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]

#211

Post by yodelshady » Fri, Jul 30, 2021, 11:15 AM UTC

obiwanpallav1 wrote: post #38

This[1] video by ColdFusion talks about a similar problem in the US in which Housing market is now being seen as the next big bet by the Wall Street Firms. In this scheme, a common man will not be able to buy/own any house but they can only rent it. It will be very similar to SaaS model in which Houses will be provided as a service. 1 - https://www.youtube.com/watch?v=gu4tC3px6mc

I don't know about other western countries but in the UK, homeowners are the election-winning group, and are considered a moderating force - being both workers and investors.

Lacking that group is going to have some interesting political consequences.

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

#212

Post by sokoloff » Fri, Jul 30, 2021, 11:16 AM UTC

wuschel wrote: post #142

digislave wrote: post #116

Earlier quoted context omitted.

Why not? It seems obvious that cheap credit would drive up prices. For example people could just be bidding up to what they can pay off in about 30 years. If they simply do that, cheaper credit would rise house prices.

I was just wondering. It's hard to understand markets, IMHO, and I have no feeling how a potential balance between cost of money, supply and demand should look like in a sector like housing. Do you have any references or literature that would give me a better understanding? Originally, I also thought that proper restriction of foreign investment might be a good solution. I agree with you that it must be domestic acto…

> it locks out people w/o access to credit to take part in the market

I think it’s been 40+ years since everyday people without any access to credit had broad practical access to buy housing. (This kind of makes sense. You’re buying something with 50+ years of future utility and probably haven’t saved 25+ years of housing costs to put down in cash.)

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

#213

Post by simonh » Fri, Jul 30, 2021, 11:19 AM UTC

cheesecake_luvr wrote: post #91

teruakohatu wrote: post #77

Earlier quoted context omitted.

> A few years ago you just needed ~$NZ5m invested in the country and you get permanent residency. There is no way the prices are driven by domestic money. In 2019-2020 just 38 of this class of visa was approved, which seems to be about the average per year over the last decade. It was just 16 in 2020-2021. I don't think these people are buying decrepit Auckland villas, two bedroom semi-detached or tiny one bedroom ap…

You may be right for that class of visa, but there are many others: https://www.immigration.govt.nz/new-zealand-visas/options/li... . And yes, the prices can be driven up by cheap loans, but from memory they were already rising steadily before the covid stimulus measures. I am still unconvinced that there exists in NZ a mechanism that can generate so much money and drive up the prices to these levels. Haven't been ba…

It doesn't take much money at all to drive property markets sky high. All it takes is a tight property market, restricted new supply and a few well capitalised investors.

Say a town has 1,000 houses worth $200k each. The housing stock is worth $200m. If 10 houses sell for $220k, those 10 buyers spent an extra $200k split between them, but the notional value of the housing stock went up by $20m.

There doesn’t actually have to be an extra $20m in the economy if the town. It only takes a few people with money to invest to drive house prices sky high.

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

#214

Post by rtpg » Fri, Jul 30, 2021, 11:21 AM UTC

Gatsky wrote: post #118

teruakohatu wrote: post #17

New Zealand has a similar housing problem. House prices are skyrocketing and pricing out young people. A 25-30% rise in the past year has meant few people are saving fast enough to get a deposit. But two or three years ago the govt. banned overseas buyers. There is no reason to suggest the ban is not effective. It even bans non-permanent residents, so plenty of legitimate residents (work visas) can't purchase propert…

Just to add that in Australia the housing market is also going nuts and presumably foreign buyers are suppressed or absent due to Covid. It is really quite bad, and nobody knows what to do about it. It is lose-lose now because there are the people who can't buy a house, and then there are those who sacrificed everything to buy a house. You can't help one group without really hurting the other. It will really hit home…

Why don’t you think increasing supply like the Japanese solution would work?

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

#215

Post by tedk-42 » Fri, Jul 30, 2021, 11:35 AM UTC

So many saying it's a supply issue...

If it's a supply issue, more people would be homeless and without a place to live.

It's an affordability issue with a small portion of 'housing investors' pricing out renters from ever buying.

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

#216

Post by mikkelam » Fri, Jul 30, 2021, 11:36 AM UTC

voisin wrote: post #198

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?

I thought that the baby boomer population was significantly larger than their inheritants, however, it seems GenX is only slighter lower in population size. So my theory doesn't hold.

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

#217

Post by refurb » Fri, Jul 30, 2021, 11:38 AM UTC

They started collecting data on foreign purchasers and it’s maybe a few single percentage points. Canadians are house horny and willing to borrow from parents and absolutely max out payments to own a house.

Does domestic money laundering and illegal money have an impact? Absolutely, but blaming foreigners is laughable considering number of them.

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

#218

Post by kwere » Fri, Jul 30, 2021, 11:42 AM UTC

renewiltord wrote: post #128

spfzero wrote: post #59

Earlier quoted context omitted.

The prices are not being driven up by buyers with 5% down payments. They are being driven up by 100% cash buyers, people moving cash across national boundaries. Just look at the percentage of "all-cash" offers. That tells the whole story.

Considering that foreigners have to buy new build, how do you reconcile that with your view? What evidence would cause you to think it is not foreigners?

They still heat the resale market

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

#219

Post by refurb » Fri, Jul 30, 2021, 11:43 AM UTC

archibaldJ wrote: post #136

Mandatum wrote: post #107

Earlier quoted context omitted.

I think what you're seeing is everyone previously investing in stocks, business, etc. are now going all-in on property. Mum and Dad are pulling their supers and investments and gifting it to their kids for their first home. It is entirely unsustainable. But we've been saying this for 15 years now.

Intersting. In where I live (Singapore), it's very common for young married people to get a loan/etc from their parents to cover the down payment (~25%) for a 20-30 year mortgage. Also, rent here is so expensive that most Singaporeans still stay with their parents even in their late 20s~30s. (Most people renting a room or apartment are none-Singaporeans (30% of the population).) So buying a house makes perfect econom…

Singapore incentivizes home ownership through HBDs to such an extent people think you’re nuts if you don’t buy one. Heavily subsidized units (think $500k for something that would sell privately for $800k-$1M). Constrained supply so prices keep climbing (quite intentional by the govt). 5 year MOP means you can rent it out for a 3-5% yield then buy a private condo.

Housing is basically a govt supported investment program in Singapore. Not that different than most Western countries, just different mechanism.

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

#220

Post by Gatsky » Fri, Jul 30, 2021, 11:44 AM UTC

rtpg wrote: post #214

Gatsky wrote: post #118

Earlier quoted context omitted.

Just to add that in Australia the housing market is also going nuts and presumably foreign buyers are suppressed or absent due to Covid. It is really quite bad, and nobody knows what to do about it. It is lose-lose now because there are the people who can't buy a house, and then there are those who sacrificed everything to buy a house. You can't help one group without really hurting the other. It will really hit home…

Why don’t you think increasing supply like the Japanese solution would work?

In Australia anyway, there is a strongly ingrained cultural norm around the backyard.

There is also the NIMBYism in the inner city suburbs which should be densified. These suburbs are filled with wealthy people who will not just acquiesce to high density developments and decades of transport infrastructure revision.

Finally there are heritage listings. These are buildings which are designated as having cultural significance. You can't knock them down, they have to be maintained, often at great expense. Councils are militant about protecting heritage listings. On more than one occasion a stalemate develops and the owner of the property lets it sit for years and years until the heritage building essential falls down by itself. Yet when a new building is built, the council is happy for any sort of ugly box. Go figure.