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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

#841

Post by xapata »

shkkmo wrote: post #784
xapata wrote: post #659

Earlier quoted context omitted.

> incentivizing developers to build affordable housing But that's unnecessary. If developers build more luxury housing, that'll reduce the price of existing housing, such that it becomes affordable.

Up to a point, this is true when the affordable housing has had it's cost bid up by high end customers because of a scarcity of high end housing. However, once that high end market pressure has been abated, then there a real and hard limits to the amount of high end housing that can/will be available to low income customers. Instead of being available cheaply, this high-end housing stock will end up being used as a v…

Suppliers will build more until the market clears. If prices are rising, that's a signal to suppliers to keep building. They won't stop until prices fall.

Re: Canada bans foreign home buyers for two years

#842

Post by fleddr »

How odd...

There's a housing crisis in Canada, and Australia, both vast countries. Oh, and also the US coasts, and well actually in the Midwest prices also doubled. And the whole of Europe, including low density eastern Europe.

...and still, surely the problem for all of this must be in some local zoning law, or "foreign investors". If only we tweak a little tax or policy here and there and defeat the boogeyman "NIMBY" all of this goes away.

Except that it won't. You cannot keep adding boat loads of people to a tiny 5% "hot" area of any of these countries and think it will fit. Any amount of (typically small) new supply is immediately in use, and what about next year? And the year after?

Re: Canada bans foreign home buyers for two years

#843

Post by screye »

> Some exceptions will be made for permanent residents

With how easy it is to get a permanent residency while on visa in Canada, this is a fair way to keep immigrants happy.

> Some exceptions will be made for foreign students.

Isn't 'Chinese investors buying canadian property and enrolling their children in schools there' why vancouver's housing market is broken. Allowing foreign students to buy houses will let the big loophole continue as is.

Re: Canada bans foreign home buyers for two years

#844

Post by chrishemsworth »

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…

Better Dwelling paints a bleaker picture when you isolate certain relevant categories of homes

For example, in BC (as of 2020), 9% of new condos (built after 2016) were owned by foreign interests, which is down from 2019, but probably holds steady for a number of years.

https://betterdwelling.com/foreign-buyers-own-1-in-10-recent...

Re: Canada bans foreign home buyers for two years

#845

Post by xapata »

RangerScience wrote: post #836
xapata wrote: post #681

Earlier quoted context omitted.

> more luxury housing can make an area more desirable Depends how big the "area" is that you're thinking about. The effect of increasing housing supply is well-studied. Demand can only grow as fast as the population does. If one area experiences increasing demand, then another area will have decreasing demand, comparatively.

Hmm. I guess that makes sense if you're looking comparatively within an area. I'm talking about an area as a whole; in particularly, I'm thinking of Venice CA and the DTLA arts district, as two distinct areas. (AFAIK) Venice is pretty much entirely shit house -> excellent house development, with some multi-unit (townhouses). DTLA is shit building -> modern condos / luxury apts. AFAIK in both places a secondary effect…

What's causing the increased demand: births, immigration, or increased wealth? The pair of Venice and Downtown LA are not closed system. If people are immigrating to those places, then they've left somewhere else, which experiences a declining demand for housing.

Re: Canada bans foreign home buyers for two years

#846

Post by _3u10 »

worik wrote: post #738
jerf wrote: post #686

Earlier quoted context omitted.

There's a path dependency problem. In principle, had you just been building housing like that all along, investing in housing is not appealing as you shouldn't see significant gains in general. However, now that it is appealing, the investment itself pushes up demand, which pushes up the appeal of investing because now prices are going up, which pushes up demand, etc. Again, in principle, if you just keep building, t…

Market forces are not magic, nor the only method of economic planning. When markets work they are very good at finding prices. But when they fail you get this sort of thing. There needs to be a lot of planned intervention in the housing sector. Entities with a lot of capital need to build the houses that people need to live in where they need to live in them and then let them live in them. The market will not do that…

Vancouver and Toronto isn’t a housing market in any real sense of the word. Supply is fixed by government, interest rates are fixed by government, etc.

If you took government control out of the market prices would plummet. Any plank will do, supply, financial backing or interest rates and the whole thing comes crashing down. That’s the real problem, how to cause a 20% “correction” and not 80%.

My house is 8 hours from Vancouver, 8 hours from Calgary, 5 hours from Banff, it’s a town of 10,000 people, it was built in 1904 and is 2500 sqft. It’s been modestly renovated and is worth $950,000. The market is insane.

Re: Canada bans foreign home buyers for two years

#847

Post by burnished »

weeksie wrote: post #511
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,…

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.

Why do you think people (lets say people like you and I) will come up with excuses? We will all find out together in a couple years what impact this may have had. I think its a good idea but if nothing changes I'll have some evidence that it was not a high impact intervention.

Like, there is no need to rail against people not changing their mind two years before you might reasonably expect them too. Besides, it would behoove you to reserve your judgement here and let results speak for themselves lest you fall into the same behavior you decry.

Good shout on the whole "build more houses to have more houses" thing though.

Re: Canada bans foreign home buyers for two years

#848

Post by xapata »

nradov wrote: post #840
xapata wrote: post #838

Earlier quoted context omitted.

I have little sympathy for people that are "forced" to sell their homes for a large capital gain. They can move to where it's cheap and live large. Maybe my perspective as an immigrant is unusual, but I'm a big fan of the freedom to migrate. That includes the freedom to buy housing at market price.

Most of the people being forced out are renters.

Then it's even easier to move. If the polity doesn't want to zone for more housing, they've chosen to expel people who can't pay more than $X for rent. They'll feel the pain when there's no one around to make their coffee anymore.

There's no such thing as unlimited demand for luxury housing. Build enough and the rent will fall for the existing housing stock.

Re: Canada bans foreign home buyers for two years

#849

Post by chrishemsworth »

RocketOne wrote: post #201

Im one of those 'greedy' old farts who owns more than one home. We have one for ourselves and 5 rentals. Im starting to agree with those who are feeling priced out of the market. What would make me stop buying homes? A graduated tax would. If there were no sales tax on the first two, and then 15% tax on the third, 25% tax on the 4th, and going up by 10% for each subsequent house, it would definitely make me quit buyi…

Would you object to a graduated tax that gets applied to your existing mortgages in addition to an outright ban on new purchases of secondary properties within the metro area? I'd be fine with it.

I don't any reason why we shouldn't do that. It discourages people in your position from hanging on to multiple residences, and it levels the playing field a bit, at least until some equilibrium is reached in which existing and incoming demand approximate the available stock and pace of development.

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