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Billions in 'unknown' funds flowing into Canada's housing market [video]

185 points by mastersip 5y ago

judge2020 5y ago
I don't think you need to look far to figure out that foreign cash purchases are coming from... foreign rich people who realize that housing is the best long-term investment possible.
- hnburnsy 5y ago
  >Canada’s Business Immigration Program, specifically the investor stream, is a primary cause of the housing crisis, according to Gordon. This “cash for citizenship” program has allowed wealthy individuals (net worth $1.6 million or higher) to come to Canada. https://the-peak.ca/2016/05/vancouvers-housing-crisis-caused-by-foreign-money-and-government-report-says/ https://the-peak.ca/2016/05/vancouvers-housing-crisis-caused...
  - judge2020 5y ago
    My comment is just about how 'unknown' the funds are. I think https://news.ycombinator.com/item?id=28004444 https://news.ycombinator.com/item?id=28004444 is a better comment thread for criticizing this practice.
  - pstrateman 5y ago
    That program hasn't existed in years.
    - redstripe 5y ago
      Doesn't it still exist in Quebec?
      - soperj 5y ago
        no
  - forkLding 5y ago
    Don't think this program exists anymore, searching around found Business Immigration Program but its for people who want to start startups but they also have to have like a designated VC fund or designated angel investor group or designated incubator. Source: https://www.canada.ca/en/immigration-refugees-citizenship/services/application/application-forms-guides/guide-5759-application-permanent-residence-business-immigration-program-start-business-class.html https://www.canada.ca/en/immigration-refugees-citizenship/se...
- hellbannedguy 5y ago
  Canada, and the USA, need to make buying our land harder, especially for foreigners. In the USA, all it takes to buy a house is money. A wealthy person sitting anywhere can buy a home with a email, and a few clicks, or a phone call. All it takes is money. If a person can't legally live in the home he bought, why are we selling it to them? I know the answer, but don't like it. I don't know of any other country that makes buying our land so dam easy. (I only know U.S.A. realestate, but care about Canadians.)
  - exporectomy 5y ago
    New Zealand did that a couple of years ago. House prices continued to skyrocket as if nothing had happened. It's local people who keep buying them and paying through the nose.
    - catmanjan 5y ago
      Imagine if a rich king comes to a small village and insists on buying a loaf of bread from the baker for $100 rather than a penny Now the butcher knows the baker is hungry and has $100, so he ups his prices to get the most value But the butcher needs knives and the blacksmith knows he can afford more now too The kings left town but the damage has been done, will probably take some time for things to go sane again
      - mixmax 5y ago
        they call it inflation...
        nemo44x 5y ago
        It’s inflation in part but low interest rates drive it more.
    - xenadu02 5y ago
      AFAIK they left a huge loophole: an NZ company can buy all the property it wants and foreigners can start or buy stakes in these companies.
- probably_wrong 5y ago
  It's not just rich people, unless by "rich" you mean "people with savings". I looked at the investments my bank made with my savings, and IIRC a chunk of it was invested in real estate companies. So I, a middle-class person who cannot afford a house, am giving money to my bank who is giving it to real estate companies to buy more apartments. And given how much apartment prices have risen, it seems like my bank made the right call for its customers.
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tolbish 5y ago
Should housing be a primary vehicle for investment and the de facto way of making money? Or should it serve as a necessity and basic aspect of life?
- jaimex2 5y ago
  Shouldn't even need to ask that question but here we are.
- devoutsalsa 5y ago
  I'll support investors snapping up real estate when they let me live in their billion dollar mansions.
- sunstone 5y ago
  In Australia if I recall correctly, foreign buyers are only able to buy newly built homes. Canada would benefit from a similar rule, it would stimulate more housing and not impact the demand for existing homes.
  - mths 5y ago
    I'm not sure Australia should be held as an example of a healthy housing market.
    - GrifMD 5y ago
      Definitely not Sydney! We just hit a record median of $1,410,133 AUD https://www.domain.com.au/news/sydney-house-prices-reach-record-median-1410133-rising-more-than-1200-in-a-day-in-just-three-months-1075735/ https://www.domain.com.au/news/sydney-house-prices-reach-rec...
    - sk0g 5y ago
      The apartment I lived in before had a few hundred sold, with most sitting empty. The building managers mentioned most of the owners were Chinese, and would rather not rent it out than drop the rent prices, so they had to constantly carry out inspections on apartments that had never been lived in, for a few years now. Absolutely depressing. The bit that weirded me out most was the post boxes. They were quite big, but about half of them were overflowing, which had to have been the result of a few years of accumulation at least. If the buying price was 40-50% lower, I could save up for a deposit in a year or two, but the crazy house prices here in Australia are not getting any better at all. It also feels morally wrong to be investing at the cost of someone being able to afford a roof over their heads, so maybe renting it is for me. Of course, the city also is going to be hosting the Olympics in a while, so that solidifies my moving away plans!
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RandomWorker 5y ago
Home owners will be happy to hear this. Not yet home owners like me are screwed because rents to damn high and I can’t afford to save up for a down payment. Sorry bud.
- jollybean 5y ago
  They shouldn't be though. What they don't realize is that the 'step above' them is getting way out their ability to move into, and they're getting stranded in the tranche they are in. It's a big new problem with globalism that needs to be addressed.
- jamal-kumar 5y ago
  I like not living in Canada anymore. It's depressing to think about how it got, but I've just stepped aside for a long while now and whenever I visit I'm just kind of shocked at how it doesn't get any better and instead just increasingly worse.
  - ant6n 5y ago
    What place could possibly be better?
    - coldacid 5y ago
      I've heard a lot of good things about Idaho.
    - jamal-kumar 5y ago
      I prefer tropical climes now.
- onion2k 5y ago
  It's good for home owners in the short term. In the long term it means everyone will spend more on housing, which limits the amount they can spend on everything else, which doesn't really help anyone.
  - 5y ago
teruakohatu 5y ago
New Zealand has a similar housing problem. House prices are skyrocketing and pricing out young people. A 25-30% rise in the past year has meant few people are saving fast enough to get a deposit. But two or three years ago the govt. banned overseas buyers. There is no reason to suggest the ban is not effective. It even bans non-permanent residents, so plenty of legitimate residents (work visas) can't purchase property. We also have strong money laundering laws, to the point of making tech innovation difficult (our prediction market run by a university had to move to the USA). Yet it didn't stop or even dent runaway house prices. Turns out the overseas investors (and immigrants) were just a good scape goats for lots of other problems. Edit: People overseas I have mentioned this struggle to belive it and suggest the ban must not be working. Yet nobody here suggests it is not. We have supply issues, transport issues, ridiculous construction and material costs and lots of regulations. Old houses are sold at prices relative to new houses. If new houses cost more and more, old houses also increase in value, especially since they are on the best land (not in new far away outer suburbs).
- redstripe 5y ago
  I don't know anything about the situation over there but did they really ban it? For example this bloomberg report talks about foreign ownership via holding companies. So are foreigners not able to hold stakes in NZ companies or are NZ companies not able to hold realestate (doubtful?).
  - Mandatum 5y ago
    Yeah all you need now is an IRD number, a NZ bank account or a corporation. All 3 you can setup without setting foot in the country. To those that say that's not possible, it very much is. There's little checks and balances, and COVID's made it even easier. It's lip service and the government does nothing to help track it. The most investigative journalism that's gone into it was a few years where people tried to look up owners of holding companies and based the research on people's last names. You can imagine how well that last bit went down in the media. Well, our trust privacy laws are very strict - so it's near impossible to tell who actually owns the companies if it's director is fronted by a corporate holding firm. These are used to protect property in the event of bankruptcies and debts, but can also be used to hide your residency.
jeffbee 5y ago
An irrelevant sideshow. If they made housing plentiful and cheap then nobody would buy it for any reason other than shelter.
- sk0g 5y ago
  > If they made housing plentiful and cheap then nobody would buy it for any reason other than shelter Do you feel that's a bad outcome? The phrasing suggests so, interested in why you feel that way.
  - jeffbee 5y ago
    No, it's the ideal outcome. Housing should not be an investment. You should just live in it and it depreciates. People should be able to make normal profits by building new ones. Nobody should profit from buying and selling old ones.
    - TedDoesntTalk 5y ago
      There wash a time that home ownership was considered a liability, not an asset (source: “Rich Dad, Poor Dad”.
      - unmole 5y ago
        That's a terrible source.
        TedDoesntTalk 5y ago
        Why?
        jeffbee 5y ago
        The whole book is self-help boilerplate wrapped around the advice to get rich by flipping real estate.
samingrassia 5y ago
When the fed suppresses interest rates and back stops the mortgage market, residential realestate starts to look like risk free treasuries with a ~9% yield.
- swiley 5y ago
  God forbid we have a housing market correction.
  - voisin 5y ago
    Government forbid we have a housing market correction.
- titzer 5y ago
