Economy Canada with a great move to help cool housing prices

[Jack V Savage]

Have you generally looked up the housing market in big Canadian cities? Obviously it would have little effect on America but Canada is a place with a narrow band where people live, with a significant portion of the population living in big cities, and lots of foreign money.

Yeah, it's not an area I'm particularly interested in (housing policy generally is, as that's the biggest area for improvement in America right now, IMO), but it does look like the issue of foreign investors is as overblown in Canada as it is here.

 

[Halifax]

2 year ban on foreign investors buying houses, as well as higher taxes for people trying to sell a house within a year of buying it. Flippers buying a cheaper house, adding a coat of paint and cheap kitchen re-do and then selling it for a marked up price with the temporary eye appeal.

I’d love to see something like this in the US. Also a penalty for people owning more than 4 houses to rent out. People are buying houses, then simply renting them out for $300 more a month than the mortgage. And elbowing potential buyers out of the market with their cash in hand offers.

I got a better one. Ban anyone not a citizen from buying land and begin seizing land owned by non citizens. This move is slightly too late considering China owns 33% of Vancouver city and drove the market into the sky years ago.

Not a Canadian citizen? You should not own Canadian land.

 

[M3t4tr0n]

Nice. Need something like that here too and also do something about air b n bs and corporations snatching up houses.

 

[650lb Sumo]

We are adding 300,000 illegals a month as well. They have to stay somewhere. It isn't helping the housing crisis.

Your point is correct but 300,000 a month seems high.

 

[ShadowRun]

Wow we know justin is racist !

 

[Jack V Savage]

Your point is correct but 300,000 a month seems high.

The U.S. unauthorized immigrant population has been falling since 2010. So on average, we're adding negative numbers every month.

 

[650lb Sumo]

The U.S. unauthorized immigrant population has been falling since 2010. So on average, we're adding negative numbers every month.

Interesting if true.

https://www.forbes.com/sites/stuart...igration-in-america-has-continued-to-decline/

new research reveals that the number of unauthorized immigrants has continued to decline in the United States. The unauthorized immigrant population fell to 10,350,000 in 2019, a decline of 12% since 2010.

/

“From 2010 to 2019, the undocumented population from Mexico declined by about 1.9 million, and the undocumented population from the rest of the world increased by about 500,000.”

///

I can't seem to find a figure of how many people illegaly enter the USA each month or year.

 

[salamander]

As much as I despise him and his acolytes, this seems like an honest attempt to address what imo is a generational issue in my province.

 

[Broke Lester]

Yea, that's pricey for sure, and there are ways to address it, but this ain't it imo. I'm not a fan at all of "this" type of market pressure and adjustments. Feels short term/shortsighted, and can unintentional limit the markets full potential, which ultimately hurts everyone around. Even in your example of 1.2 million bungalows, someone is buying it, and someone is selling it, so restraining that potential can have adverse effects.

It's short term, just for the next 2 years. It's not going to make a difference on prices here though. If you own a property or a few, you'll be fine. If not you're pretty fucked. Pretty much every house purchased here, in the Greater Toronto area, has a bidding war and probably condos as well. The problem is way too many buyers, not enough inventory, too much red tape on new builds. All in all, not nearly enough supply.
Just saw a stat, as I was writing this, that home prices went up 27.7% here in the first 3 months of 2022.
Also you're looking at this from a investor POV, what about young couples who want a piece of the pie?

 

[ElKarlo]

It is NIMBY types and laws that are making housing prices rise faster than inflation

 

[Broke Lester]

Canada has an issue with allowing corporations and people such as myself to buy up homes and rent them out to guppies on paycheque to paycheque.

SHHHHH, what's wrong with you.

 

[Lead]

I suppose we will at least get to see the results and if it really had the impact at all. What’s the measure we’d want to look at in two years and expected result of that measurement if it worked? Just lower housing costs?

 

[rikibobby]

As much as I despise him and his acolytes, this seems like an honest attempt to address what imo is a generational issue in my province.

This was lifted straight from Otoole's campaign.

 

[jeremyemilio]

Similar. Might have some very small impact on demand, but it's not what's causing the increases, and it's not going to noticeably affect them. It's another issue where the public is really dumb (like, for example, how polls will show that people want increases in almost all individual categories of spending *and* overall spending cuts, which leads politicians to pretend they can make meaningful budget cuts by "eliminating waste"). People don't want construction of new units around them, but they also want housing to be affordable (and homeowners want the value of their individual houses to go up). So politicians can appease them by trying to scapegoat certain categories of buyers who don't actually have any noticeable impact on prices to try to manipulate demand down.

