Canada to ban foreigners from buying homes
bloomberg.com
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This is such a huge deal. Anyone who has had to go through the process of buying a home through a bidding war knows how unfair and one-sided this process is. It take a high-pressure emotional situation, and gives all of the information to one side (the sellers), while leaving the buyer stuck guessing at what the real price for the house is supposed to be. An absolutely horrible process that should be banned. Banning this is such a simple reform. I sincerely hope it happens, though I doubt it it will.
Not to mention the ridiculous commission fees for realtors, and their well-known practice of "steering" people away from homes with lower commission or prices. A practice that is technically illegal, but not enforced.
Almost everything mentioned in the various comments here is a scapegoat. These all might contribute a little to the escalating prices at the margins, but they are not the root cause.
The root cause is that many capitalist societies have decided that purchasing a house is the most expensive and important investment most people will make in their lifetime. Therefore these societies gradually shape their policies to ensuring these investments continue to increase or else there are widespread repercussions. The end result is we have collectively refused to build enough housing to keep prices stable or decreasing. The prices need to go up. I don't understand why no one is willing to admit this.
All the other problems originate from this. The reason foreigners want to buy homes as speculation or a place to park their money is because governments are committed to ensuring that housing is a safe and profitable investment. It all comes back to us deciding that a basic human need should also be an investment that always is increasing in value.
We don't want prices to go down so we don't build enough supply. The policies that make housing a good investment increase demand from speculators and investors above the natural need for housing. There are all sorts of subsidies that exist to give people more money to buy housing instead of trying to make housing actually cheaper. Interest rates are a lever the government uses to support its political goals which includes increasing housing values. It all comes back to the same root cause.
No, rather somebody at the top needs to go down.
> The end result is we have collectively refused to build enough housing to keep prices stable or decreasing
This is not the result of a hushed down societal decision. The refusal to allow housing construction the cause of the ever increasing prices. As so often, it comes down to basic microeconomics: If you limit supply while demand rises, prices will constantly go up.
I do agree that foreigners, like anyone else, buy homes as speculation because they're guaranteed to increase in value.
And what would you say is the cause for that? I would generally say it is people trying to protect their existing investments in housing.
It sounds crazy today, but the vastly poorer US society of 1960 supplied pretty everyone with an indoor place to sleep and call home.
I think it was more a case of upgrading to modern sanitation standards etc.
That said, I have no real detailed knowledge, and would be happy to learn how wrong I am about this :)
The insanity of "we can't let you have a bad X, so you get no X!" is one of my least favorite things in this era...
On the other hand, flop houses aren’t economical to run anymore, and the drug problems (especially with decriminalization) have gotten much worse. It’s not clear they can work like they did in the past.
I'm American so I can't speak to the specifics of what happened in Canada, but I imagine it is similar to what happened in the US.
It is all related to the post-war suburbanization of the population. In the early part of the 20th century, homeownership rates in the US were in the 40% range. By the 70s it jumped to roughly 65%. Large swaths of the population went from being lifelong renters in cities to buying single family homes in the suburbs. Owning a home became a symbol of American middle-class life and the government both supported and encouraged this transition. Obviously a constituency that makes up 65% of the population is going to see more political power than one that only makes up 45% of the population.
1960:
Pop: 3,034,949,748
%Urban: 34%
2020
Pop: 7,794,798,739
% Urban: 56%
That aside, this is absolutely correct. It's constantly irritating to hear politicians praise "strong housing markets" when "strong" means "unaffordable if you're not already wealthy".
You mean opposite of a free market. Property rights, aka the exclusion of other people, is actually an inherent part of capitalism. When you think about it, capitalism isn't actually about physical capital. It's actually about having the rights to be allowed to do things and restricting other people's rights while boosting your own rights is considered perfectly okay under the guise of private property.
When you think about it. We have built a system that tells you whether you get to work or not. This is completely independent of your ability to work or gain skills. It's like a brain cage that tells people they are powerless when they really aren't, they just aren't allowed to help themselves.
A lot of laws that set a minimum living standard basically make it illegal to live. If you are going to demand that everyone must meet that bar, then you must actually do something to let them achieve it. Instead, we just abandon people under the guise of personal responsibility.
can you give an example of this? I don't believe the current system prevents anyone from working if they have the skill. The closest policy to what you described is segregation and racism, but i don't think that is what you're referring to.
> A lot of laws that set a minimum living standard
there's no such law. There's minimum wage law, which might cause unintended consequences, if the minimum is inappropriate. But so far, the current minimums don't seem that inappropriate.
If it’s feasible and profitable to build new homes, then developers will do so.
Everyone loves the simple solution of “build more houses”. Very few actually consider the execution of the master plan. What would it take for you to start building homes? It’s an enormous risk, requires tons of upfront capital, specialized labor and supplies.
When everyone wants to live in the same areas, housing prices go up. Lifting zoning restrictions isn’t some magic bullet that will alleviate that fact.
There's also no incentive to build affordable or well-constructed homes. Many builders will try to maximize profit by investing the bare minimum (i.e., cutting corners) and creating the largest number of dwellings possible. Mattamy Homes is infamous for developing large neighborhoods with pretty homes that practically fall apart in a matter of months if you look at them wrong.
This is sort of my point. Who's going to build the "affordable housing"? Why won't the affordable housing get snatched up by the highest bidder?
The federal government already spends way more than it can afford. State/local governments don't have anywhere near enough tax revenue. It would require a multi-trillion dollar operation to increase supply enough to offset shortages.
Homeowners don't need to orchestrate and elaborate scheme, they just vote for the politicians who will prioritize increasing home values because that will help them financially. That politician will enact policies favorable to homeowners because that is what their constituency wants. That will encourage more people to become homeowners because people see homeownership as a financially beneficial endeavor. That will increase the power of homeowners as a constituency which will lead to more politicians courting homeowners with favorable policies making homeownership more attractive. And on and on the cycle goes until it isn't "feasible and profitable to build new homes" because we have made it difficult and expensive through all our pro-homeowner policies.
Or y'know...maybe homeowners don't want to have their neighborhood become overcrowded. Not everyone wants to live in a megacity with traffic, air pollution, constant bustle, and restricted personal liberty.
If financial gain is your only motive as a homeowner, you would actually WANT an increase in density. As you cram more people into a smaller space, the land underneath becomes more valuable. Increased density attracts amenities, restaurants, businesses, nightlife...etc, all of which raise the value of your property.
Homeowners care about things other than net worth.
Nothing I said here is specific to neighborhoods. It also applies at the city, state/province, and national level. A homeowner in San Diego likely doesn't care about the density of various neighborhood in San Francisco. But they might still vote for Prop 13 which put harsh limitations on property taxes in the state and in turn increased the value of homeownership and the cost of housing. That decision has nothing to do with personal preferences of what type of neighborhood in which people want to live. It is purely homeowners being powerful enough to vote themselves tax breaks which makes homeownership more attractive which makes homeowners more powerful...
This is just one piece of the puzzle, and frankly its a bit much to chalk it all up to power/greed. Again, if CA homeowners make up the majority of voters what exactly is the alternative?
If I'm being honest, my opinion on CA housing markets means nothing...but it seems pretty sensible to me that when a shitload of people all want to live in a handful of cities, prices HAVE TO increase. Removing prop 13 and zoning restrictions isn't going to double the housing supply.
On a semi-related note, pretty much everything in CA is more expensive. The residents there vote for expensive public services and legislation. When everything is more expensive, you bet your sweet ass houses will be as well.
Then it’s time to collect your scarcity-generated windfall and move someplace rural you’ll like better! Super-common, and you can even complain self-righteously about the terribly governed crime-ridden hellhole you’re leaving behind.
I am quoting my original comment because it seems like you didn't read it:
> Not everyone wants to live in a megacity with traffic, air pollution, constant bustle, and restricted personal liberty.
> If financial gain is your only motive as a homeowner, you would actually WANT an increase in density. As you cram more people into a smaller space, the land underneath becomes more valuable. Increased density attracts amenities, restaurants, businesses, nightlife...etc, all of which raise the value of your property.
Do you have an actual response? Or do you just need to be outraged at something?
No, but real estate companies wouldn't be able to lower property taxes alone. It's only happening once there is a critical mass of homeowners that is voting themselves a tax cut. Large real estate companies get exactly the same tax cut and since they have more property they benefit more than the average homeowner. One could have a tax cut for owner occupied housing but no, there is no limit to the tax cut. Everyone including billionaires gets it. That's incredibly unfair.
High property taxes hurt renters too. Rent prices increase to cover the difference.
But because real estate agents are middlemen in the process, there's an incentive in a hot market to not act as an honest broker.
When the market isn't "hot", a realtor has an interest to move quickly. When the market is hot, they have incentive to move their own listings so they get both sides of the commission. In my case circa 2005, I bid $50k over list via the broker who was managing my home sale. The selling broker "lost" the bid somehow and sold it for $20k over listing price.
7% of 20,000 is close to 3% of 50,000. But... I came to learn later that the selling agent targeted a particular religious community hard, and did a hard sell on insurance, inspection, and even attorneys to buyers, and frequently yielded another 3-5% based on "spiffs" from those providers.
All of these inefficiencies and bad behavior add up and inflate prices.
Though I will point out that in most of the jurisdictions in the link provided, there's nothing that prevents your scenario - a third party offer is turned down due to the dual agency bid being favored by the sellers because they never received your bid. Only in Colorado, Florida or Kansas is it explicitly prohibited. But at least if it was in one of the other states that requires disclosure (Alaska, Maryland, Texas, Vermont, Wyoming) the sellers would have at least been aware of a possible conflict of interest and may not have entered into a contract because of it.
Of course the reality is that there is very little governing their conduct and behavior. Without a functional "exchange" or disclosure rules, both buyer and seller are dependent on good faith.
Where there is money and little oversight there is bound to be fraud. It grinds my gears to think about this because I bought a house and the escalation clause went to the maximum. Now do you think that was purely coincidence?
Eg. my realtor called up the selling realtor and asked for the name of the realtor that submitted a competing offer. My realtor called the competing realtor to confirm they had a client that submitted an offer.
Yes, of course the two other realtors could conspire together. But, now instead of one dodgy realtor you have 2 and the probabilities go down further.
Is there fraud, I'm sure there is. But, I don't think it's a significant factor in the market.
Steering is a problem.
In such a case, I’d predict a lot of partnerships (or whatever the lowest cost legal structure that isn’t traceable over time if not activated) would be bidding for houses. My bid as “123 Main St Partners” can be as public as you want I suppose.
It baffles me how this industry has not yet been disrupted by an outsider, like Uber did with taxis. I still remember when taxi licenses costed a fortune, and you had the exact same leeches exploiting it. They were seen as an investment in some cities, like NYC.
I know there are useless regulations that keep these agents being needed, but so there were with taxis as well, and Uber did not give a crap.
In the case of Uber, supply (people who own vehicles) was effectively unlimited and independent.
The difference, with Uber, of course, is their cost of capital was relatively low. They didn't have to buy vehicles, for example. (Imagine having to tear down a few multi-billion dollar real estate developments. Yikes.)
Real Estate isn't a regulatory trap; it's an information trap. You can buy and sell property direct. All of the legal stuff is (nominally) done by attorneys. But the association of realtors controls the listing service and makes discovery easy.
Like all salespeople, realtors add "value". When you've been in 2,000 houses, you pick up insights that are useful and learn about neighborhoods. The information is used for both good and bad purposes.
Most of the disruptors do stupid shit with stupid investor money or integrate with the existing players and add some value.
Since 1973. https://en.m.wikipedia.org/wiki/RE/MAX
No -- you're confusing real estate sales with real estate. Real estate is one of the most highly regulated industries out there. You literally can't make any significant changes to most properties without a significant permitting process that goes through many layers of regulations. Not to mention the many real estate developments that are never even a possibility because of regulation. I'm not against regulation -- it can be a very good thing -- but it is clearly at the core of the real estate problem. Society has decided, via regulations, to starve the supply of housing.
While they did disrupt the taxi market, they are also setting false expectations about what sort of model is viable in the space since _Eventually_ they will need to bring in revenue or could potentially be forced to pay their drivers more which would lead to a big hike in prices and would probably have an impact on how it functions now.
Why sellers want to pay tens of thousands in commission in a bidding war environment is a mystery to me.
In a competitive market, filled with buyers of questionable sophistication, i.e. residential real estate, everyone gets to the bottom of maximally-waived, minimal-safeguards pretty quickly to make a competitive offer. And ultimately, that isn't good for anyone, sellers included.
Better to explicitly prohibit the stupidest behavior and require some safeguards. E.g. non-waivable 72 hour cooling off period. Then everyone can compete within those bounds however they want.
Peace-of-mind is worth a lot. Especially if the buyer is sophisticated, I might take a lower offer if it has the right waivers.
Every age group, including the youngest (18-25) have a higher rate of home ownership than 20 years ago.
If you purchased a home that someone who had less money wanted is that stolen property?
Can I have your computer, phone and your car. I don't have any money but you having something I want means you stole it.
We need to take speculation out of the marketplace.
I'd also like to see a ban on corporations purchasing private homes and significant tax increases on non principle residences.
This would actually solve the problem (the calls are coming from inside the house- foreign investment is merely a scapegoat), and as such it won't be done.
But any step forward is a win.
Thank your MP and ask them to solve the next problem: Canadian corporate ownership.
The principal residence tax exemption is also a joke but I also understand it's political suicide to try and get rid of it and at this point, since so many people have their life savings tied up in real estate, you'd probably be causing more problems by removing it.
It would have broad appeal, but not to the developers etc. that are buying 10K plates at fundraising dinners ...
> The principal residence tax exemption is also a joke
The problem is that without that exemption, you literally can't afford to move. The 6% "tax" for real estate fees are already painful if you are trying to move to a house of the same value in another city, but if 40-50% of your sale value was considered a capital gain ...
The real problem is people "moving into" rentals for 6 months and then declaring that their principle residence and selling the property. Once you start renting it should be forever be a business property.
Definitely true and thought it would go without saying haha
The rest of your post is totally fair and I can't really disagree.
[0] source: an accountant I know that wants to stay in good standing with the CRA :-)
"When you change your principal residence to an income producing property, such as a rental or business property, you can make an election not to be considered as having started to use your principal residence as a rental or business property. This means you do not have to report any capital gain when you change its use. "
https://www.canada.ca/en/revenue-agency/services/tax/individ...
The taxman never leaves money on the table.
For real estate this means keeping the property ready to sell at any time. It is easier to exchange an empty apartment and even easier to exchange an empty plot than a rented out apartment.
The downsides of renting out, i.e. the inability of being able to quickly sell the property must be compensated and that compensation is part of your rent. If you cap rent, that compensation will be insufficient to "bait" the property owner into renting his property out. They would rather keep it liquid and wait for a better offer. To keep it simple, the owner has options, the renter doesn't, so the renter must go out of his way to attract the owner's attention by paying higher rent than if he had outright owned the property himself.
Eliminating the liquidity preference of land would require all land to be leased or a sufficiently high tax on owned land (so that waiting and doing nothing has opportunity costs).
For non-primary residences? Sounds pretty good to me!
Just in case, I do own the house.
1. It'd suck for me if house prices went substantially down.
2. It is nevertheless absolutely positively the right same thing for society.
The assumption that house is mandatory, can be your main retirement or even only plan, and prices can only go up is crazy and unsustainable. Pain is coming and I see no reason to keep making it worse while enriching people in undeserving ways.
This was my opinion for 20 years,from poor university student to renter to condo owner to house "owner". But I come from Europe so my brain can grok the notion of "you don't have to have a massive house. You just don't". This may sound insulting but my wife is love of my life, born Canadian, and cannot comprehend not having a house, having a family without a house, or that prices can go down. It's like seeing ultraviolet - no matter how much she squint she's not physically equipped :-)
The issue becomes people with existing outstanding mortgages. If we considerably reduce house values, would outstanding mortgages need to be reduced pro-rata? Who would 'eat' that cost? The government? The bank?
Canadian Real Estate is pretty clearly in bubble territory. Something can happen now or later, but it only gets worse with time.
Let's ignore the property itself, which is a depreciating asset which was built and can be improved through manual labor.
That land is going to stay the same no matter how much you pay. Paying more for the same plot of land doesn't make it better. You don't get a bigger plot or a plot of better quality by spending more on the land. The land isn't wealth, it's the community around the land that gives it value. If you have demographic problems, your land is going to be worthless because the community is too old and shrinking.
Betting on ever growing populations is a pyramid scheme by the way.
it has been a good bet in the past. Whether it remains a good bet is unknown - that's what makes it speculative. However, i don't see the population declining within the investment time period of a typical person buying the home.
Blinds bids prevent bidding wars. They use them in Scotland. Not sure if buyer or seller is better off using them.
I don’t see how a blind system can take those factors into account to algorithmically select a single winning bid.
Often the best bid is obvious - for example an unconditional offer at the highest bid. Sometimes the best bid is not so obvious, and the vendor chooses the bid that suits their situation the best, or they renegotiate price or conditions with the highest bidding buyer(s).
A vendor that doesn’t really need to sell and that believes prices are still rising, might accept a high price with a long settling date, or other conditions that might cause the sale to fall through.
A vendor than desperately needs the money might accept a lower price with immediate settlement, or if they know their house has problems they will accept a lower bid if it reduces their future liabilities (e.g. zero inspection, as-is clauses, etcetera).
There's a theorem an auction design that says that, under some vaguely reasonable assumptions about bidder information, it doesn't matter what form you use for the auction. Open auction, sealed auction, even second price auction should all give the same winner and same final price: https://en.wikipedia.org/wiki/Vickrey_auction#:~:text=Revenu...
It doesn't work with open bidding, because then you could bid artificially much as long as the 2nd highest bid was at your real valuation or below.
But yes my intuition when selling my house was "surely I'd get more if this was open bids"
Though psychology comes into play in a bidding war, at least it's happening because the asset for sale is highly desired. It's efficient.
Is it though? I chatted with someone from Australia which has open bidding and you know what .. houses still went way over reserve. At the end of the day, if you have 20+ offers on a house, you're not getting that house without destroying your budget, no matter how you set up the bid system.
The common sense change I wanted to see implemented was to prevent the waiving of a home inspection as a condition of purchase.
It's a very manipulated and manipulable metric.
It's not. The salient part is that the current market is crazy and there is a large number of bids on any given house.
>It's clear that in a lot of cases the list prices are intentionally below market to attract more bidders and produce the appearance of more competition at open houses and the like.
