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

Re: Canada bans foreign home buyers for two years

#551

Post by danielmarkbruce » Tue, Apr 19, 2022, 6:16 PM UTC

mpalczewski wrote: post #547

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

In general I agree, that the root cause tends to be a supply constraint. Even if there were a bunch of people buying up houses, at least in theory that should make rents go down. However, in places like Vancouver people are buying up property as a place to park money and they remain unoccupied. Policies like additional taxes on unoccupied or secondary residences. Seem like one good way of adding supply.

Similar happens in Sydney. There are a lot of foreign people looking for safe havens for their cash. I can't blame them (I'd do the same), but it is problematic for the people living there because it does reduce supply.

Re: Canada bans foreign home buyers for two years

#552

Post by volkl48 » Tue, Apr 19, 2022, 6:17 PM UTC

dimitrios1 wrote: post #527

weeksie wrote: post #519

Earlier quoted context omitted.

You can always build more dense housing on land that is in high demand. In fact, doing that is the most obvious and effective way to keep prices low for desirable locales. Backed up by pretty much all the economic research on the subject in the last decade.

Great, is that economic research based on thought experiments or reality? I'd love to read it. Let's go back to my example. You build denser housing on top of or next to the condos I mentioned, what happens? The workers move in closer to the city center. The price is low for a short period of time, until more people migrate. Just like when the highway opens up a new lane. The traffic is better for a short period, unt…

Tokyo has managed to keep housing prices pretty affordable (and while Japan's population may be shrinking, Tokyo's has continued to grow). Unsurprisingly, they build a LOT of housing and removed most legal/regulatory obstacles to building it a few decades ago.

They issue more permits for new housing units in a year than the entire state of California does, even though California has more than double the population. (or for an East Coast comparison - they issue around 9x the housing permits that NYC does, even though the population is There have been many articles written on this topic by many publications that you can find, but here's one citation: https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3...

Re: Canada bans foreign home buyers for two years

#553

Post by btbuildem » Tue, Apr 19, 2022, 6:17 PM UTC

weeksie wrote: post #511

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

It'll be interesting in a couple years when prices are still crazy and someone has to come up with an excuse for why. It's amazing to me how resistant people are to the idea that housing is expensive because there aren't enough homes for people to live in. It's always a search for exotic explanations like foreign buyers and mysterious empty apartments.

All the same, in the recent years wealthy foreigners have been parking their cash in Canadian real estate, and yes, lot of these places tend to sit unoccupied. It's not the sole factor driving up the prices, but don't discount it either.

Re: Canada bans foreign home buyers for two years

#554

Post by danielmarkbruce » Tue, Apr 19, 2022, 6:17 PM UTC

vkou wrote: post #546

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

> The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting, NIMBYism. You're conspicuously avoiding low interest rates and 30-year mortgages from that list. When people can borrow against their entire life's earnings to buy a home, the price of a home will trend towards that of a person's entire life's earnings. Limiting maximum…

This is insightful.

Re: Canada bans foreign home buyers for two years

#555

Post by munificent » Tue, Apr 19, 2022, 6:17 PM UTC

weeksie wrote: post #542

johnnyanmac wrote: post #530

Earlier quoted context omitted.

>how resistant people are to the idea that housing is expensive because there aren't enough homes for people to live in. I imagine there are enough homes in both America and Canada (they are two of the largest countries after all). But it's all about location. Very few can even afford to move out to the middle of nowhere just to own land. And not many people that can are willing to turn their potentially short commut…

There aren't enough homes _where people want to live_ and you solve that buy building more homes _where people want to live_. But that's difficult because cities have all these veto points. It takes forever to get new construction going, right? Exactly. That's why we aren't building enough, because in the current regulatory environment we can't. That's what people talk about when they talk about NIMBYism as the cause…

Given that "want to live" is a factor that is fluid and changes more quickly than building homes (which is how we ended up in this situation in the first place), it's probably also good to invest in making existing places that people are currently fleeing more desirable.

The jobs left quickly enough that our physical infrastructure couldn't keep up. That implies that jobs are more fluid than building and that therefore that's probably the easier approach to getting jobs and housing in balance.

Re: Canada bans foreign home buyers for two years

#556

Post by sokoloff » Tue, Apr 19, 2022, 6:17 PM UTC

djrogers wrote: post #347

sokoloff wrote: post #194

Earlier quoted context omitted.

