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Canada bans foreign home buyers for two years

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Re: Canada bans foreign home buyers for two years

#411

Post by Tiktaalik »

it_citizen wrote: post #31
eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

I am not super familiar with real estate markets. Has the empty house tax helped in any way? Even if it is not the best solution, is there any huge downside to that ban?

BC brought in a speculation tax that was effectively an empty house tax (you avoided the tax if you rented your house). In its first year, beyond whatever monies it made, it also added about 8000+ units to the market. Now you only get that surge one time, but hey that's not nothing, and beyond that the market seems to have reoriented slightly toward less development of apartments for sale, and more purpose built rental apartments.

https://bc.ctvnews.ca/11-000-condos-added-to-metro-vancouver...

Re: Canada bans foreign home buyers for two years

#412

Post by ep103 »

alex_sf wrote: post #400
throwaway894345 wrote: post #362

Earlier quoted context omitted.

What's stopping Canada from increasing its housing stock? Surely Canada has plenty of space for its 30M citizens, right? (Yes, I understand that much of the territory is uninhabitable, but even still...).

There is plenty of housing for plenty of people in most parts of North America. The 'problem' is that what people _want_ is cheap housing in urban centers, a.k.a cool spots. Because that doesn't exist, we claim to have a housing shortage.

I'm not in Canada, but I am in the NYC region, and your comment is absurd. Assuming you want to live in a safe area, but not live inside the 5 city boros, you're looking at 1MM for a house, and an hour+ commute.

But yeah, "cool spots". /s

Re: Canada bans foreign home buyers for two years

#413

Post by bluGill »

randomdata wrote: post #355
bluGill wrote: post #142

Earlier quoted context omitted.

Farms often are sold in live auction this way with the bidders announcing their bid. Each bidders knows their maximum, but none give that way, all they give away is they are willing to top the previous bid by someone else (even this is a trick - some bidders will pretend to be more/less interested than they really are trying to scare off other bidders) The auctioneer is typically a licensed real estate agent. The who…

As a farmer in Canada, I haven't seen a farm auction like that since I was a kid. Most farms these days are sold either by someone knocking on a door and making offer that can't be refused or by tender, conducted by law firms. Real estate agents/auctioneers, and the cut they want to take, have largely been taken out of the equation given how easy the farm properties are to sell.

I see ads for farm auctions that work like that every few weeks living in Iowa.

I have no idea why there are regional differences, but I'm not really surprised they exist.

Re: Canada bans foreign home buyers for two years

#414

Post by gen220 »

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…

There's this idea of a "city as a museum", to normalize the balance of power you describe.

In NYC there's a very similar balance of power. On some rarefied streets, it's illegal to change the silhouette or facade of a building, because it's an "historic district".

But if you go 40 minutes outside of lower manhattan, relatively affordable housing abounds and there are essentially no rules. The "museum" core creeps outwards, but with sloth-like predictability.

You're right, these places are not "for you/us". They're for people whose means allow them to make mole hills out of the mountains you describe (access to education, public transit, quality housing), and for the rest of us, who are willing to compromise their ideals and cope with the egregious terms and conditions.

Your solutions make sense in a utilitarian sense, but this is not a sense that appeals homeowners who have already rationalized away the irrational aspects of the status quo. Generations of experience have shown that, absent some highly-destructive disaster, it's cheaper to move to place you perceive to align with your ideals, or to change your own ideals, than it is to change the ideals of zoning policy.

There is a selfish component to this vector of development, but it's reductionist to say it's the only component. At any given point in time, the selfish component is there; but at many points in time it is not the biggest contributor.

Re: Canada bans foreign home buyers for two years

#415

Post by waterlaw »

alex_sf wrote: post #400
throwaway894345 wrote: post #362

Earlier quoted context omitted.

What's stopping Canada from increasing its housing stock? Surely Canada has plenty of space for its 30M citizens, right? (Yes, I understand that much of the territory is uninhabitable, but even still...).

There is plenty of housing for plenty of people in most parts of North America. The 'problem' is that what people _want_ is cheap housing in urban centers, a.k.a cool spots. Because that doesn't exist, we claim to have a housing shortage.

In Ontario it's not just urban centers. Prices are going up almost everywhere. Towns with a grocery store and Tim Hortons are seeing prices explode.

One problem in Canadian provinces is your taxes remain the same regardless of where you live, but if you need access to healthcare or education, then you have to live near a major city. Particularly if you want quality healthcare.

In fact the cost of living goes up if you're a rural inhabitant in most of Ontario. Electricity is more expensive, heating is expensive, etc.

Re: Canada bans foreign home buyers for two years

#416

Post by __alexs »

hallway_monitor wrote: post #368
alistairSH wrote: post #281

Earlier quoted context omitted.

But it's an open process. That it's close to optimal efficiency isn't a bad thing. Imagine the same level of stress, but you have to guess what the other buyers are bidding. Do you bid low and hope everybody else does? Bid high, but risk overpaying?

That's what I was thinking. In theory it should be a better system. Submitting a bid significantly over the asking price and then losing to another higher secret bid is very disheartening.

