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]

#281

Post by imtringued » Fri, Jul 30, 2021, 1:51 PM UTC

tannhaeuser wrote: post #40

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?

Investment is a basic aspect of life; housing has been traditionally an investment to earn a living when you retire, whether individually or as part of a pension funds. The problem appears to be the monetary policies of central banks and rampant public debt, and the low interest rates, inflation, and lack of alternative investments that go with it.

You got it exactly backwards. Speculation on housing beats productive work so interest rates have to be dropped lower and lower until productive work beats speculation and then speculation dies instantly in a crash.

The obvious answer is to just have 100% capital gains taxes on land and let people deduct inflation.

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

#282

Post by syshum » Fri, Jul 30, 2021, 1:54 PM UTC

nemo44x wrote: post #233

syshum wrote: post #222

Earlier quoted context omitted.

>>So the 2x income idea is badly outdated as it assume interest rates around 15%. I 100% disagree, what is badly outdated is the idea that someone can actually afford 2x income home at 15% interest.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…

I mainly agree with your feelings but it is how it is. People look at what they can “afford” per month and bid houses up to that point. Many people don’t consider what they’ll have left to save/invest, etc and they stretch themselves to be the one who gets the house. I don’t think this is a recent phenomenon though. I’ve heard stories from my parents from 40 years ago and it’s similar. One that sticks out is when rat…

There is a big difference between saying "Rates can stay this low" when they are 12% during a time when the government was not printing money, nor in the housing market so mortgage has to actually be profitable for the lenders

and a time when the fed is literally printing money and giving it away for 0% interest to institutions with the sole purpose of driving up costs so consumer confidence does not collapse...

I will not say rates cant not stay this low, but doing so is highly irresponsible and will cause massive problems in the 10 year time frame.. The longer the fed keep the money printing brrrrrring the worse off we are all going to be very soon

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

#283

Post by seniorivn » Fri, Jul 30, 2021, 1:56 PM UTC

yardstick wrote: post #187

pydry wrote: post #176

Earlier quoted context omitted.

cant build more land

The stupid thing is there is a lot of land still, just need to look at the space between Albany and Silverdale, all rural, and yet it’s only Silverdale north that is being developed. Likewise inner city suburbs have a NIMBY problem where it’s taken ages to finally change planning permission / zoning rules to build up. For example some areas on the shore only recently allowed 3-6 story multiple occupant dwellings. We…

why should there be a building height limit? if there is demand, the market with sane regulation(protection from foreign government interference and hostile manipulation) will provide as much housing as needed with as low prices as possible, driven by investors maximizing their profits from land investments

possible solutions for the inaccessible housing issue:

- make it so the people profit from housing prices rising -> minimize building and housing regulation, forbid foreign ownership of the land(like at least 50% should be owned by a local) and by taxes and loans make it more likely that a lot of people will own some land then small percentage of the people own a lot of land, specify that all those rules are going to apply for 20 years(number of years calculated to the point when the land of the nation is owned by the nation and more or less even), and it will be a completely free market afterwards(so investors are not afraid to invest) — in a society with high income inequality will require either high taxes for landowners and/or long time to achive high level of land ownership

- government built, controlled and owned housing for the people(like singopore), — has a high potential for corruption, any country with weak institutions has a huge risk to end up without housing and with high corruption, income inequality etc

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

#284

Post by seanmcdirmid » Fri, Jul 30, 2021, 1:59 PM UTC

wila wrote: post #259

seanmcdirmid wrote: post #103

Earlier quoted context omitted.

> Western real estate is the new gold. If you think western real estate is nuts, Chinese real estate is even crazier. Those Wenzhou house wives supposedly got started locally moving onto the rest of China and now the western world. It’s probably way more complex than that, however. > If you had made a few million based on your having positional power in a country where you would be jailed or killed once people found…

It's easier to put the blame elsewhere than to look at your own failing systems.

That’s true. There is actually a lot of Chinese buying interest in my own Seattle neighborhood, but then I talk to who are buying…Googlere and Amazonians like me and my Chinese wife, it is the tech money that is driving real estate prices, at least here.

Vancouver might really be (or have been) about overseas money coming in, however. Like what we know happened in Hong Kong. I’m not sure.

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

#285

Post by itsoktocry » Fri, Jul 30, 2021, 2:03 PM UTC

IkmoIkmo wrote: post #266

itsoktocry wrote: post #242

Earlier quoted context omitted.

> They have just bought something else for $1.5M which needs $200K spent to get it to how they want it (renovating bathrooms, kitchen, etc). They are putting $200k into an asset which is already 10x+ their income? Ouch. I can't wrap my head around a financial decision like that.

