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I don't know how real estate market works in Canada, but I can totally see how 5% of buyers could mess up the market in the U.S.. House pricing is set based on

I don't know how real estate market works in Canada, but I can totally see how 5% of buyers could mess up the market in the U.S.. House pricing is set based on 'comps' (comparable homes and the price they sold for). That means that a small percentage of buyers can essentially bump (initial) pricing for all homes.

ehsankia 5y ago
The problems of the housing market is the exact same as any other expensive city in the US or anywhere else. Home-owners with local power messing with zoning laws to limit supply and boost the price of their homes. It's always a supply issue. https://www.youtube.com/watch?v=6OZJClSdZ28 https://www.youtube.com/watch?v=6OZJClSdZ28
- ItsMonkk 5y ago
  The fundamental issue is the incentives. When someone who owns a home says no to increasing zoning, their net worth goes up. It's verrry hard to go upstream and fight that. I'm for those changes, and would vote for them, but the people incentivized to fight will gish gallop till the cows come home. If you shut down one, they will invent some other reason that zoning should not be increased. The only way to fix this is to tax the land equal to what it's worth - occupying or not, foreign owned or not - such that the sale price of the home is equal to the cost to build the housing on top of it. Once that's true, and saying no means they pay more, they will only actually say no to things that actually make them happier, and I'm all for that if they are willing to pay for it. But the most likely cause is that they would suddenly vote to up-zone and would allow for denser housing, and over time the tax would drop.
- gorjusborg 5y ago
  Interestingly, I'm seeing a lack of zoning enforcement drive up prices locally. Small-time investors are buying homes in residential zones to put on short-term rental sites, and because they generate revenue from the house, are able to offer a much higher amount and have it still make financial sense.
incomingpain 5y ago
>I don't know how real estate market works in Canada, but I can totally see how 5% of buyers could mess up the market in the U.S.. 5% foreigner owned is not big enough to have an appreciable difference. How about funds buying real estate? What used to be around 10% went to 20% in 2020 and then went to 40% in 2021. Nobody will buy negative yielding bonds. It only leaves a couple other options.
- gorjusborg 5y ago
  > 5% foreigner owned is not big enough to have an appreciable difference I doubt it makes zero difference, but like you, it's just my feeling. Real estate investing could be a price driver, certainly. I don't know what it's like in Canada, but I know that in my location even individuals are buying second and third homes and renting them out as short-term rentals. Doesn't seem to be sustainable to me, and certainly is affecting local housing prices. One way I'd combat this is to ban short-term rental outside of hospitality zoned areas.

ehsankia 5y ago

The problems of the housing market is the exact same as any other expensive city in the US or anywhere else. Home-owners with local power messing with zoning laws to limit supply and boost the price of their homes. It's always a supply issue. https://www.youtube.com/watch?v=6OZJClSdZ28 https://www.youtube.com/watch?v=6OZJClSdZ28

ItsMonkk 5y ago
The fundamental issue is the incentives. When someone who owns a home says no to increasing zoning, their net worth goes up. It's verrry hard to go upstream and fight that. I'm for those changes, and would vote for them, but the people incentivized to fight will gish gallop till the cows come home. If you shut down one, they will invent some other reason that zoning should not be increased. The only way to fix this is to tax the land equal to what it's worth - occupying or not, foreign owned or not - such that the sale price of the home is equal to the cost to build the housing on top of it. Once that's true, and saying no means they pay more, they will only actually say no to things that actually make them happier, and I'm all for that if they are willing to pay for it. But the most likely cause is that they would suddenly vote to up-zone and would allow for denser housing, and over time the tax would drop.
gorjusborg 5y ago
Interestingly, I'm seeing a lack of zoning enforcement drive up prices locally. Small-time investors are buying homes in residential zones to put on short-term rental sites, and because they generate revenue from the house, are able to offer a much higher amount and have it still make financial sense.

incomingpain 5y ago

>I don't know how real estate market works in Canada, but I can totally see how 5% of buyers could mess up the market in the U.S.. 5% foreigner owned is not big enough to have an appreciable difference. How about funds buying real estate? What used to be around 10% went to 20% in 2020 and then went to 40% in 2021. Nobody will buy negative yielding bonds. It only leaves a couple other options.

gorjusborg 5y ago
> 5% foreigner owned is not big enough to have an appreciable difference I doubt it makes zero difference, but like you, it's just my feeling. Real estate investing could be a price driver, certainly. I don't know what it's like in Canada, but I know that in my location even individuals are buying second and third homes and renting them out as short-term rentals. Doesn't seem to be sustainable to me, and certainly is affecting local housing prices. One way I'd combat this is to ban short-term rental outside of hospitality zoned areas.