Yes, list prices are intentionally below market but you know what ... houses are going for crazy amounts because we are in some sort of a bubble. This isn't the fault of blind bidding, or unscrupulous realtors or greed property owners. There are systemic economic issues at play. In my area, for example, there are houses that doubled in value in under 24 months. When I bought my property 12 years ago, there was blind bidding, and bad realtors, but on any given property there were only 2-3 bids, so there was no issue.
Why? The last 40 years interest rates have continued to decline and inflationary pressures have hurt the value of every currency. What reason is there to believe this won't continue indefinitely (low interest + ~2% y/y inflation) and that the market is simply pricing things well?
Clearly all these homes are being bought so it would appear people have the money.
Yes ... Back in 2007, people bought homes as well - so everything was OK - rite?
By the way, people aren't paying cash for houses.
Homes are priced based on what people who want to live in a place are willing to pay per month. The interest rate, property tax rate, and home price determine that. As rates go down prices go up.
That was a response to your statement that 'people have the money'. The larger point is that just because people are buying houses doesn't mean that things are healthy, case in point: 2007/2008 housing crash, which was preceded by a housing bubble and led to a lot of misery.
Corporations and pensions might have the proper money
I also want to see mandatory home inspection, seems common sense.
Just bring your inspector along to a showing or open house, etc. Owners won’t even be there.
But yes, you can probably inspect the construction quality and foundation pretty easily, a visual inspection of the roof and siding, and if you care the quality and age of utility appliances. You can also pull the permits if you're really interested before placing a bid. You can probably scan for termite damage, etc.
A decent inspection is a 4 hour job or longer generally in my experience.
What you're suggesting is called a "walk-and-talk" inspection, and is not going to find the high dollar problems a traditional inspection can find.
I have done all of those things on home viewings / open houses. I've opened septic risers, started generators, tripped breakers ...
Nervous smiles were the worst responses I've ever gotten.
You, and your sibling poster, are correct though: a real, comprehensive inspection is hours long and no amount of brashness is going to bridge that gap - but there is a LOT you can do with 30 minutes of knowledgeable poking and prying. You don't need an hour to see if the sills are rotting or if there are no foundation anchors ... or if all the floor joists are swiss-cheesed up by 40 years of ad-hoc electrical and plumbing runs ...
Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically.
While you're at it, you could go after other wildly popular policies that lead to high housing prices, like the primary homeowner capital gains tax exemption (probably, by value, the biggest tax dodge in the industrialized world), and Canadian cities' extremely low property tax rates (0.3% of assessed value in Vancouver, for example).
Likewise if you dont know who you're bidding against, how do you even know the bidder is even real (foreign or not)? Transparency is good thing.
While there may be some "scarcity" not having full transparency and realtors not in alignment with their own clients needs is a step in the right direction.
(I use scare quotes here because while I know we're not building enough but the current market has a fair share of retail speculation, institutional investors inflating prices, and homes held as purely places to mark money(non-owner occupied). Scarcity is real and building does need to happen, but thats slow and expensive. Millions of homes are kept empty or as poor speculative investments and thats a problem)
Of course not, and I didn't say that I'm completely against reforming the real estate industry and the bidding process. But it won't fix expensive housing.
It's all bullsh*t if it doesn't address scarcity. In 2016 we had had 10 years of 2% population growth in Vancouver and 1.2% housing stock growth and we wanted to blame foreign investors, so we enacted the foreign-buyers tax. That was going to fix high housing prices.
In 2017 we all got angry about dirty money and our casinos being used as money-laundromats so we commissioned the German report to detail what was going on and surely that would show that real estate was expensive because of money-laundering. It said prices might have gone up by 6% because of money-laundering. So that's 6% of 400%.
In 2021 we started talking about investors driving up the cost of housing, ignoring the fact that investors typically become landlords and in cities with rental vacancy rates hovering around 1% (Vancouver's was 0.4% in 2017!!!), that sounds like a good thing.
It's all bullsh*t and it's all a distraction that let's us ignore scarcity. I've decided that no matter how justified that housing reform is (ie open-bidding), I refuse to support it before we deal with scarcity because we'll deal with open-bidding and then say, "Ok ... let's see where we are in 3 years time now that we've fixed that!"
Deal with scarcity or f*ck off with talk about housing prices. Don't expect me to validate your cognitive dissonance.
This outside competition detaches local prices from the local economy. Likewise the speculation sets an anchor(comp) for neighboring homes when they go to sell. One investor overpaying by say 100K.. well now next month if Average Joe wants to sell he can now ask the same or more. Rinse and repeat just a few times and you get to where we are today.
<sigh>
As long as we have folks buying with the intention of parking money or using homes as an "investment" you're going to have competition with much deeper pockets
Why do you think foreign investors want to overpay for a Vancouver Special? And what do they do with it once they buy it?
Do they live in it? If so, what you're upset about is population growth. Sounds like scarcity!
Do they rent it out? If so, that's a social good in a city with a 1% rental vacancy rate and sky-high rents are as bad as high housing prices. Sacrificing the rental market to save home-buyers sounds like scarcity!
Do those foreign investors leave the house empty? Who cares if we can just build more? And we know (https://doodles.mountainmath.ca/blog/2022/02/14/unoccupied-c...) that Vancouver doesn't seem to have more empty homes than most cities it's size. But of course we can't "just build more". Scarcity!
The truth is that we've seen developers market condo pre-sales in China playing-up the region's dysfunctions - pointing out our 2% population growth rate and the difficulty in building new housing. Investors come to Vancouver because they know the game is rigged - they know that housing prices are mostly one-sided and hedged by political interference. Canada's real estate is "too-big-to-fail" and is mostly up-side.
Don't talk to me about housing prices unless you deal with scarcity.
I'll note here that there is a legitimate complaint to vacant housing. Some expensive city infrastructure like transit is supported by people-density rather than house-density, so a community of empty homes doesn't justify a subway line in the way that a bustling, lived-in community would.
Municipal funding that comes from the provincial level is also supported implicitly by income and sales (value-added) taxes rather than property taxes, so empty homes can easily create an imbalance of cost and revenue. The same also goes for cases of alleged tax evasion, where one globe-trotting patriarch supports their live-in family without declaring and paying Canadian taxes on income as a resident.
you've literally just responded to a post demonstrating that this is not the case, please don't just do template rants off keywords
I used to live in Yaletown (Vancouver) and the building I lived in was this very tall, maybe 35 story two tower block which only had two elevators. It took me about 6 months to realize that I never saw anybody else in the building. There were only 3 occupied apartments on my floor (I think there were 8 units per floor). I was told the building was designed to be a "piggy bank in the sky" and that low occupancy was in the design.
This is just an anecdote, but I was under the impression low occupancy is an issue in Vancouver so much so that they tried to pass laws regarding empty homes.
I completely agree with you - housing prices are high, mechanically, because of scarcity. But scarcity exists because voters like high housing prices. The truth is that most Canadians own property and are perfectly happy with their $1-3 million in equity. And regardless of their stated preferences for affordable housing, the revealed preference for scarcity and expensive housing is clear.
All I want is to shut down people looking for someone to validate their cognitive dissonance.
I mean, I think hanging 30% of your population out to dry is a bad idea, but I can't argue that this isn't a tyranny of the majority situation (or maybe tyranny of those in power, of which I expect closer to 100% are property owners).
But even if it were, it wouldn't solve the real problem in these north american cities, which is the "missing middle".
The model of small area of highly dense towers aimed at 20-something urbanites with no kids surrounded by spaced out single family homes with a yard is just fundamentally unworkable at any real scale.
If Vancouver wants to solve it's problem and not become a suburban/exurban sprawl (typical failure mode these days in north american growth) it's going to have to build a whole bunch of mid density housing near to downtown, and it's mostly going to have to build that on top of areas that are currently full of single family detached. This is not going to make current denizens of those "nice neighbourhoods" happy, naturally.
Once you leave the penninsula, though, it's surrounded by a lot of suburban sprawl, with small pockets of density around the SkyTrain stations. Unlike most North American cities, though, at least it has those pockets of density!
If I understand "the pennisula" correctly, you are referring to something like 1/10th of the city proper (not the greater area, just the city of Vanc.). It is mostly zoned appropriately; outside of that it's a mess.
Everything in grey and yellow is part of the problem mentioned above.
They're not happy with megatowers. They're ok with missing middle (townhouses).
There is a whole stretch of roads being bought out and converted to missing middle that leads to downtown. (Oak, Cambie).
Is it the case there that people are ok/happy with mid rise places along busy corridors only , but want to maintain SFD on all the side streets? That really doesn’t work either , it’s just people making a noise etc. barrier on “their” neighborhood…
> I’ve seen zoning fights about even duplexes, let alone anything bigger - not sure if Vancouver is more accepting of that than other places .
Nobody has any issues with duplexes and townhouses.
It's a bunch of patch up jobs really.
I do agree that they should just bulldoze and start developing around Skytrain stations first. That way they have a starting point to sprawl a bit. It should be a give and take from both sides: govt and nimby. Govt needs to give nimby something to keep them happy (sad but what can you do) while telling them to F off when it comes to building towers around skytrain (first).
I can't do it because it's illegal, that's why. And I would have to go to city council to have them change the law (rezone the land). And the neighbors will campaign against me and argue against density. I own the land - I paid good money for it and it's mine in every sense of the word, but the neighbors will argue that their preferences and whims outweigh both my property rights and the rights of other Canadians to have a home.
That is not an accurate summary. Earlier...
Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically
The only loss when building more dense housing in urban areas is the existing owners whose views are blocked. Otherwise it seems to generally increase the tax base, support more businesses (when mixed-use housing is built), and increase renter mobility.
It is a lot about more supply (and less price increase, or even decrease). Not about views being blocked. People who own homes feel the need to defend the price of their prized asset, for which they have used their life savings plus leverage. The system is designed to perpetuate itsself
So you, the realtor, will sell every house you got anyway, so why not bump the price while you're at it?
Can all affect what you would select, not just the price.
Its a poor sales person that thinks, "I might not sell one this month..." Not with that attitude.
I'm all for building more houses in cities/high demand areas, but doesn't Canada only have a population growth rate of around 1%/yr? It seems like you could easily build your way past that without giving up the advantages of immigration and a little population growth.
Densification is unpopular with existing municipal voters, and bankrupting CPP would be unpopular with federal voters.
> hitting the limits of sprawl (congested highway commute time)
There's only so far you can bus, train, drive, bike, walk, seaplane, helicopter, hyperloop, or transporter in to go to work. Canadian cities are, just like cities in the US, hitting this limit rather aggressively.
In cities where sprawl isn't physically prohibitive, like Calgary or Toronto, the upper bound of "this shit ain't worth it" for time and money is a limiting factor. I know someone who commutes from Kitchener to Toronto on GO, so they don't even have to put up with driving, and they're debating moving back home to Winnipeg for a 40% salary cut just to not have to put up with it any more.
Remote work might help with this but even there, you have people who are moving "a little further out" but not leaving the region because they want to stay nearby for other reasons (or because they're not entirely convinced that full remote is actually on the table long term).
Isn't this a good thing in some ways or maybe many/all ways? Now wealth is less concentrated in one or a few locations. Every dollar not spent commuting is a dollar spent at a local coffee shop, or money that goes into the tax base of the other city.
So while you'd be spending a larger percentage of your money locally, you'd also be spending less money in absolute terms.
While I think there's a lot that Canada (and other democracies) can do to help reduce housing prices, it's almost like a truism that if you have a great city with a lot of high paying jobs, getting closer to the city and getting access to that city will be expensive. I mean, if we were to take what you were saying to heart, why doesn't all of Canada move to one city? Clearly there are some bounds.
> So while you'd be spending a larger percentage of your money locally, you'd also be spending less money in absolute terms.
True, but in absolute terms it's cheaper to live where you're spending the money as well, which pays for a house, etc.
Canada's largest urban area is 5.6 million people. London, Paris and Seoul are around double that, NYC is 19 million and Tokyo is 37 million.
Why are Canadian cities hitting this limit at such a comparatively low population compared to other cities in the world? Why are all the major cities in the western world seemingly hitting this limit at the same time, even though they all have different populations?
It seems to me that we've just become less aggressive at building the infrastructure necessary to support population growth.
I can’t speak for Canada, but in America the answer is always cars. Car based transit is wildly land inefficient, and the main reason why all car based cities hit their limit at the same time.
In particular there are two huge shortcomings with cars in urban design:
1. Parking eats up a huge amount of space. Either you let that drive density way down (which means commutes get longer) or you build underground parking at exorbitant prices driving up rents. Even in the latter case the roads around housing ends up becoming an issue, limiting density far below what you’d expect in say, Paris on Chicago.
2. Car transit to a shared destination is almost comically inefficient, which is really noticeable when people try and commute via car to job centers. This wouldn’t be as bad if we restricted cars to what they’re good at, such as driving away from the city, but most American cities have the unique psychosis of demanding that transit into the city center be via car. This does not scale, and is why places with wildly different zoning laws can have equally hellish commutes.
The issue is not that we can’t build, we’re really good at adding more highway lanes, it’s more that we are monomaniacally focused on building the wrong things.
1) Taking the metro many places (for example, from my apartment in an urban "luxury" apartment building a couple blocks from the initial station to my boat near the waterfront in downtown DC) doubled the time it took to get there. It was actually faster to drive there even during rush hour where you'll sit motionless on the 395 bridge. Yes I can redeem a lot of that time with my above average personal mobile computing set up but a: most people have a pretty mediocre personal mobile computing setup and b: now I can't use that time for anything other than programming projects.
2) I couldn't get rid of the car entirely because I still needed it to move bulky things that I really can't take on transit. It's bad enough not having a truck but losing the car entirely would create some serious logistical problems on a regular basis. So while I saved some money I couldn't save as much as I wanted.
3) Most wealthy people (many of my friends) start families^ and people who can afford it buy detached housing for that. You're not going to be taking transit to these places. It might not ever be economical. Like it or not transit will probably always lower property values in the US too. For whatever reason the more violent people here tend to take it and anywhere it goes becomes more violent so building it into suburbs like these is always going to be unpopular.
4) Bringing me to the fact that I've been accosted multiple times on transit by people who were high, drunk, or just belligerent. I have an extremely high tolerance for this sort of thing (I've wandered around some of the more violent cities early in the morning just to see what the fuss is about) but I can absolutely see why most people here would give up after that happening once at a maximum.
I'm a huge fan of transit but pretending it isn't a large sacrifice to give up a car is just going to get people to ignore you, because it is and for most people it isn't worth it.
(^ and for those that don't start families, many have lots of intense DIY projects that don't fit in apartment buildings and actually need either detached housing or industrial space with similar density.)
Depends a lot on where you live and work. My experience was the exact opposite in Chicago. Heck, for some of my jobs I could outrun car commuters on my bike pretty trivially.
One of the clear downsides to transit oriented cities is that you do need to pay attention to transit access when renting. A unit being “luxury” is no guarantee that it’s in a convenient place for transit, nor that the trip will be short.
> Yes I can redeem a lot of that time with my above average personal mobile computing set up
I find the need to make commute time productive quite an odd but common impulse. How about just making your commute suck less? Reading a book is better than driving in traffic.
> I couldn't get rid of the car entirely because I still needed it to move bulky things that I really can't take on transit.
Again, experience varies. For a lot of people it would be cheaper to abandon the car and pay for deliveries when necessary.
Regardless, do not let the perfect be the enemy of the good. If you relegate your car trips to just when you need bulk goods, that is far more efficient than the current habit of using a car fo every single trip.
> Most wealthy people (many of my friends) start families and people who can afford it buy detached housing for that. You're not going to be taking transit to these places.
We could, but we’ve built our infrastructure with the opposite assumption in mind. Most other rich countries use a mix of regional rail, bus, and cars to solve this problem. The issue of “mass transit doesn’t go to the burbs, therefore I must use a car everywhere for everything” is an entirely self inflicted wound.
> Bringing me to the fact that I've been accosted multiple times on transit by people who were high, drunk, or just belligerent
Maybe we could solve that problem instead? Because that seems like a rather silly rationale for designing a transit system around.
Also, it’s not like all car drivers are sober. In fact, a drunk driver is almost certainly a far bigger risk to your safety than a belligerent drunk on the train.
> I'm a huge fan of transit but pretending it isn't a large sacrifice to give up a car is just going to get people to ignore you, because it is and for most people it isn't worth it.
It’s almost like I’m arguing that we should make public transit more convenient than using a car for urban transit or something.
I got a taxi from Gare du Nord to a hotel on Champs Eleyse this evening -- took about 40 minutes to go 2 miles. That's ridiculous, but it's apparently a thing.
Obviously a bus would be a better choice, or a train depending on geography. They handle baggage just fine.
Historically, and in some countries still, we solved this problem by identifying when it was happening and creating new public transport lines for faster commutes and people living further out. In the UK, we even developed whole "New Towns", upgraded their transport, amenities and infrastructure specifically to support shuttling a greater number of people into London. They weren't particularly inspiring towns, and we still make fun of them nearly a century later - but it worked. Even today, it's far quicker to take the train into London from those towns than it is to drive, as is the case for pretty much all suburb to central commuting here.
There are still lots of situations where a car will be better (I have one too, in London), but if we can get people out of their cars for their commutes, that frees cities up to expand and useful houses will become more affordable. Driving to the tip or mall is much less of a problem.
Regarding the violence and antisocial behaviour, that's really a problem of policing and allocation of funding. It needn't be that way and it doesn't happen to nearly the same extent in the UK and I put that down at least partially to the excellent British Transport Police. Apparently it used to be violent and dangerous in the 80s but we turned it around. Now the train stations are mostly far safer than the surrounding environs. If I was ever being harassed or attacked, I would run towards the station as there would most likely be someone to help me there. Living within a few minutes of a train station also significantly increases your property value here, provided you're not so close that it rattles your bed...
Japan has one of the lowest crime rates in the world with heavy investment in public transportation & policing, and yet they still have issues with sexual harassment and sexual assault on their trains. It’s a hard problem to fix related to population density.
It’s also a matter of civil liberties.
In California, people have a constitutional right to defecate on the streets.
In was once in a San Francisco bus and watched a young woman of West Asian descent break down in tears because a homeless man was calling her a “sand n***”.
She screamed back at him the Trump was going to put him in a concentration camp. He made some comments about the Muslim faith, and she told she was going to pray he’d die a horrible death.
Some more words were exchanged about Trumps policies towards Muslims and the homeless.