  If it looks like either the stock market or the housing market is about to crash, the fed will print unlimited amounts of money to prevent that. The only problem is that the rational action with that knowledge is to buy in as soon as possible, with all your cash, thereby making the bubble even bigger. It's a death spiral of inflation.
  - Xcelerate 5y ago
    I agree. Also sounds like a great way to transfer more wealth from the poor to the rich considering only the rich have the ability to quickly funnel most of their wealth between different types of investments.
- biasedbrain 5y ago
  Where can you get 9% yield on housing? Where I live, you can only buy houses at prices that are above what you can get back in rents. You are very lucky if you can get to 1% yields, which is below inflation and not technically a good investment. The only way it still makes "sense" is by speculating on rising prices for real estate. Which is not risk free at all.
  - opportune 5y ago
haribr 5y ago
Surely a role played by Chinese Govt. Why no one talks about that?
- guai888 5y ago
  Actually CCP is doing everything they can to stop the outflow of money. CCP wants to keep the money inside of China but not very successful. There is no rule of law in China and people with money in China want to put money in place where government can not take it away from them. As CCP tighten control, money will keep flowing out by any mean possible.
  - spfzero 5y ago
    This. China has no safe place for people to save the money that they have made, by whatever means. Anywhere you put it in there, it can go away in an instant if the government wants to take it away from you. We don't understand this in the west, but whatever you have, in some countries, is fair game for people with friends in high places. It's not just China, but Russia and many other countries are like this. If you make enough money to pique the jealousy of the wrong person, You will end up in jail and your savings grabbed. Long term it's a good thing for the money to go into western real estate. Its value in the global market is being correctly recognized. Short term it is bad for local home buyers who end up priced out of the market.
    - epicureanideal 5y ago
      > Anywhere you put it in there, it can go away in an instant if the government wants to take it away from you. We don't understand this in the west Divorced or divorcing men understand how this can happen in the west.
      - steve_adams_86 5y ago
        As far as I know this applies to anyone divorcing; divorce laws apply equally to spouses these days, not just to men.
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chaganated 5y ago
You will own nothing, and you will be happy.
obiwanpallav1 5y ago
This[1] video by ColdFusion talks about a similar problem in the US in which Housing market is now being seen as the next big bet by the Wall Street Firms. In this scheme, a common man will not be able to buy/own any house but they can only rent it. It will be very similar to SaaS model in which Houses will be provided as a service. 1 - https://www.youtube.com/watch?v=gu4tC3px6mc https://www.youtube.com/watch?v=gu4tC3px6mc
- toxik 5y ago
  Fortunately, this is pretty easy to ban.
  - TedDoesntTalk 5y ago
    How?
    - adflux 5y ago
      Taxes, relax zoning laws, subsidise building of housing.
      - duemti 5y ago
        "Taxes" The classic an all-answer and all-solver of ignorant people. Bigger government is what you are saying. Every time it only burdens the working class; the poor just want things gifted to them; the rich get richer. A 2v1 game.
- CTDOCodebases 5y ago
  Agricultural land is being bought up too. Small farms are being bought up by big agricultural firms. Bill Gates and Michael Blurry (big short game) are heavy invested in agricultural land.
- yodelshady 5y ago
  I don't know about other western countries but in the UK, homeowners are the election-winning group, and are considered a moderating force - being both workers and investors. Lacking that group is going to have some interesting political consequences.
xbmcuser 5y ago
Every year 100s of billions dollars of black money/corruption money goes from the 3rd world countries to the rich countries. Terrorist financing got the west to monitor the movement of black money but they still have left loop holes and were not going after developed countries and other tax haven countries. Panama leaks and other data breaches have started shining a light on this and the developed countries have had to do something.
wyck 5y ago
This isn't new, nor is it only related to China. Mexico, Russia, many middle east countries, and whole slew of other places has poured billions of cash into Canadian real estate. It's done via regulated banks who turn a blind eye because there nothing illegal about how it's being done. The are skyrises being built in every major city in which 95% of the tenants are not Canadian, and they sit practically empty. Some city blocks are a virtual ghost town of empty buildings the most Canadians can't even afford.
- spfzero 5y ago
  Western real estate is the new gold. It's protected by the entrenched lawful property rights of western countries, so money made in countries without those rights are going to flow in. Think about it. If you had made a few million based on your having positional power in a country where you would be jailed or killed once people found out what you had been doing, you'd get the money out to somewhere your descendants would have safe access to it no matter what happened.
  - dandanua 5y ago
    Very few people realize that the western acceptance of blood money actually fuels autocratic regimes around the world and makes them much stronger. For example, Russian power elites have millions and billions in assets in the West. Hence, this new "cold war" with authoritarian Russia and Putin is a total farce. But those blood money will ruin the West, one day or another. Trump was the first major sign of it.
  - seanmcdirmid 5y ago
    > Western real estate is the new gold. If you think western real estate is nuts, Chinese real estate is even crazier. Those Wenzhou house wives supposedly got started locally moving onto the rest of China and now the western world. It’s probably way more complex than that, however. > If you had made a few million based on your having positional power in a country where you would be jailed or killed once people found out what you had been doing, you'd get the money out to somewhere your descendants would have safe access to it no matter what happened. If that hypothesis were true, then Chinese would be fleeing the Chinese real estate market for the west, which isn’t really happening. It’s more of an expansion (if it is actually happening in significant amounts of money at all, which is not proven).
jollybean 5y ago
This has to stop, unfortunately a lot of people like the money coming in, and politicians often don't have the most effective policies. I think the inflow is fine, but there should be hefty taxes associated with the fact that the property is made valuable by the civic infrastructure in place in the country which only citizens are paying for. One thing they could do is build apartment buildings in less sensitive areas, and designate them as 'foreign ownership allowed'. Literally buildings would get built and remain largely empty, as a form of 'investment' (this happens in China) and so long as it wasn't affecting local prices too much, it'd be fine. I wonder if they should pick a spot in Southern Ontario and declare it such a 'zone' where they only build 30 story buildings for this purpose. Of course, the nature of the economic waste is laid bare. It might be more appropriate for the local governments to be selling a special kind of bond or some other financial instrument designed for this purpose.
msie 5y ago
House prices were soaring in Canada during the pandemic and the media couldn’t blame foreigners for once because of travel restrictions. Also the news reported on the rise of anti-asian racism. They should look in the mirror for blaming high r.e. prices on foreigners when it was proven that they only made up a small percentage of the market.
- robjan 5y ago
  Most overseas buyers don't actually visit the property before buying it. In fact, it's pretty common to buy a property before it's even built. I live in HK and receive brochures every few days for foreign property in Canada, the UK and Australia. If you have the cash, you can pretty much visit the agent and buy the place on the spot.
killjoywashere 5y ago
Meanwhile, 3 provinces in China keep facing unexpected power shortages from their hydroelectric dams, but the airport keeps landing 747s full of GPUs.
- killjoywashere 5y ago
  Why the downvotes? This is old, well reported news: https://www.cnbc.com/2021/06/21/bitcoin-btc-price-drops-on-china-crypto-mining-crackdown.html https://www.cnbc.com/2021/06/21/bitcoin-btc-price-drops-on-c....
  - nitrogen 5y ago
    It's unrelated to the article, and is likely to spur even less related comments.
    - killjoywashere 5y ago
      It is related to the article. Where do you think these mystery billions are coming from?
anovikov 5y ago
If idiots want to pour their millions into worthless concrete to inevitably lose everything when the wave of free money from central banks recedes, leaving innumerous almost free homes in the market for everyone to buy - why any sane person should object? Notice that there is no comparable craze on the stock market. P/E has gone somewhat up sure but it's just out of anticipation of record corporate profits in the coming quarters - which is not unjustified given rampant inflation and deficit of everything which everyone is now making tons of money trying to fill. Because smart people never invest in real estate (at least not in residential real estate, especially not in single family, detached houses). In Russia, we have a proverb - "best thing to do about fools is not trying to stop them".
- redisman 5y ago
  > If idiots want to pour their millions into worthless concrete to inevitably lose everything when the wave of free money from central banks recedes, leaving innumerous almost free homes in the market for everyone to buy - why any sane person should object? Because everything you said is completely wrong and it takes the already extremely tight housing market to an absurd extreme where no ordinary person can purchase lodging to own. It would take a lot more than a monetary policy tightening to crash Vancouver or Toronto housing markets given how many people are moving in every year. Probably something quite cataclysmic
  - anovikov 5y ago
