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I wonder if this will help make housing more affordable due to reduced foreign investment.

panpanna 7y ago
A lot of rich common wealth Asians moved to Canada and created a similar situation x10. Then government created new laws to tax empty buildings. Did it solve the housing issue? Not entirely, but it sure helped a bit.
- remote_phone 7y ago
  Vancouver will suffer from “be careful what you wish for”. If house prices drop it will kill the economy because people will will be locked in their underwater homes for the rest of their lives. Deflation will destroy the entire economy.
  - pen2l 7y ago
    It'll destroy chiefly the minority rich though, the minority capitalists. And since they are in fewer numbers than the workers, I don't know if it'll impact the greater economy so much. Somewhere in this, Vancouver might become being a neat place to be I think.
    - ShroudedNight 7y ago
      As a Canadian living in Markham, I am also deeply concerned about the growing inequality (or at least its growing visibility) and the damage it can do to our social fabric. That being said, modulo some extreme reconfiguration of Canadian society, workers need someone to pay them. I think we should be _very_ cautious about unduly alienating capitalists in an indiscriminant manner.
    - whatshisface 7y ago
      Unlike the situation in Marx's time, many workers have their retirement savings in "capitalist" equity devices like home ownership and the stock market. 2008 was terrible for them in America. The divide between workers who can only access linear growth and capitalists who can access exponential growth no longer exists.
      - the-dude 7y ago
        Where did they stash their wealth in Marx's time?
        whatshisface 7y ago
        Cash, mostly.
  - eloff 7y ago
    One can only dream that prices correct that much. But while expensive for Canada, prices are not wholly unreasonable for such a desirable city. And the population here is expected to increase by a million (33%) by 2050. That just won't be handled on the supply side the way zoning is done. So long term I expect prices to continue on the upward trajectory. Speaking as a renter with no house in the race.
    - seanmcdirmid 7y ago
      Except if you have a high end tech job in Vancouver that only pays 80k/year or less. Unless you are already rich, it makes sense to get a T1 and head off south to Seattle where the houses are still pricey but the salaries are much higher.
      - eloff 7y ago
        I'm not sure exactly what that had to do with my comment, but I've long told anyone who will listen in tech that you can double your salary by moving to the US or working remote for a US company with no Canadian office. Why anyone in tech remains in Canada makes no sense to me.
        seanmcdirmid 7y ago
        Just that Vancouver property values are not sustainable on Vancouver salaries.
        eloff 7y ago
        They're not, but Vancouver is a very international city and owning a single family home is hardly a fundamental right. People who choose to live in Vancouver on Vancouver salaries pretty much have no hope of owning a home. That most locals can't afford it doesn't make it unsustainable unfortunately as long as there are enough people willing to live there anyway.
        seanmcdirmid 7y ago
  - ninth_ant 7y ago
    Home prices have not fallen meaningfully since those measures were taken except at the very high end. At a certain point naysayers may have to admit they were wrong about the sky falling. Increased density allowances continue to prop up lot values on single family homes, which allows homeowners to not be underwater but also increase housing supply when they are torn down and duplexes/condos are built in place. Overall I feel like most people are happy with the outcome thus far.
  - chiefalchemist 7y ago
    > Deflation will destroy the entire economy. How healthy and legit is an economy if this is the case? The same can be said of a Ponzi scheme, yes. It seems that the change of the rules effects the current winners the most. And thus the unsustainable persists...until it doesn't.
    - bmurphy1976 7y ago
      The problem with deflation (and hyper-inflation) is that people are irrational, not that the economies are illegitimate. The danger is that people acting irrationally causes a vicious feedback loop. That feedback loop could potentially take down the best of economies
      - chiefalchemist 7y ago
        The problem with economic theory is that it assumes people are rational. There is absolutely zero historic record to support that. Until economics embraces reality it's foolish for the rest of us to hold a false god so high.
        dodobirdlord 7y ago
