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It appears to me, the rise was almost exclusively artificial overseas (likely from China) investments. Basically, Canada is stable and the wealthy in China need

It appears to me, the rise was almost exclusively artificial overseas (likely from China) investments. Basically, Canada is stable and the wealthy in China need a place to park wealth (in a diversified way). Best option is foreign land purchases. This has been occurring in largely west coast US cities as well. The solution(s) are pretty straight forward and I believe Vancouver already initiated a tax on not living in a residence. If the goal is affordability, those policies need to be increased as well as new building efforts (aka change zoning).

TuringNYC 6y ago
>> The solution(s) are pretty straight forward and I believe Vancouver already initiated a tax on not living in a residence. If the goal is affordability, those policies need to be increased as well as new building efforts (aka change zoning). Wouldn't simply ONLY building new buildings/housing be more effective? This way, the wealthy can continue to purchase, but the investment would become worse and worse in returns and essentially provide subsidized housing to renters. This is somewhat the case in NYC where rents are far lower than ownership carry for identical units because the units are sometimes treated as stores of value.
- baybal2 6y ago
  No, in short term people hoarding apartments will be happy to buy whatever amount of new property built. Probably it will hit people 2, 3 apartments, but not ones with 20+ ones.
  - TuringNYC 6y ago
    I'm sorry if i'm not familiar with the situation in Canada -- but the people hoarding apartments, why do they keep them empty? Why not at least try to rent them for a partial recovery of carry cost? Wouldn't it be irrational to keep apartments empty when you could at least rent them for a bit of money. If they rent for a partial recovery, then isn't that good as renters get a good deal?
    - deleted 6y ago
      [deleted]
    - baybal2 6y ago
      > I'm sorry if i'm not familiar with the situation in Canada -- but the people hoarding apartments, why do they keep them empty? Why not at least try to rent them for a partial recovery of carry cost? Because they are too lazy? And look this https://news.ycombinator.com/item?id=26610167 https://news.ycombinator.com/item?id=26610167 Paying people money to avoid the vacancy tax sounds bizarre, beyond idiotic, but somebody does it, and it's there. They will prefer to pay money rather than bothering flying to Canada every month to collect rent, and making sure that renters keep the apartment pristine.
    - mandelbrotwurst 6y ago
      One reason might be so that you have the option to live in the place yourself on short notice.
- bradleyjg 6y ago
  In the NYC case the property taxes go the other way. A rental unit is taxed at a much higher rate than an equivalent condo. Nonetheless the effect you point (speculation) is so strong that renting still comes out ahead.
- JamisonM 6y ago
  "Wouldn't simply ONLY building new buildings/housing be more effective?" Yes, the vacant house tax is just politics, Vancouver has had some actual success with build-build-build but that strategy is limited by NIMBYs in many areas. Same with downtown Toronto, the suburbs are a pricing disaster but condo prices are not following as steep a curve simply because there is supply being built.
baybal2 6y ago
> The solution(s) are pretty straight forward and I believe Vancouver already initiated a tax on not living in a residence. If the goal is affordability, those policies need to be increased as well as new building efforts (aka change zoning). And there instantly came ads for services to keep appearance of home being occupied on https://www.vansky.com/ https://www.vansky.com/ =D Basically, property owners pay those guys to go and live there!
yanderekko 6y ago
Not sure how this narrative plays out in Canada, but given that it's raised in California but doesn't pass the laugh test I don't have much hope for it. Not only is such foreign ownership rather limited in terms of the % of total units it affects, but this would really only drive up housing prices if not only were these investments being made but that the investors for whatever reasons were leaving the units empty and/or converting them from being residential and thus actually taking them off the market and putting upwards pressure on other units. But this is nonsensical and basically never happens, and I don't think you're seeing skyrocketing vacancy rates in any of these "overheated" housing markets.
- bo1024 6y ago