    Then again - if people are moving in to already tight place, who is to blame? What are the probable ways of "tackling" it you suggest? Soviet-style "closing" of a place where the Party will decide if you are eligible to buy? This is how they prevented Moscow from overpopulating in the Soviet Union, resulting in doubling the population in the decade once barrier fell with the end of Communism. If anything, it's a source of free money for the residents: sell your current house for millions and move out somewhere cheaper, maybe retiring early as a result. If you don't want to people to move, analyse the reasons that push them to move and see what can be done about it. Real estate prices are just an indicator. It's stupid to "tackle" indicator rather than underlying reason.
throwaway5752 5y ago
It's global warming. Same as New Zealand. Money is easy and smart money is flocking to places that will be survivable in a decade or two. This is very easy.
- asdff 5y ago
  Not really. Sharks are smelling blood in the water everywhere, since nowhere is building enough supply. Guaranteed profit with that sort of regressive housing policy. Prices are rising in Miami almost as fast as the water table.
- xvilka 5y ago
  Siberia is a good place too - right now apartments and houses are very cheap.
john579 5y ago
Blackrock and other firms using federal reserve fiat money are buying up real estate in entire communities across Europe and North America. Jay ewe double-u's are behind it.
puskavi 5y ago
Chinese money, I guess.
digislave 5y ago
In my country, there are cheap houses in the countryside, and housing in attractive locations is very expensive. Perhaps the factor of demand is underrated in the discussion of housing prices.
- fuzzybear3965 5y ago
  Which country?
  - digislave 5y ago
    Germany
zz865 5y ago
Tax tax tax. Everyone should be able to buy a property but its not fair if you sell for a profit and pay no Canadian tax as non-residents do. Property taxes should also be extra high for non-residents.
- voisin 5y ago
  I don’t disagree about using taxes to deal with this (though noncompliance and loopholes are a problem), but to clarify, non-residents pay tax on the sale of Canadian real estate. This is written into all reciprocal tax treaties. The only way out of this would be if the house was a principal residence, which is the same rule as applies to residents selling their principal residence. Apologies for all the residence/residents.
rorykoehler 5y ago
There should be a global rule that non-residents can't buy property. Homes should be prioritised for living not investments. It's a drag on the global economy with so much money being tied up in unproductive assets which in turn soak up even more money through rent seeking.
- lrem 5y ago
  Nah, let them invest. What we need is adding vacancies to the social housing pool.
  - rorykoehler 5y ago
    There is no space for that without radical rezoning and densification. The alternative is every city turning into massive urban sprawl which is entirely undesirable. If you are suggesting forcing private investors to make their properties available to public housing stock then I’m not sure why that would be an improvement without serious rent caps in place.
    - lrem 5y ago
      A colleague told me about the setup in their home country some weeks ago, I _think_ that was the Dutch one, excuse my fuzzy memory... Once your €1500 tenant leaves, you have 3 or 6 months to find the next one. If not, the city will offer your place in parallel as social housing and you'll get €400 (flat rate for the whole municipality per size band) if that gets filled first. On a three year contract. Makes for a very good incentive to meet the market.
      - rorykoehler 5y ago
        It's good and I wouldn't complain if this was an outcome however better yet would be a system that allows people to buy their own homes. One of the major pitfalls and imo systemic national security risks in Europe are the high income tax rates. This coupled with foreign investment in the property market means that regular Europeans are effectively priced out of the market with no way back in. Long term this is a crazy risk to run for the sake of maintaining inefficient bureaucracies that don't remotely cater to the pressing needs of citizens.
DrBazza 5y ago
London has similar problems. Apartment blocks that have a hundred flats, but only 5 are occupied all year round. The new ones at Battersea being a good example. The others owned by shell companies that are speculating and investing, or just plain hiding ownership and tax dodging. The UK government have made some small steps in trying to associate property with people via proceeds of crime acts, and the financial conduct authority, but it is woeful.
- alva 5y ago
  I do not think successive UK governments have had enough of a long term strategy to do this consciously (though I would love to find out it was a deliberate), but I think the Battersea / Nine Elms development is a fantastic way to exploit the surging demand into Western real estate. Tens of thousands of flats have been built almost entirely funded by foreign investment. If/once the market collapses on whatever time frame, London now has significantly increased housing stock almost entirely on the back of foreign money (whilst providing income for local builders and suppliers). Already foreign owners are taking huge losses on their investment and I expect this to drop even further. If price drop to a reasonable level for your average Londoner, this will be a great win. On a side note, that entire development is an architectural disgrace and as you note, for the time being a ghost town, parking dodgy money from abroad.
  - DrBazza 5y ago
    Nine Elms is horrific, isn't it? Designed by supposedly some of the world's best architects. Where the votes were presumably cast by other architects and not the general public. Also, that development, and others have "poor doors" around the side or back for the non-penthouse owning riff raff to use. Another thing that's completely wrong with these kinds of developments in London.
  - strogonoff 5y ago
    While using foreign money flowing into Western property to build public housing is a cool strategy, in reality it did result in some controversy: https://www.theguardian.com/artanddesign/2021/feb/02/penthouses-poor-doors-nine-elms-battersea-london-luxury-housing-development https://www.theguardian.com/artanddesign/2021/feb/02/penthou...
LightG 5y ago
In Breaking Bad, you go to Los Pollos Hermanos ... In real life, you go to Toronto, or London, or any number of capital cities.
louloulou 5y ago
Approximate M2 growth since the start of 2020: USA: 33% Canada: 23% UK: 17% Euro Area: 15% China: 15% Japan: 13% WhERe iS aLL thE MOney ComInG fRoM guYS?
- voisin 5y ago
  Let me summarize the next four replies before they are posted: “Oh but it’s ok because velocity of money plummeted!!!” Ignoring the fact that there has never been an instance of money supply increase in relation to velocity of money decrease that was reversed once the velocity eventually returned to normal. Those money supply numbers you posted are the new normal now.
- someguydave 5y ago
  Not only that, but those governments also subsidize things like 30 year fixed rate mortgages with government guarantees. So not only is there more money burning a hole in people's pockets, the artificially low rates create massive leverage. I wager that if home buyers had to convince private hard-money lenders to give them 30 year mortgages the rates may increase. (Imagine if houses were denominated in gold)
aurizon 5y ago
Low rates allow high ratio mortgages(5% or less down) so all the rent needs to cover is 1-2% of that down payment to break even. After that the tenant works to feed the mortgage and gets zero equity. Fix? If you buy to reside in it = normal realty taxes. If you buy to rent, it is a business and needs to be taxed as such. Extracting money from the current positive feed back loop changes the equation and could eliminate this sort of rent seeking behaviors.
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polskibus 5y ago
They say in the video that the report is based on 2008-2018 data. Do we know how the situation unfolded since covid started?
stvkoch 5y ago
$1.53T was born from nothing and the should go to somewhere
mikkelam 5y ago
I honestly don't see a way out until boomers start dying. The 2030s will probably see a large decline in the housing market
- voisin 5y ago
  How will that solve it?
  - mikkelam 5y ago
    I thought that the baby boomer population was significantly larger than their inheritants, however, it seems GenX is only slighter lower in population size. So my theory doesn't hold.
- theklub 5y ago
  That will always just be a slow bleed. Some are already selling and moving to warmer climates. https://en.m.wikipedia.org/wiki/The_Villages,_Florida https://en.m.wikipedia.org/wiki/The_Villages,_Florida
tedk-42 5y ago
So many saying it's a supply issue... If it's a supply issue, more people would be homeless and without a place to live. It's an affordability issue with a small portion of 'housing investors' pricing out renters from ever buying.
- swiley 5y ago
  Higher supply would mean lower prices. By definition affordability issues and supply issues are the same barring some kind of regulatory capture or abuse of credit.
  - tedk-42 5y ago
    Credit abuse is subjective - accessibility to credit for all parties equally mean that it will continue to be profitable for property investors to buy up more and more of the housing supply without constraint. Building 'more' housing is not the answer. Preventing people from holding real estate as assets is the solution. We don't privatise ownership of water or air - two basic resources for humans to survive. Privatisation of basic human necessities is dangerous and we'll see in the future how large scale private property ownership will continue to drive social issues. It's really just the beginning...
    - swiley 5y ago
      Holding realestate as an investment is the incentive for developing land and maintaining buildings.
      - tedk-42 5y ago
        I'm completing against the idea that 1 person can own 100 houses while the other 99 are forced to rent from that person. Developing land is a no brainer. No need to keep making the rich richer while pricing out first time buyers from the market. We can all afford to purchase water and there's no fear of it running out when investment is properly done to manage water as a resource. Surely we can do the same with housing so people can afford to buy.
refurb 5y ago