She got off early and walked the rest of the way.
This is all 100% constitutionally protected, or at least, under the policies of subsequent DAs (including Kamala Harris) officially tolerated.
It also makes public transportation unusable.
Public transit is one of the few public spaces we have left, ironically. Perhaps especially so post-Covid. I think that it's worth the investments necessary to make it usable. You can't blame public transit for the lack of effectiveness of homeless programs, and some folks are homeless by choice. It's a fraught situation, and that's why folks choose cars a lot of the time. It's more convenient for them and I guess I don't fault folks for that, but the built environment shows a lot of deference for cars in many metro areas, and that doesn't help with the traffic issues, or with zoning issues, or with housing affordability.
Yet, if you improve those other issues, then property values will probably just go up even higher than they already are, but at least that money will benefit more than just the buyer and the seller; it will benefit the entire community.
In America it’s protected.
We have a jurisprudence that allows Neo-Nazis to March through Jewish neighborhoods.
Our public sphere is extremely permissive. So permissive that avoiding the public sphere is necessary to avoid anti-social behavior.
For example: You're upset that Nazis marched through a Jewish neighborhood. Are you upset about the violent BLM protestors marching through White neighborhoods? I would guess not but there's little difference between the two.
I've moved to places to see if I thought the changes improved things, you learn a lot about yourself and the world by doing that.
But that’s different from Nazis going around on a subway screaming racial insults at passengers.
For many passengers that would make the subway unusable.
Remember this thread is ultimately about “why public transit is better than people having cars.”
Antisocial behavior is a disadvantage of public transit, and in some cases makes it unusable.
I think keeping this conversation focused around public transit is a good idea.
Plenty of European cities have achieved this. I work in London and I wouldn’t even dream of driving into the city. It’s far more convenient to get the train.
I'm not against transit but it's not the solution people think it is.
Personal economies are literally built on the idea of driving, it will be painful to solve that, but unfortunately it’s necessary to solve it otherwise you end up losing enormous amounts of your life to traffic and the infrastructure cost grows exponentially.
There's an old cliche that goes something like, "In America, people think 100 years is a long time. In Europe, people think 100 kilometers is a long distance." It's pretty much spot on.
And this is just looking at density in terms of population. There's also building density, London would rank very high up there and has excellent public transport.
The problem in DC isn't technical; the problem is cultural. You see the car as a solution so you keep investing in roads and under funding public transport. Whereas Europe took a different approach. Some UK cities have "park and ride" schemes where you parks on the outskirts and get a cheap bus into the city. Buses will have their own dedicated lanes too so aren't subject to congestion. Some of these cities even go as far as pedestrianizing chunks of the city center so the only way to access it is via subway, bus, tram or bicycle.
The benefits of improving public transport isn't just reducing congestion either. You improve the transport for the vulnerable (elderly, poor, etc), you improve the air quality in the city, you improve road safety. It's better for the environment, it's better for peoples health, it's better for moving people around. But it requires a cultural shift to happen.
Then both in terms of any arbitrary area in the US or any arbitrary city in the US, it's unusually dense (much more dense than the mean density.)
>Park and ride
Many places in the US have these and both DC and the suburbs around it are full of them.
I haven’t visited DC so I’ll have to take your word for it. But it should be noted that I can’t find anything online that supports yours assessment of DC being unusually dense.
And even if it is, that just makes a stronger case for the need of better public transport services.
> Many places in the US have these and both DC and the suburbs around it are full of them.
I’m sure they are but having a park and ride scheme is only of benefit if you invest in public transport, which, by your own admission, DC doesn’t.
Read a book.
This smells of the coded racism that is so rampant in the USA. It's sad because there might be some element of truth at its root, but it gets exaggerated and the attitude creates more and more segregation, exacerbates the divisions and creates a hostile society.
To all those thinking about is as 'policy' - you have to solve ways for making the subjective experience actually better if people are going to go for it.
If we had much more housing in tall buildings near where people worked then they either would not need a car or would at least not need to drive their car to work. You still of course need to provide parking but tall parking garages can solve that as well (or underground).
Seems like tons of cars are the symptom of the problem here not the cause
1. It takes a lot longer to get to your destination even accounting for traffic.
2. The potential for harassment based on your gender or race.
3. The potential for sexual assault.
4. The potential for violence.
Unfortunately, Western society at large is not collective and conformist like the one in Japan, which would heavily mitigate 2 out of the 4 problems stated above. Even then, Japan has a huge problem with harassment and sexual assault when it comes to female passengers.
It’s not just a matter of people’s preferences for cars, it’s not possible to build a non car city anymore due to pathologies that have nothing to do with “car culture”.
The number one issue is that we’ve allowed too many people and interest groups to effectively bring any major project to a halt. This is not some inherent feature of democracy either, you can have a democracy where the majority gets to do things. We just don’t have one of those in the US, or Canada it sounds like.
“Cars are land inefficient” isn’t a slogan, it’s literal fact.
> I live in NYC and we’ve built three brand new subway stations in the last fifty years
Ah, the stereotype of New Yorkers not paying attention to other cities strikes again! Yes, New York has its own problems, but for the vast majority of other cities GP’s comment is true. New York is one of the very few exception cases in the US.
> The number one issue is that we’ve allowed too many people and interest groups to effectively bring any major project to a halt. This is not some inherent feature of democracy either, you can have a democracy where the majority gets to do things. We just don’t have one of those in the US, or Canada it sounds like.
What if I told you that for a lot of transit activists, undemocratic processes that prioritize the needs of drivers over the rest of society is car culture?
Meanwhile complaints from a tiny number of affected people completely scuppered the high speed rail planned between Los Angeles and San Francisco before any track got laid.
Governments pull out the stops to complete car-centric infrastructure even over the loud complaints of the populace, but flinch the moment there is any push back against any public transit. Heck, trading on street parking for a bike lane is often a herculean effort.
Oh, and there's this little gem about the Big Dig "As of 2021, promised projects to extend the Green Line beyond Lechmere, to connect the Red and Blue subway lines, and to restore the Green Line streetcar service to the Arborway in Jamaica Plain have not been completed. Construction of the extension beyond Lechmere has begun.[20] The Red and Blue subway line connection underwent initial design,[21] but no funding has been designated for the project. The Arborway Line restoration has been abandoned, following a final court decision in 2011.[22]".
So once again, governments promised the moon about public transit and then did a rug pull once the highways were done. They in fact used this as an opportunity to destroy existing streetcar service. Exactly what we've been talking about.
> Or the new Kosciuszko Bridge?
Completed in 3 years. Again, we are really capable of building stuff, so long as that stuff supports cars.
That sounds pithy, but it overlooks all the maintenance work done on the system. Have you ever looked at pictures from the NYC subway in the 1970s? It was hell. (You can Google it.) My father lived in NYC in the 1970s and said the subway was like the "Fourth World" (vis-a-via first/second/third world!).
Also, how about PATH, Metro North, NJT, LIRR, AirTrain JFK, or AirTrain Newark? These are not the NYC subway, but they have also seen major upgrades in the last 50 years.
Finally, I tried to Google for list of stations opened from 1972. It could not find a concise list. I'm pretty sure it is more than three, just for NYC subway.
Have any metro areas built entirely new subways where there were none before in recent times? I know a lot of places are looking at light rail too, so have there been any greenfield light rail deployments in USA either?
It seems like a uniquely American problem, which leads me to believe that there just isn't political will to overcome the massive car lobby in most places, which is all the more reason to advocate for it, in my view.
I am not an urban planner but the north-south & east-west initial two-line style seems very popular. In my experience, the trick to quickly increasing ridership on new lines is closely coordinate with private developers. Be transparent about line planning, then team-up with private developers who can build (large) residential or office buildings with subway entrances in their basement. I've never seen a city do it better than Tokyo. My assumption is that the Elizabeth Line in London will spur similarly spectacular levels of redevelopment.
Light rail: Silicon Valley opened their system in Dec 1987.
About "unlocking value": Two massive upgrades come to mind. East Side Access in Manhattan will allow LIRR trains to enter Grand Central Station. The construction photos online are like something from science fiction. And look at last 30 years of Tokyo metro tightly integrating with private suburban rail lines where trains enter same station, but opposite sides of same platform. Everything is timed to the minute, so transfers are seamless.
None that I can think of in the US, but Madrid is generally pointed to as the stellar example of rapid and cheap subway expansion. They added an unbelievable amount of track and stations at really low cost.
> Between 1995 and 2007, the Spanish capital swiftly and cost-effectively upgraded its subway system, building more than 150 new stations over 120 miles at costs far below New York City rates. First, in just four years, Madrid designed, constructed, and opened 39 new metro stations and laid 35 miles of rail, 23.5 miles of which required new tunneling. The expansion was unprecedented for its low costs (about $65 million per mile of rail) and speed. Then, between 2000 and 2003, Madrid built Metro Sur, a 28-station, 25-mile circular subway line that connects the densely populated municipalities south of the city. Simultaneously, Madrid completed a direct metro line from the city’s central business district to its airport, now a 12-minute train ride away. Finally, between 2004 and 2007, commuters in the Madrid region gained an additional 80 new metro and light-rail stations, at a cost of $6 billion.
Just like high speed rail, this was less of a revolution in public works, and more a series of unglamorous minor improvements that added up to something greater than the sum of its parts. The government aimed for speed above all else, with the understanding that delays and financial uncertainty are the doom of any large project. So they would hire multiple teams to bore tunnels at once, and pit them in friendly competitions to bore faster. They negotiated with local land and business owners over more interruptions over a shorter period of time to reduce lawsuits (a big issue in NYC subway expansion), and they designed all the stations to be modular so that they wouldn't waste a ton of time designing and constructing bespoke stations. The sum is that they got it done really fast and really cheap.
Ironically, it looks a bit like the way that we construct our highways.
https://www.nationalbcc.org/news/latest-news/1737-ca-high-sp...
Pointing out obvious symptoms without pointing out the causes can get this "kneejerk reaction".
Sure, we have a good option for a significant majority of the time. But those many edge cases are non-trivial to resolve so a large majority of people will keep their cars for simple practicality sake.
There's also only been one subway line opened this century.
We seemed to do better at facilitating growth last century, particular in the first half. Since then we've struggled, mostly for political reasons.
Given the right infrastructure, we can probably scale cities up to incredible populations.
Instead, we stopped building that infrastructure, and everyone started commuting by car. Then we wonder why cities are struggling to expand and usefully located housing has become so expensive.
We're trying to watch 4K YouTube over 28.8k dialup, and wondering why it's buffering all the time.
Toronto is suffering from the same problem Dubai has. It suddenly became relevant when sovereignists gained power in Quebec and the business class were worried about Montreal being a liability. So they packed up and went down the 401 to Toronto.
It has the infrastructure for a much much smaller city, and one in the North American car-driven style (massive highways, occasional regional rail that is artificially slowed down by regulation, little to no metro service in most areas, etc)
Combine with NIMBYs blocking every form of intensification, and here we are:
https://www.google.com/maps/@43.6783092,-79.352227,3a,90y,68...
A metro station close to the downtown core. In Tokyo this is the kind of development you find on the far side of Saitama, bounded by mountains or poor soil. In Toronto, this is an area that has suffered population decline, as the locals went from having a nuclear family to being 2 or even 1 empty nesters, being replaced by DINKs.
It gets much, much worse the further out you go.
A lot of the city has a blanket ban on anything more dense than a single family detached home.
Just look at the city's size in sqkm. It will never scale like this, things need to change and density needs to be improved.
All other Ontario cities suffer the same paste-eating mentality, especially Ottawa and cities in the GTHA.
If you look around the area, other than campuses like IBM's and CGI's, a very significant percentage of the business development in the area is still big box B2C (walmart/home depot/etc) or small-ish businesses. That's in stark contrast to areas like the financial district where the vast majority of workers are white collar office people. Which is to say, Markham/Vaughan could still stand to become much more metropolitan with the presence of more B2B big corps.
My pet theory is that concentration of white collar work is what drives up home prices. Exhibit A: places like Palo Alto and Mountain View in the San Francisco Bay Area (vs, say, Pacifica or Half Moon Bay) are clearly propped up by the presence of FAANG campuses. I'd bet that if a Google setup a campus in Ajax, you'd see an appreciable increase in demand for housing in surrounding areas even if they are traditionally considered too far from downtown TO (e.g. Whitby)
[0] https://www.google.com/maps/@43.842627,-79.3906732,3a,75y,20...
The high paying companies benefit from this when the markets are up, as their stock prices appreciate due to being able to compete in the market and remain highly paying companies. And when bubbles burst, their stock prices may go down, but so do their outlying obligations, which are denominated in dollars also. The gains made and invested into the company during the boom years allow strong companies to ride out the lean years better than their weaker competitors, whose workers are then in need of a job at one of the remaining companies unless they become or are already self-employed. This allows the strongest companies to get the benefit of both extremes of market conditions.
All of this causes metro areas, which are full of both established megacorps and VC-infused startups, to become pressure cooker bellwether barometers of property values and rent prices.
There are many ways to solve the problem of unaffordable home prices, and an answer is more supply. Why it isn't chosen more often is primarily a political problem inasmuch as it is a market problem, or land availability problem, or zoning problem.
I think at some point, even if the government were to scream "let there be more housing", there still needs to be private capital poured into these very expensive projects, and surely there must be a significant amount of analysis done to determine where it makes sense to put up condos, where amenities and other businesses sprout up in response, and rinse and repeat.
The side of supply where I think things get dicier is wrt wealth inequality. The real estate agent I used to buy my house had 3 mortgages of her own, it's an incredibly common thing for well-off people and real estate insiders to over-leverage on rental property mortgages. My wife had friends from China buying up property with corruption money given to them by their parents, it's been a thing since forever. There's no easy way to regulate who gets to buy houses and who doesn't.
I get what you’re saying, but didn’t Canada do just that? That’s not to say that it was easy, but I think it’s a step in the right direction.
Additional/secondary homes, and especially empty homes need to be taxed more to help disincentivize the anticompetitive behavior in the housing market that you mentioned.
But you're right, I don't think there's going to be a single action that solves the problem fully on its own, so taking it one step at a time is a good approach.
We didn't build a single subway station for decades.
One of our chief problems is that there’s no interlock between development - whether dense or not - and public transit and other public infrastructure. London is still bisected by surface level train tracks with minimal above or below grade crossings; and in the seven years I’ve lived here nothing has changed.
The solution is to enable density. Zoning in the US and Canada is done at the local level and zoning codes look like a list of things you can’t do. (You can have a house, but you can’t live with more than X unmarried people, you can have a home office but you can’t do hairdressing out of your home, etc.)
Zoning codes in Japan are a lot more relaxed, in that there are only about a dozen types defined by “maximum nuisance level.” Every additional level of zoning permits all the uses from the previous level as well. Which generally increases building capacity and density and lowers prices by staying ahead of demand.
Toronto has a laughable subway / train network given the urban sprawl and distance that people are commuting.
If I pay to take one of the most expensive toll highways in the world I can get from my home to the office in just under an hour.
The reason is that these are all post-war constructions. London and Paris (I don't know Seoul) already had dense, walkable cores that predate not just the modern highway, but even the automobile. Inner London was 5 million people in 1911, and the rise of the car drove that population down! And things didn't really get going until the highway boom. The interstate system (and similar projects in Canada) didn't start until the 50s, and didn't finish until the 80s. So this whole project is fairly recent. Highways enabled a whole new kind of development - the suburban project. And now the boom is over, and it's time for the hangover.
And you'll note that it hasn't been all at the same time. LA famously hit these limits in the 80s. While Atlanta only hit them in the last couple of decades. What you're seeing is the end of a long process.
Truly "cheap" housing is historically limited to rural areas far outside the traditional commuting area of the big cities, but the covid shock has put even that in question through remote work. Even though a small number of people in absolute terms are moving to rural areas (with sufficient Internet infrastructure, etc), that still can represent a large relative demand increase.
Some of this will probably shake out over the next few years as construction catches up where it can, but that's cold comfort to younger families on the market today.
It’s interest rates!
Go and look how many of these homes are on AirBNB and summer short term rentals every year and then sit empty the rest of the time.
If you want a house and a job in this country, you have to go to Alberta, Saskatchewan, or Manitoba. BC has no land and is either mountain or agricultural land reserve (the second-largest city in the province has massive fields in the middle of it; average single family home price $1M). ON and QC are similarly boxed in for land (the Canadian Shield is very difficult to build on, and if you don't know French the only part of Quebec you can really go to is the Montreal area), and the Maritime provinces have land but no work.
The important thing to remember is that, unlike the US, the vast majority of Canadian land is much more difficult to inhabit- 90% of the population lives within 100 miles of the border, because that's where the good land ends.
The area in the red is one continuous granite slab called the Canadian Shield. The US has no comparable geography.
There's almost zero topsoil, and building any community there involves a lot of very expensive blasting. It's bad land for the opposite reason that the Australian continent is largely uninhabitable: there's tons of water, but no soil.
(The only real upside to it is that it's very conducive to hydroelectric energy; the vast majority of Canadian energy production can be, and has always been, zero-emissions- we call electric companies "the hydro", and combined with the nuclear reactors in Ontario, 85% of national electrical power generation is zero-emissions.)
Superimpose a population density map on the Eastern provinces, and you'll notice that generally speaking, the settled area of the provinces ends where the shield begins. That isn't a coincidence.
Sure, climate change should make a bit of the [non-red-shaded] land more economically useful, but that's about it, and mining/farming communities generally aren't large enough to provide a base for a new city especially because it's landlocked- so you're not going to see any new cities spring up there any time soon.
I was going to say, there is still a lot of land both outside and inside the “Shield”.
I think you're just ascribing cause when in fact northern Alberta is just as empty but has no Canadian Shield.
You can go to BC and see massive valleys of farmland (maybe used for grazing) that could easily be built on.
90% of Canadians live within 100 miles of the US border because: 1) the weather is better and 2) transportation options 150 years ago drove settlement (transCanadian railway and access to waterways) and 3) development begets more development, so established communities tend to grow rather than new one sprouting up.
My current city, Hamilton, is currently fighting with the Ontario government over this matter. The mayor is a regular feature on the local news and speaks to that often.
Their major push is for more density and resources for urban development. The provincial government has pushed for developing in Ontario's green belt and watershed instead. They've faced massive backlash over that to the point where they had to capitulate in some cases.
The current provincial government is the one pushing for downtown to be filled with parking lots and low-density housing developed outward. They're also responsible for nixing various transit and green power initiatives in favour of highway expansion. It's infuriating.
