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]

#361

Post by arj » Fri, Jul 30, 2021, 11:05 PM UTC

zz865 wrote: post #141

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…

NZ has no capital gains tax, low property taxes and negligible stock market. Its a great way to make money and really the only way to make money.

Denmark also has no capital gains tax and the housing prices has also gone up like crazy over the last year.

I guess the thinking must be that if it were taxed and say you bought a house for 500k and a decade later it is worth 750k and you have to move for another job to a place where a comparable house would also be 750k$, then you can't afford the "same house" any longer because you have to pay tax on the 250k gain. The funny thing is I don't think we would see this kind of increase on the house price if it where taxed, making the point pretty mood.

Does anyone know of a country with tax on capital gains from selling a house and how the prices on houses are there?

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

#362

Post by pas » Fri, Jul 30, 2021, 11:41 PM UTC

akudha wrote: post #334

pas wrote: post #317

Earlier quoted context omitted.

Why do you think it's morally bad what this guy does? Developers make a profit, he basically provides loans to developers, takes on risks. Prices are too high because there aren't enough units being built, not because folks speculate on new developments. The rentiers are who do nothing yet they earn extra profit due to market failures. (Usually mandated monopolies or emergent oligopoly markets, see ISPs in the US.) I…

Not enough units being built is only part of the problem. There are empty apartments in the buildings that he buys. You know why? Because they are owned by people who reside abroad (US, Australia, Canada etc). These people have plenty of cash, so they buy multiple properties and just let it sit there (if they can't sell it for a profit), visiting for a week every 2-3 years. They are simply pricing the locals out. The…

Why can they sell for a future profit? Because there prices are going up faster than inflation? What does this mean? Demand grows faster than supply. What does this mean? Not enough units are being built.

... it's microeconomics. It's real estate. One of the most liquid of markets, one of the most well studied of economic fields. One of the most common example in microecon. Literally econ 101, no oversimplification, no simplification.

Sure, we can add other aspects, like vacancy. (Just as there's a natural rate of unemployment, there's a natural rate of vacancy. And if property taxes are too low, then this rate is too high.)

Also it's possible to tax vacant units. As some cities in Canada do.

> This guy I told you about, he can sit on these empty properties for 5, 10, 20 years if he chooses to, because he doesn't need the money.

What's the problem with that? He basically subsidized the construction. That's equivalent to a direct zero interest loan to the developers.

-----------

Yes, we all know that since the market has a tendency to remain irrational longer than one anticipates it's rarely a good idea to bet against very visible trends. Especially if those trends directly emerge from very visibly bad politics.

In this sense I think buying real estate and letting it sit empty is questionable. But, like I said, it's still funding development. High prices still incentivize development. We know how these things go. We know how irrational people are. (How we regularly fail to elect competent governments.) At some point it's impossible to paper over this. Like you said, basic housing should be provided, not something to fight tooth and nail for. But for some reason it's not happening. (And it's not like we don't know how. Soviet high-rise blocs are all over Europe and they are pretty okay, yet somehow the 'projects' in the US failed spectacularly. [And of course we know why they failed.]) And it's hard [but not impossible!] to hold people accountable for looking out for themselves in this crazy world (by using their existing capital to invest into housing).

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

#363

Post by exporectomy » Sat, Jul 31, 2021, 12:34 AM UTC

kennywinker wrote: post #90

exporectomy wrote: post #24

Earlier quoted context omitted.

If the problem is caused by too many people wanting to live there, rather than empty houses, it wouldn't help. Nobody likes to blame themselves, but everyone living in a high-priced area is partly to blame for the high prices, not just some faceless evil baddies.

There are more empty homes (or occupied just enough to avoid the tax) in vancouver than there are unhoused people here.

Unhoused people? Homeless people aren't the market for house buying. It's people who aren't even in Vancouver because they can't afford to live there.

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

#364

Post by harambae » Sat, Jul 31, 2021, 12:43 AM UTC

brutus1213 wrote: post #278

moeadham wrote: post #272

Earlier quoted context omitted.

There is no physical limit to the amount of houses. The best way to fix this in the long term is to flood the market with new housing inventory. We need to remove restrictions and make it easy to build new high-density housing anywhere and everywhere. The wealthy have the capital to find loopholes in any tax that is levied. We need to punish the housing speculators with a supply surge.

In GTA, there is a limit for single family homes (with yards) that have access to proper public transit. I have no belief an entlightened govt can fix all these factors in my lifetime (wide spread efficient public transit, increased investments in recreational parks, etc.). We have a policy called the greenbelt, which was pitched as an environmental thing but has been at least one factor in this whole mess.

For any other Americans that were confused, GTA here is "Greater Toronto Area" and not "Grand Theft Auto"

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

#365

Post by exporectomy » Sat, Jul 31, 2021, 12:46 AM UTC

voisin wrote: post #192

exporectomy wrote: post #21

Earlier quoted context omitted.