        > The problem with economic theory is that it assumes people are rational. No, it doesn't. [0] > There is absolutely zero historic record to support that. Yes, there is. [1] > Until economics embraces reality it's foolish for the rest of us to hold a false god so high. Sorry to be kinda blunt here, but I'd like to appeal to you to try to maintain a higher standard of discourse on HN. [0]: https://en.wikipedia.org/wiki/Behavioral_economics https://en.wikipedia.org/wiki/Behavioral_economics [1]: https://en.wikipedia.org/wiki/New_Keynesian_economics https://en.wikipedia.org/wiki/New_Keynesian_economics
        chiefalchemist 7y ago
        What % of economists are versed and apply Behavioral Economics? Ironic. Your reply does more to support my point than your own.
  - katbyte 7y ago
    A lot of us are hopeful it will happen as that’s when we will buy so ️ Some will win some will lose and I have little sympathy for those who entered the market in the last 5 years expecting it to keep increasing as it has.
    - petersellers 7y ago
      Your statement comes across as rather heartless. What about those of us who entered in the last 5 years just because they were ready to settle down in an area they liked?
  - jbay808 7y ago
    I'm not sure the consequences of falling home prices will be as catastrophic for the economy as it sounds. At the moment the high price of real estate is putting a lot of strain on almost every other sector of the economy: tourism (cheaper to visit other beautiful places like Banff), tech (it's expensive to attract talent with high cost of living), services (similar deal). It's also driven out a lot of younger families which can have delayed impacts on the economy. On the other hand, it's been great for the construction industry, tax revenue, and infrastructure investment. The high price of land has also justified investments in density which will result in a lasting increase of land value even if the market cools. There are also a lot of people who have sold their expensive homes and taken the money to cheaper areas, like Victoria and Nanaimo, distributing the windfall a bit.
  - Tiktaalik 7y ago
    Sales and land values are plunging in Vancouver and even with the accordingly significantly decreased property transfer tax revenues the economy is great and the BC NDP government has posted a big surplus. https://www.cbc.ca/news/canada/british-columbia/bc-finances-operating-surplus-1.5217333 https://www.cbc.ca/news/canada/british-columbia/bc-finances-...
rat9988 7y ago
It would also mean less wealth in the us. I'm not sure how the two get balanced. But I guess things are more skewed toward to more affordable zoning as government regulation, when it exists, limits construction.
- admiralspoo 7y ago
  Less foreign inflows means the dollar gets devalued, and US exports become more competitive against everyone, including China.
  - rat9988 7y ago
    It also means everything imported is more expensive no?
usaar333 7y ago
Couldn't it also make housing less affordable as less investment means less homes get built?
- conceptpad 7y ago
  Building isn't the bottleneck in the system - it's land that is zoned for residential development.
  - Fjolsvith 7y ago
    Sure is nice to live in a non-zoned area. I built an addition to my garage and poured a large concrete pad next to my driveway without consulting any government authority, here in western Kansas.
    - maxerickson 7y ago
      I don't expect you to disclose further information, but it seems that many counties in Kansas, even agricultural ones, have zoning and permitting.
      - Fjolsvith 7y ago
        That's what happens when you get a lot of people living together in a city or county.
- Tiktaalik 7y ago
  This is why the government and non-profits need to be involved in constantly building housing. So long as population is growing we'll always need more homes, regardless of whether it's a good investment or not.
sct202 7y ago
It'll probably help in California, where 38% of the Chinese money is going. But only 266k properties were purchased in 2018 by ALL foreign buyers https://www.gbreb.com/GBREBDocs/GBAR/News/Informer/2018/2018-profile-of-international-transactions-in-us-residential-real-estate-07-26-2018.pdf https://www.gbreb.com/GBREBDocs/GBAR/News/Informer/2018/2018... (page 22 has purchase locations by country of origin) out of 5.33 million existing home sales and 667k new home sales in the same year https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics https://www.nar.realtor/research-and-statistics/quick-real-e... . So if you figure California and Florida look like they're disproportionately attracting foreign investment, there isn't that much left over for the rest of the country to be impacted with.
- trevelyan 7y ago