As with most (but not all) issues, my view is that letting markets work is the best solution.

Agreed.

I do think (as I'm sure you do as well) that the federal government has an interest in assuring more affordable housing options for low income individuals and families. But it's time to admit that what is meant by "affordable" is really "subsidized." Housing costs are legitimately high right now. Landlords aren't running off with boatloads of excess cash (or at least most aren't). In fact, at any given time there are plenty of landlords in the market who are renting at a loss.

More builds, as you suggest, will help. But they won't do the whole job because part of the problem that no one wants to admit or address is that there is a segment of the population that is almost impossible to rent to without taking big losses. People who have trouble keeping jobs, who are relatively transient, and who tend to do shockingly costly damage to their living spaces in very short order, pose a dilemma. These people need places to stay. Their children deserve a roof. But no one can afford to house them. Landlords are left with the choice of being "slumlords" who rent to these people but do not spend money on maintenance and upkeep (because to do so would be to operate at a loss), or to renovate with higher end features and rent to a higher end client at higher rents, more certain payments, and lesser maintenance costs.

I feel like the best thing that government could do if they were serious about affordable housing would be to subsidize owners of low income rentals to help cover losses due to disproportionate maintenance costs and unpaid rents.

I realize this is a little off the topic of home prices, but if you take care of rental prices so that low income people can afford to live, home prices become a less acute problem and "letting markets work" becomes much more palatable for the general public, leading to fewer of these political but not particularly practical/impactful sorts of responses.

 

[Kana Li]

2 year ban on foreign investors buying houses, as well as higher taxes for people trying to sell a house within a year of buying it. Flippers buying a cheaper house, adding a coat of paint and cheap kitchen re-do and then selling it for a marked up price with the temporary eye appeal.

I’d love to see something like this in the US. Also a penalty for people owning more than 4 houses to rent out. People are buying houses, then simply renting them out for $300 more a month than the mortgage. And elbowing potential buyers out of the market with their cash in hand offers.

I like a lot of capitalisms, but there are things like real estate is where it needs to be constrained.

 

[Pride23]

Interesting move, I haven't given it enough thought but I do believe actions are needed at this point. I'm not sure these are the actions but interested to see how this plays out.

 

[Fugazy]

I don't know if I agree with this. If I buy a house, tune it up, then sell it after investing my own money and time, why should I be penalized for a full year before being able to sell it? If someone wants to buy that house they should be allowed to buy it, if I want to sell it I should be able to sell it, at whatever the deal is and the taxes are. The fact that the houses are being sold quickly tells you that the market is responding well. This type of change if anything will do the opposite of incentivizing the housing market. It also doesn't factor in that it is a person's investment, and sometimes those house flips don't go according to plan and the person is left taking a loss who tried to flip when the market isn't as hot.

Also, if I own 5 houses and rent them, why should I have to pay a penalty for working my way up the success ladder? Most people renting 5 houses aren't ultra rich or anything and likely worked very hard to get to that point. My mom was renting 3 houses out and we weren't rich at all. That just penalizes people who worked hard and made a lot of sacrifices to get there.

Even the foreign investor ban I don't like. Why purposely limit the economic growth of your country by banning investment money? If a foreign investor contributes X amount into the country's housing market, and houses are being bought all over, and residents are making lots of cash on their sales of their houses, that is not a negative.

Maybe I'm missing something but I'm really not feeling this one.

Penalizing house flippers is bullshit. If they are doing quality up to code work no reason they shouldn’t be allowed to resell houses in better shape for more money.

 

[aerius]

I suppose we will at least get to see the results and if it really had the impact at all. What’s the measure we’d want to look at in two years and expected result of that measurement if it worked? Just lower housing costs?

Housing price to annual income ratio. Long term average for Canada is about 3:1, with major urban areas up at 5:1 or so.
I just checked the stats for Toronto where I live and it's at something like 25:1. That's gonna be a hell of a haircut if prices correct back to historical norms.

 

[Scheme]

As he brings 1 million new immigrants over 3 years, to major cities mostly

 

[AznTrojan]

this will do basically nothing for bc home prices.. maybe bump up the prices a bit in washington