Isn't the problem in Australia (and New Zealand) mainly caused by first home buyers? They seem to pay the maximum the bank will lend them with no regard for being profitable or a good investment. Just get the best house possible at any cost. Once they own them, they fill them with lower occupancy than investors do, so the supply of housing effectively decreases. I'm one of those people. My house used to be a rental w…

> They seem to pay the maximum the bank will lend them with no regard for being profitable or a good investment. Just get the best house possible at any cost. Where is the direction of causality? I don’t know any first time home buyer that wants to be paying the maximum they can afford given bank lending standards. They are doing so because otherwise they cannot buy a house.

No. They can always buy a house in some small rural town. They chose to buy in more expensive places up to what they can borrow. Some people will buy a house a 1 hour commute from their work because that's all they can afford while others will be only 30 minutes away. I wanted to live closer to the nearby city but couldn't afford it so I ended up in a more distant poor suburb.

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

#366

Post by kennywinker » Sat, Jul 31, 2021, 12:58 AM UTC

exporectomy wrote: post #363

kennywinker wrote: post #90

Earlier quoted context omitted.

There are more empty homes (or occupied just enough to avoid the tax) in vancouver than there are unhoused people here.

Unhoused people? Homeless people aren't the market for house buying. It's people who aren't even in Vancouver because they can't afford to live there.

But they are in need of a place to live. One of the consequences of the current housing market in vancouver is that housing is unaffordable even as a renter. Those vacant homes, if they were available for rent would drive down rents for everyone and help house some of those unhoused people.

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

#367

Post by exporectomy » Sat, Jul 31, 2021, 1:03 AM UTC

kennywinker wrote: post #366

exporectomy wrote: post #363

Earlier quoted context omitted.

Unhoused people? Homeless people aren't the market for house buying. It's people who aren't even in Vancouver because they can't afford to live there.

But they are in need of a place to live. One of the consequences of the current housing market in vancouver is that housing is unaffordable even as a renter. Those vacant homes, if they were available for rent would drive down rents for everyone and help house some of those unhoused people.

Sure, there will be some downward pressure on rents (not necessarily an actual decrease) but that's not an argument that empty homes are a major contributor to the high prices. It might not even be discernable above the noise. The argument of counting homeless people and empty homes is disingenuous because it seems superficially like that's the whole problem when it's surely not.

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

#368

Post by exporectomy » Sat, Jul 31, 2021, 1:09 AM UTC

CTDOCodebases wrote: post #114

exporectomy wrote: post #21

Earlier quoted context omitted.

Isn't the problem in Australia (and New Zealand) mainly caused by first home buyers? They seem to pay the maximum the bank will lend them with no regard for being profitable or a good investment. Just get the best house possible at any cost. Once they own them, they fill them with lower occupancy than investors do, so the supply of housing effectively decreases. I'm one of those people. My house used to be a rental w…

The problem is caused by a whole number of factors that incentivise people to buy houses they won’t live in. Housing in Sydney is becoming a self fulfilling prophecy. The more people spend on it the more it’s value increases hence attracting more investors who drive prices up. In order for this to stop the majority of the public will need to find this whole situation unacceptable. I find it absurd that citizens from…

And factors that incentivize people to buy houses with rooms they won't live in! I.e. owner-occupiers. I'm trying to say that these people are a major cause of high prices but they're the "us" and the "goodies" and even the "victims" so it's not popular to blame them. Instead, the popular opinion is to blame some outgroup like foreigners, nebulous "rich" people, "evil" investors, etc.

One way for it to stop is for owner-occupiers to stop fetishizing a single family home on a 1/4 acre section and tolerate living in a high density apartment like most people in big cities everywhere else in the world.

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

#369

Post by zzzzzzzza » Sat, Jul 31, 2021, 1:25 AM UTC

wuschel wrote: post #111

cheesecake_luvr wrote: post #54

Earlier quoted context omitted.

Overseas buyers just get permanent residency and citizenship and buy houses. 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. My factory supervisor brother has a house in Mangere Bridge, a blue-collar suburb, built for ~$100k 20 years ago is now well over $1m. It is batshit crazy. I hear of eye-watering prices in M…

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?

mortgages are pretty much where money comes from in the global financial system. that and government debt. (when banks lend they create money).

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

#370

Post by tedk-42 » Sat, Jul 31, 2021, 1:53 AM UTC

swiley wrote: post #276

tedk-42 wrote: post #215

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.

Higher supply would mean lower prices. By definition affordability issues and supply issues are the same barring some kind of regulatory capture or abuse of credit.

Credit abuse is subjective - accessibility to credit for all parties equally mean that it will continue to be profitable for property investors to buy up more and more of the housing supply without constraint.

Building 'more' housing is not the answer. Preventing people from holding real estate as assets is the solution. We don't privatise ownership of water or air - two basic resources for humans to survive. Privatisation of basic human necessities is dangerous and we'll see in the future how large scale private property ownership will continue to drive social issues. It's really just the beginning...