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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

#141

Post by fock »

pkorzeniewski wrote: post #74

I would like governments in countries with housing crisis to do something different - soft limit how many properties can a person own by inducing taxes that drastically increase with each new owned property. Most people just want to own a roof over their head without getting into debt for life, but because some people treat housing as an investment and buy properties in bulk - which results in prices skyrocketing - t…

for that you would have to know who (as in a single person) owns everything. Great against corruption, great for democracy. Not so great for our ~oligarchs~ ahem, democrats

Re: Canada bans foreign home buyers for two years

#142

Post by bluGill »

3qz wrote: post #120
koolba wrote: post #115

Earlier quoted context omitted.

> IMHO blind bidding is an unethical practice that should be outlawed regardless of its impact on housing prices. Why? There’s no special virtue ascribed to the purchaser v.s. the seller. Nothing stops the purchasers from standing in front of the property and publicly announcing their bids (outside of game theory). If they’re bidding less than they are willing to pay, then de facto they’re low balling the seller. The…

The real estate agents operate as a cartel and wouldn’t accept offers this way.

Farms often are sold in live auction this way with the bidders announcing their bid. Each bidders knows their maximum, but none give that way, all they give away is they are willing to top the previous bid by someone else (even this is a trick - some bidders will pretend to be more/less interested than they really are trying to scare off other bidders)

The auctioneer is typically a licensed real estate agent. The whole farm will be sold that day, sometimes field by field, sometimes as a whole (sometimes both ways - this is complex to understand: they get bids an all fields separately, then for the whole and the larger total wins). Then they sell the equipment and junk. Bankers are on hand to verify financing... For houses most people wouldn't work this way, but for farms it makes sense.

Re: Canada bans foreign home buyers for two years

#143

Post by 3qz »

jlahp wrote: post #107

I appreciate an effort, but how can a student afford a house ? Is it possible that a rich parents can invest in properties through their kids on a student visa?

> Is it possible that a rich parents can invest in properties through their kids on a student visa?

Yes, I’ve met many people who do this. The father works in China and sends money to their kid (and sometimes wife) in Canada to buy real estate. Then since the family in Canada is technically low income (no job) they maximize every possible government benefit as well.

Re: Canada bans foreign home buyers for two years

#144

Post by fennecfoxen »

libertine wrote: post #62
user3939382 wrote: post #53

Related, 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 are translating between a lump sum and an income stream. They are making a six-figure asset available for the low four figures a month, without someone needing to bring six figures of money, or five to six figures of down payment and closing costs and five times as much debt. If the six figure asset actually falls 50% in value, the tenant is not stuck and does not lose a penny.

In short, they’re offering homes to rent. You can live in the home without buying the home. That’s the value. It’s kinda huge.

And to some extent it becomes class warfare to deny this to renters. These investors are betting big on the houses’ value going up, and expect them to go up a fair bit. This is essentially a bet that the housing market will fail to add new supply, and that anyone who does not own a home yet will suffer greatly from increased rent. And if we’re fighting over is rules on specifically who can buy, instead of doing things to actually make new homes, it seems a fairly sure bet to me.

Re: Canada bans foreign home buyers for two years

#145

Post by asvitkine »

bawolff wrote: post #37
eru wrote: post #22

Earlier quoted context omitted.

Or why don't they just tax the owning of real estate? No need to ban those 'evil' foreigners, just tax them so they can pay for what the locals want.

BC actually did this (tax empty homes). Did not affect prices. I suspect the real problem is low supply high demand + domestic speculation, which is why none of the blame the foreigner solutions work

Increase the taxes until there is an effect?

Re: Canada bans foreign home buyers for two years

#146

Post by beaconstudios »

tomrod wrote: post #87
rch wrote: post #72

Earlier quoted context omitted.

Why not progressively increment after the second? (not mutually exclusive with other measures)

Local small-time property ownership encourages land liquidity (that isn't our current issue, but is an issue). That model currently looks good up to a 4plex.

Plus you want to encourage models like a housing co-op - they're pretty good for keeping people's housing costs down and building community relations.

Re: Canada bans foreign home buyers for two years

#147

Post by asvitkine »

zarzavat wrote: post #78
eru wrote: post #18

Earlier quoted context omitted.

In economics, in general it's usually better to tax than to ban. In this case, you could just tax foreigners for owning property. Or you could tax non-residents for owning property. A land value tax would be a good idea in general. But if it's politically necessary to restrict that to people from far away, that's still better than a ban.

The people who buy these properties are often looking to put their money somewhere safe from government seizure (i.e. 100% tax). A tax is not going to be much of a deterrent unless it is really very big.

Funds from the tax could be used to incentivize new construction.

Re: Canada bans foreign home buyers for two years

#148

Post by nameisname »

Cthulhu_ wrote: post #127
libertine wrote: post #62

Earlier quoted context omitted.

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?

> those who hoard housing should get a kick from a exponential tax. Yes, but at the same time it should not be possible for them to pass those costs on to people renting the house; rents should be fixed, or based on things like floor space and amenities. But personally I think everyone should have a way in to the housing market. Renting is throwing away money; it goes into someone else's pocket and it's gone. When yo…

As you said in your comment there is a market for renting. I think in an ideal world, housing prices would not increase so rapidly. I remember a time where houses went up a lot more from quality renovations than just waiting a few months. A situation like that would increase the demand on rent and make it less appealing for slumlords and give them more incentive to keep quality tenants happy instead of viewing them as a space filler until you can cash out in a year.

Re: Canada bans foreign home buyers for two years

#149

Post by bluGill »

user3939382 wrote: post #53

Related, 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…

The vast majority of houses are not going to foreigners or corporations. Some do, but it is only a tiny percentage. We need to build more housing, in the end housing costs are about supply and demand.

Re: Canada bans foreign home buyers for two years

#150

Post by BobbyJo »

sbarre wrote: post #56
j7ake wrote: post #8

I would have thought that the pandemic and travel restrictions would have effectively “banned foreigners from buying homes” for 2 years. If home prices haven’t fallen during pandemic, then the reason why prices are high is not because of foreigners. The government is trying to point to a scapegoat rather than trying to get to the root cause.

The root cause in Canada is that a lot of the older generation, existing home owners, have put their investments in buying second or third homes as income properties, and for a lot of Canadians (I read that 1/3 of Canadian home owners have one or more additional properties) that's the nest egg now. For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home p…

> all they did was follow the advice given to them by the market

The market doesn't give advice, it's risk and return. Don't take more risk than you can handle is investing 101. In any case, if the market is unsustainable (non-productive assets appreciating several times inflation is indeed unsustainable), these people are going to get screwed regardless. Either completely later, or almost completely now.

Maybe in the future, after the smoke settles, governments will be more wary of moral hazard. Probably not, but one can hope.

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