycheques relies on this information remaining hidden from the public. The conflict of interest beggars belief, but it's allowed to remain, among other reasons, since it also tends to benefit political parties courting vot…

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...).

38 million, with an annual immigration target of over 400k, plus foreign students, temporary visas, etc. New construction simply isn't keeping up with demand. Politicians have tried to solve this from the supply side for decades, but many of the issues like zoning are in provincial and municipal jurisdiction, where the incentive is to keep prices high and homeowners happy.

So the federal government refuses to address the demand side of the equation (very high immigration rate) while the the provinces and municipalities block increases in supply. The natural result? Runaway price increases, and the rest of Canada's economy becoming uncompetitive because employees can't find a house within a 2 hour commute for under $1MM in the GTA.

Re: Canada bans foreign home buyers for two years

#550

Post by ProfessorLayton » Tue, Apr 19, 2022, 6:16 PM UTC

dimitrios1 wrote: post #527

weeksie wrote: post #519

Earlier quoted context omitted.

You can always build more dense housing on land that is in high demand. In fact, doing that is the most obvious and effective way to keep prices low for desirable locales. Backed up by pretty much all the economic research on the subject in the last decade.

Great, is that economic research based on thought experiments or reality? I'd love to read it. Let's go back to my example. You build denser housing on top of or next to the condos I mentioned, what happens? The workers move in closer to the city center. The price is low for a short period of time, until more people migrate. Just like when the highway opens up a new lane. The traffic is better for a short period, unt…

>You could argue that you can just keep building up and up until you cross the threshold of demand affecting the price, but without a market incentive to do that, it's wishful thinking at best.

Tokyo, with its reasonable zoning, seems to have figured out how to build densely without being absurdly expensive. The key here is that the "market" is indeed allowed to figure it out, and not as restricted by NIMBYism.

The best thing the government can do right now is to get out of the way in regards to building more units.