They started collecting data on foreign purchasers and it’s maybe a few single percentage points. Canadians are house horny and willing to borrow from parents and absolutely max out payments to own a house. Does domestic money laundering and illegal money have an impact? Absolutely, but blaming foreigners is laughable considering number of them.
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brutus1213 5y ago
I think the housing situation in major Canadian cities is so bad, it is going to have clear detrimental outcomes to society. Starter homes in nice (not posh, subway access, good walk score) neighborhoods in Toronto are going for 2-2.5 million. The math on these are bad even if you made a profit on the condo you bought previously (which many people may not have made). The govt has made a series of very half hearted moves to try to quell the swell, but do they really care? Construction and the general housing sector is a major part of our economy now. This is not going to end well :( I agree with posters who say that foreign buyers are the scapegoat. We need to start taxing real-estate gains on primary residences above a threshold (I thought the US did that). Also, the govt needs to take serious measures to break the assumption that housing always goes up double digits. Everyone I know thinks housing will go up .. this sounds like a recipe for collapse. People with little means are going all in on the most expensive real-estate they can find. Illegal suites (rooms for rent, basements) are rampant. The sort of side hustle I hear about are insane (someone boasted growing shrimp in their garage to supplement income).
- bravo22 5y ago
  Taxing gains on sales of primary homes just leads to fewer homes for sale and higher prices. The only thing that correlates with the price change is months of available inventory in the market.
- moeadham 5y ago
  There is no physical limit to the amount of houses. The best way to fix this in the long term is to flood the market with new housing inventory. We need to remove restrictions and make it easy to build new high-density housing anywhere and everywhere. The wealthy have the capital to find loopholes in any tax that is levied. We need to punish the housing speculators with a supply surge.
  - brutus1213 5y ago
    In GTA, there is a limit for single family homes (with yards) that have access to proper public transit. I have no belief an entlightened govt can fix all these factors in my lifetime (wide spread efficient public transit, increased investments in recreational parks, etc.). We have a policy called the greenbelt, which was pitched as an environmental thing but has been at least one factor in this whole mess.
netheril96 5y ago
Beijing has the strictest restriction on property purchase in the world. Its property prices had been declining for two years before 2020. It has had no new policies regarding real estate and loans since 2017. Yet its property prices has been rising since 2020, several months after the infinite QE the US starts.
motohagiography 5y ago
Note, the post is an interview with the head of Transparency International, who got data from 1.4 million transactions from the main land and mortgate registries in Ontario. The article isn't just some opinion about "foreign buyers," with racist undertones, there is a real pattern and data. They found Toronto matches matches markets around the world that real estate is being bought by companies, with cash, and through unregulated lenders. Given their general agenda, they have conflated holding companies with all foreign companies, and they are suspicious of private enterprise in general, but as a stopped clock they appear right on this issue. Their transparency issue is real money laundering for a change instead of capital flight, and even though I don't care much for their usual agenda, for them to criticize the housing market in Canada is accurate. Casual BBQ conversations in Toronto are as likely to be about real estate prices as they are to talk about how many of the neighbourhood businesses are foreign money laundering operations. It's an open secret, and most milenials are priced out of the cities they grew up in. Not only are investment banks churing real estate (see Blackrock buying homes search) with Fed driven liquidity, Canada's political parties forfeited their national focus, and instead spend their time courting foreign leaders and their diaspora networks to get dodgy campaign funding sources and voting blocs. The parties realized it's easier to raise money from and pay off constituencies to stay in power in foreign countries to work votes here because there is no transparency once aid, loans, financing, and other money vehicles leave the country. The logic appears to be, "why should our globally elite and governing classes be subject to the opinions of working class people we disagree with in these mere nations when we can just import people and money dependent on our policies, both from educated and wealthy and poor dependent classes, and then manage them to keep us power." It's post-national policy. The parties run offense by calling everyone they disagree with racists, and the whole thing is absolutely rotten. A big part of that is attracting capital flight from other countries into assets like real estate and lax beneficial owner enforcement and turning a blind eye to it in return for political support.
- 908B64B197 5y ago
  > The logic appears to be, "why should our globally elite and governing classes be subject to the opinions of working class people we disagree with in these mere nations when we can just import people and money dependent on our policies, both from educated and wealthy and poor dependent classes, and then manage them to keep us power." It's post-national policy. The parties run offense by calling everyone they disagree with racists, and the whole thing is absolutely rotten. Sounds like you need a new party.
CosmicShadow 5y ago
Living in Kitchener-Waterloo (an hour from Toronto), our housing rates have gone through the roof with rich Torontonians buying our stuff for 100-300k over, but who the fuck is buying their extremely overpriced stuff?? That's what we always wonder. Who can afford to live in Toronto or buy anything there? Their jobs don't pay that much more. There is no "more expensive market" or "secret Ultra-Toronto" that can move downstream into Toronto. Is it just "there are a lot of rich Canadian investors" (seems unlikely) or is it mostly just people overseas buying and leaving places empty and/or hoping to maybe rent it out? Something doesn't seem to make much sense. What Canadian investor is going to think, hmmm, I'll bid $400k over on a 2.5MM home that no one in my country can afford in the most expensive city and it's not even that nice. Who is going to buy it from them as it goes up? Anyone in Canada who could possibly afford it now, or in the future will already have a nice home, unless are just swapping around for a different location. There has to be some 3rd party upstream they know will buy it out from them, or else they will be the sucker who hit the ceiling with a property they can't sell.
- coldacid 5y ago
  It's almost entirely foreign buyers, as investments or for money laundering. If Trudeau would rub some brain cells together, we'd get changes to the law that would limit foreign real estate ownership, and close loopholes allowing the banks or other Canadian investment firms to hold real estate on behalf of foreign owners.
  - 908B64B197 5y ago
    > If Trudeau would rub some brain cells together What about the votes he needs from certain communities? https://globalnews.ca/news/4853439/karen-wang-liberal-burnaby-south-candidate-wechat-message-controversy/ https://globalnews.ca/news/4853439/karen-wang-liberal-burnab...
dukeofdoom 5y ago
You can always build more houses, start new cities, its not a real problem. But a million dollars brought in, goes directly into the economy from a foreign investor, makes a country rich. Trading something that is low skill to make, into money that can be spent on all kinds of infrastructure and technology. So my only take on this is that how that invest money is spent by that country if its a net positive or negative. If it goes to a corrupt circle at the top, and bankers, then obviously its not benefitting the economy as it should.
- s1artibartfast 5y ago
  That really depends on the net flow of cash and how it is used. Housing is bought specifically because it is a good investment with positive returns. This is money that flows back out.
- MichaelZuo 5y ago
  I agree, municipal budgets should be going way up since they’re all funded by property taxes to varying degrees. That means there will be more money for investing in infrastructure, new projects, etc., that of course benefit every resident.
- cannabis_sam 5y ago
  > You can always build more houses, start new cities, its not a real problem. Of course, but that would devalue the existing housing stock, which for the vast majority of politicians would mean a loss on their real estate investments. Why would they give a shit about young and future people being able to afford a place to live, when they can make a mint by denying these people housing?
boublepop 5y ago
It says something about the state of the world that the instant that “state guaranteed wealth increase” became invalidated, the entire worlds elites united to purchase every single residential unit they could to keep profiting of the working class. World war 3 won’t be fought over natural resources. It’ll be the rent slaves class fighting against the upper classes “right” to keep them in indebted servitude. We need some policies preventing rent seeking on peoples primary residents.
kodah 5y ago
I'd like to point out how nutty it is that this is happening all over the world now. I first experienced this in 2017 in Dallas, TX - now it's everywhere. One thing I worked very consciously with my financial planner about was this sentiment that: - My job does not facilitate staying in a place long enough to make owning a home a worthwhile investment - I will probably never own a home because there are enough people that have a lot more liquidity than I do We have now setup an investment strategy that has become more stable and effective than owning a home. Point being, this is a FP's bread and butter - engage them!
arcanon 5y ago
I mean all the farmable land will be up there in a few decades. Seems like a good investment.
jbverschoor 5y ago
Yeah foreign, untaxed, gray or black money is a very good source to buy houses. Meanwhile, as a resident and citizen, you're taxes 40+% and every coin is turned upside down because of "anti money laundering". Realestate and banks are the biggest fraud ever.

