4 ms·

Here's the actual "study" (see page 3): https://nbf.bluematrix.com/sellside/EmailDocViewer?encrypt=5ef50212-0fd5-41cb-9e7c-94ee145e6208&mime=pdf&co=nbf&id=pete

by Dowwie 11y ago

Here's the actual "study" (see page 3): https://nbf.bluematrix.com/sellside/EmailDocViewer?encrypt=5ef50212-0fd5-41cb-9e7c-94ee145e6208&mime=pdf&co=nbf&id=peter.routledge@nbc.ca&source=mail https://nbf.bluematrix.com/sellside/EmailDocViewer?encrypt=5... Although this "study" was based on back of the envelope estimates, and the 1/3 estimate is probably inaccurate, there is anecdotal evidence of large-pursed foreign investors from around the world -- not just China but Australia, Russia, etc -- who are sustaining, if not increasing the demand for housing in populous areas. This foreign investment is great for people who are trying to sell a home in one of these markets but horrible for buyers, who can't compete with all-cash fast-close-best-price offers. Further, the few realtors who are boots-on-the-ground for these investors have market insights -- they know what's potentially about to go on the market but hasn't yet, get insider information, etc -- and use this information asymmetry to their advantage by offering on homes even before any real home buyers have a chance or offer on the first day of listing! I have personally gone through losing multiple times to these sorts of customers while trying to buy a new home (in the NYC metropolitan area on the NJ side), not an investment property. The experience of buying a home in a high-demand housing market where institutional/major investors are participating really challenges my thinking about whether free market practices should be allowed to operate in housing at all. Considering the rising cost of housing, it is tough to side with capitalism on this subject. I'd like to see a study about the "artificial growth" of housing prices by investors. Interestingly to note is that such a study may conflict with the agenda of at least some leading universities who tend to publish reports about rising cost of housing after receiving generous funding from housing investors. NYU Furman, for instance, has a long-lasting public relationship with Capital One (and god knows who else in private).

crdb 11y ago
> it is tough to side with capitalism on this subject Assuming you mean "with the philosophy of free markets and individual rights" by the catch all "capitalism", it's not. The foreign buyer is benefiting from state-provided services, such as the police providing some degree of safety from robbery and damage, safety from invasion and confiscation by the armed forces, and a sound legal framework and justice system that protects their property right. Citizen pay for this via income taxes and their employer's corporate tax, as well as value-added taxes on products and services purchased (since there is no modern country that generally allocates a certain type of tax income to a certain type of spending). Non-resident owners do not. They get a free ride. Thus, the free market, moral, individual rights protecting solution that might be Barry Goldwater approved is to charge the non-resident owners a yearly tax that covers the cost of services provided.
- Dowwie 11y ago
  I think I've got a clear understanding of capitalism but let me know whether something is missing: https://goo.gl/DEIU6Y https://goo.gl/DEIU6Y Assuming what you mean by "a yearly tax that covers the cost" , which I have also quoted although it's obvious what was meant by what was said, it's not covering the "true cost to society". I don't have to stretch far to define this cost as there is a limited supply of housing and you know where this leads. I like your suggestion that we charge investors, at least of the high-net-worth or institutional kind, for participating in housing. However, how we measure that tax needs to include variables other than taxes paid for waste management and law enforcement. Oh this is good stuff. Thanks for contributing! ;)
  - deleted 11y ago
    [deleted]
- nshelly 11y ago
  > Citizen pay for this via income taxes and their employer's corporate tax 100% correct. The property tax rate in Vancouver is 0.35%, which is a small fraction of what other cities across North America pay, while income taxes are significantly higher on the middle class. NYC suburbs, for example Weschester, charge 1.93% of assessment, and even in California, property tax is 1.25%. Some Texas counties are 2+%. In the absence of a reasonably high property tax, like in Vancouver, homes become much more like an expensive savings account. This is especially the case as interest rates falling below 0 in much of the Western world (some banks in Switzerland charge you to put your money there). And day-to-day services like police, schools and ambulatory are paid for by locals through income and sales taxes. UCLA professor says CA could get rid of income taxes through a 3% property tax. http://www.latimes.com/opinion/op-ed/la-oe-adv-welch-california-tax-reform-20140530-story.html http://www.latimes.com/opinion/op-ed/la-oe-adv-welch-califor... My suggestion to reduce property speculation is to reduce income taxes drastically (1/2 to 1/3), raise property taxes to at least 1.5% (5x) and provide basic tax assessment increase controls for owner-occupied dwellings, up to say $1m in value.
  - crdb 11y ago

by Dowwie 11y ago

crdb 11y ago

> it is tough to side with capitalism on this subject Assuming you mean "with the philosophy of free markets and individual rights" by the catch all "capitalism", it's not. The foreign buyer is benefiting from state-provided services, such as the police providing some degree of safety from robbery and damage, safety from invasion and confiscation by the armed forces, and a sound legal framework and justice system that protects their property right. Citizen pay for this via income taxes and their employer's corporate tax, as well as value-added taxes on products and services purchased (since there is no modern country that generally allocates a certain type of tax income to a certain type of spending). Non-resident owners do not. They get a free ride. Thus, the free market, moral, individual rights protecting solution that might be Barry Goldwater approved is to charge the non-resident owners a yearly tax that covers the cost of services provided.

Dowwie 11y ago
I think I've got a clear understanding of capitalism but let me know whether something is missing: https://goo.gl/DEIU6Y https://goo.gl/DEIU6Y Assuming what you mean by "a yearly tax that covers the cost" , which I have also quoted although it's obvious what was meant by what was said, it's not covering the "true cost to society". I don't have to stretch far to define this cost as there is a limited supply of housing and you know where this leads. I like your suggestion that we charge investors, at least of the high-net-worth or institutional kind, for participating in housing. However, how we measure that tax needs to include variables other than taxes paid for waste management and law enforcement. Oh this is good stuff. Thanks for contributing! ;)
- deleted 11y ago
  [deleted]
nshelly 11y ago
> Citizen pay for this via income taxes and their employer's corporate tax 100% correct. The property tax rate in Vancouver is 0.35%, which is a small fraction of what other cities across North America pay, while income taxes are significantly higher on the middle class. NYC suburbs, for example Weschester, charge 1.93% of assessment, and even in California, property tax is 1.25%. Some Texas counties are 2+%. In the absence of a reasonably high property tax, like in Vancouver, homes become much more like an expensive savings account. This is especially the case as interest rates falling below 0 in much of the Western world (some banks in Switzerland charge you to put your money there). And day-to-day services like police, schools and ambulatory are paid for by locals through income and sales taxes. UCLA professor says CA could get rid of income taxes through a 3% property tax. http://www.latimes.com/opinion/op-ed/la-oe-adv-welch-california-tax-reform-20140530-story.html http://www.latimes.com/opinion/op-ed/la-oe-adv-welch-califor... My suggestion to reduce property speculation is to reduce income taxes drastically (1/2 to 1/3), raise property taxes to at least 1.5% (5x) and provide basic tax assessment increase controls for owner-occupied dwellings, up to say $1m in value.
- crdb 11y ago