  First result I found: > in San Francisco – as well as many other high-cost cities such as Vancouver, London, and New York – we see a different phenomenon: an extremely tight housing market with skyrocketing rents, that puzzlingly also has a high vacancy rate. ... > It is difficult to know whether an “absentee” or foreign buyer has an intent to occupy the unit or rent the unit, or whether the unit is intended solely to be an investment property. ... > In August 2017, CoreLogic estimates that absentee buyers purchased 15.8% of homes in the San Francisco Bay area. In September, this number increased to 17.1%. 23 Thus, while we do not know how many of these units purchased by absentee buyers in the Bay Area may be held vacant, it seems to be a significant amount of ongoing sales in the region. https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/CR_Final_2.3.19.pdf https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/CR...
  - JamisonM 6y ago
    If every empty house on the market in SF or Vancouver came on the market tomorrow it wouldn't make a dent in housing prices. Vancouver has actually seen some price declines as recently as 2018 and CMHC says it is driven by new construction - any jurisdiction where you can't build will attract investors that can afford to sit on empty properties and still expect a reasonable return. It is just the iron law of modern real estate.
bradleyjg 6y ago
> the wealthy in China need a place to park wealth (in a diversified way). Best option is foreign land purchases. Why is this the best option? Are wealthy Chinese forbidden from buying foreign stocks?
- baybal2 6y ago
  > Why is this the best option? Are wealthy Chinese forbidden from buying foreign stocks? Yes, does it sounds surprising to you?
  - bradleyjg 6y ago
    Well. In one sense no, but in another—-if you are going to do capital controls why leave giant loopholes like foreign land?
    - baybal2 6y ago
      Not so giant, the $50,000 limit works for it as well. The property is specially attractive because unlike socks, you can do one big effort to move money out in one go, and then forget about it for a few years. Plus, the customary blindness of Western law enforcement institutions to dirty money in property transactions.
      - robjan 6y ago
        The 50k limit is easy to circumvent. Anyone who's anyone in China has a Hong Kong bank account. They then hire a tour bus and a bunch of poor elderly people and each takes 50k across the border and deposits it into the HK account. This money can then be invested however they see fit. Before the pandemic this was not an uncommon sight.
        baybal2 6y ago
        Yes, it is, but having a string of correspondence in between you, and broker, and a stream of legal records pouring from sock transactions is much more bothersome, unlike pouring money into a stone cold piece of concrete in Ontario which will assuredly not go anywhere, and would not bother you with requests to prove your place of residence 4 times a year.
pupdogg 6y ago
I have family in Toronto and I concur that the primary cause of the rise in real estate prices is China. My cousin is an established IP attorney who earns a pretty good salary and this is directly from him...he was looking to move last year into a $1MM house (approx. 4k sqft) in suburbs of Toronto. He had the deal all worked up and ready to close until the real estate agent called him in the 11th hour and said the house was sold. He had been looking for some time and thought he finally found what he liked only to not get it. This really irritated him so he decided to find out what really happened. Well, it turns out that a Chinese foreign student made a $1.25MM all cash offer with contingency to close right away. This is the current state of real estate in Toronto. Imagine someone willing to pay more than the assessed value of the property because they’re not taking NO for an answer. Which seller would not want to make extra profit?
- bentlegen 6y ago
  I’m going to share my own personal anecdote because I think “it’s China’s fault” is both wrong and leads to the anti-Asian sentiment that is going around North America right now. I viewed many properties during the pandemic, and when we saw other potential buyers (e.g. had the appointment before or after us), they were all white couples in their 30s or 40s. After a couple tries, we bid on a home and won (I am white citizen). We have since moved in, and I’ve observed that the other homes that sold on our street all now have white families living in them. This is obviously inconclusive, but I believe “it’s all foreign money” is mostly a convenient scapegoat and doesn’t really capture what’s going on. (Also I find it strange that in your story, the homeowner would break a contractual agreement to sell and go with someone else. I’m not a lawyer, but that seems like obvious grounds for a lawsuit. Note that in 2017 in Ontario a buyer broke an agreement to buy and was ordered to pay hundreds of thousands of dollars in the ensuing lawsuit.) https://www.thestar.com/news/gta/2018/04/11/couple-ordered-to-pay-470000-after-reneging-on-stouffville-home-deal.html https://www.thestar.com/news/gta/2018/04/11/couple-ordered-t...
  - x86_64Ubuntu 6y ago
    In the defense of the narrative, they've spoken about Chinese money stashing in real estate in Toronto LOONNNGGG before Covid was even thought of.