It does touch on building, but it's mostly about, "NOT IN MY BACKYARD!"
Council wasn't for intensification until they got the results of the poll back (and even then, the likes of Ferguson continue to be aghast at the idea of not being in the pockets of suburban developers).
We can see that with the kneejerk response to Bill 109, and the fact that only one Secondary Housing Unit has been approved by the city so far, the rest denied for what seem like vague reasons that won't hold up at OLT.
Back in the 90s they had a plan called "Vision 2020" that painted a dense, people-friendly Hamilton.
Now that 2020 has come and gone, the sprawl is crazy, downtown dead, transit gutted, and commuting by bike a near impossibility unless you're in the west end.
Some fun Hamilton transit facts: 1. There's an abandoned subway station underneath downtown. 2. There used to be a Funicular going up and down the escarpment. 3. When I was a kid many of the buses were electric, with overhead lines criss-crossing the streets like other cities have for trams.
(1) https://www.cbc.ca/news/canada/kitchener-waterloo/belmont-vi...
Parent post’s point is that there are many levers that can be pulled to alleviate the problem, but that zero of the options are being acted on.
Maybe it’s trivial to stack wood together, but apparently you can’t “easily build your way past” given the political climate.
Perhaps you and I should get together and we can explain to a group of detached-house-owning baby-boomers/empty-nesters why liberalizing or eliminating zoning laws would lead to optimal land utility and that they should be ok with allowing row-houses in their neighborhood. And that would be an interesting conversation.
Of course some millennials will enjoy a windfall when mom and dad eventually downsize. Not all, by any means - but some.
I hope you're lucky enough to have some house-rich parents! It's always good to be an aristocrat!
Without holidays, iphones, food delivery, cafe coffees, gap year, 'finding myself', international travel etc.
That generation (of which I'm not part, but have taken the time to hear the stories of) lived week to week scraping by on bare subsistence living so they could pay the mortgage, with interest rates of 7-18%.
So they strove and sacrificed for the defining decades of their life for that equity, and of course they want to keep what they worked and sacrificed so hard for.
You would think that wouldn't be too hard, but housing construction in Canada has been seriously lagging even at a countrywide level[1] with housing units per capita continuing to trend downward. And then of course it doesn't help if major metros see population growth rates faster than this.
[1] https://dailyhive.com/vancouver/canada-new-housing-populatio...
The houses are being built across the country, immigration tends to drive people to 3 main cities in the country.
The 3 main cities have a hard time expanding and building due to zoning laws, NIMBY, and basic infrastructure (transit, roads, education, health).
Plus there are a few stories of rich int'l students eventually becoming PR holder and get their monies from parents.
If the country can't figure out how to deal with a population growth of ~1%/year, the problem is not the growth, the problem is somewhere else.
... Or build more.
And yet here we are.
Folks love their suburbs. And they love those laws protecting their suburbs and excluding everything else the market might want to try.
2. Of course you shouldn't count foreign students or temporary workers, they get counted if they choose to stay. If you were counting them, as well as immigrants, you'd be double-counting the same people.
3. I didn't realize that the singular suburb of Vancouver called Richmond, BC (Population: 216,000) can be referred to as 'several cities'.
4. Why does a young[1], educated[2] person moving into the country in the prime of their life 'put an enormous strain on everything'? Would you care to elaborate? To me, it seems like a gift of all the costs of early-life childcare, plus the cost of a K-12-post-secondary education from their country of origin.
[1] https://www.statista.com/statistics/443305/international-mig...
[2] https://www.statista.com/statistics/555224/number-of-landed-...
No, they're fighting market inefficiency. A free market requires accurate and timely information to be efficient. This is literally people putting constraints on the market for what they are selling so the information is not available to one side, and the price is inflated.
A rational actor should walk away from a system like this, but if that's all that's available around you because of scarcity, you're forced to work at a disadvantage.
Banning this is akin to banning other anticomptitive behavior, such as collusion and monopolies. That is, it's up to the government to decide whether the harm outweighs the problems regulation introduces (regulation always introduces some level of friction and problems, you just hope to minimize them and maximize the benefits it brings) and is thus worth pursuing.
That scarcity exists is the whole reason we're focusing on foreign buyers in 2022. And blind-bidding in 2021. And investors in 2019. And money-laundering in 2018. And Chinese money in 2017. All of these things should be addressed, but every one of them has provided political cover for the real reason that housing is so expensive in popular cities, which is scarcity.
None of these things will matter one whit to housing affordability. "Helps in some way" is fine as long as we understand that it has nothing to do with high housing prices. "Helps in some way" is fine as long as we measure our claims and admit that this is about basic fairness and respect for the law. "Helps in some way" is alright except that "helps in some way" has been sold for the last 6 years, politically, as, "this is the reason you can't buy a home! Surely it has nothing to do with NIMBYism and our suburbs! Please don't ask me, as your elected representative, to take on suburban voters and start talking about housing equity as it relates to affordability!"
Every one of these things should be dealt with. Canada should probably have anti-racketeering laws. Real-estate boards should have less power and should be compelled to publicize their sales data. Etc, etc, ...
Just quit the bullsh*t about this being about addressing housing affordability.
> "Helps in some way" is alright except that "helps in some way" has been sold for the last 6 years, politically, as, "this is the reason you can't buy a home! Surely it has nothing to do with NIMBYism and our suburbs! Please don't ask me, as your elected representative, to take on suburban voters and start talking about housing equity as it relates to affordability!"
That isn't what the commenter you originally replied to was stating, nor was it my position. While your argument may have merit, it's a non-sequitur when used as a rebuttal to either that commenter or myself.
> Just quit the bullsh*t about this being about addressing housing affordability.
I get it, you have a point you want to make. There are more constructive ways to do so than to misconstrue the arguments of the people you are replying to.
The poster is literally responding to a news article about housing affordability with the declaration about blind-bidding, "This is such a huge deal".
It really isn't. This is the difference between English vs Dutch auctions and the relative merits in an open and sane market can be debated. Sealed auctions are not a market failure. Sealed auctions do not necessarily lead to higher bids. Sealed auctions do not necessarily lead to market asymmetries. The effects of these two auction choices is largely irrelevant as long as we have the demand curve pushed out to crazy-town.
Do research on the property! One of the big advantages of Dutch auctions is that bidders don't get information on how you value something! Except of course that everything is valuable because of scarcity so yeah actually I guess sealed bids won't really provide a lot of value for the buyer.
Adjust your bid as others bid! English auctions allow you to make lots of adjustments based on what other bidders think something is worth! Oh, except of course everything is in demand so everyone just keeps bidding and the frenzy makes other participants unpredictable... so yeah, actually I guess open bids won't really provide a lot of value for the buyer.
I get it, you have a point you want to make. There are more constructive ways to do so than to misconstrue the arguments of the people you are replying to.
I'm really just tired of the bs.
This isn't really true though. Housing is expensive everywhere, even in unpopular cities, even in cities losing population. (Except for a few specific cities), housing is not scarce, we just pretend it is because we pretend all these fake financial transactions count as valid 'demand'.
> we're focusing on foreign buyers in 2022. And blind-bidding in 2021. And investors in 2019. And money-laundering in 2018. And Chinese money in 2017. All of these things should be addressed, but every one of them has provided political cover for the real reason that housing is so expensive in popular cities, which is scarcity
And why is housing "scarce"? Because we waste housing on fake buyers (every single thing you just mentioned). That's why it's all in focus so much.
My midwestern city has built 2x to 3x more housing units than it's received in new residents, for almost 15 years straight now, and housing still goes up 15% each year like clockwork. You can outbuild new resident growth (many places already do), but you can never outbuild investor demand while housing is federally forced to appreciate like this.
I'm so sick of people bullsh*tting that 'zoning' and 'nimbys' are why housing is expensive, when we have dozens of major cities with no meaningful zoning restrictions, no 'nimbys', and no restrictions on growth or construction of any kind -- and even in these cities, housing is shit and expensive.
Calgary? Its a hugely popular city, with a similar growth rate as vancouver and yet housing is much cheaper (relatively speaking)
I disagree. Depending on the jurisdiction (in the US), part of the issue is the 10% net loss you end up with. 5-6% on the agent fee(s), another 1% on "mansion tax", in NYS/NYC there is a 1% and 1% transfer tax and 1/2% mortgage tax. Different jurisdictions are less (or more). Throw in more for the lawyer and you're down 10% on the sale. The sales agent fee seem fair for tough markets but even 1% sales agent fees seem preposterous given the market. If the house flips in 1 day, how is that worth 5 or 6%? These days people are negotiating that down to 4% but even that is preposterous given the market.
The problem with the extra 5 or 6% agent fees is: that people dont want to buy/sell as much, because you're effectively losing 20-30% of your 20% down equity on the sale (you'll lose more on the buy with the the 1-2% Title Insurance.) Effectively, you're losing half your 20% down equity.
Of course then...even if sellers want to sell, they dont because they need to bypass the frictional hurdles. Because if you sell and host half your 20% down equity, how the heck do you buy the next home?
The resulting price boom isn’t a mere 5-10% increase, but hundreds of percent over the course of only 5-10 years.
I’ve seen condo prices double three times in five years in places.
My point is that if you reduce the red tape (and deadweight loss) there are actually people who want to sell, but wont sell if they are losing a ton of money on the sale. Reduce the loss and more supply appears.
In the US this is a huge issue. If you switch cities twice and sell each time, your entire downpayment has disappeared in fees/taxes. You literally have nothing left to buy your next home with. So people stick around in houses they dont want in cities without ideal jobs because they have no choice.
It is not that there are people that aren’t selling, it’s that there aren’t enough houses for the number of people in the country. House prices have risen enough to cover all of the fees, except that there is nowhere in the country you can move to where this isn’t happening.
(And if they are choosing to rent after they sell, that just shifts unaffordable home prices to unaffordable rents, as rental demand increases without a corresponding increase in supply.)
You forgot cheap debt. There's also a ton of speculation. Jack up those interest rates and see where we're at.
Making it too expensive to buy a home does 'help' with prices, but it's more like treating the symptom than the cause. The result is there still isn't enough affordable housing in places where it is needed.
Consider the long term consequences of this debt economy. We’re just kicking the can down the road. It won’t magically get better. The sooner we (society) learn that massively over borrowing has consequences, the better.
I agree though that building more housing (or maybe radically changing the way housing works) should also happen. Maybe once everyone wakes up from this real estate debt fantasy there’ll be the political will to actually do something about it.
Average house price in Canada has ballooned. It’s like a crypto scheme, only instead of a bunch of shady YouTubers selling it, we have an entire industry of snake oil pushers. I don’t think your average Jane really gets how ridiculous it is… yet.
I've sold 3 houses myself, and bought 3 without a broker.
They are doing work, so the real question is whether you feel they are overcharging or not for whatever it is that they do.
Also, I think you meant to say "you lose practically every buyer WITH a buyer agent". This has not been my experience.
In a world where there was enough housing supply, you would just walk away from a blind bidding auction since it's a pain, and buy a bigger house for cheaper across the street.
There’s indeed an order book that’s “public enough”, but not every trading system enters every intent into the public order book. (Even as a retail nobody, I can create contingent orders that only become public orders once the trigger conditions are met.) I also don’t believe that individual bid/asks can be traced to a specific bidder.
Further, block trades are negotiated off-order-book and later reported.
> Even as a retail nobody, I can create contingent orders that only become public orders once the trigger conditions are met.
Do different brokers implement this differently, or is this an a property of the exchanges themselves?
In terms of links, I don’t have a ready primer to vouch for. I worked 6 years in online broker tech, but it was decades ago.
For given supply and demand if market was efficient the price of housing should have been a constant. I am guessing of course here there is an increase in demand also. (Which is what you perhaps you might mean as "scarcity?" Scarcity however has a separate definition.)
One of the problems is that once people buy into the system, their entire life's savings (plus often 4x more via leverage) is tied up in the house and the price of the house. At that point, most dont want more development, because they lose their life savings if home prices go down.
Each person entering this horrible system is forced to perpetuate it, or lose it all.
You could just stop there, it’s clear where your priorities lie. I’m not Canadian (and don’t worry I’m not emigrating), but I welcome a “crazy high” 1% population immigration rate and I don’t see a conflict with that and reasonable housing policy. Many major cities already see this kind of growth regardless of where people are moving from. We should be able to house and sustain that growth.
Limits on immigration don’t slow the growth, they just satisfy anti immigration attitudes for a while.
This is such a toxic take - listen I know there are xenophobic people out there, but just because someone brings up the fact that our immigration is high doesn't make them one.
Canada builds on average something like 189K houses a year, our current immigration targets are 400-450K ppl per year. We have the LOWEST housing stock in the G8 while having one of the largest immigration numbers, plus due to the selection / scoring methods for our immigration policy they are often entering the country with a sizable nest egg which allows them to enter the housing market sooner.
Add on top of all this that Canada has a blatantly broken provincial nomination process which allows people to get perm residency faster if they have a province nominate them - it was intended to get people to put down roots in those provinces, instead people use it to fast track PR status and then immediately move to Toronto, Vancouver or Montreal. This again stresses an already saturated market and infrastructure.
Canada needs immigration - there is zero doubt about it - however the rate needs to be lock step with the infrastructure and housing needs that population boost brings with it.
Canada needs to:
1. Slow immigration by roughly 1/3 for a period of 3-5 years. 2. Massively increase housing stock during that period, possibly shifting some of the entrance requirements for people in #1 from white collar workers to trades to help with this. 3. Close the provincially nominated loop holes, either do away with the system and not allow fast tracks or require that if you fast track you need to stay in the province until you become a full citizen - moving revokes your PR status. 4. In Canada's smaller cities start doing deed restrictions like Colorado did with Vails Indeed program, this will help with smaller towns / cities having their native population priced out by people fleeing the larger cities.
None of those takes are xenophobic or anti-immigration. A person can be pro immigration but be against the current policies that surround it. You muddy the water and come off as dishonest and toxic when you automatically assume malice.
In the last year, we've ended up #2 in 6 bidding wars (as disclosed by the listing agents) in one particular area of the GTA. In each case we reached our absolute max and wouldn't have paid any more.
Several times we lost by $100-200k, and once by $250k. These overpayments set new price benchmarks for the area which became sticky. To continue to be competitive, we had to make hard sacrifices to increase our budget throughout the year.
The fact that houses continued to move at the prices determined by these over-payments indicates there are some buyers at the higher prices. However, the market is very thin and the pace of price growth in this speculative market would've been slowed with open bidding.
Beyond the blind bidding issue, I don't know why people focus on foreign and large corporate buyers. Yes, they're scary because they represent potentially large sources of demand. But are they actually buying a large percentage of the homes? No. It's the smaller investors who speculatively bought 40% of homes last fall.
But we should definitely protect mom and pop investors, such as our housing minister wink
Real solution? Reduce the incentive for speculation among these groups by treating all gains on non-primary residences as income.
There are also tenders, which I don’t know much about.
And I have seen auctions where they set the reserve at a ridiculously high amount, and then negotiate with the highest bidder. A few years ago, one place I was underbidder at $280k (for something that I thought should go for about $250k), final bid was $290k, then vendor negotiated that bidder up to $350k! Another I was underbidder at $190k, final bidder was at $200k, then vendor negotiated them up to $250k.
The dirtiest trick that real estate agents do is to convince/pressure vendors to bring the date of sale forward. Sale goes through at a lower price, agent does less work and turns over their properties more quickly (which vastly enhances the agents yearly profits).
New Zealand restricted sales to foreign buyers in 2018, to prevent ballooning property prices for New Zealanders. Also rich foreigners buying large farms and prime coastal real estate was unpopular with most of the voting public?
Edit: when the real estate market was burning hot, lots of sales were deadline (blind). I think deadline sales mean that the winner often has bid their highest price (I certainly did for my home). In auctions you often pay just a little bit over the underbidder, even if your top dollar might have been potentially a lot higher. When selling you mostly care about that one person who really loves your place and that is willing to, and can afford to, pay well over market price for it. All other potential buyers are just wasting time.
I've just bought a house, and it's been interesting to see the selling method change as the market goes from hot to cold - Auction, Tender, Deadline, Buyer Enquires Over, Asking price.
We're currently hunting for houses, and lost out on a few listings because we didn't want to overbid. When the sold price was revealed, SO many times we'd think DAMN, we'd prob pay $10-$25K on top of that to get it had we known..
Probably, less than people think. Sealed bid auctions do not increase revenue to the seller, according to auction theory.
https://en.wikipedia.org/wiki/Revenue_equivalence
> gives all of the information to one side (the sellers)
Well, not all the information; just what other people are bidding. But all that matters to the bidder is that that other bidders do not have access to more information.
The fact that someone's bid is higher than yours, is not caused by its temporary secrecy.
Auction theory has so many assumptions that it really can’t be applied to buying a home. The link above assumes the highest bidder knows[1] the highest price the underbidder would pay, which is extremely silly. Apart from the fact that if you know the highest price of another bidder, then the seller also probably knows your highest price, and the seller can just ask for the highest possible price, duhhhh!
Bidding (auction or blind) is used precisely because the prices are not known.
Personally I have been involved with enough home auctions and blind bids to know that there are huge information asymmetries or uncertainties. When you lack information, sometimes you need to make your best bid, and you might value a property a lot higher than the underbidder.
I would like to see more protection against lemon markets, but realistically I can’t think of a fair way to enforce that. Banks and insurance protect some people against doing stupid things.
[1] First price auction: “if each player bids such that they bid the expected value of second highest bid”
> The link above assumes the highest bidder knows the price of the underbidder, which is silly
The first price auction and second price auction types are understood to be sealed bid. The English auction is open: bidders can bid more than once and see other bids.
In the second price auction, the underbidder's price is revealed when the auction ends, not during the bidding; the highest bidder pays that price.
In my experience academic auction theory is almost irrelevant when buying a house. I do have a close friend who designs huge market trading systems, so I will talk to them and validate my opinion.
In practice, house transactions appear to be driven by irrational or ignorant participants (vendors, other bidders, agents, banks, insurance companies) and sometimes understanding those factors can give you a significant edge in the market. Also every house transaction has different context, risks and it’s own unique factors, so it is very difficult to make generalised rules.
Disclaimer: I know little about auction theory, and I have only spent a few years trying to understand one tiny property market, so my opinions are not that valuable.
Right; so wouldn't those be the causes of whatever (if anything) is wrong, rather than bids being sealed? Give some irrational bidders open bids and they will have a bidding war instead.