185 points by mastersip 5y ago

judge2020 5y ago

I don't think you need to look far to figure out that foreign cash purchases are coming from... foreign rich people who realize that housing is the best long-term investment possible.

hnburnsy 5y ago
>Canada’s Business Immigration Program, specifically the investor stream, is a primary cause of the housing crisis, according to Gordon. This “cash for citizenship” program has allowed wealthy individuals (net worth $1.6 million or higher) to come to Canada. https://the-peak.ca/2016/05/vancouvers-housing-crisis-caused-by-foreign-money-and-government-report-says/ https://the-peak.ca/2016/05/vancouvers-housing-crisis-caused...
- judge2020 5y ago
  My comment is just about how 'unknown' the funds are. I think https://news.ycombinator.com/item?id=28004444 https://news.ycombinator.com/item?id=28004444 is a better comment thread for criticizing this practice.
- pstrateman 5y ago
  That program hasn't existed in years.
  - redstripe 5y ago
    Doesn't it still exist in Quebec?
    - soperj 5y ago
      no
- forkLding 5y ago
  Don't think this program exists anymore, searching around found Business Immigration Program but its for people who want to start startups but they also have to have like a designated VC fund or designated angel investor group or designated incubator. Source: https://www.canada.ca/en/immigration-refugees-citizenship/services/application/application-forms-guides/guide-5759-application-permanent-residence-business-immigration-program-start-business-class.html https://www.canada.ca/en/immigration-refugees-citizenship/se...
hellbannedguy 5y ago
Canada, and the USA, need to make buying our land harder, especially for foreigners. In the USA, all it takes to buy a house is money. A wealthy person sitting anywhere can buy a home with a email, and a few clicks, or a phone call. All it takes is money. If a person can't legally live in the home he bought, why are we selling it to them? I know the answer, but don't like it. I don't know of any other country that makes buying our land so dam easy. (I only know U.S.A. realestate, but care about Canadians.)
- exporectomy 5y ago
  New Zealand did that a couple of years ago. House prices continued to skyrocket as if nothing had happened. It's local people who keep buying them and paying through the nose.
  - catmanjan 5y ago
    Imagine if a rich king comes to a small village and insists on buying a loaf of bread from the baker for $100 rather than a penny Now the butcher knows the baker is hungry and has $100, so he ups his prices to get the most value But the butcher needs knives and the blacksmith knows he can afford more now too The kings left town but the damage has been done, will probably take some time for things to go sane again
    - mixmax 5y ago
      they call it inflation...
      - nemo44x 5y ago
        It’s inflation in part but low interest rates drive it more.
  - xenadu02 5y ago
    AFAIK they left a huge loophole: an NZ company can buy all the property it wants and foreigners can start or buy stakes in these companies.
probably_wrong 5y ago
It's not just rich people, unless by "rich" you mean "people with savings". I looked at the investments my bank made with my savings, and IIRC a chunk of it was invested in real estate companies. So I, a middle-class person who cannot afford a house, am giving money to my bank who is giving it to real estate companies to buy more apartments. And given how much apartment prices have risen, it seems like my bank made the right call for its customers.

deleted 5y ago

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tolbish 5y ago

Should housing be a primary vehicle for investment and the de facto way of making money? Or should it serve as a necessity and basic aspect of life?

jaimex2 5y ago
Shouldn't even need to ask that question but here we are.
devoutsalsa 5y ago
I'll support investors snapping up real estate when they let me live in their billion dollar mansions.
sunstone 5y ago
In Australia if I recall correctly, foreign buyers are only able to buy newly built homes. Canada would benefit from a similar rule, it would stimulate more housing and not impact the demand for existing homes.
- mths 5y ago
  I'm not sure Australia should be held as an example of a healthy housing market.
  - GrifMD 5y ago
    Definitely not Sydney! We just hit a record median of $1,410,133 AUD https://www.domain.com.au/news/sydney-house-prices-reach-record-median-1410133-rising-more-than-1200-in-a-day-in-just-three-months-1075735/ https://www.domain.com.au/news/sydney-house-prices-reach-rec...
  - sk0g 5y ago
    The apartment I lived in before had a few hundred sold, with most sitting empty. The building managers mentioned most of the owners were Chinese, and would rather not rent it out than drop the rent prices, so they had to constantly carry out inspections on apartments that had never been lived in, for a few years now. Absolutely depressing. The bit that weirded me out most was the post boxes. They were quite big, but about half of them were overflowing, which had to have been the result of a few years of accumulation at least. If the buying price was 40-50% lower, I could save up for a deposit in a year or two, but the crazy house prices here in Australia are not getting any better at all. It also feels morally wrong to be investing at the cost of someone being able to afford a roof over their heads, so maybe renting it is for me. Of course, the city also is going to be hosting the Olympics in a while, so that solidifies my moving away plans!

deleted 5y ago

[deleted]

RandomWorker 5y ago

Home owners will be happy to hear this. Not yet home owners like me are screwed because rents to damn high and I can’t afford to save up for a down payment. Sorry bud.

jollybean 5y ago
They shouldn't be though. What they don't realize is that the 'step above' them is getting way out their ability to move into, and they're getting stranded in the tranche they are in. It's a big new problem with globalism that needs to be addressed.
jamal-kumar 5y ago
I like not living in Canada anymore. It's depressing to think about how it got, but I've just stepped aside for a long while now and whenever I visit I'm just kind of shocked at how it doesn't get any better and instead just increasingly worse.
- ant6n 5y ago
  What place could possibly be better?
  - coldacid 5y ago
    I've heard a lot of good things about Idaho.
  - jamal-kumar 5y ago
    I prefer tropical climes now.
onion2k 5y ago
It's good for home owners in the short term. In the long term it means everyone will spend more on housing, which limits the amount they can spend on everything else, which doesn't really help anyone.
- 5y ago

teruakohatu 5y ago

New Zealand has a similar housing problem. House prices are skyrocketing and pricing out young people. A 25-30% rise in the past year has meant few people are saving fast enough to get a deposit. But two or three years ago the govt. banned overseas buyers. There is no reason to suggest the ban is not effective. It even bans non-permanent residents, so plenty of legitimate residents (work visas) can't purchase property. We also have strong money laundering laws, to the point of making tech innovation difficult (our prediction market run by a university had to move to the USA). Yet it didn't stop or even dent runaway house prices. Turns out the overseas investors (and immigrants) were just a good scape goats for lots of other problems. Edit: People overseas I have mentioned this struggle to belive it and suggest the ban must not be working. Yet nobody here suggests it is not. We have supply issues, transport issues, ridiculous construction and material costs and lots of regulations. Old houses are sold at prices relative to new houses. If new houses cost more and more, old houses also increase in value, especially since they are on the best land (not in new far away outer suburbs).

redstripe 5y ago
I don't know anything about the situation over there but did they really ban it? For example this bloomberg report talks about foreign ownership via holding companies. So are foreigners not able to hold stakes in NZ companies or are NZ companies not able to hold realestate (doubtful?).
- Mandatum 5y ago
  Yeah all you need now is an IRD number, a NZ bank account or a corporation. All 3 you can setup without setting foot in the country. To those that say that's not possible, it very much is. There's little checks and balances, and COVID's made it even easier. It's lip service and the government does nothing to help track it. The most investigative journalism that's gone into it was a few years where people tried to look up owners of holding companies and based the research on people's last names. You can imagine how well that last bit went down in the media. Well, our trust privacy laws are very strict - so it's near impossible to tell who actually owns the companies if it's director is fronted by a corporate holding firm. These are used to protect property in the event of bankruptcies and debts, but can also be used to hide your residency.

jeffbee 5y ago

An irrelevant sideshow. If they made housing plentiful and cheap then nobody would buy it for any reason other than shelter.

sk0g 5y ago
> If they made housing plentiful and cheap then nobody would buy it for any reason other than shelter Do you feel that's a bad outcome? The phrasing suggests so, interested in why you feel that way.
- jeffbee 5y ago
  No, it's the ideal outcome. Housing should not be an investment. You should just live in it and it depreciates. People should be able to make normal profits by building new ones. Nobody should profit from buying and selling old ones.
  - TedDoesntTalk 5y ago
    There wash a time that home ownership was considered a liability, not an asset (source: “Rich Dad, Poor Dad”.
    - unmole 5y ago
      That's a terrible source.
      - TedDoesntTalk 5y ago
        Why?
        jeffbee 5y ago
        The whole book is self-help boilerplate wrapped around the advice to get rich by flipping real estate.

