Billions in 'unknown' funds flowing into Canada's housing market [video] • Hacker News Board

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#191

Post by voisin » Fri, Jul 30, 2021, 10:29 AM UTC

digislave wrote: post #127

ttul wrote: post #72

Earlier quoted context omitted.

It’s utterly bonkers. The median single family home in Vancouver costs CAD $1.9M (USD $1.5M).

Vancouver is famous all over the world as an attractive city (for example I live in Berlin, Germany, and many people I know would like to visit Vancouver). I've never been there, but I have heard it is next to the sea AND next to the mountains, and it lies in a first world country with a solid economy and good health care. Maybe the prices just reflect demand?

All true, and all were true 20 years ago when prices were not this out of line with local incomes.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#192

Post by voisin » Fri, Jul 30, 2021, 10:31 AM UTC

exporectomy wrote: post #21

sunstone wrote: post #11

Earlier quoted context omitted.

In Australia if I recall correctly, foreign buyers are only able to buy newly built homes. Canada would benefit from a similar rule, it would stimulate more housing and not impact the demand for existing homes.

Isn't the problem in Australia (and New Zealand) mainly caused by first home buyers? They seem to pay the maximum the bank will lend them with no regard for being profitable or a good investment. Just get the best house possible at any cost. Once they own them, they fill them with lower occupancy than investors do, so the supply of housing effectively decreases. I'm one of those people. My house used to be a rental w…

> They seem to pay the maximum the bank will lend them with no regard for being profitable or a good investment. Just get the best house possible at any cost.

Where is the direction of causality? I don’t know any first time home buyer that wants to be paying the maximum they can afford given bank lending standards. They are doing so because otherwise they cannot buy a house.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#193

Post by voisin » Fri, Jul 30, 2021, 10:34 AM UTC

swiley wrote: post #46

samingrassia wrote: post #23

When the fed suppresses interest rates and back stops the mortgage market, residential realestate starts to look like risk free treasuries with a ~9% yield.

God forbid we have a housing market correction.

Government forbid we have a housing market correction.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#194

Post by dgudkov » Fri, Jul 30, 2021, 10:35 AM UTC

pkorzeniewski wrote: post #168

tolbish wrote: post #3

Should housing be a primary vehicle for investment and the de facto way of making money? Or should it serve as a necessity and basic aspect of life?

I'm disgusted by the whole real estate market, people buying dozens of apartments and houses just to rent them - and hence increasing prices for people who just want something on their own instead of making rich people richer - is destructive for society, especially for young people. Owning a roof over your head shouldn't require an average person to work their ass for half of their lives.

It wasn't like that. The inflated real estate market is a result of several factors that emerged in the last 15-20 years and combine and reinforce each other:

- A decade of near-zero interest rates

- A lack of investment opportunities: real estate usually has a below average ROI but there is nothing else to invest in nowadays (look at startup valuations to understand how desperate investors have become)

- Too much money printed worldwide (again, look at startup valuations)

- The desire to park money earned (or stolen) in developing countries in a Western country that hypocritically turns a blind eye on money origin because banks, construction industry, and legislators (who own real estate en masse) all are interested in heating up the market as much as possible (looking at you, Canada)

What makes it worse, is that all stakeholders are now locked up in this situation. Increasing interest rates is not possible because it will bankrupt millions of families with mortgage. Western countries are in the late industrial cycle, so creating new investment opportunities is problematic until a new industrial cycle begins. In this situation central banks have no choice but to print money and lie about inflation as long as possible because there is no way this whole situation can be resolved without money losing value.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#195

Post by voisin » Fri, Jul 30, 2021, 10:37 AM UTC

louloulou wrote: post #157

Approximate M2 growth since the start of 2020: USA: 33% Canada: 23% UK: 17% Euro Area: 15% China: 15% Japan: 13% WhERe iS aLL thE MOney ComInG fRoM guYS?

Let me summarize the next four replies before they are posted:

“Oh but it’s ok because velocity of money plummeted!!!”

Ignoring the fact that there has never been an instance of money supply increase in relation to velocity of money decrease that was reversed once the velocity eventually returned to normal.

Those money supply numbers you posted are the new normal now.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#196

Post by biasedbrain » Fri, Jul 30, 2021, 10:39 AM UTC

samingrassia wrote: post #23

When the fed suppresses interest rates and back stops the mortgage market, residential realestate starts to look like risk free treasuries with a ~9% yield.

Where can you get 9% yield on housing? Where I live, you can only buy houses at prices that are above what you can get back in rents. You are very lucky if you can get to 1% yields, which is below inflation and not technically a good investment. The only way it still makes "sense" is by speculating on rising prices for real estate. Which is not risk free at all.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#197

Post by voisin » Fri, Jul 30, 2021, 10:40 AM UTC

zz865 wrote: post #140

Tax tax tax. Everyone should be able to buy a property but its not fair if you sell for a profit and pay no Canadian tax as non-residents do. Property taxes should also be extra high for non-residents.

I don’t disagree about using taxes to deal with this (though noncompliance and loopholes are a problem), but to clarify, non-residents pay tax on the sale of Canadian real estate. This is written into all reciprocal tax treaties. The only way out of this would be if the house was a principal residence, which is the same rule as applies to residents selling their principal residence.

Apologies for all the residence/residents.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#198

Post by voisin » Fri, Jul 30, 2021, 10:40 AM UTC

mikkelam wrote: post #188

I honestly don't see a way out until boomers start dying. The 2030s will probably see a large decline in the housing market

How will that solve it?

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#199

Post by redis_mlc » Fri, Jul 30, 2021, 10:41 AM UTC

steve_adams_86 wrote: post #138

epicureanideal wrote: post #104

Earlier quoted context omitted.

> Anywhere you put it in there, it can go away in an instant if the government wants to take it away from you. We don't understand this in the west Divorced or divorcing men understand how this can happen in the west.

As far as I know this applies to anyone divorcing; divorce laws apply equally to spouses these days, not just to men.

You're being disingenuous.

Because of hypergamy, women date up, which means they are almost always the recipient of divorce and child support settlements.

So in practise, divorce laws don't apply equally.

But you already knew that.

Re: Billions in 'unknown' funds flowing into Canada's housing market [video]

#200

Post by nemo44x » Fri, Jul 30, 2021, 10:51 AM UTC

syshum wrote: post #182

pkorzeniewski wrote: post #168

Earlier quoted context omitted.

I'm disgusted by the whole real estate market, people buying dozens of apartments and houses just to rent them - and hence increasing prices for people who just want something on their own instead of making rich people richer - is destructive for society, especially for young people. Owning a roof over your head shouldn't require an average person to work their ass for half of their lives.

Historically the price of the Average Home should be about 2x average household annual income. We are way off that good median today, so either prices have to fall or incomes have to go up. However the causes of this can not be simply explained away by "people buying dozens of apartments and houses just to rent them" the reality is far more complicated than that. even if you put a ban or cap on the number of rentals…

Interest rates have steadily fallen for about 40 years. So the 2x income idea is badly outdated as it assume interest rates around 15%.

When you consider inflation and interest rate decreases, owning a home today is essentially the same as it was 40 years ago in most markets. There are some outliers but overall the inflation adjusted monthly payment isn’t that different. It’s just that a bigger part of that payment is going to principal rather than interest.

The biggest issue is the outdated idea of putting 20% down. As interest rates fall, down payment percentages should fall. And although you can put less down you end up paying PMI which should be adjusted down too.