- Make home inspections an unwaivable right.
- Eliminate blind bidding
- Fully open MLS data
- Heavily regulate (specifically buyers') real estate agents to eliminate much of the corrupt practices.
If you want open bid/ask, there is always the stock/futures/options markets.
And BTW I also bought a house before (no wonder, since I am not that handy, to sell a house I had to buy it first ;) - and if you hire RE agent, which at least in the US most people do, and they are worth anything, they'd get you at least the rough information on how high you should go, and sometimes even the exact numbers. There were situations where we knew exactly how high the highest bid is, and more when we had decent idea if not exact figure. So it wasn't exactly blind.
Thought I do agree that a non-primary-resident investment, whether from citizens, foreigners, or capital should be greatly limited overall and these rules should only loosen to direct investment towards areas that are in dire need of an influx of capital for redevelopment. That is - if it’s not distressed, and it’s not going to be your primary residence - GTFO, you should be last in line to buy.
And I say that as former landlord. I just believe that if I was looking to make some money - I could probably do just fine under these conditions. I don’t see an issue of buying a distressed property needing a rehab, and I think doing so benefits everyone.
I am getting real tired of society getting ever more dystopian just so that someone can make a buck.
https://www.fool.com/investing/stock-market/market-sectors/r...
Yeah the Right loves to blame poor foreigners while the Left prefers to blame rich foreigners but at the end of the day they at least agree that it is never the voters themselves who are to blame.
This is false if you think about it.
What drives the price of a house is what people can pay on their monthly payments.
As rates go down prices go up as people can afford to pay more.
Unfortunately for home buyers this means the downpayment goes up. What you end up with is a bunch of first time home buyers who can in theory afford the mortgage payments but can't build up the $200,000 nest egg required as a 20% downpayment on a $1,000,000 home.
When rates go back up home prices will drop and so will the size of the downpayment required, even though the person will pay about the same monthly on their mortgage.
Lower rate help those with existing homes and therefor existing equity more than those without homes.
Why is financializing land and real estate a cause for the problem?
I argue it's not financializing, but the lack of allowance for production of more, when the price signals a demand for more.
When crop prices are high, farmers grow more, or make use of more land to grow. Ditto with electricity or water. Why isn't more land opened up for development, when price of real estate is high?
If you want a convenient scapegoat, blame the McGuinty government of the early 2000s. When the 2005 Greenbelt Act was passed, developers across the country warned of a housing crisis in the future due to the effect the bill would have on the price and timelines for new construction. 17 years later we'd prefer to blame China or NIMBYs, but the reality is Canadians, and especially Ontarians, did this to themselves when they allowed politicians and environmentalists to ignore the concerns of land developers and engineers.
Also for real how can the voters (ie the average citizen) be the problem? The average citizen has no money and no political or regulatory power. The average citizen just exists in a system they have no control over and responds to incentives. Hoping that en mass people won’t do that is like politely asking a river to move.
To use the UK as an example, attacking rich foreigners for their "non-domiciled" tax status is extremely common. This is where you live in the UK, but for tax purposes hide your wealth in another system with lower tax rates, effectively paying no income taxes at all in the UK. Variations of this concept exist throughout the world in many countries and routinely draw politically ire.
Just this week: https://www.bbc.com/news/uk-politics-61017993
Wealth coupled with a collection of passports often creates far more opportunities to avoid tax than being stuck under the rules of one single State, rightly or wrongly.
Tax evasion is seen as a moral problem no matter how you accomplish (so hiding it with your other citizenship is just as bad as using a shell company).
Tax evasion is a legal term, not a moral one. Tax evasion isn't a problem in USA given that it has the highest compliance rate in the world. Jurisdictional arbitrage is a freedom and should be protected as such.
> The foreign-buyer ban won’t apply to students, foreign workers or foreign citizens who are permanent residents of Canada, the person said.
The article says some of those foreigners will be exempt. I will say this, the country needs the immigrants' money (ie spend in that country, on top of taxes paid)
While I agree that getting people to change their mind is pretty hopeless, I dislike the framing that they are just "responding to incentives" and therefore not only off the hook for the shitty outcomes of their choices, but also not responsible for the choices themselves.
But yeah it’s the immigrants fault. Lets reduce immigration while we are facing a labor shortage.
The truth is, this problem has been growing for many years and public servants have allowed the issue to grow beyond any control (and actually profiting off it in some cases). Now, the rest of the population will suffer and it's become a hard problem to solve.
Finally, yes we have a labor shortage - but it may actually be a labor correction. Wages have been stagnant for years and inflation is running wild. Wages need to rise to catch up - artificially depressing wages with immigration is a recipe for disaster.
[0] https://www.cicnews.com/2022/02/canada-fastest-growing-count...
The government may be faceless, but there are lots of things that could have been done - including more "development-friendly" practices. However, there's always a cost - do you sacrifice environmental protections? Democratic government principles?
You can't just blame whatever out-group you dislike at the moment. If those neighbors you described vanished as of 5 years ago, the prices of houses would have risen just the same.
The reason that I blame government is because they explicitly had a responsibility to protect society from this. Officials have either neglected or outright contravened this responsibility.
Also, immigrants to Canada usually move to one of its three main metro areas - Vancouver, Toronto and Montreal, which, coincidentally, have also seen the highest amount of housing increases.
Other places, like Calgary or Winnipeg, have not had housing explode in the same way (although prices have risen in smaller amounts there as well).
Keep in mind, the original article is focusing on Canadian housing, which, while complex, may be even simpler than the American model.
Wealthy-ish, semiretired older local people, or non-locals with vacation property who do everything they can to shut down any kind of housing project. Their methods include suing the town at great expense to the taxpayers and floating their own and sympathetic friends into town council.
It's extremely frustrating when a really well designed development that takes a year and millions to craft can get shut down in a single meeting by a very loud, adamant and group of busybodies.
Those very same people are the taxpayers. They have and should have the right to represent their interests in a court of law. If the town ends up being a victim of it, so be it.
Yes, of course they have this right, I don't dispute that. But when a single case like this eats up literally 10% of a small town's yearly budget, and the same small group of people repeatedly behave in this way, I also have the right to call them assholes.
> Yeah the Right loves to blame poor foreigners while the Left prefers to blame rich foreigners but at the end of the day they at least agree that it is never the voters themselves who are to blame.
Generally speaking I think you're mostly correct, but there are exceptions, and nuances.
I am one of the odd outliers who believes that much of the blame lies with voters, but at the same time it is a bit of a chicken and egg problem. It's ~true that voters "should" "vote for better politicians", but consider:
- what if the particular flavour of democracy that we practice does not make this possible?
- what if the public's ability to make optimal decisions is a function of the quality of education they received, which is largely a consequence of government policy (and other things, like culture)?
Take HN for example: observe how many comments there are in this subthread (or the overall thread) asserting that "The problem is X", as if the causality behind the situation is due to a single variable. Might this error be to some degree (perhaps even a large degree) a consequence of causality (philosophy, epistemology, logic, etc) not being first class subjects in school (and culture/society), on par with science, math, and language?
And if one's answer to this question is something along the lines of "Oh, they didn't mean that literally, they were just speaking loosely, or expressing their opinion, etc", then I ask: why is it that we have ~culturally normalized (if not worse) speaking (and I would say: thinking) so inaccurately and imprecisely about so many matters that are extremely important, be it housing prices, immigration, war, politics, you name it? Might it be possible that we (~everyone) are "doing it wrong", at massive scale?
If I was forced to nominate a single variable that lies behind not just this problem, but perhaps ~all problems (mostly excluding natural disasters), it would be the inability of the population of this planet to think and speak/listen/conceptualize/understand at a level that is adequate to rise above the local optima we find ourselves stuck in (note: there's substantial unaddressed complexity here: some things are improving on a relative basis, etc - I am speaking in an absolute sense, which includes that which is beyond our current knowledge, or ability to know).
If corporations buying houses was actually affecting the purchase market prices, then we'd see an equal effect on rental prices going down. A corporation can't live in a house, so they'd be renting it out. If these evvvill corporations were keeping houses vacant just to screw over regular hard working folks, resulting in no effect on the rental market prices, then we'd see it in the vacancy stats. But that's never actually mentioned by housing conspiracy theorists because the vacancy stats show that the areas with highest prices have extremely low vacancy rates, because demand for housing is so much higher than supply, because not enough housing has been built.
Rents are high because there are not enough houses on the rental market, because not enough houses are built.
Can you not do this and also seek to identify hedge funds, private capital, REITs, and other entities which may be more difficult to regulate at a later time? Maybe this first piece of legislation is the quick win?
Are you saying that foreigners who do not reside at all in Canada should be able to buy a primary home in Canada? Because that's what this bill is preventing. If you're a "foreigner" it's not relevant so long as you're actually a resident of Canada.
You can, and I specifically pointed out that I generally agree with what is being proposed, and certainly hope that it isn’t an attempt at diversion by throwing out the usual scapegoat.
I can't recommend this article enough on that subject:
https://www.vox.com/22524829/wall-street-housing-market-blac...
"The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach."
If you view housing and ownership of your domicile as something that should be accessible to people, then housing necessarily cannot be viewed as an investment vehicle and large corporations, REITs, wallstreet, etc. need to be excluded so that more supply can be available to "correct" buyers.
Limiting these groups does help on the supply-side. While it may not be the root cause, it's far better than showering the demand-side with cash like tax breaks for first-time home buyers.
Perfect is the enemy of good.
You're quite correct that more money chasing after the same limited number of homes is just going to drive up prices.
But if supply gets constrained enough that prices complete detach from those fundamentals, then, sure, why not jump in? These investors are only in this market in the first place because of supply constraints, so it's not just that low supply is a more important factor than the investors -- the investors wouldn't even exist if not for the low supply!
Limiting large investors does not solve the problem, but it could help alleviate some acute symptoms.
https://www.brookings.edu/blog/the-avenue/2022/03/31/where-p...
https://noahpinion.substack.com/p/the-yimbys-are-starting-to...
black markets spring up to serve demand when there's law and regulation that tries to prohibit such demand. I don't see how making the real estate market this way is gonna get it better.
The only way to make prices drop is to increase supply. trying to tax a fringe group, or to penalize investors etc, is not going to do well at all. And doing so will also dry up investment for growing supply.
> help alleviate some acute symptoms.
A short term symptom abatement, if it even does abate anything, is not going to make any difference tbh. Concentrate on solving the fundamental issue - lack of supply due to various interest groups resisting supply growth.
The real issue is that there is not enough supply in desirable locations.
Foreign ownership is just one problem though, and IMO a smaller one than both cheap debt and lack of supply.
Both are incorrect in the same way, and incite an emotional response of hating some "other" for causing the problem at hand!
Also, institutional investors do have a reputation for inciting bubbles and that possibility absolutely needs to be carefully scrutinized, particularly for something as essential and socially compounding as housing.
If you drive through any major American (or Canadian) city outside of the core downtown area...it's pretty clear _something_ is preventing large developments. If you drive through the Bay Area, or stand on a 4-storey "high-rise" and look out over miles upon miles of aging bungalows, and consider the value of the land they're sitting on, it's really a bit shocking.
And if you look into adding a suite for rental to your house, it'll be pretty clear what the barrier is to new development. It basically doesn't matter where you are in the country.
Local zoning really does play a huge role in housing cost in North America.
And yet, at every hearing I've attended about housing, ever public comment period for a project, it is my "neighbors" opposing the homes. The editorials in the local paper about how re-legalizing fourplexes would lead to (I'm paraphrasing) "those people" living in your neighborhood are not from wall street bankers, they're from people I've met who live here.
There are some very real concerns that people have. Violence. Drugs. Noise. School quality. People want a good environment in which to bring up their kids and these are all crucial. Fortunately they could be solved in other ways than expensive housing. Unfortunately people have a very justified fear that they wont be.
We have been eyeing for a new construction neighborhoods in the last many years so we can get something larger and more specific for our needs (multi-generational). All I see are town homes and apartments. For reference, our city population is ~25,000...we have lots of land.
For the record - we don't need new construction and if an existing home fits our needs exactly we'd go for it. But I'm just referencing that no new single family home neighborhoods have popped up as abundantly as before...just townhouses, condos and "Luxury Apartments" with rents more than my monthly mortgage.
There is truth, however. The Wenzhou house wife property speculator trope has some basis in reality, and Chinese markets are already rife with massive speculation that has seeped into foreign markets popular for Chinese emigration (Toronto, Vancouver, and to a much lesser extent NYC and west cost American cities). You don't have to look hard to see the effects in Vancouver, where condo buildings and housing remain empty due to being seen as speculative assets.
American and some western European housing markets (e.g. UK) are a bit unique in that they haven't limited foreigners from buying and speculating on real estate. Whereas in China, many tier 1 and 2 cities have strict residency requirements before you can buy an apartment (but these also apply to Chinese via their hukou residency system).
The really affluent immigrant groups aren't buying multiple properties, they already have a great deal of income, and their properties are well outside most of what HN can afford and do not impact the condo market which is the most competitive, accessible and volatile.
They already taxed and stopped foreign buyers but the home prices in Vancouver keep going up as sales amongst local Canadians make up most of the volume.
Now they announce this virtue signaling to appease the other Canadians who can't afford homes but the problem will not change.
In fact, without outside capital constantly coming in, the Vancouver real estate market is not sustainable. It literally is just another game of musical chairs, it is the news of some Chinese communist elite member buying a mansion in West Vancouver that gets local Canadians eager to own properties.
I'm no stranger to the anti-asian sentiments in Vancouver, just head over to r/vancouver to see people regularly blame Asians for the fact that they can't afford to live there. In fact in the 80s, they blamed Japanese, 90s they blamed Hong Kongers, 2000s they blame Taiwan, Mainlanders.
It's really disgusting to see the blatant racism against one group that is normalized but not for others. It literally is the same attitude that people with anti-semitic views constantly deride Jews of their financial success that largely came out of merit.
These were always easy to work around: how many Chinese students come to Canada to study and just happen to have a few million dollars to spend on a house? The new proposal is also easy to work around, the Canadian government isn't serious about solving the speculation problem.
> In fact, without outside capital constantly coming in, the Vancouver real estate market is not sustainable. It literally is just another game of musical chairs, it is the news of some Chinese communist elite member buying a mansion in West Vancouver that gets local Canadians eager to own properties.
Perhaps. We already went through this in the 80s with the Japanese, and after the Japanese real estate bubble burst, Vancouver real estate was depressed for almost a decade (I remember the signs for condos starting at $100k in 1997! And no one was blaming the Hong Kongese for that at the time). China is just Japan 2.0 in this regard: after the Chinese property bubble bursts, Vancouver real estate will be heavily effected.
Now this is why I love HN, its to see another fisherman!
I remember the 90s were depressing time for Vancouver. The economy was in complete slump and NDP took the fall for that.
Now the Chinese real estate market is incomplete shambles, people are in complete denial about that the Vancouver real estate market lags behind. Already the bubble has started to burst in Montreal, which I remember were the last to join the party!
Chinese real estate prices are still pretty high. The government keeps things from bursting by controlling the real estate agents and their companies (owned mostly by red families, they just taper off on sales volume instead of letting prices fall). We will see how long they can keep juggling that. Which is why rich Chinese like to invest in western property markets in the first place: there is more liquidity in Vancouver and Toronto vs. Shanghai or Beijing.
BTW, I'm not from Vancouver, I just visited a lot in the 90s (when I was going to school in Seattle).
For the Japanese it was cheap debt that exported property inflation which led to an immediate drop in liquidity however currently there is cheap debt locally and its the locals participating in the real estate speculation.
the actual foreign ownership is like less than 5% in Vancouver yet the media and establishment constantly loves to shift attention away from REIT and institutional money, rich Canadians and against scapegoat groups.
unlike the melting pot system you have in America, Canadians fall into ethnic tribalism, safety in similarity. There's an idea that everyone can be Canadian/American but its implicit understanding that it is false. Canadians have this sort of superiority complex and see themselves holier than thou, it is far more broken than America in some ways and just in my personal interactions, Americans by large, were far more "Canadian" than real Canadians.
The country honestly feels very much broken and the more dystopian and divided it becomes, the more it will push people on the fringes away to isolation. Ethnic enclaves aren't by choice, they are a byproduct of an unwelcoming and implicitly hostile incumbent establishment.
It is probably much higher than that, 5% is just what ownership can clearly be traced to a non-resident foreign owner. But you have a lot of property owned by Chinese students. The government is really conservative when they measure these numbers. Heck, I think the empty Seattle townhome next to mine, which I know is owned by an old retired couple in Beijing (the daughter told us as much before she left), is not counted as foreign owned even though it for all practical purposes is (and was bought with money from China...but then again, I bought my townhome largely with money I earned in Beijing as well).
I'm sure plenty of resident Chinese and Indians own property in Vancouver also (since there are so many of them), but I wouldn't count those as foreign owners either. At that point, it is mostly Canadian money chasing after Canadian assets, rather than Chinese or Indian money. Here in Seattle, it is rich techies driving the market, and many of those just happen to be Chinese or Indian (citizens, permanent residents, and H1s). That is a different problem (rich techies like us bidding up the market, not that many techies are Chinese and Indian).
Is "fisherman" supposed to be a Canadian expression?
This doesn't mean though that there haven't been real issues with the Vancouver market that involve foreign wealth.
Prior to the foreign buyers tax we were seeing condo developers explicitly opening up sales offices in foreign cities, explicitly marketing their condos as pied-a-terres. I understand why people didn't like that. That sort of thing really doesn't help the local buyer or renter.
I'm happy to see that while Canadian politicians have brought in these rules to deal with some distortions of the real estate market from foreign wealth, we really haven't our politicians embrace the bigoted anti-immigrant rhetoric around this topic of the sort that you occasionally see on twitter and reddit.
And arguably housing crisis in Canada started with foreign investment. Now domestic players and instituitional investors are also involved in housing market. Together there are enough parties involved not to let housing prices go down.
I am sure banning that wealthy family from China will do “something” to help alleviate the crisis, but I think putting restrictions on capital being used to buy up homes that aren’t primary-residence should be a priority and will have much larger effect.
And to be clear - as it stands with the situation in real estate being what it is right now, I am in favor of massive taxes on real estate investments that are to be used to finance affordable housing to be made available exclusively to first-time buyers and primary residents.
I hear about people pulling out equity in the form of HELOC's to put a downpayment on another home. That's a pretty big chunk of Canadian "investors". And that should scare the shit out of anyone considering that was a major problem in 2008 in the US. People vastly over-leveraging themselves under the assumption that housing only goes up.