  A lot of Chinese money involves families paying for housing ostensibly bought by a legal resident or green card purchaser, usually a student who comes over and then ends up owning one or two properties and sheltering family assets. These purchases aren't usually reflected in the stats. It is more unusual for non-residents to end up owning property with no guarantees they can use it. Same in Australia and Vancouver.
  - cheriot 7y ago
    Any sources on how much that actually happens?
    - asah 7y ago
      It doesn't take much to distort the real estate market.
      - cheriot 7y ago
        In June alone, California saw 389,690 home sales worth $238 billion. Markets that large are not moved easily. https://www.car.org/marketdata/data/countysalesactivity https://www.car.org/marketdata/data/countysalesactivity
samsonradu 7y ago
Considering the "new normal" interest rates around the world and the direction things are going (down), I have doubts housing prices will decrease in any developed country for the upcoming 5 years.
- cptskippy 7y ago
  Housing prices in Las Vegas and Southern California are declining. This is a first time for LV since the Great Recession. Declines like this have historically preceded every recession. Do you anticipate housing prices will weather such a recession which many predict is looming on the horizon? That would be a first.
  - cheriot 7y ago
    declining by what magnitude? In Cali it's more like they've been oscillating around an upward trend.
    - o-__-o 7y ago
      10% down in Texas metro cities. Considering buying a house, but may wait for complete recession to hit first
    - cptskippy 7y ago
      We're in preparation to move to SoCal so we've been watching prices for the last year. The trend has definitely been downward for housing in our price range.
      - scruple 7y ago
        It's flat where I live (south Orange county, California) for homes in the $500k-$1M mark. Newer development has stickier prices than older homes. However, there's a lot of local business development happening and, in the case of a single organization that I am aware of, many high-paying jobs are moving into the immediate area in the next 18-24 months. That single organization is stated to be investing over a billion in this new facility alone. It'll be very interesting to see what this does to the local market.
msie 7y ago
I doubt it. The impact of foreign investment is overblown. The majority of buyers are domestic.
- dmix 7y ago
  I remember reading an article about the obsession with Chinese money in Vancouvers housing market was totally overstated since it was in the single percentage points. People just can’t accept there’s a ton of people who want to live downtown than ever before (reverse ‘white flight’) and the housing market is incredibly constrained in supply for a ton of other reasons that can’t be blamed on foreign boogiemen. Not to mention those small percentage of foreign investors are making regular Canadians wealthier than they ever would be normally which goes right back into the economy which creates jobs and industry for other Canadians. The solution then is increasing supply or not expecting to live in a big place whole living in expensive downtown areas, not whining about demand.
  - teunispeters 7y ago
    A lot of it turns out to have been money laundering by people trying to either hide income for tax reasons (eg : US 1%) or less legitimate sources - all operating through countries which are good at hiding ownership histories (Eg : China) It doesn't mean the money's coming from China - it could be coming from the USA or other countries with high incentive for tax evasion. Or it could be coming from money laundering from large scale organized crime. (RCMP did a fairly thorough trace and report on this not too long back) Speaking as someone who moved away from Vancouver BC as it became unaffordable. And my income is higher than most Canadians. The "Dirty Money" series breaks this down further, but a not bad link to stories is : https://www.cbc.ca/news/canada/british-columbia/laundered-money-bc-real-estate-1.5128769 https://www.cbc.ca/news/canada/british-columbia/laundered-mo...
  - hn_throwaway_99 7y ago
    > I remember reading an article about the obsession with Chinese money in Vancouvers housing market was totally overstated since it was in the single percentage points. Valuations are set at the margins, so single digits percentage of ownership could easily translate into a huge change in prices if the Chinese have different criteria for buying a house (which they obviously do since the goals - asset protection vs. a place to live - are different). Vancouver housing prices are falling, largely due to the tax on empty homes and a large retreat in foreign buyers. Whether it was the Chinese or domestic buyers, people buying Vancouver real estate to park assets (as opposed to live in) had a large impact on prices.