Maybe it’s different in Canada, but in the US (or at least in Massachusetts and New Hampshire) the agent merely must disclose to whom they owe allegiance. In both of my purchase transactions, the agent I worked most consistently with was legally working for the seller. (I was comfortable with that and acted accordingly, having “my” agent submit bids that I was comfortable with, but not treating/trusting them as if th…

Your experience is not the norm, nor is it one I would recommend in most cases. You should find an agent you trust and can work with well to represent you, and they should be the only agent you ever have to speak to. Dual representation can work out ok in some scenarios, but the hyper-inflated and super competitive market we're in right now isn't one of them.

Even in a situation where your agent is representing only you, they still have a massive incentive to get you to raise your bid so they get 1/4 of the total commission (and their brokerage house gets 1/4 of it). Their incentive is even stronger than that of the listing agent, because when it comes time to choosing a bid, the listing agent and brokerage is getting their commission one way or another and so a 1% difference in final contract price on a $1M house represents a difference of around $150 pre-tax to the listing agent. A difference of 1% that causes that specific buyer to get the house can represent a $15150 pre-tax difference to the buyer's agent.

If you tell "your" agent that you'd like to bid $1M but are able to and would pay up to $1.2M because you really love the house, you're giving away a lot of information that I decided I wasn't willing to give up and so kept all Realtors at arms-length.

Re: Canada bans foreign home buyers for two years

#557

Post by seanmcdirmid » Tue, Apr 19, 2022, 6:18 PM UTC

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

We really should follow Japan on this:

(a) National zoning

(b) A culture that abhors second hand housing (so structures don't appreciate like land does). Housing that depreciates is no longer a sound investment.

(c) Liberal definition on minimal standard housing to rent (central heating not required, toilets can be shared, no personal shower or even a shower at all in the building you are renting a room in, small spaces are OK).

Maybe not this one:

(d) Not very open to immigration at all, have a decreasing population.

Re: Canada bans foreign home buyers for two years

#558

Post by weeksie » Tue, Apr 19, 2022, 6:20 PM UTC

mpalczewski wrote: post #547

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

In general I agree, that the root cause tends to be a supply constraint. Even if there were a bunch of people buying up houses, at least in theory that should make rents go down. However, in places like Vancouver people are buying up property as a place to park money and they remain unoccupied. Policies like additional taxes on unoccupied or secondary residences. Seem like one good way of adding supply.

The easiest way to solve that is by making housing a less attractive investment, which you can do by building a lot more of it.

Otherwise you're stuck crafting clever anti-investment legislation which may or may not work and may or may not create weird distortions due to some unforeseen consequence of how the regulations are worded.

Re: Canada bans foreign home buyers for two years

#559

Post by alar44 » Tue, Apr 19, 2022, 6:20 PM UTC

weeksie wrote: post #511

huevosabio wrote: post #493

These are boogieman policies that have zero influence on the root cause. Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth. But that is not the root cause. The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting,…

It'll be interesting in a couple years when prices are still crazy and someone has to come up with an excuse for why. It's amazing to me how resistant people are to the idea that housing is expensive because there aren't enough homes for people to live in. It's always a search for exotic explanations like foreign buyers and mysterious empty apartments.

I think the problem is that people want to buy 3 bedroom homes with a 3 stall garage on 2 acres of land. In my market, there are tons of affordable homes, but they aren't brand new, huge, with a ton of land. People are going to have to pay for that. It's a matter of keeping up with the Joneses from my perspective. People just don't want an average size home built in the 60s. They need a brand new 3k SQ ft home and bitch that's it's not affordable. They can't all be.

Re: Canada bans foreign home buyers for two years

#560

Post by seanmcdirmid » Tue, Apr 19, 2022, 6:20 PM UTC

weeksie wrote: post #542

johnnyanmac wrote: post #530

Earlier quoted context omitted.

>how resistant people are to the idea that housing is expensive because there aren't enough homes for people to live in. I imagine there are enough homes in both America and Canada (they are two of the largest countries after all). But it's all about location. Very few can even afford to move out to the middle of nowhere just to own land. And not many people that can are willing to turn their potentially short commut…

There aren't enough homes _where people want to live_ and you solve that buy building more homes _where people want to live_. But that's difficult because cities have all these veto points. It takes forever to get new construction going, right? Exactly. That's why we aren't building enough, because in the current regulatory environment we can't. That's what people talk about when they talk about NIMBYism as the cause…

> There aren't enough homes _where people want to live_ and you solve that buy building more homes _where people want to live_.

You mean, if we had the density of Manhattan or Shanghai, our housing would be as cheap as Manhattan or Shanghai? I'm not sure people would like that (given that those places are more expensive in general). The best example in the states is Houston, but it is horrible sprawl (so housing isn't being built exactly where people want to live, but continues to build outward). Tokyo is the best example internationally, but they have special conditions (housing depreciates since second-hand houses are not popular, decreasing population, liberal definitions on what is needed to call something a home).