The landlords that run the real estate holdings companies are mostly White. They buy up the properties, apartments, condos when they are cheap with the sole purpose of renting them out. Guess who influences local media and politicians. It's not some rich Chinese communist fu er dai they could care less.
The fact is that Canada isn't the all shining socialist paradise that outsiders make out to be. In fact places like Vancouver almost gets a pass when race issues are mentioned because its automatically chalked up as a "social liberal progressive city" compared to other American cities that often get thrown into the "shithole conservative counties"
I wouldn’t call it a paradise but it’s definitely communist
As a Canadian, I agree with this.
Part of the problem is that the federal govt doesn't have jurisdiction over the actually issues causing the problem. I _think_ the provinces own it but delegate it to the cities. But for some reason, this isn't an issue in those elections. BC had an election less than a year ago and housing wasn't an issue outside of Reddit. And BC has the second worse housing market in the country (Vancouver).
EDIT: Actually, that BC election was a year and a half ago. I even looked that up before posting and got it wrong. The covid time warp strikes again.
I don’t really know whether you have read the rest of what I wrote or just got triggered by me seemingly defending “foreigners” and hit the Reply button.
I don’t mean to single you out specifically, there other posts that seem oddly similar.
Anyway, I think there’s a big distinction between immigrants (who cease to be immigrants at some point, how many years does it take in your opinion by the way? Who is more worthy of being helped to buy a home - a immigrant who came to the country 30 years ago, or a natural-born 25 year-old citizen?… but I digress.) and investment real estate that requires an intervention.
Let’s say we put a huge tax on all real estate that isn’t a primary residence, I am all for making it super unprofitable to hold so that rents cannot cover the expense - to force all these REITs having to fire-sale their holdings to people who want to live in them.
>Let’s say we put a huge tax on all real estate that isn’t a primary residence
Because cottages are a traditional part of life here and real estate is one of the only ways to make real money for someone with some capital in the middle class.
At what point cottages cease to be “way to make real money with some capital in the middle class” and we firmly enter the territory of “make a buck while fuck everyone else”? One or two is probably the former. 80,000 properties we all probably agree is the latter.
There was a two year moratorium announced today, but there are several exemptions. Permanent residents, refugees, some international students on the path to PR, and people here on work permits are all exempt.
Sorry friend, but you're wrong. First, the issue of foreign ownership in the real estate market has already been studied. So, they have evidence supporting the moratorium. And second, this budget also announced that they are going to investigate the role of hedge funds, private capital, REITs, etc. Early actions could be announced before the end of the year.
I'm not an economist but this seems pretty dumb? To the extent that it helps someone afford a home that they can save tax-free for it, the same is true of some of the people they're bidding against, driving up the price they ultimately pay for it. The government is just transferring their own future tax revenue to people who own homes, not people in the market for them.
It seems that governments have a reflex of dealing with a supply crisis by showering money on the demand side (see also: gas tax decreases, higher education subsidies, etc.), which just drives up prices further.
You're completely right, it just drives up prices further... but they're vote winning policies and using these pots makes conveyencers a nice profit.
LISA specifically mentions that it has to be your first house anywhere in the world, so it is targeted at home ownership. People speculating shouldn't be able to take advantage of this.
Though LISA is pretty much useless in London. Good luck finding even a good 1 BHK under 450k inside Zone 4
It's a demand-side policy to what is a supply-side problem. If the demand is already there, and you induce more demand by providing subsidies, prices will go up. If you want to reduce prices you must either increase supply (building housing) or decrease demand (remove someone, hopefully speculators, from the market).
However, given housing has become a defacto investment asset for Americans and Canadians, I don't see this issue ever being resolved without a political revolution or an economic depression.
Is there a major economy where this is not true? In fact it becomes comical in some developing countries.
Cities in India have NY/London like prices for much worse infrastructure and much lower purchasing power.
I think you're assuming that everyone bidding will be a first time home buyer under 40 years old. While that may be the bulk of buyers, there are also many investors also in the mix who are buying up houses to rent/flip them.
I realize that people also leave the system, so maybe my logic is flawed.
The desired effect typically is not achieved because such measures are aimed at the least affluent buyers. Giving those ways to bid more will not decrease prices. It just means someone else is now the least affluent buyer - typically not investors.
We can increase the supply of other things which are also called “housing” but are fundamentally different products, and not what most people in North America are talking about when they talk about wanting to buy or own homes.
No commuting for work = much less need for roads. If commuting and working in a centralized location is viewed as exceptional rather than normal, society could easily switch to lower density living, which is highly beneficial to most mammalian species (reduced stress, reduced aggression).
If the most lucrative information-age jobs (tech, finance) become remote-first (or better, remote-only) and dominated by shape rotators, people will be able to move away from cities (and take the money with them). Only wordcels, who grift on social interactions, really need high density humanity to thrive.
Dallas seems to be doing it by organically creating a multi-core urban metropolis. Infinite suburbia only fails if you assume that each metropolitan area can only have a single urban core.
A more extreme version of this is the public housing Singapore sells at a subsidy to each citizen (as long as they get married, and there is still a waiting list since supply can't keep up with the benefit).
There are two implications of this: 1) NIMBYs need to realize that allowing more housing isn't going to tank prices; if you're worried about prices tanking, you need not be; 2) YIMBYs need to realize that NIMBYs aren't exclusively motivated by greed. When they tell you that they don't want their neighborhood to densify they actually mean it. It's not covering for racism or greed. People genuinely don't want their neighborhoods to change.
There's hope in this. If the state forces upzoning, then people are going to grumble about it. And some of them won't be happy no matter what. But the average homeowner isn't going to be that upset about it once they realize there's money to be made.
Ya, a lot of NIMBYs don't care about housing prices since they aren't thinking about selling anytime soon, they just don't want the traffic and (perhaps) crime that goes along with density.
I get what they mean since I became home owner. I don't want my view to go away, and crime is already a problem (having some random person come into my drive way to check if my car doors are unlocked is quite unnerving when you can see it happen in real time through your cameras). I bought in an already upzoned area, however, so I'm more concerned if my son can get in the local choice school (which is heavily oversubscribed given the density).
Something I've been trying to think through recently is that people clearly have some kind of proximity theory of crime. If there is a murder in the building next door to me, then that's going to make me uncomfortable, whether there is one family living in that building or 10. The obvious urbanist (or generic intellectual) response to this is to say, you know, obviously there will be more crimes in a neighborhood with more families, but you should only care about the per capita numbers, not absolute totals.
And increasingly I just think, yeah, obviously that's right, but that answer isn't good enough. Fear of interpersonal violence is lodged deep in our brains and I just don't think you can talk people out of it. You could make everybody in the city attend a class on crime statistics and quiz them at the end to make sure they understand per capita rates, but when those people get home that night they're still going to be worried about the murder that happened next door. And I don't think it's because they're dumb.
In my experience this is almost 100% the real truth. I haven't met many people that are looking at their house price when they think about changes to the neighborhood. First consideration is usually traffic. Second consideration is character. In neighborhoods where almost everyone owns, they very much don't want to see it become a rental neighborhood.
It's an exersize in shifting money from relatively lower income renters who will never have enough money for a downpayment and who will never own a home, toward the relatively rich on the cusp of being able to buy.
Of course the main winner here is the home builder.
- OR - at least one of
* First time home buyer
* Total homes owned plus being purchased will remain at one after the transaction is completed, and net-worth is under 20% the cost of a median home within the home's metro area.
* Qualified for a federal benefits program excluded from the upper 60% of society
The phrasing on the last one is specific, it's the wording required to select for economically disadvantaged individuals in a mechanically testable way. The exact number might be tweaked, this is just a back of the napkin ballpark. Other entry qualifiers can be added to the list. The second allows someone to move homes and if they need the benefit, not be locked out of assistance moving to an economically 'hotter' area that might have better jobs.
This is just pandering to young people in Vancouver & Toronto.
Any tax savings will be passed on to owners in the form of higher prices.
The only thing you'll do is pay higher property taxes and insurance.
It also doesn't have to be your first one. If you had a house than sold it and lived in an apartment for 4 years you are eligible again. If you own your house but your spouse doesn't they can use this for your next house.
The federal government knows this and knows they can't do anything. If they targeted retirement funds like they should... what happens? Housing bubble pops, retirement funds lose tons of money. They are busy attacking the oil industry because they know they cant extract anything out of Finance, Real Estate, or insurance.
"supply 100, demand 99, price goes down. Supply 100, deman 101, price goes up."
5% isn't a lot, but it could have a disproportionate impact.
Housing isn't a federal responsibility, so the provinces are more to blame for the crisis. Ontario just totally whiffed implementing a report on how to reduce housing costs, so I expect the problem to continue.
Also, if you look at the 5% in different ways, it becomes more significant. In your neighbourhood across Canada, 1 in 20 of the houses is owned by a foreigner. Now if you concentrate that in to Vancouver and Toronto... lets say 1 in 10 is owned by a foreigner... really starting to have an impact.
I don’t feel this is broadly true. I just watched a friend jump though ridiculous hoops and inefficient bureaucracies to get her PR. Is there a particular method for getting a PR that you feel is too easy?
In particular, there has been pretty widespread abuse of investor visas, region-specific incentives, and student work visas. Investor visas have an extremely poor economic return, and most of the people who benefit from regional programs immediately move to the GTA. There are also a plethora of degree mill community colleges that count as "Canadian postsecondary institutions" for immigration purposes. In reality, their students do a few hours of academic work a week to keep their student work visa and moonlight as a trucker or in some other blue-collar field.
Canada's approach to immigration, with over 400k people last year, is to take whoever as long as it keeps wages down and property prices up.
The Myth of 1.3 Million Vacant Investor Homes in Canada:
Imagine you're a boomer who is about to retire. You told your advisor to go into safe investments but you're not going into savings accounts, money market, or bonds. Maybe you pick up some corporate bonds? But that's higher risk. Once you eliminate all these negative yielding options... you're really just left with real estate.
Then you look at Canada's economic breakdown. Oil/Gas industry is under constant attack by the federal government. Manufacturing in quebec and ontario has practically died.
The only things holding Canada together economically is Finance, Insurance, and Real Estate. FIRE. The only thing holding Canada's economy from being in a depression is banks and insurance on over priced real estate.
As a politician, you dont dare touch the housing market. If that explodes, you take the blame AND you have to actually fix the economy? lol!
House pricing is set based on 'comps' (comparable homes and the price they sold for). That means that a small percentage of buyers can essentially bump (initial) pricing for all homes.
The only way to fix this is to tax the land equal to what it's worth - occupying or not, foreign owned or not - such that the sale price of the home is equal to the cost to build the housing on top of it. Once that's true, and saying no means they pay more, they will only actually say no to things that actually make them happier, and I'm all for that if they are willing to pay for it. But the most likely cause is that they would suddenly vote to up-zone and would allow for denser housing, and over time the tax would drop.
Small-time investors are buying homes in residential zones to put on short-term rental sites, and because they generate revenue from the house, are able to offer a much higher amount and have it still make financial sense.
5% foreigner owned is not big enough to have an appreciable difference. How about funds buying real estate? What used to be around 10% went to 20% in 2020 and then went to 40% in 2021. Nobody will buy negative yielding bonds. It only leaves a couple other options.
I doubt it makes zero difference, but like you, it's just my feeling.
Real estate investing could be a price driver, certainly. I don't know what it's like in Canada, but I know that in my location even individuals are buying second and third homes and renting them out as short-term rentals. Doesn't seem to be sustainable to me, and certainly is affecting local housing prices.
One way I'd combat this is to ban short-term rental outside of hospitality zoned areas.
Canada has always been a paradise for rich crooks worldwide, and government has always chosen to turn a blind eye.
Does the 5% stat include those kinds of situations, in which on paper it's not a "foreign investor" buying the property, but in reality it's just that?
What attack? Have they rolled back any of the billions of subsidies?
https://globalnews.ca/news/8641905/bc-local-governments-hous...
In many countries, including Europe, new properties are quickly snatched by investment companies that have much easier access to capital than private individuals and can easily afford to pay above market prices. People shouldn’t really have to compete with companies or “investors” on the housing market.
Given the billion of investment dollars and cheap loans avaliable, it might be physically impossible to build enough homes fast enougg for the prices to go down
If ghost cities are a real concern, you could punitively tax vacant housing that's not offered for lease or sale, and limit housing starts when housing offered for sale or lease was above some threshold price. Or you could do something like a deposit per housing start, paid back over time to the owner or occupant while occupied.
Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.
> Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.
I think it's kind of pointless to argue over which one policy to pursue to fix this problem, why not try a multi-pronged approach?
1. Implement some policy to ban large investors from home-ownership (say no corporate ownership and a small cap on how many an individual/family can own). There are more reasons to do this than just supply.
2. Put an onerous tax on housing that is not occupied full-time.
3. Build more housing.
1 & 2 would help ease some (but not all) pressure that makes 3 less desirable.
Not if the rule is scoped to single-family homes and individual units in multi-owner buildings. Purpose-built rental housing (e.g. apartment buildings) would be exempted for obvious reasons. The intent is to keep large investors out of markets where owner-occupancy is typical. Even in my original comment I did make allowances for single-family home rentals, but they'd have to be from small-scale landlords.
Also suggestion 2 wouldn't prevent a rental market anywhere there's demand for housing, it would just force landlords to drop rents aggressively to get units occupied.
And obviously, as is true for any internet comment suggestion of regulatory changes, actual implementation will be more complicated than can be expressed in a pithy comment that lays out the gist.
People don't like to rent because of instability or unpredictability of pricing. But a large and growing long term rental market where it's straightforward to find a new place and nobody has an incentive to kick you out or raise your rent is really just fine.
You might be thinking, right but if you rent you'd be giving up the ability to make all that money from appreciation that homebuyers get BUT THAT IS ACTUALLY THE PROBLEM WITH THE ENTIRE SYSTEM because you can't have affordable housing and also have housing as a guaranteed investment that always builds wealth the two concepts are fundamentally incompatible with each other and when you get that you're really starting to understand the problem.
It almost NEVER works out in favor of buying except for some crazy flukes like pandemic accelerating prices in Toronto.
I think it's largely cultural? Canadian's (more than any of my American friends) are fed the idea that owning a home is the best financial decision and the holy grail of life. It may happen to be the best financial decision for them, but because they lack the information that it's not and wouldn't otherwise invest very well.
Even in spite of that information, I still want to spend money and buy a house. I've been asked for vacate my apt for property sale more than once, and faced +800/mo rent spike (NYC...), and I'm over it.
I can't see how that's possible.
Rent is pissing away money, and from the rates I've seen, the monthly rent on a house is often very close to the monthly mortgage payment, so the "investing the difference ins S&P500" ends up being moot.
For my house, Zillow estimates the monthly rent value at $2,400/month, which is almost exactly what my mortgage payment (including property tax) is. And in 10 years, that payment will become ~$570 once the mortgage is paid off and all that's left is property tax. Meanwhile, if I chose to rent instead, after 10 years, my rent would probably be well $3,500/month.
Yeah, owning means I'm paying maintenance and repair costs, but those certainly don't add up to anywhere near what the rental payment would be.
I fully reject any claims that in the long term, renting could ever possibly be better than buying from a purely financial perspective. A mortgage is constant (Unless you fell for the scam that is an ARM) and eventually goes away. Rents perpetually go up and don't leave you with an asset.
This source [0] states annual appreciation to be about 6.11% for real estate. In my models I use 6.5% as a safe return rate for the S&P500. In the long term, you are no longer leveraged so that's a fair comparison I believe.
anecdote: My parents bought a house 35 years ago in a suburb of the GTA. Purchase price was around 250K I think. It was a lot for the time, too! And now it's probably worth 1.8-2M. Amazing! Except 250k @ 6.5% over 35 years is just over 2.2M.
[0] https://precondo.ca/canada-real-estate-statistics/#:~:text=T...
Right...but if you're using that to compare it to renting, the renter still comes out behind. WAYYYY behind.
The buyer (using your example) : Spends $250K on a house. After 35 years, they have a $1.8-2M asset, for a net gain of $1.55-1.75M.
The renter: Put $250K into the S&P500 which returned 6.5%/year. After 35 years, they have $2.2M. Meanwhile, they've been paying rent. How this ends up working out depends on the rent. $1,000/month is $12,000/year. For 35 years is $420,000. A net gain of $1.78M. That sounds good, but we all know the rent isn't $1,000/month. If the house is currently $1.8-2M, then the rent on that is going to be at least $4K.
I don't feel like doing the math on how much you would spend on rent if you had a 6% rent increase every year, but even if I'm generous and say that over the course of 35 years, your rent averaged $2K/month, the renter CLEARLY comes out way behind. They'll have made $1.95M in the stock market, but spent $840K in rent, for a net gain of only $1.11M.
And considering a mortgage payment is constant while rent continuously goes up, in a few years, rent would EXCEED the mortgage payment.
When I bought my house in the end of 2015, I paid $338K. Mortgage + property tax was $1800/month. Zillow estimated the rent value at $1700/month. It's now early 2022, 6 1/2 years later. Zillow estimates the house is worth $615K and has a rent value of $2500/month.
Rent and mortgage may be similar for the same exact space, but rarely in cities do people rent entire houses. There is usually significant lifestyle inflation that comes with buying.
In any case, where do you live? 615 is so cheap that I suspect the economics here aren't comparable to my situation. Maybe I'll move! Haha
I was renting a 2-bedroom, 1 bath, 800 sq foot apartment for $900/month which would have been going up to $1,100/month if I had signed a new lease instead of buying the house.
The house is 3 bedroom, 2.5 bath, 1850 sq feet.
> In any case, where do you live? 615 is so cheap that I suspect the economics here aren't comparable to my situation. Maybe I'll move! Haha
Suburbs just outside of Portland, OR.
this varies a lot locale to locale. in some places the rent is very close to the monthly mortgage payment. in some places, the mortgage is much higher.
https://www.investopedia.com/terms/p/price-to-rent-ratio.asp
if you're damn sure you want to live somewhere long enough to pay off a 15 year mortgage, then yeah, odds are it's better than renting. most people can't be 100% sure of that, so to make it a fair calculation you also have to include the costs of buying and selling. in theory, you should also have to price in the risk of having so much money concentrated in a single asset, but it seems to be a matter of policy that housing prices are never allowed to go down.