A lot of rich common wealth Asians moved to Canada and created a similar situation x10. Then government created new laws to tax empty buildings. Did it solve the housing issue? Not entirely, but it sure helped a bit.

remote_phone 7y ago
Vancouver will suffer from “be careful what you wish for”. If house prices drop it will kill the economy because people will will be locked in their underwater homes for the rest of their lives. Deflation will destroy the entire economy.
- pen2l 7y ago
  It'll destroy chiefly the minority rich though, the minority capitalists. And since they are in fewer numbers than the workers, I don't know if it'll impact the greater economy so much. Somewhere in this, Vancouver might become being a neat place to be I think.
  - ShroudedNight 7y ago
    As a Canadian living in Markham, I am also deeply concerned about the growing inequality (or at least its growing visibility) and the damage it can do to our social fabric. That being said, modulo some extreme reconfiguration of Canadian society, workers need someone to pay them. I think we should be _very_ cautious about unduly alienating capitalists in an indiscriminant manner.
  - whatshisface 7y ago
    Unlike the situation in Marx's time, many workers have their retirement savings in "capitalist" equity devices like home ownership and the stock market. 2008 was terrible for them in America. The divide between workers who can only access linear growth and capitalists who can access exponential growth no longer exists.
    - the-dude 7y ago
      Where did they stash their wealth in Marx's time?
      - whatshisface 7y ago
        Cash, mostly.
- eloff 7y ago
  One can only dream that prices correct that much. But while expensive for Canada, prices are not wholly unreasonable for such a desirable city. And the population here is expected to increase by a million (33%) by 2050. That just won't be handled on the supply side the way zoning is done. So long term I expect prices to continue on the upward trajectory. Speaking as a renter with no house in the race.
  - seanmcdirmid 7y ago
    Except if you have a high end tech job in Vancouver that only pays 80k/year or less. Unless you are already rich, it makes sense to get a T1 and head off south to Seattle where the houses are still pricey but the salaries are much higher.
    - eloff 7y ago
      I'm not sure exactly what that had to do with my comment, but I've long told anyone who will listen in tech that you can double your salary by moving to the US or working remote for a US company with no Canadian office. Why anyone in tech remains in Canada makes no sense to me.
      - seanmcdirmid 7y ago
        Just that Vancouver property values are not sustainable on Vancouver salaries.
        eloff 7y ago
        They're not, but Vancouver is a very international city and owning a single family home is hardly a fundamental right. People who choose to live in Vancouver on Vancouver salaries pretty much have no hope of owning a home. That most locals can't afford it doesn't make it unsustainable unfortunately as long as there are enough people willing to live there anyway.
        seanmcdirmid 7y ago
- ninth_ant 7y ago
  Home prices have not fallen meaningfully since those measures were taken except at the very high end. At a certain point naysayers may have to admit they were wrong about the sky falling. Increased density allowances continue to prop up lot values on single family homes, which allows homeowners to not be underwater but also increase housing supply when they are torn down and duplexes/condos are built in place. Overall I feel like most people are happy with the outcome thus far.
- chiefalchemist 7y ago
  > Deflation will destroy the entire economy. How healthy and legit is an economy if this is the case? The same can be said of a Ponzi scheme, yes. It seems that the change of the rules effects the current winners the most. And thus the unsustainable persists...until it doesn't.
  - bmurphy1976 7y ago
    The problem with deflation (and hyper-inflation) is that people are irrational, not that the economies are illegitimate. The danger is that people acting irrationally causes a vicious feedback loop. That feedback loop could potentially take down the best of economies
    - chiefalchemist 7y ago
      The problem with economic theory is that it assumes people are rational. There is absolutely zero historic record to support that. Until economics embraces reality it's foolish for the rest of us to hold a false god so high.
      - dodobirdlord 7y ago
        > The problem with economic theory is that it assumes people are rational. No, it doesn't. [0] > There is absolutely zero historic record to support that. Yes, there is. [1] > Until economics embraces reality it's foolish for the rest of us to hold a false god so high. Sorry to be kinda blunt here, but I'd like to appeal to you to try to maintain a higher standard of discourse on HN. [0]: https://en.wikipedia.org/wiki/Behavioral_economics https://en.wikipedia.org/wiki/Behavioral_economics [1]: https://en.wikipedia.org/wiki/New_Keynesian_economics https://en.wikipedia.org/wiki/New_Keynesian_economics
        chiefalchemist 7y ago
        What % of economists are versed and apply Behavioral Economics? Ironic. Your reply does more to support my point than your own.
- katbyte 7y ago
  A lot of us are hopeful it will happen as that’s when we will buy so ️ Some will win some will lose and I have little sympathy for those who entered the market in the last 5 years expecting it to keep increasing as it has.
  - petersellers 7y ago
    Your statement comes across as rather heartless. What about those of us who entered in the last 5 years just because they were ready to settle down in an area they liked?
- jbay808 7y ago
  I'm not sure the consequences of falling home prices will be as catastrophic for the economy as it sounds. At the moment the high price of real estate is putting a lot of strain on almost every other sector of the economy: tourism (cheaper to visit other beautiful places like Banff), tech (it's expensive to attract talent with high cost of living), services (similar deal). It's also driven out a lot of younger families which can have delayed impacts on the economy. On the other hand, it's been great for the construction industry, tax revenue, and infrastructure investment. The high price of land has also justified investments in density which will result in a lasting increase of land value even if the market cools. There are also a lot of people who have sold their expensive homes and taken the money to cheaper areas, like Victoria and Nanaimo, distributing the windfall a bit.
- Tiktaalik 7y ago
  Sales and land values are plunging in Vancouver and even with the accordingly significantly decreased property transfer tax revenues the economy is great and the BC NDP government has posted a big surplus. https://www.cbc.ca/news/canada/british-columbia/bc-finances-operating-surplus-1.5217333 https://www.cbc.ca/news/canada/british-columbia/bc-finances-...