samingrassia 5y ago

When the fed suppresses interest rates and back stops the mortgage market, residential realestate starts to look like risk free treasuries with a ~9% yield.

swiley 5y ago
God forbid we have a housing market correction.
- voisin 5y ago
  Government forbid we have a housing market correction.
titzer 5y ago
If it looks like either the stock market or the housing market is about to crash, the fed will print unlimited amounts of money to prevent that. The only problem is that the rational action with that knowledge is to buy in as soon as possible, with all your cash, thereby making the bubble even bigger. It's a death spiral of inflation.
- Xcelerate 5y ago
  I agree. Also sounds like a great way to transfer more wealth from the poor to the rich considering only the rich have the ability to quickly funnel most of their wealth between different types of investments.
biasedbrain 5y ago
Where can you get 9% yield on housing? Where I live, you can only buy houses at prices that are above what you can get back in rents. You are very lucky if you can get to 1% yields, which is below inflation and not technically a good investment. The only way it still makes "sense" is by speculating on rising prices for real estate. Which is not risk free at all.
- opportune 5y ago

haribr 5y ago

Surely a role played by Chinese Govt. Why no one talks about that?

guai888 5y ago
Actually CCP is doing everything they can to stop the outflow of money. CCP wants to keep the money inside of China but not very successful. There is no rule of law in China and people with money in China want to put money in place where government can not take it away from them. As CCP tighten control, money will keep flowing out by any mean possible.
- spfzero 5y ago
  This. China has no safe place for people to save the money that they have made, by whatever means. Anywhere you put it in there, it can go away in an instant if the government wants to take it away from you. We don't understand this in the west, but whatever you have, in some countries, is fair game for people with friends in high places. It's not just China, but Russia and many other countries are like this. If you make enough money to pique the jealousy of the wrong person, You will end up in jail and your savings grabbed. Long term it's a good thing for the money to go into western real estate. Its value in the global market is being correctly recognized. Short term it is bad for local home buyers who end up priced out of the market.
  - epicureanideal 5y ago
    > Anywhere you put it in there, it can go away in an instant if the government wants to take it away from you. We don't understand this in the west Divorced or divorcing men understand how this can happen in the west.
    - steve_adams_86 5y ago
      As far as I know this applies to anyone divorcing; divorce laws apply equally to spouses these days, not just to men.

deleted 5y ago

[deleted]

chaganated 5y ago

You will own nothing, and you will be happy.

obiwanpallav1 5y ago

This[1] video by ColdFusion talks about a similar problem in the US in which Housing market is now being seen as the next big bet by the Wall Street Firms. In this scheme, a common man will not be able to buy/own any house but they can only rent it. It will be very similar to SaaS model in which Houses will be provided as a service. 1 - https://www.youtube.com/watch?v=gu4tC3px6mc https://www.youtube.com/watch?v=gu4tC3px6mc

toxik 5y ago
Fortunately, this is pretty easy to ban.
- TedDoesntTalk 5y ago
  How?
  - adflux 5y ago
    Taxes, relax zoning laws, subsidise building of housing.
    - duemti 5y ago
      "Taxes" The classic an all-answer and all-solver of ignorant people. Bigger government is what you are saying. Every time it only burdens the working class; the poor just want things gifted to them; the rich get richer. A 2v1 game.
CTDOCodebases 5y ago
Agricultural land is being bought up too. Small farms are being bought up by big agricultural firms. Bill Gates and Michael Blurry (big short game) are heavy invested in agricultural land.
yodelshady 5y ago
I don't know about other western countries but in the UK, homeowners are the election-winning group, and are considered a moderating force - being both workers and investors. Lacking that group is going to have some interesting political consequences.

xbmcuser 5y ago

Every year 100s of billions dollars of black money/corruption money goes from the 3rd world countries to the rich countries. Terrorist financing got the west to monitor the movement of black money but they still have left loop holes and were not going after developed countries and other tax haven countries. Panama leaks and other data breaches have started shining a light on this and the developed countries have had to do something.

wyck 5y ago

This isn't new, nor is it only related to China. Mexico, Russia, many middle east countries, and whole slew of other places has poured billions of cash into Canadian real estate. It's done via regulated banks who turn a blind eye because there nothing illegal about how it's being done. The are skyrises being built in every major city in which 95% of the tenants are not Canadian, and they sit practically empty. Some city blocks are a virtual ghost town of empty buildings the most Canadians can't even afford.

spfzero 5y ago
Western real estate is the new gold. It's protected by the entrenched lawful property rights of western countries, so money made in countries without those rights are going to flow in. Think about it. If you had made a few million based on your having positional power in a country where you would be jailed or killed once people found out what you had been doing, you'd get the money out to somewhere your descendants would have safe access to it no matter what happened.
- dandanua 5y ago
  Very few people realize that the western acceptance of blood money actually fuels autocratic regimes around the world and makes them much stronger. For example, Russian power elites have millions and billions in assets in the West. Hence, this new "cold war" with authoritarian Russia and Putin is a total farce. But those blood money will ruin the West, one day or another. Trump was the first major sign of it.
- seanmcdirmid 5y ago
  > Western real estate is the new gold. If you think western real estate is nuts, Chinese real estate is even crazier. Those Wenzhou house wives supposedly got started locally moving onto the rest of China and now the western world. It’s probably way more complex than that, however. > If you had made a few million based on your having positional power in a country where you would be jailed or killed once people found out what you had been doing, you'd get the money out to somewhere your descendants would have safe access to it no matter what happened. If that hypothesis were true, then Chinese would be fleeing the Chinese real estate market for the west, which isn’t really happening. It’s more of an expansion (if it is actually happening in significant amounts of money at all, which is not proven).

jollybean 5y ago

This has to stop, unfortunately a lot of people like the money coming in, and politicians often don't have the most effective policies. I think the inflow is fine, but there should be hefty taxes associated with the fact that the property is made valuable by the civic infrastructure in place in the country which only citizens are paying for. One thing they could do is build apartment buildings in less sensitive areas, and designate them as 'foreign ownership allowed'. Literally buildings would get built and remain largely empty, as a form of 'investment' (this happens in China) and so long as it wasn't affecting local prices too much, it'd be fine. I wonder if they should pick a spot in Southern Ontario and declare it such a 'zone' where they only build 30 story buildings for this purpose. Of course, the nature of the economic waste is laid bare. It might be more appropriate for the local governments to be selling a special kind of bond or some other financial instrument designed for this purpose.

msie 5y ago

House prices were soaring in Canada during the pandemic and the media couldn’t blame foreigners for once because of travel restrictions. Also the news reported on the rise of anti-asian racism. They should look in the mirror for blaming high r.e. prices on foreigners when it was proven that they only made up a small percentage of the market.

robjan 5y ago
Most overseas buyers don't actually visit the property before buying it. In fact, it's pretty common to buy a property before it's even built. I live in HK and receive brochures every few days for foreign property in Canada, the UK and Australia. If you have the cash, you can pretty much visit the agent and buy the place on the spot.

killjoywashere 5y ago

Meanwhile, 3 provinces in China keep facing unexpected power shortages from their hydroelectric dams, but the airport keeps landing 747s full of GPUs.

killjoywashere 5y ago
Why the downvotes? This is old, well reported news: https://www.cnbc.com/2021/06/21/bitcoin-btc-price-drops-on-china-crypto-mining-crackdown.html https://www.cnbc.com/2021/06/21/bitcoin-btc-price-drops-on-c....
- nitrogen 5y ago
  It's unrelated to the article, and is likely to spur even less related comments.
  - killjoywashere 5y ago
    It is related to the article. Where do you think these mystery billions are coming from?

anovikov 5y ago

If idiots want to pour their millions into worthless concrete to inevitably lose everything when the wave of free money from central banks recedes, leaving innumerous almost free homes in the market for everyone to buy - why any sane person should object? Notice that there is no comparable craze on the stock market. P/E has gone somewhat up sure but it's just out of anticipation of record corporate profits in the coming quarters - which is not unjustified given rampant inflation and deficit of everything which everyone is now making tons of money trying to fill. Because smart people never invest in real estate (at least not in residential real estate, especially not in single family, detached houses). In Russia, we have a proverb - "best thing to do about fools is not trying to stop them".