TuringNYC 6y ago

>> The solution(s) are pretty straight forward and I believe Vancouver already initiated a tax on not living in a residence. If the goal is affordability, those policies need to be increased as well as new building efforts (aka change zoning). Wouldn't simply ONLY building new buildings/housing be more effective? This way, the wealthy can continue to purchase, but the investment would become worse and worse in returns and essentially provide subsidized housing to renters. This is somewhat the case in NYC where rents are far lower than ownership carry for identical units because the units are sometimes treated as stores of value.

baybal2 6y ago
No, in short term people hoarding apartments will be happy to buy whatever amount of new property built. Probably it will hit people 2, 3 apartments, but not ones with 20+ ones.
- TuringNYC 6y ago
  I'm sorry if i'm not familiar with the situation in Canada -- but the people hoarding apartments, why do they keep them empty? Why not at least try to rent them for a partial recovery of carry cost? Wouldn't it be irrational to keep apartments empty when you could at least rent them for a bit of money. If they rent for a partial recovery, then isn't that good as renters get a good deal?
  - deleted 6y ago
    [deleted]
  - baybal2 6y ago
    > I'm sorry if i'm not familiar with the situation in Canada -- but the people hoarding apartments, why do they keep them empty? Why not at least try to rent them for a partial recovery of carry cost? Because they are too lazy? And look this https://news.ycombinator.com/item?id=26610167 https://news.ycombinator.com/item?id=26610167 Paying people money to avoid the vacancy tax sounds bizarre, beyond idiotic, but somebody does it, and it's there. They will prefer to pay money rather than bothering flying to Canada every month to collect rent, and making sure that renters keep the apartment pristine.
  - mandelbrotwurst 6y ago
    One reason might be so that you have the option to live in the place yourself on short notice.
bradleyjg 6y ago
In the NYC case the property taxes go the other way. A rental unit is taxed at a much higher rate than an equivalent condo. Nonetheless the effect you point (speculation) is so strong that renting still comes out ahead.
JamisonM 6y ago
"Wouldn't simply ONLY building new buildings/housing be more effective?" Yes, the vacant house tax is just politics, Vancouver has had some actual success with build-build-build but that strategy is limited by NIMBYs in many areas. Same with downtown Toronto, the suburbs are a pricing disaster but condo prices are not following as steep a curve simply because there is supply being built.

baybal2 6y ago

> The solution(s) are pretty straight forward and I believe Vancouver already initiated a tax on not living in a residence. If the goal is affordability, those policies need to be increased as well as new building efforts (aka change zoning). And there instantly came ads for services to keep appearance of home being occupied on https://www.vansky.com/ https://www.vansky.com/ =D Basically, property owners pay those guys to go and live there!

yanderekko 6y ago

Not sure how this narrative plays out in Canada, but given that it's raised in California but doesn't pass the laugh test I don't have much hope for it. Not only is such foreign ownership rather limited in terms of the % of total units it affects, but this would really only drive up housing prices if not only were these investments being made but that the investors for whatever reasons were leaving the units empty and/or converting them from being residential and thus actually taking them off the market and putting upwards pressure on other units. But this is nonsensical and basically never happens, and I don't think you're seeing skyrocketing vacancy rates in any of these "overheated" housing markets.