rat9988 7y ago

It would also mean less wealth in the us. I'm not sure how the two get balanced. But I guess things are more skewed toward to more affordable zoning as government regulation, when it exists, limits construction.

admiralspoo 7y ago
Less foreign inflows means the dollar gets devalued, and US exports become more competitive against everyone, including China.
- rat9988 7y ago
  It also means everything imported is more expensive no?

usaar333 7y ago

Couldn't it also make housing less affordable as less investment means less homes get built?

conceptpad 7y ago
Building isn't the bottleneck in the system - it's land that is zoned for residential development.
- Fjolsvith 7y ago
  Sure is nice to live in a non-zoned area. I built an addition to my garage and poured a large concrete pad next to my driveway without consulting any government authority, here in western Kansas.
  - maxerickson 7y ago
    I don't expect you to disclose further information, but it seems that many counties in Kansas, even agricultural ones, have zoning and permitting.
    - Fjolsvith 7y ago
      That's what happens when you get a lot of people living together in a city or county.
Tiktaalik 7y ago
This is why the government and non-profits need to be involved in constantly building housing. So long as population is growing we'll always need more homes, regardless of whether it's a good investment or not.

sct202 7y ago

It'll probably help in California, where 38% of the Chinese money is going. But only 266k properties were purchased in 2018 by ALL foreign buyers https://www.gbreb.com/GBREBDocs/GBAR/News/Informer/2018/2018-profile-of-international-transactions-in-us-residential-real-estate-07-26-2018.pdf https://www.gbreb.com/GBREBDocs/GBAR/News/Informer/2018/2018... (page 22 has purchase locations by country of origin) out of 5.33 million existing home sales and 667k new home sales in the same year https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics https://www.nar.realtor/research-and-statistics/quick-real-e... . So if you figure California and Florida look like they're disproportionately attracting foreign investment, there isn't that much left over for the rest of the country to be impacted with.