redisman 5y ago
> If idiots want to pour their millions into worthless concrete to inevitably lose everything when the wave of free money from central banks recedes, leaving innumerous almost free homes in the market for everyone to buy - why any sane person should object? Because everything you said is completely wrong and it takes the already extremely tight housing market to an absurd extreme where no ordinary person can purchase lodging to own. It would take a lot more than a monetary policy tightening to crash Vancouver or Toronto housing markets given how many people are moving in every year. Probably something quite cataclysmic
- anovikov 5y ago
  Then again - if people are moving in to already tight place, who is to blame? What are the probable ways of "tackling" it you suggest? Soviet-style "closing" of a place where the Party will decide if you are eligible to buy? This is how they prevented Moscow from overpopulating in the Soviet Union, resulting in doubling the population in the decade once barrier fell with the end of Communism. If anything, it's a source of free money for the residents: sell your current house for millions and move out somewhere cheaper, maybe retiring early as a result. If you don't want to people to move, analyse the reasons that push them to move and see what can be done about it. Real estate prices are just an indicator. It's stupid to "tackle" indicator rather than underlying reason.

throwaway5752 5y ago

It's global warming. Same as New Zealand. Money is easy and smart money is flocking to places that will be survivable in a decade or two. This is very easy.

asdff 5y ago
Not really. Sharks are smelling blood in the water everywhere, since nowhere is building enough supply. Guaranteed profit with that sort of regressive housing policy. Prices are rising in Miami almost as fast as the water table.
xvilka 5y ago
Siberia is a good place too - right now apartments and houses are very cheap.

john579 5y ago

Blackrock and other firms using federal reserve fiat money are buying up real estate in entire communities across Europe and North America. Jay ewe double-u's are behind it.

puskavi 5y ago

Chinese money, I guess.

digislave 5y ago

In my country, there are cheap houses in the countryside, and housing in attractive locations is very expensive. Perhaps the factor of demand is underrated in the discussion of housing prices.

fuzzybear3965 5y ago
Which country?
- digislave 5y ago
  Germany

zz865 5y ago

Tax tax tax. Everyone should be able to buy a property but its not fair if you sell for a profit and pay no Canadian tax as non-residents do. Property taxes should also be extra high for non-residents.

voisin 5y ago
I don’t disagree about using taxes to deal with this (though noncompliance and loopholes are a problem), but to clarify, non-residents pay tax on the sale of Canadian real estate. This is written into all reciprocal tax treaties. The only way out of this would be if the house was a principal residence, which is the same rule as applies to residents selling their principal residence. Apologies for all the residence/residents.

rorykoehler 5y ago

There should be a global rule that non-residents can't buy property. Homes should be prioritised for living not investments. It's a drag on the global economy with so much money being tied up in unproductive assets which in turn soak up even more money through rent seeking.

lrem 5y ago
Nah, let them invest. What we need is adding vacancies to the social housing pool.
- rorykoehler 5y ago
  There is no space for that without radical rezoning and densification. The alternative is every city turning into massive urban sprawl which is entirely undesirable. If you are suggesting forcing private investors to make their properties available to public housing stock then I’m not sure why that would be an improvement without serious rent caps in place.
  - lrem 5y ago
    A colleague told me about the setup in their home country some weeks ago, I _think_ that was the Dutch one, excuse my fuzzy memory... Once your €1500 tenant leaves, you have 3 or 6 months to find the next one. If not, the city will offer your place in parallel as social housing and you'll get €400 (flat rate for the whole municipality per size band) if that gets filled first. On a three year contract. Makes for a very good incentive to meet the market.
    - rorykoehler 5y ago
      It's good and I wouldn't complain if this was an outcome however better yet would be a system that allows people to buy their own homes. One of the major pitfalls and imo systemic national security risks in Europe are the high income tax rates. This coupled with foreign investment in the property market means that regular Europeans are effectively priced out of the market with no way back in. Long term this is a crazy risk to run for the sake of maintaining inefficient bureaucracies that don't remotely cater to the pressing needs of citizens.

DrBazza 5y ago

London has similar problems. Apartment blocks that have a hundred flats, but only 5 are occupied all year round. The new ones at Battersea being a good example. The others owned by shell companies that are speculating and investing, or just plain hiding ownership and tax dodging. The UK government have made some small steps in trying to associate property with people via proceeds of crime acts, and the financial conduct authority, but it is woeful.

alva 5y ago
I do not think successive UK governments have had enough of a long term strategy to do this consciously (though I would love to find out it was a deliberate), but I think the Battersea / Nine Elms development is a fantastic way to exploit the surging demand into Western real estate. Tens of thousands of flats have been built almost entirely funded by foreign investment. If/once the market collapses on whatever time frame, London now has significantly increased housing stock almost entirely on the back of foreign money (whilst providing income for local builders and suppliers). Already foreign owners are taking huge losses on their investment and I expect this to drop even further. If price drop to a reasonable level for your average Londoner, this will be a great win. On a side note, that entire development is an architectural disgrace and as you note, for the time being a ghost town, parking dodgy money from abroad.
- DrBazza 5y ago
  Nine Elms is horrific, isn't it? Designed by supposedly some of the world's best architects. Where the votes were presumably cast by other architects and not the general public. Also, that development, and others have "poor doors" around the side or back for the non-penthouse owning riff raff to use. Another thing that's completely wrong with these kinds of developments in London.
- strogonoff 5y ago
  While using foreign money flowing into Western property to build public housing is a cool strategy, in reality it did result in some controversy: https://www.theguardian.com/artanddesign/2021/feb/02/penthouses-poor-doors-nine-elms-battersea-london-luxury-housing-development https://www.theguardian.com/artanddesign/2021/feb/02/penthou...

LightG 5y ago

In Breaking Bad, you go to Los Pollos Hermanos ... In real life, you go to Toronto, or London, or any number of capital cities.

louloulou 5y ago

Approximate M2 growth since the start of 2020: USA: 33% Canada: 23% UK: 17% Euro Area: 15% China: 15% Japan: 13% WhERe iS aLL thE MOney ComInG fRoM guYS?

voisin 5y ago
Let me summarize the next four replies before they are posted: “Oh but it’s ok because velocity of money plummeted!!!” Ignoring the fact that there has never been an instance of money supply increase in relation to velocity of money decrease that was reversed once the velocity eventually returned to normal. Those money supply numbers you posted are the new normal now.
someguydave 5y ago
Not only that, but those governments also subsidize things like 30 year fixed rate mortgages with government guarantees. So not only is there more money burning a hole in people's pockets, the artificially low rates create massive leverage. I wager that if home buyers had to convince private hard-money lenders to give them 30 year mortgages the rates may increase. (Imagine if houses were denominated in gold)

aurizon 5y ago

Low rates allow high ratio mortgages(5% or less down) so all the rent needs to cover is 1-2% of that down payment to break even. After that the tenant works to feed the mortgage and gets zero equity. Fix? If you buy to reside in it = normal realty taxes. If you buy to rent, it is a business and needs to be taxed as such. Extracting money from the current positive feed back loop changes the equation and could eliminate this sort of rent seeking behaviors.

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polskibus 5y ago

They say in the video that the report is based on 2008-2018 data. Do we know how the situation unfolded since covid started?

stvkoch 5y ago

$1.53T was born from nothing and the should go to somewhere

mikkelam 5y ago

I honestly don't see a way out until boomers start dying. The 2030s will probably see a large decline in the housing market

voisin 5y ago
How will that solve it?
- mikkelam 5y ago
  I thought that the baby boomer population was significantly larger than their inheritants, however, it seems GenX is only slighter lower in population size. So my theory doesn't hold.
theklub 5y ago
That will always just be a slow bleed. Some are already selling and moving to warmer climates. https://en.m.wikipedia.org/wiki/The_Villages,_Florida https://en.m.wikipedia.org/wiki/The_Villages,_Florida

tedk-42 5y ago

So many saying it's a supply issue... If it's a supply issue, more people would be homeless and without a place to live. It's an affordability issue with a small portion of 'housing investors' pricing out renters from ever buying.

swiley 5y ago
Higher supply would mean lower prices. By definition affordability issues and supply issues are the same barring some kind of regulatory capture or abuse of credit.
- tedk-42 5y ago
  Credit abuse is subjective - accessibility to credit for all parties equally mean that it will continue to be profitable for property investors to buy up more and more of the housing supply without constraint. Building 'more' housing is not the answer. Preventing people from holding real estate as assets is the solution. We don't privatise ownership of water or air - two basic resources for humans to survive. Privatisation of basic human necessities is dangerous and we'll see in the future how large scale private property ownership will continue to drive social issues. It's really just the beginning...
  - swiley 5y ago
    Holding realestate as an investment is the incentive for developing land and maintaining buildings.
    - tedk-42 5y ago
      I'm completing against the idea that 1 person can own 100 houses while the other 99 are forced to rent from that person. Developing land is a no brainer. No need to keep making the rich richer while pricing out first time buyers from the market. We can all afford to purchase water and there's no fear of it running out when investment is properly done to manage water as a resource. Surely we can do the same with housing so people can afford to buy.

refurb 5y ago

They started collecting data on foreign purchasers and it’s maybe a few single percentage points. Canadians are house horny and willing to borrow from parents and absolutely max out payments to own a house. Does domestic money laundering and illegal money have an impact? Absolutely, but blaming foreigners is laughable considering number of them.