And the benefits of having it tied up in an asset covered by things like, in certain jurisdictions, generous bankruptcy homestead exemptions and, in certain jurisdictions, financed by a mortgage in a no-recourse jurisdiction; there are downside risk protections attached to owner-occupied housing that aren't available elsewhere.
In a perfect world that would be true but in the actual world where lending is subsidized and tax-preferenced and the supply of housing is artificially constrained buying is just clearly a better scenario if you can do it.
Some people do this by comparing a 5:1 leveraged portfolio of the S&P 500 against a home purchase or something but that's not a real comparison that exists as a choice in the real world.
But our housing market is ridiculously overheated for other reasons.
The principal residence sale tax free thing is a huge deal in Canada, so as an individual I can see it in many cases (though you need to sell to access it).
That still doesn't help investors at all - which is confusing to me. It doesn't seem worth it to me to be a landlord of a standard duplex/triplex in Toronto.
The comparison against a leveraged portfolio is only true at day one. You are continually de-leveraging yourself. At the end of the mortgage term, it's comparable 1:1, no?
Renting has a bad name in North America because it is associated with insecurity, low-income situation, exploitation, etc.
But in reality most people here are just paying rent to the bank. Housing prices in southern Ontario are so high that there's no way most of these people will ever truly "own" their home outright.
While rates are historically low and a return to the rates of the 80’s would cause a lot of defaults, I think the market has tuned itself for maximum extraction of labour from those buying houses. You will pay as much as you can afford out of the income of your career to live in a desirable place.
There are many undesirable places with cheap land, few jobs near by, no amenities, schools, restaurants, etc. so everyone pays as much as they can afford because it is worth it.
But they are only allowed to afford what they can pay off with a 30 year amortization and meeting the stress test.
I’m considering moving to the Yukon.
There's hundreds of thousands of square kilometres of places to live in Canada, it's primarily a humid temperate climate (in Ontario and southwestern Quebec) no different than the midwest or other parts more like the US northeast and with huge sections that are prairie or poplar "parkland" like the Dakotas etc. You have to go really far north to find anything "uninhabitable."
Southern Ontario (where almost half of Canadians live) alone is 139,931 km² -- about the size of all of England (130,279 km²), or half of all of Germany -- and almost all highly arable land with copious fresh water and developed highway and rail networks. And it's further south than most northern US states, sitting at about the same latitude as southern Oregon.
There's lots of room to build. Stereotypes of Canada as a barren northern land are laughable products of American ignorance or Toronto-centric myopia.
I meant there are few desirable places to reside (to me and anyone I've ever known) on the basis of access to jobs, culture, major hospitals, higher education, etc.
Yes some people can live full and happy lives in Timmins, Ontario. But is anybody moving to Timmins from Vancouver because they're tired of housing prices? Not really. Thus, demand to live in places like the GTA are sky high (and I argue, deservedly so)
In the US there's at least one city in every state that I'd voluntarily live in. Most have several. The amount of choice there is insane.
While this is most obviously the case for southern Ontario, I think you'll find actually Timmins or Sault Ste Marie, etc. have gone up at precipitous rates as well. And elsewhere in the country:. Lots of people relocated to Nova Scotia during the pandemic, because housing was cheaper there, they handled COVID better, and they figured they could work remote forever. Housing prices have skyrocketed there, too.
The only place where this didn't happen is in Alberta, where low oil prices and other factors. caused a bit of a net emigration and lower housing prices for a bit and things were quite affordable there. That's now changing as the price of oil goes up.
In the end, there's boatloads of places for people to live in Canada, those places are growing, in some ways regaining a bit of the demand they had prior flattening out in the 1990s & 2000s. The problem is in general that industry and good paying jobs aren't necessarily coming with the people and they're creating an affordability problem for the existing "locals".
In the past people concentrated in the GTA and the lower mainland BC because of jobs jobs jobs. Remote is changing that a bit. For now.
If well below, you haven’t an argument.
The market, right now, is constrained by regulations. Adding more regulations is unlikely to fix things.
Construction permitting is mainly a municipal issue, with a bit of provincial thrown in there. Municipal representatives are not aligned with particular parties, and provinces are mostly not governed by Liberals at the moment (7 conservative, 2 Liberal, 2 independent, 1 NDP, 1 Saskatchewan "we aren't conservative, pinky swear!" Party.
The federal Liberals don't have much control over the situation (though there are other specific actions I think they should take)
The Ontario provincial Conservatives commissioned a report into how to make housing affordable, and then completely ignored almost everything it said.
This summer, I'm voting for whoever promises to actually implement the Housing Affordability Task Force report.
The Federal government was deeply involved in funding both for-profit and non-profit housing in the 1970s, the last era where Canada built a lot of housing.
/s (sort of)
Mega tower condos could solve housing issues, but the NIMBY folks and local governments need to get out of the way - https://citylimits.org/2018/10/26/cityviews-proposed-mega-to...
For example, in Toronto, you get about 30-40k new housing starts a year in a city of 3M. https://ycharts.com/indicators/toronto_on_housing_starts. >1% / year isn't terrible.
Your statement isn't wrong, but I don't know how much it applies to Canada Real Estate particularly.
[1] https://www.rlb.com/americas/insight/rlb-crane-index-north-a...
Astronaut families are a problem and I feel leach on the society. Paying very low taxes, using all the social services, yet making income outside of the country so not paying anything.
I agree, but I think we both know how well fixing that will go down with the absolutely massive voting group that is seniors.
The US is the exception to that rule. Canada mirrors most of Europe.
It looks like more in the "hundreds" given that it's 3%/year of the assessed value. But still, a good start I'd say.
If nobody is around to buy that mansion, it would eventually be sold to a developer who either turns it into apartments, or tears it down and builds an apartment building there. I've seen this happen numerous times in my neighborhood.
Also 20% is huge.
zoning makes each class of property non fungible between other classes , it is like price gold doesn’t much have impact on say price of diamonds.
Rezoning benefits the economy and improves the wealth of everyone, even if NIMBYs don’t see it, however it will affect the quality of life of people who don’t want to live in “cities” proper but want the sweet spot where enough density enables them to have niceties of civilization like say neighborhood coffee shops , good schools , hospitals, art /culture/social activists without all the negativities of large cities like homelessness/high crime / poor noise /environment/pollution etc.
There is a racist angle too typically people of color, immigrants and any economically disadvantaged groups will not be able to afford to live in these neighborhoods .
[1] not strictly true for commercial as it can impact demand even if supply is not impacted , i.e. a new big office building is going to draw a lot of workers want to live near by competing for the same housing .
There is nobody looking to buy a condo under $1MM mark competing to purchase the 8 digit figure homes in West Vancouver. The rich people selling and buying them aren't hurting at all.
Local Canadians are competing to expand their real estate portfolios and they aren't looking at homes in Langley because they sold their mansion in West Vancouver.
a west vancouver home easily costs above $10 million, you think they are going to move into a penthouse in Yaletown as their primary residence and thus driving condo prices up?
this makes no sense, people aren't selling their west vancouver home to downsize they are in a position to get even more leverage from the bank and expand their portfolio and likely own homes in North Vancouver and/or abroad already.
the people selling their homes for ~$1MM are downsizing because they can't buy a home at that price range anymore
If you expropriated all of the unoccupied mansions and replaced them with normal-priced, mixed housing, the cost of housing in the city would broadly go down, as supply would massively increase. Pricing being bid up amongst specific classes of housing and people is a second order problem - the first order problem is that unoccupied mansions are a criminal misuse of land which must be remedied by taxation.
and then the masses turn around to blame that group. its straight up xenophobia one that has been in Vancouver for a very long time, anti-asian xenophobia in Vancouver is not new. 80s, it was the japanese, 90s, hong kong & koreans, 2000s, taiwanese and mainlanders.
I’m not from Vancouver, so their xenophobia doesn’t apply to me. Vancouverites burned down their own city after losing the Stanley Cup Finals - I’m definitely not here to defend their character. You can stop going to that well, I only see this as land use issue.
Very much so and it probably stings even more for that have-not group, that its people from what they perceive to be of "third world origin". There's just no helping such people, instead of seeking ways to better themselves, they choose to live in a state of angst and anger and expect the government to somehow fix it.
Again you don't live here and you don't fall in the category so you won't understand how sensitive this issue is here.
how?
That competition is driving the anxiety, and the anxiety is driving the reaction. Wealthy foreign buyers are the easiest target. Wealthy Asian businesspeople have been stashing their money in Canada for a long time, so it's not surprising they've been targeted for as long as you claim. It may be xenophobic, but inherent xenophobia isn't what is driving the behavior, it's a reaction to the class and land use issues, and it gets more intense as the divide grows more obvious.
The reason it's worth 8 figures is because of demand. If there was rich people to buy it they'd have to sell it for a reasonable price that locals can afford.
Also, "only" 20%? That's a massive number for housing.
Right now 1031 exchanges mean real estate over many other types of investment are tax advantaged, (I can't do the same thing with my stock for instance) and doubly so for places that put caps on property taxes.
The US (and canada?) should heavily tax capital gains on land appreciation for all but your primary residence, at the same time it would give tax incentives on capital gains for constructing new units.
Right now excess capital is encouraged by multiple tax laws to just play the rent seeking game waiting for land appreciation while others do the hard work of causing an area's land to become more valuable.
Maybe people here would do better to visualize it in startup terms where people are willing to put excess capital to use. Imagine you needed to get approval of neighborhood committees and so on to do a startup. Would YCominator still look the same? I don't think it would. You would have VCs that more about forming cozy relationships with politicians and poker brokers.
It is unfair to renters because renters do not have an equivalent 100%, completely unlimited tax-free investment vehicle. We have Tax-Free Savings Accounts, limited to ~$5k contribution per year, and we have RRSP's with max contributions scaled to income, but homeowners have access to all those things too, and they are limited. Homeowners can take advantage of TFSA, RRSP, and then shove all of their remaining savings into maxing out their home purchase and enjoy all of their gains completely tax free. Renters have to start paying capital gains at an inclusion rate of 50% once they max out TFSA/RRSP.
This system is completely unfair and places a higher tax burden on renters who are, on average, less wealthy than homeowners. It encourages us to spend more than we should be on housing just to get around taxes, and discourages investing in actual productive things like innovation/companies.
Policy is hard and unintended consequences are around every corner. For example, I could see an argument for changing the scheme to a special rebate. So you pay your capital gain tax when you sell your primary residence but then get it all refunded when you buy another one. But then this scheme would wind up dinging senior citizens with a massive tax hit just when they're trying to put together cash for some end-of-life care.
Also, I believe what you're describing does exist in the states in the form of a "1031 exchange".
Analyze any specific tax policy deeply enough and you’ll find that there is no way to fix something that starts off as unnecessary and harmful.
Voting for more taxes on other people does not reduce your taxes.
https://fred.stlouisfed.org/graph/?g=O2ZH
2. Tax collection does not change a governments ability or willingness to incur debt.
3. Government spending may not be related to ‘needs’ of the citizens.
It’s just a collection of organizations and employees. They get promoted based on spending. Effectiveness is impossible to measure.
Monetary inflation builds the potential for price/goods/CPI inflation - whether than potential is realized depends on fiscal policy and the supply response (more redistribution => more inflation - if productive capacity can't catch up, or if we limit supply - for example ESG / anti-oil stance).
2. Governments employ debt because of the political price of raising taxes. Issuing debt is basically taxing savers via inflation over the medium term - it's more "invisible", since the government will eventually have to devalue or default on its debt in real terms (the U.S. has done it twice in the last century - in 1934 and 1971, and it's possible that a third one is coming in the next decade. It's a little trickier since the currency is no longer gold backed, but it's de-facto oil-backed. If oil goes to $10K / barrel (hypothetically), that's as good as US defaulting on its debt as far as foreign creditors are concerned).
3. True, though there are transparency measures that monitor government spending and we have rough measures of effectiveness. Government is to people what the FED is to banks - the provider of needs of last resort. It might not give you the best service or work efficiently, but it will be there when everything else goes bankrupt or refuses to work. There are things that are unprofitable and unenviable to do in a capitalist system - and we rely on the government to do them.
2. You’re assuming that the budget is constant. It is not. Governments employ debt because they can. Governments tax because they can. If anything, the relationship is the opposite of the way you state it. Taxation allows them to take on more debt. Debt forces them to increase taxation.
3. Good theory. It is what I would have believed before spending over a decade in the bureaucracy. It’s neither right nor wrong, but irrelevant to the actual functioning of the system.
I don't think it does presume that. I can want another group to pay their fair share of taxes without necessarily wanting my own taxes lowered.
The problem with taxing primary residencies is that homeowners aren't usually selling their homes to exit the market, they're upgrading or downgrading.
Key problem here is that the inventory is super low, part of it is due to everyone wants to settle in places like Toronto/Montreal/Vancouver due to high job concentration along with NIMBY attitude among the existing suburbs. There is an inflow of 400k immigrants every year who mainly tend to settle in the big cities such as Toronto/Montreal/Vancouver, putting upward pressures. On top of that, the liberal government flat out does not want to impose tax free capital gain from primary home sales, and wide availability of credits with as low as 5% downpayment which can be used with equities from first, second, third homes.
This is just a political move to show they did something. The liberal party minister once said they don't want to entertain any crush on house prices because that would be detrimental to new home buyers. When buyers get the signal that Government has their back and there will never be a crush [1].
[1] https://www.cbc.ca/news/business/housing-canada-policy-marke...
https://www.thestar.com/politics/federal-election/2021/08/24...
It would be political suicide.
Also as the article says, this is just a bandaid, won't fix things.
How about ending the bizarre zoning restrictions that result in a sea of SFHs with little islands of super highrise condos around transit hubs? Maybe that would untap a huge repressed demand for missing middle housing?
They're trying to fix it, please join in the discussions and open houses... too many NIMBYs with free time available are participating.
The government promised 10k houses. It’s done something like 500? There’s no houses on the cheap for people to buy to push prices down. But many people trying to buy and rent that sellers and landlords are upping prices.
Atleast locals will haggle a price. The foreigners buying were paying above market prices despite never setting foot in the country.
No cheap houses to push prices down? That doesn't make sense. Prices are falling now, so houses are getting cheaper.
Agree, but don't single out first time buyers. Easy money is what causes the prices to rise regardless of who is buying. In the US lower interest rates lead to tons of ads for refinancing, and some people refi AND take out some cash to spend.
Home prices vary inversely to interest rates.
I know nothing about the situation in New Zealand, but taking what you say at face value, they are the victims. It's just that now, as opposed to bidding high on houses they could barely afford, they can't afford to enter the market at all. So things are even worse for them.
https://www.globalpropertyguide.com/Pacific/New-Zealand/Pric...
"Canada to ban foreign homebuyers who refuse to set up dummy corporations"
https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-h...
The NIMBY mayors of cities such as Mississauga pushed back [2] and the province has effectively backed down.
[1] - https://www.cbc.ca/news/canada/toronto/ontario-doug-ford-hou...
[2] - https://twitter.com/BonnieCrombie/status/1507080290602299392
• Speculation tax of 50% of the assessed or sold home value (whichever is greater) of any home held for less than two years, decreasing on a daily basis to 0% over years 3 through 8. Exemptions can be had due to extenuating circumstances (military or police redeployment, divorce, death of co-holder of title, etc.). Because most pre-sales are snatched up by investors before ground has even been broken, only to be sold for two or three times its original value upon completion.
• Businesses (and by proxy, business owners that own multiple businesses) cannot own more than one rental residence per municipal district. This prevents speculators from buying up entire neighbourhoods just to jack up rents. There is a valid case for a business to own a residence (to host guests of the business), but anything more than the occasional guest can be put up in a hotel.
• Individual non-business landlords cannot derive more than 50% of their income from rental properties. Another method is to have taxes on rental income on a sliding scale depending on what proportion of their entire personal income rent is a part of, starting at normal rates up to 20% of income and rising to 100% taxation at the point where 100% of income is rental income.
The last one alone ought to protect people for whom landlording is NOT a full time job in of itself, such as people with mortgage helper suites or second homes that they upgraded from.
The point being, those with just one or three units are far less likely to be predatory than slumlords who own entire apartment blocks or institutional investors that own a significant block of rental units in a city.
And such a progressive taxation scheme ought to materially prevent rentals from being dominated by a handful of investors.
Properties are one of the top income generator for (pure) retirees. How would you ensure they can retire and still have income via properties?
I guess you can add clausal to exclude {retirement_age} ownership? Hopefully nobody uses them as proxy. Tricky huh?
Yes, and that's part of the problem - holding property shouldn't be a viable retirement plan. If they want retirement income they could sell the houses and buy an annuity or invest in productive enterprises (or buy government bonds back in the day - which is no longer an option, unfortunately).
Extracting surplus income from workers via property rent-seeking should not be a way to fund retirement in the first place.
It's how many retirees in high living cost around the world fetch their income (when their retirement < standard of living cost of the city).
I don't see that as a problem for those who work hard and made good decisions throughout their life.
> If they want retirement income they could sell the houses and buy an annuity or invest in productive enterprises (or buy government bonds back in the day - which is no longer an option, unfortunately).
Riskier. Why should they?
Blaming them for holding one or two properties for retirement income is pretty much scapegoating the victim of the situation given for them: they made the best investment choice and they're being told that they're part of the problem.
I see many people blaming "shareholder's" greed too when it comes to investment.
The truth is that majority of people are just trying to secure their future and it's hard to blame them because their choices are guided by their surrounding (what's given to them).
I would look into the Government (specifically the cities, municipalities, and urban planners). They have the power to shape our environment.
The point is that this eventually devolves into a feudal system of landowners and workers - it's been tried in Europe, and while it's great for the landowning class, it's not as great for the workers.
> Riskier. Why should they?
Yes, my point is the fact that owning/renting houses is the safest retirement option is a political choice, not a law of nature. And that political choice is specifically benefitting retires as a whole at the cost of the working population.
I believe that people should be able to finance their own retirement, but via real contribution to society - yes, I have problems with stocks and other methods of passive income as well. I think they should exist, but that they should be much less advantageous than they are now.
The fact that these methods are the ones chosen to promote to achieve financial independence is a large part of what leads to moral rot in America today. People see that hard work is not rewarded - financial speculation, holding real estate and other unproductive work is what is really rewarded, and that calls into question the whole American dream.
So yes, I believe things need to change - and a land value tax is a step in the right direction. Also increasing capital gains to the level of the income tax.
