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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

#871

Post by arrosenberg »

la6472 wrote: post #859
arrosenberg wrote: post #857

Earlier quoted context omitted.

The government pays for those things with money generated in the cities. We need rural communities to grow food, but most rural and suburban communities in the US do not generate enough revenue through taxes to support themselves without federal assistance. Sometimes it is worth doing, but the cities make the money that pay for it. So again, why should we subsidize lower density that requires more subsidy and more en…

Suburbs are not rural areas. Suburbs are sane living condition which every human being in the planet is entitled to. Suburbs are also the source of majority of tax revenue.

Entitled, huh? I don’t see what entitles you to any particular mode of living, but its your ethos.

Suburbs may be the majority (I have no idea if thats true), but that doesn’t make them self-sustaining. They only exist because cities paid for highways, water, and power infrastructure to make it all possible (and continue to fund their maintenance) - exponentially moreso the further west you go.

Re: Canada bans foreign home buyers for two years

#872

Post by jackcosgrove »

jjav wrote: post #750
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.

> 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. I have to wonder if it is ever possible to build enough in the places everyone wants to live for it to become cheap? Manhattan is extremely dense and yet, incredible expensive. More expensive than nearly every less-dense area. So density isn't helping drive cost down.

As late as the mid-90s the vast majority of American cities had a median house price to income ratio of 3. California was 3.5-4 and New York was 5 iirc. A lot of factors converged to upend this, but within living memory housing markets were affordable. Whether everyone lived "where they wanted to" is unknowable.

Re: Canada bans foreign home buyers for two years

#873

Post by danans »

xapata wrote: post #659
clpm4j wrote: post #582

Earlier quoted context omitted.

Eliminating a subset of buyers, i.e. slightly decreasing demand, is an easy and obvious action to take. Will it have a significant and long lasting effect? Very likely not. But when examining the supply-demand equation, it's painfully obvious to say "foreigners who don't live here should not be allowed to buy residential housing". It's way, way easier than incentivizing developers to build affordable housing and deal…

> 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.

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

If the last few decades have taught us anything, it'd that location (and every social category that location encodes) matters to people more than luxury, or rather a desirable location is the biggest luxury.

This is why a 3 BD fixer-upper in Palo Alto will cost more than a luxury 5 bedroom house in East San Jose.

To have any effect on housing prices I desirable places, you'd have to build gobs more housing in the highly desirable places, but those are usually the places most opposed to new housing development. And if you build a little bit more, because location dominates all, the existing housing would be as expensive as the new luxury housing in that location, because there is always a higher demand/supply ratio to live in Palo Alto than for East San Jose.

By the same token, building luxury housing in less desirable places won't change things unless you somehow make those places more desirable, but that takes a lot more than new luxury apartments. You usually have to change the kind of people that inhabit that location.

We absolutely need to build more housing of all categories everywhere, but it won't have much effect on housing costs until we address transportation, public education, and crime, the massive factors that affect housing costs.

Re: Canada bans foreign home buyers for two years

#874

Post by FireBeyond »

cpwright wrote: post #226
chasd00 wrote: post #202

Earlier quoted context omitted.

> The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint. But that’s a very well known risk. An agent will have a whole checklist of things to look at before putting a house on the market to minimize that risk. Also, buyers lose at least some money if they back out, there’s a nominal sum put up that you don’t get back if you decide to not buy once…

In my NY suburb, you do the inspection before the contract is signed. No money has yet changed hands, and it can be a point of negotiation or just walking away.

That gets expensive at $400-800 inspection fees for any house you want to put an offer on.

Re: Canada bans foreign home buyers for two years

#875

Post by FireBeyond »

alistairSH wrote: post #281
fratlas wrote: post #244

Earlier quoted context omitted.

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.

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's been a bunch of issues, though. When I grew up in Australia, there were regular news/investigative reports of auctioneers pulling bids from trees, etc., to kick the price up a bit. Not without risk, but definitely possible.

Re: Canada bans foreign home buyers for two years

#876

Post by dwighttk »

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,…

If houses don’t appreciate, why buy a house? Just rent

Re: Canada bans foreign home buyers for two years

#877

Post by FireBeyond »

s1artibartfast wrote: post #734
brewdad wrote: post #670

Earlier quoted context omitted.

Um. Look at your numbers again. Assuming your 36-43% is correct (I haven't shopped a mortgage in almost 15 years), that puts the combined total at 61-73%. Also, that combined tax rate feels really low for anyone with the income to effectively bid in this current market. Add up SS and Medicare taxes, federal income taxes, state income taxes, and sales taxes and 30% feels like a floor rather than a ceiling.

EXAMPLE: 120k income breakdown (10k/month): Federal actual rate 16.5% (24% marginal) CA State actual rate 6.4% (9.3% marginal) Medicare rate 1.45% OSDI rate 6.2 % CA SDI rate 1.0% Total:31.55% total before tax deductions and tax shelters If your mortgage is ~40%, you have ~30% left over. Per month, this is 4,000 for a mortgage, 3,000 taxes, and 3,000 remainder. A 4,000/month mortgage covers a 800k loan on $1 million…

You are not going to get an 800,000 loan with a repayment of $4,000/mo on a 120K income. For one, that's in jumbo loan territory with more onerous requirements for DTI above and beyond 20% down payment.

You haven't factored in property taxes, home insurance, or anything. Putting these numbers into a calculator, your monthly loan payment is going to be closer to $5,400 a month.

You're taking home $6,800 a month.

You're not living on $1,400 a month in the Bay Area.

No bank is giving you this loan.

Re: Canada bans foreign home buyers for two years

#878

Post by eru »

krageon wrote: post #40
eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

It's not about the "economy", it's about people being able to buy a roof over their head. Foreign investors simply don't belong in that space at all.

Foreigners are people to.

Re: Canada bans foreign home buyers for two years

#879

Post by eru »

Bilal_io wrote: post #60
krageon wrote: post #40

Earlier quoted context omitted.

It's not about the "economy", it's about people being able to buy a roof over their head. Foreign investors simply don't belong in that space at all.

Exactly, and I honestly wish there were measures to fine owners that have empty homes as well. Many people would disagree with me, but to me it's not about economics. We need a way to fight the idea of hoarding homes, a basic human right, as being an "investment".

Look into land value taxes.

I would advise against specifically fining empty homes, because then you have to define what an empty home is; and that will have lots of weird grey areas.

That being said: fining/taxing is still better than banning.

Re: Canada bans foreign home buyers for two years

#880

Post by eru »

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.

Until Canadian city centres look like Singapore, I don't think you can claim that you can't build more.
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