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

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

#221

Post by roel_v »

digislave wrote: post #116
wuschel wrote: post #111

Earlier quoted context omitted.

Let us assume it is not overseas buyers - what factors are left? Is it just access to cheap credit that drives investment into the housing market all over the globe?

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.

But then why not before these low rates? If people were bidding up to maximum lending capacity as a % of total income back when mortgage rates were, say, 6%; and now they do the same but at mortgage rates of 2%; then there is a ceiling to house prices, but we've passed that ceiling a long time ago. So something else must have changed, too. (I did this math some time ago for the Dutch market and our prices were already like 20 or 30% over what you would expect by this logic; and prices have gone up 20% since then, just in the last year. How insane is that?).

Maybe another factor is that people who are not first time buyers now have a lot more money from the sale of their previous house. We always focus on the first time buyers, but those are only a small part of the market, and for couples with two high incomes, houses are affordable still. So maybe higher assortative mating leads to higher spending potential in first time buyers, and the rest of the money just comes from people selling their first houses and upgrading. It's quite hard to model though, I don't really see a way to test this hypothesis in a few spare minutes here or there like many simpler theories are.

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

#222

Post by syshum »

nemo44x wrote: post #200
syshum wrote: post #182

Earlier quoted context omitted.

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 i…

>>So the 2x income idea is badly outdated as it assume interest rates around 15%.

I 100% disagree, what is badly outdated is the idea that someone can actually afford 2x income home at 15% interest. Doing that would mean likely the inability to have an emergency fund, or save for retirement.

The metrics banks use today to determine "affordability" put people in terrible situations. the focus is on the monthly payment level not the over all debt load. Which IMO is a mistake. the classic Mortgage payment of 30% gross income is WAY to high IMO.

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

#223

Post by kwere »

peterburkimsher wrote: post #37
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 heard a message the other day that there's 3 main vehicles of investment: stocks in companies, bonds in governments, and property (owned mostly by banks and a few rich people). I've been thinking about it ever since, particularly that money usually flows between these 3. The exponential growth required for compound interest to work is only possible in a shortage. Stocks in companies follow a contract-expand busines…

Real estate Is growing due to heavily regulation and International Capital. Change these parameters and real estate values Will come back to family purchases

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

#224

Post by kwere »

TedDoesntTalk wrote: post #121
yunohn wrote: post #78

Earlier quoted context omitted.

> housing has been traditionally an investment to earn a living when you retire, whether individually … Do you mean that people are expected to buy additional houses to make money from, after retirement? I don’t think that’s ever been the case.

I think he means rental income.

Or selling the deeds keeping the rigths to live in

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

#225

Post by chimichangga »

simonh wrote: post #213
cheesecake_luvr wrote: post #91

Earlier quoted context omitted.

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…

coughhedge funds

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

#226

Post by refurb »

ttul wrote: post #72
rishav_sharan wrote: post #52

Earlier quoted context omitted.

Did it have any effect? From what I hear, Vancouver has one of the costliest real state markets in Canada

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

Even more bonkers is the average house price in Canada (all of it) is over $700k now.

https://www.cbc.ca/news/canada/photos/canada-real-estate-pri...

It’s half that in the US.

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

#227

Post by contingencies »

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…

AU/NZ/DE citizen here. Passed up buying a bit of bush in Northland (NZ's "subtropical" region, if you believe the kiwis) a few years ago, after the real estate agent advised us not to buy there due to the number of nutcases running around shooting pigs with shotguns. Might have made some money, but not 30% in a year like Sydney...

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

#228

Post by refurb »

sk0g wrote: post #29
mths wrote: post #13

Earlier quoted context omitted.

I'm not sure Australia should be held as an example of a healthy housing market.

The apartment I lived in before had a few hundred sold, with most sitting empty. The building managers mentioned most of the owners were Chinese, and would rather not rent it out than drop the rent prices, so they had to constantly carry out inspections on apartments that had never been lived in, for a few years now. Absolutely depressing. The bit that weirded me out most was the post boxes. They were quite big, but…

Buying a house and leaving it empty is incredibly common in China and other Asian countries. You’ll see entire developments with nobody living there and most of the units unfinished inside.

The reason I was told was:1) with crappy equity markets property is a safer investment, 2) not many questions about where the money comes from, 3) very low or non-existent property taxes (costs nothing to hold) and 4) as these countries get wealthier demand for housing only goes up.

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

#229

Post by tejohnso »

syshum wrote: post #185
RandomWorker wrote: post #14

Home owners will be happy to hear this. Not yet home owners like me are screwed because rents to damn high and I can’t afford to save up for a down payment. Sorry bud.

Unless you own more than one home, or want to extract your equity as debt then increasing housing prices are paper wealth you will never be able to realize until death. Why. Because while your home went up, so did everyone else's, you still need a place to live so if you sold your home you could only buy another home that was of equal value to your current home thus making it is net transfer not a gain...

> or want to extract your equity as debt

Pretty tempting to do just that when your house value doubles in 5 years and you're left with six figure equity with near zero interest rates, in an investment market that is manipulated to avoid any serious correction or recession.

Personally, I prefer to avoid debt, but the past ~20 years has been a perfect environment to maximize leverage in home equity and invest it into more real estate, or the stock market.

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

#230

Post by roel_v »

rorykoehler wrote: post #145

There should be a global rule that non-residents can't buy property. Homes should be prioritised for living not investments. It's a drag on the global economy with so much money being tied up in unproductive assets which in turn soak up even more money through rent seeking.

That's not what rent seeking means
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