bo1024 6y ago
First result I found: > in San Francisco – as well as many other high-cost cities such as Vancouver, London, and New York – we see a different phenomenon: an extremely tight housing market with skyrocketing rents, that puzzlingly also has a high vacancy rate. ... > It is difficult to know whether an “absentee” or foreign buyer has an intent to occupy the unit or rent the unit, or whether the unit is intended solely to be an investment property. ... > In August 2017, CoreLogic estimates that absentee buyers purchased 15.8% of homes in the San Francisco Bay area. In September, this number increased to 17.1%. 23 Thus, while we do not know how many of these units purchased by absentee buyers in the Bay Area may be held vacant, it seems to be a significant amount of ongoing sales in the region. https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/CR_Final_2.3.19.pdf https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/CR...
- JamisonM 6y ago
  If every empty house on the market in SF or Vancouver came on the market tomorrow it wouldn't make a dent in housing prices. Vancouver has actually seen some price declines as recently as 2018 and CMHC says it is driven by new construction - any jurisdiction where you can't build will attract investors that can afford to sit on empty properties and still expect a reasonable return. It is just the iron law of modern real estate.

bradleyjg 6y ago

> the wealthy in China need a place to park wealth (in a diversified way). Best option is foreign land purchases. Why is this the best option? Are wealthy Chinese forbidden from buying foreign stocks?

baybal2 6y ago
> Why is this the best option? Are wealthy Chinese forbidden from buying foreign stocks? Yes, does it sounds surprising to you?
- bradleyjg 6y ago
  Well. In one sense no, but in another—-if you are going to do capital controls why leave giant loopholes like foreign land?
  - baybal2 6y ago
    Not so giant, the $50,000 limit works for it as well. The property is specially attractive because unlike socks, you can do one big effort to move money out in one go, and then forget about it for a few years. Plus, the customary blindness of Western law enforcement institutions to dirty money in property transactions.
    - robjan 6y ago
      The 50k limit is easy to circumvent. Anyone who's anyone in China has a Hong Kong bank account. They then hire a tour bus and a bunch of poor elderly people and each takes 50k across the border and deposits it into the HK account. This money can then be invested however they see fit. Before the pandemic this was not an uncommon sight.
      - baybal2 6y ago
        Yes, it is, but having a string of correspondence in between you, and broker, and a stream of legal records pouring from sock transactions is much more bothersome, unlike pouring money into a stone cold piece of concrete in Ontario which will assuredly not go anywhere, and would not bother you with requests to prove your place of residence 4 times a year.

pupdogg 6y ago

I have family in Toronto and I concur that the primary cause of the rise in real estate prices is China. My cousin is an established IP attorney who earns a pretty good salary and this is directly from him...he was looking to move last year into a $1MM house (approx. 4k sqft) in suburbs of Toronto. He had the deal all worked up and ready to close until the real estate agent called him in the 11th hour and said the house was sold. He had been looking for some time and thought he finally found what he liked only to not get it. This really irritated him so he decided to find out what really happened. Well, it turns out that a Chinese foreign student made a $1.25MM all cash offer with contingency to close right away. This is the current state of real estate in Toronto. Imagine someone willing to pay more than the assessed value of the property because they’re not taking NO for an answer. Which seller would not want to make extra profit?

bentlegen 6y ago
I’m going to share my own personal anecdote because I think “it’s China’s fault” is both wrong and leads to the anti-Asian sentiment that is going around North America right now. I viewed many properties during the pandemic, and when we saw other potential buyers (e.g. had the appointment before or after us), they were all white couples in their 30s or 40s. After a couple tries, we bid on a home and won (I am white citizen). We have since moved in, and I’ve observed that the other homes that sold on our street all now have white families living in them. This is obviously inconclusive, but I believe “it’s all foreign money” is mostly a convenient scapegoat and doesn’t really capture what’s going on. (Also I find it strange that in your story, the homeowner would break a contractual agreement to sell and go with someone else. I’m not a lawyer, but that seems like obvious grounds for a lawsuit. Note that in 2017 in Ontario a buyer broke an agreement to buy and was ordered to pay hundreds of thousands of dollars in the ensuing lawsuit.) https://www.thestar.com/news/gta/2018/04/11/couple-ordered-to-pay-470000-after-reneging-on-stouffville-home-deal.html https://www.thestar.com/news/gta/2018/04/11/couple-ordered-t...
- x86_64Ubuntu 6y ago
  In the defense of the narrative, they've spoken about Chinese money stashing in real estate in Toronto LOONNNGGG before Covid was even thought of.