If you look at income and ignore their wealth, maybe it seems strange. But they have > 1.4 million in equity. They're allocating At the end of the day they'd be sitting on a mortgage that's only 2-3x their annual income, that's very reasonable.

>that's very reasonable.

If you look at current prices, and think that they can only rise, that's very reasonable. Otherwise, that equity can be wiped out pretty quickly.

I suppose what I find strange is killing it on an investment (turning 400k into 1.5M) then turning around and reinvesting in the same inflated asset-class. Hence my comment regarding buying a more expensive home AND dumping money into it.

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

#286

Post by slothtrop » Fri, Jul 30, 2021, 2:04 PM UTC

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…

It will take a multi-pronged effort to fix because there are several different pressures. The rate of immigration in Canada has been increased, and will increase again, without any intervention to fix housing regulations and incentivize rate of creating new structures.

Since the demand is growing faster than the supply, you can both a) curb the demand, by lowering the ludicrous immigration rate, b) fix regulations and impose other restrictions on foreign ownership. And if you refuse to do 'a', then you have to double-down on 'b'.

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

#287

Post by nemo44x » Fri, Jul 30, 2021, 2:04 PM UTC

syshum wrote: post #282

nemo44x wrote: post #233

Earlier quoted context omitted.

I mainly agree with your feelings but it is how it is. People look at what they can “afford” per month and bid houses up to that point. Many people don’t consider what they’ll have left to save/invest, etc and they stretch themselves to be the one who gets the house. I don’t think this is a recent phenomenon though. I’ve heard stories from my parents from 40 years ago and it’s similar. One that sticks out is when rat…

There is a big difference between saying "Rates can stay this low" when they are 12% during a time when the government was not printing money, nor in the housing market so mortgage has to actually be profitable for the lenders and a time when the fed is literally printing money and giving it away for 0% interest to institutions with the sole purpose of driving up costs so consumer confidence does not collapse... I wi…

So I do wonder where the equilibrium is between inflation and raising interest rates. That is, inflation gets to a point where homes double in dollar value over a few years but interest rates go much higher creating a situation where anyone with an existing, low rate mortgage is making pretty easy payments (due to inflation and therefore wage inflation) but the real value of their house hasn't really gone up in value due to that same inflation.

Would end up with a win-win situation for existing and future home buyers as opposed to a situation where rates go up but inflation does not which would crust millions of existing home owners and probably lead to regime change, making it political unviable.

Orchestrating this is the difficult part as it couldn't happen over night. But rather as inflation begins to take hold and we see increases in wages, interest rates rise slowly enough to let the housing market avoid collapse.

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

#288

Post by itsoktocry » Fri, Jul 30, 2021, 2:06 PM UTC

lepton wrote: post #260

itsoktocry wrote: post #242

Earlier quoted context omitted.

> They have just bought something else for $1.5M which needs $200K spent to get it to how they want it (renovating bathrooms, kitchen, etc). They are putting $200k into an asset which is already 10x+ their income? Ouch. I can't wrap my head around a financial decision like that.

By "income", parent is referring to employment income. But their true income is the real estate investment of their primary residence, which nearly doubles their income. They are borrowing $300k I guess (1.5m + 0.2m, less 1.4m), and will likely sell their new house for far more than $1.5m when they sell again in another dozen years.

>and will likely sell their new house for far more than $1.5m when they sell again in another dozen years.

Why do you assume this to be the case? It has been the story of the last 20 years or so, sure. But it could be a complete aberration in the historical timeline of real estate, which for many decades had real rates of return around 1% annually. Houses were not investments.

It's wild that people now assume it's "normal" that you buy a house a triple your money in a decade.

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

#289

Post by C19is20 » Fri, Jul 30, 2021, 2:17 PM UTC

slothtrop wrote: post #286

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…

It will take a multi-pronged effort to fix because there are several different pressures. The rate of immigration in Canada has been increased, and will increase again, without any intervention to fix housing regulations and incentivize rate of creating new structures. Since the demand is growing faster than the supply, you can both a) curb the demand, by lowering the ludicrous immigration rate, b) fix regulations an…

Why 'ludicrous'?

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

#290

Post by ecshafer » Fri, Jul 30, 2021, 2:23 PM UTC

yunohn wrote: post #202

TedDoesntTalk wrote: post #121

Earlier quoted context omitted.

I think he means rental income.

Yes, but you can’t rent out the house you live in. So that means you need to buy multiple houses…

You can rent out rooms in the house you live in, but that is less of a thing now than in the past. In the 1800s/1900s widows, spinsters, old women, that had property would often get by by renting out rooms/beds, essentially being a "mother" to young men or women. Men/women came to the city to work, or school, or whatever and they would rent a room and the landlady would serve meals, do laundry, etc.