They should use a Vickrey auction. Then you can bid very high and only pay as much as the 2nd highest bid.

Re: Canada bans foreign home buyers for two years

#417

Post by fennecfoxen »

rockbruno wrote: post #401
fennecfoxen wrote: post #144

Earlier quoted context omitted.

They are translating between a lump sum and an income stream. They are making a six-figure asset available for the low four figures a month, without someone needing to bring six figures of money, or five to six figures of down payment and closing costs and five times as much debt. If the six figure asset actually falls 50% in value, the tenant is not stuck and does not lose a penny. In short, they’re offering homes t…

This explanation hides the actual problem in a way that almost feels like gaslighting. Yes, their ability to buy homes allows people who don't have money to live in them. ...except that their greediness of wanting to own everything is precisely what made houses explode in price in first place.

Blaming corporations is a cute meme, but it's not the problem. Corporations in this market are NOT monopolistic price-setters, they do not have remarkable market-concentration, and they are not colluding with each other to limit supply. They are competitive price-takers.

If you want to fix housing prices (or if you just want to screw over these corporations for funsies, which is fine) then you want to increase the supply of homes: that is, you want homebuilders to build, build, build, build, build, build, build — and where necessary, you want to drive the political reforms that make this possible. All the evilcorps™ are betting that you won't — and I'd bet that too, given where you're focusing your attention and efforts.

Re: Canada bans foreign home buyers for two years

#418

Post by Tiktaalik »

refurb wrote: post #85
j7ake wrote: post #8

I would have thought that the pandemic and travel restrictions would have effectively “banned foreigners from buying homes” for 2 years. If home prices haven’t fallen during pandemic, then the reason why prices are high is not because of foreigners. The government is trying to point to a scapegoat rather than trying to get to the root cause.

For the hottest market in Canada, Vancouver, the hottest communities had single digit foreign ownership. That doesn't explain why Halifax, Nova Scotia has double in price. But regardless, not sure why travel restrictions would matter. You don't need to see a house to buy it.

This isn't true at all.

If any foreign buying stat looked single digit it was only because the metric was so broad so as to include areas where there was zero foreign buying interest.

The week the BC Liberals brought in the foreign buyer tax they had data in hand that showed foreign buying in Richmond and Burnaby was (going from memory here) between 15-20% of sales that period. Worth noting that at the time those areas were building lots of new builds so possible that the trend the government was concerned about was new build condo purchases being dominated by foreign capital. That's my speculation only. CoV proper I think was around 11%.

Globe and Mail articles on this issue from around 2016 call out some of the data and there are some startling numbers that make it clear why the government acted. Perhaps its available on some government website too I dunno.

Re: Canada bans foreign home buyers for two years

#419

Post by jaclaz »

hkt wrote: post #126
3qz wrote: post #120

Earlier quoted context omitted.

The real estate agents operate as a cartel and wouldn’t accept offers this way.

I don't know how it works in Canada, but in the UK the incentive is that most estate agents take a % of the sale value. They have every reason to push house prices higher. Cartel or no cartel, it is very harmful.

The issue is that the flat percentage incentive is not a valid one, there was a chapter in Freakonomics about that (I seem to remember it was about Chicago estates, but it could have been another city in the US).

The study determined that when a house was the property of the estate agent sold in a little more time at a noticeably higher price.

The idea if that your house sells (today) for (say) 100,000 units of value (pounds/dollars/whatever) the estate agent will get (still say) 5% of it, i.e. 5,000 "units" (also today).

If in a few more months time you can sell it for 120,000, the agent will get (a few months later) 1,000 "units" more, but he/she will have spent a lot more time visiting the property with prospective buyers, runnning ads on newspapers, whatever, so the incentive for the agent is to conclude the sale as soon as possible, even if at a (reasonably) lower price.

The proposal to correct the incentves was to have a flat percentage (like the mentioned 5%) until a certain amount and a much higher percentage (like - if I recall correctly 15% or maybe 20%) on the excess.

Of course it depends on the local current market, but estate agents have interest to push house price higher only until the property is an "easy sale", the sheer moment the house stays on the market for some time (this highly depends on the local market, it could be weeks or months) they will start saying something "Hmmm, maybe we valued a little too much, we (that means you) should discount it by 10%", this in the same 100,000 unit house means that you will get 10,000 unit less, while the agent would get 4,500 units instead of 5,000.

Re: Canada bans foreign home buyers for two years

#420

Post by usrn »

BlargMcLarg wrote: post #350
usrn wrote: post #308

Earlier quoted context omitted.

Domestic population in developed countries hit their peak a while ago. The demand side here is all immigration and I wish people would talk about that before they talk about bulldozing neighborhoods.

Of course. But realistically, no one wants to deal with the inevitability of ageing populations having to either take the bullet and accept they were sold a bunch of lies, or causing the working class to crumble under the collective weight of all who depend on them. Most immigration and pushing for higher birthrates is just that, an admission by politicians they don't want to deal with the problem and passing it onto…

Which countries are you talking about? I'd be very interested in seeing that.
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