I understand how to play the current system, but I interact with lots of people (and have friends) at different income scales from the homeless to middle class to centi-millionaires and so I've seen how unfair the system is and how unequal the opportunities at the different ends are. There's also way less options for making big money in a moral way - as a society, we seem to have chosen to reward inherently immoral actions higher than moral ones.
And it does not solve the problems of:
- there is just too much cash out there
- land is limited. once it's gone, it's gone
- when you die, your kids get your house and land
It's also why LA is such a mess.
The two biggest jurisdictions where there has been evidence of notable foreign investment in housing has been Vancouver and Toronto, and foreign buyer taxes were already introduced in those places years and years ago.
Prices certainly haven't gone down, but these taxes have had substantial impact in changing the sort of products that house developers are making. There's been a significant pivot by developers toward building purpose built entirely rental apartments whereas prior to the taxes developers rarely built these, instead favouring condominiums (multi-unit buildings where the apts are sold).
Seems like the government should provide some sort of evidence that foreign buying remains a problem. They haven't to date though perhaps they'll drop some numbers as part of the budget.
HDB and a few restrictions on who can purchase it. etc.
It's a fine black of pretending to do something, but just not enough to hurt your friends.
ex. taxes are [rate * appraisedValue * 1.1 ^ numPropertiesOwned]
Needs some sort of mechanism to prevent corporations from spinning up subsidiaries to use as a tax shield in these calculations though.
The foreign-buyer ban won’t apply to students, foreign workers or foreign citizens who are permanent residents of Canada, the person said.
They did this stunt here in New Zealand too, where "foreigners" excluded Australian Citizens, Singaporean citizens, and permanent residents.
Anyway, prepare for the media (and public, because the media determines how we talk) to use the term "foreign buyer ban" forever.
Having lived in singapore for 10 years tho people there seem far more interested in moving to australia to live.
My wife is a permanent resident, FWIW.
1. He lived in the same neighborhood as his renters, and not 1000s of miles away in the UK
2. He didn’t kick them out after a few years by flipping it.
3. It was a slow, long-term acquisition of rentals for income rather than flipping profit.
Sorry; the facts indicate a scheme. I don’t begrudge him personally; there is always some government program that makes this chicanery profitable at the expense of the working class, and somebody else would have done it.
I grew up in Waterloo. The home my parents bought in 1989 went up by about 2000% since then. I make more than both combined then, inflation adjusted, and can’t afford that home.
I bought a home down the road in a small blue collar city for 525k. It took 24 months for it to _double_ in value.
I hate this. It needs to stop. The bubble need to be popped.
As a non-affluent person, I don’t know if rich Americans do the same thing. However, enrolling your child in a Master’s program, who takes the minimum number of credits per semester, may pencil in as a good property management option for someone with no ties to the U.S. otherwise and only wants capital appreciation.
It will also help to keep the prices lower.
problem fixed!
Srsly, why can't we concentrate on policies that unlock supply. nothing else matters.
You know who calls for "more supply"? Real estate developers, speculators and investors.
This is how they distract from fixing the real issues in housing prices.
Adding more supply won't bring house prices down, it will just give housing stock for investors to buy.
I am one of these migrants. Canada's immigration system recruits high-skilled workers and many of the fast track programmes require that you demonstrate a minimum proof of funds in the tens of thousands of dollars (multiples of the average Canadian's liquid savings).
High-skilled workers aren't moving to Canada to live in the abundant land of northern Manitoba. They're moving here to live in areas with relatively high opportunity: Toronto, Vancouver, and Montreal if they speak French. Housing demand is concentrated in those areas and surrounding regions.
There isn't a matching desire to build homes at a pace that outstrips immigration. Interestingly, total number of dwellings in Canada has grown by ~1% annually over the last 5 years. On the surface, that looks to match the immigration rate (1.1%), but both those numbers are for the whole of Canada. The majority of immigrants move to one of the main cities, whereas new homes are much more geographically spread.
TL;DR: increase homes or decrease people, everything else is pointless.
The way countries allow the ultra-wealthy to park money in real estate and pay almost no taxes on it while it drives up the price of a necessary resource for everyone else has to stop. Period.
In an ideal world, this wouldn't be a ban per se. I'd prefer to see that owning a property anyywhere allows that jurisdiction to tax your worldwide income and assets of the beneficial owner as if they were a resident.
Double taxation treatires exist and can handle that case.
New York City (as one example) should be for New Yorkers, not Russian oligarchs, nonresident billionaires and corrupt heads of state.
You want to ban REITs, institutional money and local landlords with access to near 0% debt buying up and flipping homes. The average immigrant that buys homes from them aren't here to start a portfolio, they can't
By your argument, New Iroquais should be owned by the original people that lived there.
Here's two more: income inequality, and the construction skills crisis.
Income inequality: You might think "prices are crazy, no one can afford this", but the fact is that some people are affording it, even repeatedly. Depending on your family and circle of friends, you may know someone who owns 2, 3 or 4 homes or one over-sized home. It is not uncommon, just not usually discussed openly. They buy or retain homes and then rent them rather than selling. Why horde houses? Some people just like to see a tangible asset. Most upper middle class people have most of their assets in stocks. But with stocks up significantly in 2020 and 2021, a lot of people are ready to diversify into real estate. And those who own homes can watch them appreciate even if the home sits empty.
Construction skills crisis: At least in the US, there just aren't enough construction workers to fill construction jobs. You could open up zoning rules, but that won't make housing starts instantly increase, because there are not enough workers. A generation of people has been taught that knowledge worker jobs are the best. I think that is a largely correct. Even with construction salaries up, I think that it is tough to have a long career doing physical labor in the trades.
The excessive imbalance in demand Vs supply also means that the owners have > 10 offers for each house and the prospective buyers/renters are just putting blind offers in the hope that their offer is more than most of the other offers.
Right now it's just awful.
Canada has 'housing' but no one wants to live in anything other than a detached house close to the city.
Lots of condos, semi-detached, and townhouse, however no one wants them because you have to have a detached home to have made it in life.
I can't remember in my twenties obsessively wanting a detached house.
GenX is buying up all the houses after selling their condos and townhouse they bought as first homes.
Same people who's first car needs to be a 2022 BMW.
This is completely made up. Look at the prices they fetch. If you build it, they will come; zoning heavily restricts the level of mixed development, hence you mostly see detached homes or very large condo buildings with little in between like triplexes. There's a reason Montreal has generally been more affordable for years than other large Canadian cities (population notwithstanding).
Who make up the buyers? Is there a breakdown? Ie foreign companies?
I would also like to know for Australia too.
I think that one mathematically appealing structure for such a tax is to work out what the median (inhabited, primary) property size is (including garden etc.) and set that as the tax-free threshold. Any land tax paid by the top half can then be distributed to those in the lower half.
This would be similar to (and is based on the same logic as) Thomas Paine's proposal for what we would now call a Universal Basic Income.
https://basicincometoday.com/thomas-paines-centuries-old-arg...
For those interested in how crazy this is in Canada, journalist Sam Cooper (https://twitter.com/scoopercooper) has done some awesome reporting.
Canada (especially Ontario and BC) has become so addicted to real estate inflation, so convinced in the inevitability of "number go up" when it comes to housing prices that it would be a toxic pill for any political party or government that actually cooled this market.
Hundreds of thousands of baby boomer upper middle class Liberal voters would freak out. People who have banked their entire retirement on expecting a payout on their home. And an entire generation of people who think this is just what housing does, and don't remember the early 90s housing price slump.
It's toxic, really. Get a group of adults together at a party in any home in Toronto etc. and the conversation veers into banal banter about housing prices and people live in their houses like they live in a product not a home -- what reno can I do to increase its value? What did the neighbour's place sell for? What could I get? Blah blah. It's been like this for so long.
Meanwhile, industrial / manufacturing cities like Hamilton, Windsor etc. have become unaffordable to the people who actually work in the manufacturing jobs. A poison pill for the actual, real, productive secondary industry on which Ontario and Quebec were traditionally built.
Blind bidding is so clearly biased towards sellers I couldn't believe it was legal in the first place.
I don't think foreigners can buy land in Mexico either, but you can open trust at a bank in Mexico and the trust can own the property.
Banning them won't stop local Canadians with access to literally free debt to leverage their real estate portfolios and rental properties.
Neither will their investments in REIT companies that snap up new properties to flip them to those groups.
> The foreign-buyer ban won’t apply to students
People will send their kid to college and buy them a 5 million dollar house to live in while they are there. And presumably they won't be forced to sell once the student leaves.
Do you have data that makes you think banning foreign buyers would actually make a significant impact? I haven’t seen any indications that this is the case in the city I live in.
Not sure if HN or OP removed the "some" in the title. It is quite important here, since the average foreigner in Canada is unlikely to be impacted directly.
https://www.reddit.com/r/toronto/comments/tpym75/toronto_lan...
1. Many foreign buyers buy through a child studying in Canada or numbered company.
2. Canada’s immigration (~400,000/year) far outpaces housing completions (~200,000/year, of which only 50,000 are single family homes). Many of these are replacing existing housing stock, too.
The situation we have here with average property prices, reaching 10x median income, is simply untenable.
I bet that the short-term rental market is also somewhat involved.
With any legislative approach to solving a problem, I wonder if enforcement is possible and likely to happen.
... Isn't that the whole point of an auction. Offer as much money as you can to get an thing that's worth that amount of money?
In a hot market this is playing on the FOMO for people looking for a place to live.
Such shenanigans should never be allowed in basic necessities: shelter, food, water, medical care.
Unfortunately none of them are loaded enough to buy a place, so…
Most of the RE demand comes from immigration (in CA, currently more than 1%/year) - look at any country that has high immigration and you'll see huge appreciation in RE (CA, AU, NZ, etc).
You will also see a huge decline in birth rates in those same countries.
[0] https://en.wikipedia.org/wiki/Economy_of_Canada#Key_industri... [1] https://betterdwelling.com/canadas-economy-hits-a-new-record...
https://financialpost.com/news/economy/ontario-alberta-and-m...
https://www.livabl.com/2021/05/canada-housing-market-most-un...
Look at any satellite or aerial view of Vancouver or Toronto and it's basically all SFH
https://www.reddit.com/r/toronto/comments/twj89s/yonge_st_fr...
The NIMBY theory is probably part of it, but definitely not the full story. For one, Toronto and Vancouver's population density is on par with major european cities (Toronto is about the same as Berlin, and Vancouver same as London). Arguably most european cities have similar affordability problems, but if NIMBYism is an issue, it's not particular to Canadian cities.
My pet theory is it all comes down to money supply. All that money generated out of nothing through quantitative easing over the last decade+ had to end up somewhere, and it's settled in real estate and equities. If that's the case, then the end of QE and "balance sheet pruning" is going to put a stop to this... and likely pop a giant bubble in the process. That's a scary prospect for countries like Canada and New Zealand, where RE has played such a huge part in inflating wealth.
Japan's zoning laws are at the federal level so despite growing population in Tokyo metro, they have comparatively less affordability issues. It's crazy (as a Canadian) to think that Tokyo's central wards have roughly 3x the population and same land area as Toronto but are still able to have sub $1 million detached homes.
People with money will find a way in; like they always do.
Umm your link says real-estate is 13%. How can you justify calling that "almost entirely dependent".
I would agree Real-estate in Canada s too large for Canada's own good
This is a myth, real estate makes no contribution to (ironically) the Real Economy.
Think about it, if rents in London double, then the % of GDP in real estate doubles! Everyone's life has just gotten worse because they have to earn money elsewhere and pump it into real estate whether they like it or not.
The greater is your housing shortage, the more the people are suffering, the greater is the share of realestate in the economy.
It affects you negatively even if you own a house, you pay someone's rent every time you need a plumber or buy a coffee.
The housing shortage is a giant vampire squid sucking the first world dry. i am not a PhD economist, but institutional investors are definately contributing to the problem.
[1] https://nationalpost.com/news/canada/canadas-unhinged-housin...
https://betterdwelling.com/canada-is-now-50-more-dependent-o...
The S&P was flat for 6 years following 2007 in the US. Doesn't seem like a good path to follow.
That's a good example of blind bidding driving up overall prices.
What about farmland or ranch property or commercial buildings?
Some Canadian needs to step up and become the unvaxxed Moses. “Let my people go, Eh?”
Where else can you buy a house for $x/mo , slap a rental on it for $1.5x/mo , and keep .5x/mo AND get equity?
That's a fucking scam no matter how you look at it. And they're adding in NOTHING to the economy. They're parasites that inject themselves on reasonable costing houses and arbitrarily inflate them for their own profit.
And who's predominantly doing this scam? Boomers are. They're the ones who have access to this kind of money and equity.
And who's getting screwed? Millenials and GenZ are.
Immigration:
- Rent has not increased like real estate: https://www.zumper.com/rent-research/toronto-on
- In 2020, immigration dropped by half to 184,500. Real Estate prices went up. https://www.canada.ca/en/immigration-refugees-citizenship/ne...
Construction constraints:
- This is probably hyper-local, but in Toronto for example, they are building over 1 new housing start per year for every 100 residents (https://ycharts.com/indicators/toronto_on_housing_starts). That's not bad, it's not the CA Bay Area's situation.
- Anyone in Toronto can tell you there is a lot of home building going on with construction everywhere.
Canadian mortgages don't have the typical 30-year fixed rate that a lot of US mortgages do. Instead, typical mortgages reset every 5 years, and in fact many are month-to-month variable rates. In fact, the percentage of new mortgages originating as these variable rates in Canada has been rising and recently broke 50%. The majority of homes are now financed using a month-to-month variable rate which is set to some profit above Bank of Canada prime rate.
Until March, it was possible to get a mortgage with a 1% or even lower interest rate in Canada. Take a look at the average: https://www.ratehub.ca/5-year-variable-mortgage-rate-history
In Mar 2020, Canada dropped the short term bond rate from 1.75% to 0.25% overnight. In 2008, they did something similar from 4% down to nearly zero, and had only just started raising them back towards 1.75% right before Covid. Only in March 2022 did we see the first rate hike and it was very mild.
Canada Real estate is basically a bubble driven by aggressively low interest rates. The problem now is that inflation is causing the interest rates to rise, and that could pop this bubble, so we might be seeing some of these laws designed to shift the blame.
More sources:
- https://en.m.wikipedia.org/wiki/Canadian_property_bubble
- https://www.bloomberg.com/news/articles/2021-06-15/world-s-m...
- https://betterdwelling.com/the-toronto-real-estate-bubble-no...
- https://seekingalpha.com/article/4477223-canadian-housing-ma...
- https://financialpost.com/executive/executive-summary/postha...
But before that, and after the rates rise again, we will still see incredibly expensive home prices compared to the salaries of Canadians. There are lots of possible factors that make up this "floor price", all throughout this thread.
In the end I think it's just that Toronto is _the_ large city of Canada, and there aren't many others to choose from, AND in my experience Canadians won't relocate as readily as Americans do. So the demand to live in Toronto is VERY high. I don't see this changing.
Obviously the property market isn't functioning like a free market, but why do you think that having more private landlords would make things better?
Do you just want a limit on the share of the property market in a given location that one entity can own? That would definitely make sense.
First of all, this “ban” is for 2 years. Secondly, majority of the homes bought, as in the stark-fucking-majority, are by investment firms. This ban doesn’t apply to them.
This is just another reshuffling of money that’s going to be pocketed by the government cronies. What are they going to spend $10B on? They aren’t the ones building houses and residencies, that’s for sure.
Other commenters in here are spot on. First they tried to swindle us by saying oh no no it’s not the foreigners, you’re just being racist and xenophobic. Now fucking what.
This isn’t a matter of supply and demand, of investors taking 80% of all new houses, of foreigners laundering money, or of NIMBYs. These are all red herrings. These are all secondary effects of a bigger problem. These are all ways to ignore the real problem.
No amount of policy will slash house prices in Toronto by half, and no policy will double your income to match the increasing prices.
I suggest you stop looking for policies, because by the time any of them take effect and reverb through society, long enough time would have passed that you’d spend your whole life renting and paying off someone else’s mortgage anyway.
Now ask yourself if that’s the future you want, and act accordingly.
> I suggest you stop looking for policies […] you’d spend your whole life renting and paying off someone else’s mortgage anyway.
> Now ask yourself if that’s the future you want, and act accordingly.
Sorry? I don’t speak in vagueries.
There's a reason why we still also pay the highest telecommunications bills in the world - industrial complexes have captured our government, and even it's far worse that that; regulatory capture.
Edit to add: 3 points down to 0 points; downvotes are an embarrassment to civil and critical conversation, and you should be embarrassed if you use them.
Unless you are referring to this toothless promise made prior to the election in question, and now they're happy to follow that as it won't actually change anything.
E.g. our electoral system is designed to be unfairly balanced towards the duopoly, so we've been stuck in a cycle of voting for the lesser of two evils - instead of who we actually want to vote for.
In particular, I want to point out that the NDP have agreed to help the Liberal government to pass its legislative agenda, which presumably includes this ban, as the NDP had pushed for a tax for non-resident home purchases, which is a similar policy.[0]
Considering the government as a two party coalition, therefore, and with the NDP getting close to half the number of votes as the Liberals, that would mean that 30% of Canadians voted for the current government. That's somewhere between Biden's numbers[1] and Boris Johnson's[2], to compare it to other major recent Western FPTP elections.
[0] https://www.theglobeandmail.com/business/article-ottawa-face...
[1] 34% = 81m / (158m / 66.2%)
[2] 29% = 14.0m / 47.6m
Thank Goodness we have the Senate that requires passing these measures, these harmless ones like this one because it basically does nothing, but thankfully would have voted down the Emergency Act being extended for a month - which is why Trudeau the night before revoked it himself.
I hope you're against Bill C-11 - the internet censorship bill as well? Did you hear their illogical conclusion for why they're doing it?
I'm not claiming it's a good thing, just that your headline figure of 20% makes it sound like coalition governments are somehow less good and less fair than single-party governments.
Anyway, yes, you'll be glad to know that I'm against permanent "emergency" powers, and concerned about Canada's internet censorship bill, which seems to be an attempt to control social media as tightly as (government-approved) broadcast media[0].
[0] https://reclaimthenet.org/canadas-internet-censorship-bill-i...
Almost all of British Columbia is mountain. We flooded many of the river valleys for hydro power in the 1950s. Can't build on the side of the mountain that easy.
Huge swathes of Canada are muskeg bog and tundra. etc.
Feel bad for the farmers that happened to be born on the wrong side of the border in the US side of the valley. In the USA there's heaps of places where wine can be made and their land isn't worth anywhere nearly as much.