trevelyan 7y ago
A lot of Chinese money involves families paying for housing ostensibly bought by a legal resident or green card purchaser, usually a student who comes over and then ends up owning one or two properties and sheltering family assets. These purchases aren't usually reflected in the stats. It is more unusual for non-residents to end up owning property with no guarantees they can use it. Same in Australia and Vancouver.
- cheriot 7y ago
  Any sources on how much that actually happens?
  - asah 7y ago
    It doesn't take much to distort the real estate market.
    - cheriot 7y ago
      In June alone, California saw 389,690 home sales worth $238 billion. Markets that large are not moved easily. https://www.car.org/marketdata/data/countysalesactivity https://www.car.org/marketdata/data/countysalesactivity

samsonradu 7y ago

Considering the "new normal" interest rates around the world and the direction things are going (down), I have doubts housing prices will decrease in any developed country for the upcoming 5 years.

cptskippy 7y ago
Housing prices in Las Vegas and Southern California are declining. This is a first time for LV since the Great Recession. Declines like this have historically preceded every recession. Do you anticipate housing prices will weather such a recession which many predict is looming on the horizon? That would be a first.
- cheriot 7y ago
  declining by what magnitude? In Cali it's more like they've been oscillating around an upward trend.
  - o-__-o 7y ago
    10% down in Texas metro cities. Considering buying a house, but may wait for complete recession to hit first
  - cptskippy 7y ago
    We're in preparation to move to SoCal so we've been watching prices for the last year. The trend has definitely been downward for housing in our price range.
    - scruple 7y ago
      It's flat where I live (south Orange county, California) for homes in the $500k-$1M mark. Newer development has stickier prices than older homes. However, there's a lot of local business development happening and, in the case of a single organization that I am aware of, many high-paying jobs are moving into the immediate area in the next 18-24 months. That single organization is stated to be investing over a billion in this new facility alone. It'll be very interesting to see what this does to the local market.

msie 7y ago

I doubt it. The impact of foreign investment is overblown. The majority of buyers are domestic.

dmix 7y ago
I remember reading an article about the obsession with Chinese money in Vancouvers housing market was totally overstated since it was in the single percentage points. People just can’t accept there’s a ton of people who want to live downtown than ever before (reverse ‘white flight’) and the housing market is incredibly constrained in supply for a ton of other reasons that can’t be blamed on foreign boogiemen. Not to mention those small percentage of foreign investors are making regular Canadians wealthier than they ever would be normally which goes right back into the economy which creates jobs and industry for other Canadians. The solution then is increasing supply or not expecting to live in a big place whole living in expensive downtown areas, not whining about demand.
- teunispeters 7y ago
  A lot of it turns out to have been money laundering by people trying to either hide income for tax reasons (eg : US 1%) or less legitimate sources - all operating through countries which are good at hiding ownership histories (Eg : China) It doesn't mean the money's coming from China - it could be coming from the USA or other countries with high incentive for tax evasion. Or it could be coming from money laundering from large scale organized crime. (RCMP did a fairly thorough trace and report on this not too long back) Speaking as someone who moved away from Vancouver BC as it became unaffordable. And my income is higher than most Canadians. The "Dirty Money" series breaks this down further, but a not bad link to stories is : https://www.cbc.ca/news/canada/british-columbia/laundered-money-bc-real-estate-1.5128769 https://www.cbc.ca/news/canada/british-columbia/laundered-mo...
- hn_throwaway_99 7y ago
  > I remember reading an article about the obsession with Chinese money in Vancouvers housing market was totally overstated since it was in the single percentage points. Valuations are set at the margins, so single digits percentage of ownership could easily translate into a huge change in prices if the Chinese have different criteria for buying a house (which they obviously do since the goals - asset protection vs. a place to live - are different). Vancouver housing prices are falling, largely due to the tax on empty homes and a large retreat in foreign buyers. Whether it was the Chinese or domestic buyers, people buying Vancouver real estate to park assets (as opposed to live in) had a large impact on prices.