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brutus1213 5y ago

I think the housing situation in major Canadian cities is so bad, it is going to have clear detrimental outcomes to society. Starter homes in nice (not posh, subway access, good walk score) neighborhoods in Toronto are going for 2-2.5 million. The math on these are bad even if you made a profit on the condo you bought previously (which many people may not have made). The govt has made a series of very half hearted moves to try to quell the swell, but do they really care? Construction and the general housing sector is a major part of our economy now. This is not going to end well :( I agree with posters who say that foreign buyers are the scapegoat. We need to start taxing real-estate gains on primary residences above a threshold (I thought the US did that). Also, the govt needs to take serious measures to break the assumption that housing always goes up double digits. Everyone I know thinks housing will go up .. this sounds like a recipe for collapse. People with little means are going all in on the most expensive real-estate they can find. Illegal suites (rooms for rent, basements) are rampant. The sort of side hustle I hear about are insane (someone boasted growing shrimp in their garage to supplement income).

bravo22 5y ago
Taxing gains on sales of primary homes just leads to fewer homes for sale and higher prices. The only thing that correlates with the price change is months of available inventory in the market.
moeadham 5y ago
There is no physical limit to the amount of houses. The best way to fix this in the long term is to flood the market with new housing inventory. We need to remove restrictions and make it easy to build new high-density housing anywhere and everywhere. The wealthy have the capital to find loopholes in any tax that is levied. We need to punish the housing speculators with a supply surge.
- brutus1213 5y ago
  In GTA, there is a limit for single family homes (with yards) that have access to proper public transit. I have no belief an entlightened govt can fix all these factors in my lifetime (wide spread efficient public transit, increased investments in recreational parks, etc.). We have a policy called the greenbelt, which was pitched as an environmental thing but has been at least one factor in this whole mess.

netheril96 5y ago

Beijing has the strictest restriction on property purchase in the world. Its property prices had been declining for two years before 2020. It has had no new policies regarding real estate and loans since 2017. Yet its property prices has been rising since 2020, several months after the infinite QE the US starts.

motohagiography 5y ago

Note, the post is an interview with the head of Transparency International, who got data from 1.4 million transactions from the main land and mortgate registries in Ontario. The article isn't just some opinion about "foreign buyers," with racist undertones, there is a real pattern and data. They found Toronto matches matches markets around the world that real estate is being bought by companies, with cash, and through unregulated lenders. Given their general agenda, they have conflated holding companies with all foreign companies, and they are suspicious of private enterprise in general, but as a stopped clock they appear right on this issue. Their transparency issue is real money laundering for a change instead of capital flight, and even though I don't care much for their usual agenda, for them to criticize the housing market in Canada is accurate. Casual BBQ conversations in Toronto are as likely to be about real estate prices as they are to talk about how many of the neighbourhood businesses are foreign money laundering operations. It's an open secret, and most milenials are priced out of the cities they grew up in. Not only are investment banks churing real estate (see Blackrock buying homes search) with Fed driven liquidity, Canada's political parties forfeited their national focus, and instead spend their time courting foreign leaders and their diaspora networks to get dodgy campaign funding sources and voting blocs. The parties realized it's easier to raise money from and pay off constituencies to stay in power in foreign countries to work votes here because there is no transparency once aid, loans, financing, and other money vehicles leave the country. The logic appears to be, "why should our globally elite and governing classes be subject to the opinions of working class people we disagree with in these mere nations when we can just import people and money dependent on our policies, both from educated and wealthy and poor dependent classes, and then manage them to keep us power." It's post-national policy. The parties run offense by calling everyone they disagree with racists, and the whole thing is absolutely rotten. A big part of that is attracting capital flight from other countries into assets like real estate and lax beneficial owner enforcement and turning a blind eye to it in return for political support.

908B64B197 5y ago
> The logic appears to be, "why should our globally elite and governing classes be subject to the opinions of working class people we disagree with in these mere nations when we can just import people and money dependent on our policies, both from educated and wealthy and poor dependent classes, and then manage them to keep us power." It's post-national policy. The parties run offense by calling everyone they disagree with racists, and the whole thing is absolutely rotten. Sounds like you need a new party.

CosmicShadow 5y ago

Living in Kitchener-Waterloo (an hour from Toronto), our housing rates have gone through the roof with rich Torontonians buying our stuff for 100-300k over, but who the fuck is buying their extremely overpriced stuff?? That's what we always wonder. Who can afford to live in Toronto or buy anything there? Their jobs don't pay that much more. There is no "more expensive market" or "secret Ultra-Toronto" that can move downstream into Toronto. Is it just "there are a lot of rich Canadian investors" (seems unlikely) or is it mostly just people overseas buying and leaving places empty and/or hoping to maybe rent it out? Something doesn't seem to make much sense. What Canadian investor is going to think, hmmm, I'll bid $400k over on a 2.5MM home that no one in my country can afford in the most expensive city and it's not even that nice. Who is going to buy it from them as it goes up? Anyone in Canada who could possibly afford it now, or in the future will already have a nice home, unless are just swapping around for a different location. There has to be some 3rd party upstream they know will buy it out from them, or else they will be the sucker who hit the ceiling with a property they can't sell.

coldacid 5y ago
It's almost entirely foreign buyers, as investments or for money laundering. If Trudeau would rub some brain cells together, we'd get changes to the law that would limit foreign real estate ownership, and close loopholes allowing the banks or other Canadian investment firms to hold real estate on behalf of foreign owners.
- 908B64B197 5y ago
  > If Trudeau would rub some brain cells together What about the votes he needs from certain communities? https://globalnews.ca/news/4853439/karen-wang-liberal-burnaby-south-candidate-wechat-message-controversy/ https://globalnews.ca/news/4853439/karen-wang-liberal-burnab...

dukeofdoom 5y ago

You can always build more houses, start new cities, its not a real problem. But a million dollars brought in, goes directly into the economy from a foreign investor, makes a country rich. Trading something that is low skill to make, into money that can be spent on all kinds of infrastructure and technology. So my only take on this is that how that invest money is spent by that country if its a net positive or negative. If it goes to a corrupt circle at the top, and bankers, then obviously its not benefitting the economy as it should.

s1artibartfast 5y ago
That really depends on the net flow of cash and how it is used. Housing is bought specifically because it is a good investment with positive returns. This is money that flows back out.
MichaelZuo 5y ago
I agree, municipal budgets should be going way up since they’re all funded by property taxes to varying degrees. That means there will be more money for investing in infrastructure, new projects, etc., that of course benefit every resident.
cannabis_sam 5y ago
> You can always build more houses, start new cities, its not a real problem. Of course, but that would devalue the existing housing stock, which for the vast majority of politicians would mean a loss on their real estate investments. Why would they give a shit about young and future people being able to afford a place to live, when they can make a mint by denying these people housing?

boublepop 5y ago

It says something about the state of the world that the instant that “state guaranteed wealth increase” became invalidated, the entire worlds elites united to purchase every single residential unit they could to keep profiting of the working class. World war 3 won’t be fought over natural resources. It’ll be the rent slaves class fighting against the upper classes “right” to keep them in indebted servitude. We need some policies preventing rent seeking on peoples primary residents.

kodah 5y ago

I'd like to point out how nutty it is that this is happening all over the world now. I first experienced this in 2017 in Dallas, TX - now it's everywhere. One thing I worked very consciously with my financial planner about was this sentiment that: - My job does not facilitate staying in a place long enough to make owning a home a worthwhile investment - I will probably never own a home because there are enough people that have a lot more liquidity than I do We have now setup an investment strategy that has become more stable and effective than owning a home. Point being, this is a FP's bread and butter - engage them!

arcanon 5y ago

I mean all the farmable land will be up there in a few decades. Seems like a good investment.

jbverschoor 5y ago

Yeah foreign, untaxed, gray or black money is a very good source to buy houses. Meanwhile, as a resident and citizen, you're taxes 40+% and every coin is turned upside down because of "anti money laundering". Realestate and banks are the biggest fraud ever.