Canada bans foreign home buyers for two years • Hacker News Board

Re: Canada bans foreign home buyers for two years

#311

Post by joejerryronnie » Tue, Apr 19, 2022, 2:00 PM UTC

alistairSH wrote: post #283

bitshiftfaced wrote: post #176

Earlier quoted context omitted.

> Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.

This is only possible in a slow market. Right now, in DC metro, all contingencies are being waived, bids are $100k+ over list on moderately priced homes, and the seller is demanding a 2-month free "rent" back from the buyer. Both my home purchases have waived inspection. The second waived financing contingencies as well. This isn't uncommon, based on what friends and family have done.

You can still back out of the deal but you will typically forfeit your deposit or earnest money (sometimes in the $10’s of thousands). But I hear you with the seller’s market - we just purchased a couple homes in the Austin area, bid significantly over asking price, waived all contingencies, and offered free 2-month rent back.

Re: Canada bans foreign home buyers for two years

#312

Post by folkrav » Tue, Apr 19, 2022, 2:00 PM UTC

bitshiftfaced wrote: post #176

stevesimmons wrote: post #135

Earlier quoted context omitted.

In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent stands on the front step, acting as the auctioneer, using the rolled up "Section 32" document like a gavel. Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call. Just befor…

> Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.

In Canada inspection contingencies only protect the buyer for major problems, and definitely aren't a "get out of jail free" card... I haven't seen anyone be able to back out after inspection in the last handful of years. Hell, we're having trouble even getting an inspection contingency to stick as people are more and more often foregoing that in hopes of getting their bid in.

Re: Canada bans foreign home buyers for two years

#313

Post by s1artibartfast » Tue, Apr 19, 2022, 2:01 PM UTC

ranit wrote: post #237

jejeyyy77 wrote: post #166

Earlier quoted context omitted.

This is wrong on a few levels. 1) as someone who has been on the ground as well, I’ve lost a few offers because I was worried about over paying. On multiple occasions, after seeing what it sold for we thought “damn, we woulda paid another $25K on top to get it had we known.” 2) Canadian banks has a very conservative “stress test” for securing mortgages. This includes qualifying at much higher rates then is being offe…

> Canadian banks has a very conservative “stress test” ... Therefore it isn’t possible to “stretch yourself beyond any reasonable limits” “stretch yourself beyond any reasonable limits” means that you may not be able to pay your mortgage, it doesn't mean the bank won't offer it to you.

The bank won't offer if you can't pay, at least in the US these days. But we have 30 year fixed mortgages, I think Canada is shorter

Re: Canada bans foreign home buyers for two years

#314

Post by kmlx » Tue, Apr 19, 2022, 2:02 PM UTC

a_c wrote: post #103

gpderetta wrote: post #91

Earlier quoted context omitted.

The typical workaround in UK is that instead of selling the house, the corporation that directly or or directly owns it is sold instead, usually on a tax haven.

UK property prices surged a lot in the past year, especially in smaller cities. I wonder if the UK government is going to do something about it

the only solution is to take away home owners rights to contest planning permissions and massively overhaul planning.

they tried doing this with wind turbines and it was shelved the next day because nimby’s didn’t want wind turbines.

Re: Canada bans foreign home buyers for two years

#315

Post by funksta » Tue, Apr 19, 2022, 2:02 PM UTC

tici_88 wrote: post #34

Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measure will do nothing to stop this practice. The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and ev…

Exactly. Without an airtight national beneficial ownership registry, this "ban" is just theatre and pandering for votes

Re: Canada bans foreign home buyers for two years

#316

Post by joejerryronnie » Tue, Apr 19, 2022, 2:04 PM UTC

boplicity wrote: post #195

pards wrote: post #98

I'm a homeowner in Toronto and I don't think this will help. They've eliminated a small number of buyers from the market but have added other incentives like a first home buyers tax credit that will only fuel the fire - Australia tried this with tragic results. >> working with provinces and territories to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding. Blind…

I live in Toronto as well. We make a good income, have large savings for a down payment, and recently thought about buying a house. It's depressing. So, I decided to look at the City Plan -- to see what the actual plan is for addressing the housing cost crisis in Toronto. Not surprisingly, the real problem became very clear to me, almost immediately. The problem is not blind bidding. The problem is not foreign buyers…

If you’re waiting for a progressive zoning plan which incentivizes enough building to naturally bring down housing prices in Toronto, you will be dead before that reasonably priced home becomes available.

Re: Canada bans foreign home buyers for two years

#317

Post by OJFord » Tue, Apr 19, 2022, 2:04 PM UTC

DangitBobby wrote: post #307

NamTaf wrote: post #255

Earlier quoted context omitted.

