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]

#291

Post by CosmicShadow » Fri, Jul 30, 2021, 2:27 PM UTC

Living in Kitchener-Waterloo (an hour from Toronto), our housing rates have gone through the roof with rich Torontonians buying our stuff for 100-300k over, but who the fuck is buying their extremely overpriced stuff?? That's what we always wonder. Who can afford to live in Toronto or buy anything there? Their jobs don't pay that much more.

There is no "more expensive market" or "secret Ultra-Toronto" that can move downstream into Toronto. Is it just "there are a lot of rich Canadian investors" (seems unlikely) or is it mostly just people overseas buying and leaving places empty and/or hoping to maybe rent it out?

Something doesn't seem to make much sense. What Canadian investor is going to think, hmmm, I'll bid $400k over on a 2.5MM home that no one in my country can afford in the most expensive city and it's not even that nice. Who is going to buy it from them as it goes up? Anyone in Canada who could possibly afford it now, or in the future will already have a nice home, unless are just swapping around for a different location. There has to be some 3rd party upstream they know will buy it out from them, or else they will be the sucker who hit the ceiling with a property they can't sell.

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

#292

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

seniorivn wrote: post #283

yardstick wrote: post #187

Earlier quoted context omitted.

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 risin…

Agree govt controlled and owned housing is not a good idea in general, private home ownership is the way to go. Exceptions are people on benefits.

> 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

This is what my original comment is all about. Except no 20yr limit, any investor who is banking on capital gains from house price increases will have no problem waiting 20 years to sell.

Edit: re height limits, they are important to preserve views and ambience of the local area (London has some rules for instance where St Paul’s cathedral must be visible from certain other major landmarks), avoid too dense housing if it will cause undue issues with infrastructure (insufficient sewage capacity in the area for example), transport on an already congested road etc, and preserve the general vibe of the area (to a degree, people accept gradual change a lot better than a Big Bang approach), also sunlight issues for neighbouring properties. Building a 30 story apartment block in a suburb of 2-3 story houses is just out of place. Building slightly up to 6 stories is not so bad.

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

#293

Post by Supermancho » Fri, Jul 30, 2021, 2:34 PM UTC

mymythisisthis wrote: post #262

k2enemy wrote: post #255

Earlier quoted context omitted.

This is speculation on my part, but I think the wealth transfer from the baby boomer generation to their kids is playing a part. I've seen estimates ranging from $30 to $70 trillion to be passed down. At least anecdotally (in the United States) I have many friends in their 30s-40s that are buying new homes with money from their parents. Or their parents buy the home and they live in it.

It is wealth transfer from Baby Boomers to their kids. Demographics also plays a role. We saw a massive boom in the 1950s, 1980s, and now in the 2000s. This boom is less sharp, and more spread out then the previous ones. The war generation all had kids between 1944 and 1950 (5-10 year span). The Boomers all had kids in the mid 70s to mid 80s (10-15 year span). The children of Boomers are now buying houses. So it's a…

I don't think so, especially with the relative wealth erosion over the last 50 years. This also doesnt explain the timing. We should have seen a more gradual increase, not such a sharp increase. I suspect it's people cashing out of more expensive southern metropolitan areas (semi/coastal cities). These are investments by climate refugees who can work remotely.

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

#294

Post by hnarn » Fri, Jul 30, 2021, 2:35 PM UTC

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?

To be quite frank, if there's one thing in the world that has the potential of making me a communist, it's the current state of the global real estate market.

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

#295

Post by panzagl » Fri, Jul 30, 2021, 2:47 PM UTC

mistrial9 wrote: post #270

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.

huh? both Mom and Dad - you lost a great number of people right there.. pulling their supers? over-65 wealth is that common? and this one, really interesting.. "gifting" .. what is that ? I see tooth-and-nail fights over any piece of money in sight among otherwise ordinary relatives.. Mostly Los Angeles SoCal but everywhere in California really.. "gifting" ?!?

Really? Because in places like Colorado and Montana the Californians who sold their parents' house to move there and start their 'lifestyle business' is so old it's beyond a cliché. Maybe substitute 'inherit' for 'gifted'?

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

#296

Post by michael1999 » Fri, Jul 30, 2021, 2:56 PM UTC

mymythisisthis wrote: post #267

yardstick wrote: post #160

Earlier quoted context omitted.

I’ve talked with a friend in NZ who have recently purchased 5 houses all to rent, all have mortgages, and none in expensive cities (think South Island outside CHCH and Queenstown). They work full time in Auckland in a business they run. The housing crisis has been this way since at least 2000 or so. It won’t change until: - Stamp duty for buying rentals / converting to rentals, maybe 10-20% - Limit the number of exis…

I'm from Ontario, Canada. I find that it's average people getting into the real estate game as a way of protecting their wealth against inflation and not wanting to play the stock market. People blame internation investors, but that is only a small problem. People say we should build more homes, but Ontario already has 10s of thousands of approved homes to build, that have not yet been started. Lack of skilled trades…

Ontario grows by more than 100k people per year. 10s of thousands of homes/year is losing ground, not even treading water.

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

#297

Post by opportune » Fri, Jul 30, 2021, 2:58 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…

My hunch is that this is true in the US too. There are a few cities where I think foreign buyers may actually be buying condos and leaving them vacant (namely the nice parts of Manhattan and Miami) but it’s a very small portion of the total housing supply.

I think we want to pretend foreign buyers are the problem because it’s much easier to understand and try to stop than wealth/income inequality, access to credit, and low interest rates.

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

#298

Post by strogonoff » Fri, Jul 30, 2021, 3:03 PM UTC

alva wrote: post #204

DrBazza wrote: post #149

London has similar problems. Apartment blocks that have a hundred flats, but only 5 are occupied all year round. The new ones at Battersea being a good example. The others owned by shell companies that are speculating and investing, or just plain hiding ownership and tax dodging. The UK government have made some small steps in trying to associate property with people via proceeds of crime acts, and the financial cond…

I do not think successive UK governments have had enough of a long term strategy to do this consciously (though I would love to find out it was a deliberate), but I think the Battersea / Nine Elms development is a fantastic way to exploit the surging demand into Western real estate. Tens of thousands of flats have been built almost entirely funded by foreign investment. If/once the market collapses on whatever time f…

While using foreign money flowing into Western property to build public housing is a cool strategy, in reality it did result in some controversy: https://www.theguardian.com/artanddesign/2021/feb/02/penthou...

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

#299

Post by opportune » Fri, Jul 30, 2021, 3:05 PM UTC

biasedbrain wrote: post #196

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.

If you buy housing all cash the appreciation and rent (net of expenses) could easily hit 9% per year. If you mortgage it you do pay interest which lowers the yield, but also need to factor in the increase in principal, and that the appreciation is net of your down payment + interest, not the entire sticker price (eg a 10% down purchase of a $1m home financed at 3% that appreciates 6% is actually a 30% yield).

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

#300

Post by dukeofdoom » Fri, Jul 30, 2021, 3:13 PM UTC

You can always build more houses, start new cities, its not a real problem. But a million dollars brought in, goes directly into the economy from a foreign investor, makes a country rich. Trading something that is low skill to make, into money that can be spent on all kinds of infrastructure and technology. So my only take on this is that how that invest money is spent by that country if its a net positive or negative. If it goes to a corrupt circle at the top, and bankers, then obviously its not benefitting the economy as it should.