It’s largely understood (I am in a pub halfway across the world and have no specific citation) that the FHBG just bumped the purchase price up by that amount. In Australia, many new buyers’ max purchase prices are dictated by their total borrowing capacity (in that, few limit themselves to less), and many FHBs are competing against each other for a similar cross-section of the market, so grants are easily absorbed by…

Not everyone is a first time homebuyer though. Why would the market bear that price bump?

Not every house in the market is going to be a first home either though; especially when such incentives are often limited to a certain (the lower end) range.

Re: Canada bans foreign home buyers for two years

#318

Post by motohagiography » Tue, Apr 19, 2022, 2:07 PM UTC

Canada's housing market is a destination for capital flight from other countries. Imo, the market is completely financialized and not producing actual homes.

That money is also made in countries without the same levels of taxation Canada has, and that puts citizens at a huge disadvantage in their own market. Why should a 21yr old from North Bay or Timmins in Ontario have to compete for bidding on a house with the someone in the top 10% of earners in Hong Kong, Delhi, or Tehran - let alone their REITs? I'm a huge believer in positive sum economics, where people can be trusted and bet on to find a way and create new businesses and value, but that only works when there is a diversity of markets based on geography and not a single zero sum managed global one.

Whether one calls this "nationalism," or just a government being responsible for the people who elected it, the dynamic is clear. Canada's economy has been hollowed out by two decades of globalization, whereby all that "empty space" is not economical to inhabit because we can import everything people could produce in that new town at higher volumes and cheaper from asia. There is nothing "local," to be produced or manufactured for export that would facilitate growth, and therefore no incentive to build new housing to serve that local market. Precisely due to Canada's theory driven agricultural supply management laws against entrepreneurship and smallholders, there are no local markets either.

Even though I don't trust this govt to implement the rule in an effective way, it's the bare minimum necessary to mitigate a crisis. If millenials and gen Z and beyond do not have homes, they aren't going to have kids (after losing 2+ years on that path to covid), and the govt is using this policy to try and mitigate an imminent disruptive population bust. Boomers are coming to terms with the fact that generally, they aren't getting grandchildren (unless you count "fur babies"), and now Gen X is about to experience the same. As a signal that your society is damaged, consider that the only time any creatures on earth cease to have kids is during war or famine, or in captivity. The greater issue of the culture being broken and physically dying off isn't going to be stopped by banning foreign ownership, and unfortunately it may keep the people responsible for these policies in power even longer to do even more harm, but it's a sign they apprehend the disaster they have caused, imo.

Re: Canada bans foreign home buyers for two years

#319

Post by symlinkk » Tue, Apr 19, 2022, 2:08 PM UTC

3qz wrote: post #111

The country is ruined for non owners and it will never get better. The only options left are moving to the prairies or living in a neo-feudal shithole. This is only being introduced so they can officially give up after pretending to fix anything. Quality of life has almost nothing to do with income anymore so it’s impossible to work for a better future. Being born 5 years later is the difference between tax free, 6 f…

This is well written and is something I noticed too during my own house hunt: houses owned by teachers, plumbers, and car mechanics were getting fought over by engineers, doctors, and lawyers.

Re: Canada bans foreign home buyers for two years

#320

Post by vel0city » Tue, Apr 19, 2022, 2:08 PM UTC

TimPC wrote: post #185

Cthulhu_ wrote: post #127

Earlier quoted context omitted.

> those who hoard housing should get a kick from a exponential tax. Yes, but at the same time it should not be possible for them to pass those costs on to people renting the house; rents should be fixed, or based on things like floor space and amenities. But personally I think everyone should have a way in to the housing market. Renting is throwing away money; it goes into someone else's pocket and it's gone. When yo…

Buying is throwing away money too, often just as much as the rent you were paying. Yes some portion of what you pay goes to principle and you eventually own the home but the following amounts are just lost money: - interest on the loan - utility bills - property taxes You also have to replace anything that breaks and are responsible for all repairs on the property. Many of these replacements and repairs don’t increas…

You're missing a big point of buying with a fixed mortgage though -- its partially a hedge against housing cost inflation. Sure, property taxes will go up as property values increase, but taxes aren't really that large of the total housing cost of my home. Taxes could double and it still wouldn't be the majority of the cost of my house. Most of my monthly cost of my house is P&I, values that won't go up.

My mortgage, insurance, taxes, and savings towards repairs is now a good bit less than the current rent at my last apartment just a couple of miles from my house. But my house has over twice the square footage, a private garage, a private yard, etc.