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>> All the market efficiency in the world won't stop the continual increase in prices from bad zoning and missing middle housing. I disagree. Depending on the

>> All the market efficiency in the world won't stop the continual increase in prices from bad zoning and missing middle housing. I disagree. Depending on the jurisdiction (in the US), part of the issue is the 10% net loss you end up with. 5-6% on the agent fee(s), another 1% on "mansion tax", in NYS/NYC there is a 1% and 1% transfer tax and 1/2% mortgage tax. Different jurisdictions are less (or more). Throw in more for the lawyer and you're down 10% on the sale. The sales agent fee seem fair for tough markets but even 1% sales agent fees seem preposterous given the market. If the house flips in 1 day, how is that worth 5 or 6%? These days people are negotiating that down to 4% but even that is preposterous given the market. The problem with the extra 5 or 6% agent fees is: that people dont want to buy/sell as much, because you're effectively losing 20-30% of your 20% down equity on the sale (you'll lose more on the buy with the the 1-2% Title Insurance.) Effectively, you're losing half your 20% down equity. Of course then...even if sellers want to sell, they dont because they need to bypass the frictional hurdles. Because if you sell and host half your 20% down equity, how the heck do you buy the next home?

FredPret 5y ago
All this is true and bad but the Canadian market is primarily driven by supply issues, not red tape. There just aren’t enough houses/condos. The resulting price boom isn’t a mere 5-10% increase, but hundreds of percent over the course of only 5-10 years. I’ve seen condo prices double three times in five years in places.
- rapind 5y ago
  > All this is true and bad but the Canadian market is primarily driven by supply issues, not red tape. There just aren’t enough houses/condos. You forgot cheap debt. There's also a ton of speculation. Jack up those interest rates and see where we're at.
  - TheCowboy 5y ago
    Jack up interest rates to trigger a recession, and now not only do you still have a housing market that exists in its current form due to perpetual undersupply but with a recession on top. Making it too expensive to buy a home does 'help' with prices, but it's more like treating the symptom than the cause. The result is there still isn't enough affordable housing in places where it is needed.
    - rapind 5y ago
      If raising interest rates causes a recession then we’re already in one and just pretending we’re not. Consider the long term consequences of this debt economy. We’re just kicking the can down the road. It won’t magically get better. The sooner we (society) learn that massively over borrowing has consequences, the better. I agree though that building more housing (or maybe radically changing the way housing works) should also happen. Maybe once everyone wakes up from this real estate debt fantasy there’ll be the political will to actually do something about it. Average house price in Canada has ballooned. It’s like a crypto scheme, only instead of a bunch of shady YouTubers selling it, we have an entire industry of snake oil pushers. I don’t think your average Jane really gets how ridiculous it is… yet.
- TuringNYC 5y ago
  >> All this is true and bad but the Canadian market is primarily driven by supply issues, not red tape. My point is that if you reduce the red tape (and deadweight loss) there are actually people who want to sell, but wont sell if they are losing a ton of money on the sale. Reduce the loss and more supply appears. In the US this is a huge issue. If you switch cities twice and sell each time, your entire downpayment has disappeared in fees/taxes. You literally have nothing left to buy your next home with. So people stick around in houses they dont want in cities without ideal jobs because they have no choice.
  - smugma 5y ago
    When markets are rising so rapidly, there are very few people who might lose money on a sale. There’s a lot of fat in the process, but it’s not particularly relevant when prices are going up double digits each year.
  - pmfgpmfg 5y ago
  - dghlsakjg 5y ago
    That isn’t what’s happening in the Canadian market is what we’re telling you. It is not that there are people that aren’t selling, it’s that there aren’t enough houses for the number of people in the country. House prices have risen enough to cover all of the fees, except that there is nowhere in the country you can move to where this isn’t happening.
  - kelnos 5y ago
    Unless potential sellers are leaving the country or are choosing to rent after they sell, wouldn't more sellers also increase the number of buyers (because those sellers have to live somewhere else after they sell), and it all will end up being a wash? (And if they are choosing to rent after they sell, that just shifts unaffordable home prices to unaffordable rents, as rental demand increases without a corresponding increase in supply.)
nradov 5y ago
No one is required to pay a 5-6% commission. Use a discount real estate broker. You won't get much in the way of marketing or staging service, but in a hot market that hardly matters.
- passerby1 5y ago
  Looks like a valid for a non-canadian, why is this downvoted?
  - RocketOne 5y ago
    Because there are realtors here?
PaulDavisThe1st 5y ago
If the broker fee isn't worth it, then sell your house yourself. It's not that hard, but it's not zero work either. In addition, it's increasingly likely that many modern transactions involve a buyer and a seller broker, reducing their commission to half of whatever you pay. I've sold 3 houses myself, and bought 3 without a broker.
- TuringNYC 5y ago
  In the US, The buyer AND the seller fees are paid by the seller. Even if you have no seller agent, you lose practically every buyer without a buyer agent because many agents will not show you a home not offering a fee. Its a shakedown.
  - PaulDavisThe1st 5y ago
    I sold one of the 3 houses I've owned & sold to someone using a buyer broker. The broker reached out to negotiate the fee, and we settled on 2.5% (a bit too easily, I suspect I could have pushed it down to 2%). The last house I sold we almost sold via a buyer agent, and they did the same thing. They are doing work, so the real question is whether you feel they are overcharging or not for whatever it is that they do. Also, I think you meant to say "you lose practically every buyer WITH a buyer agent". This has not been my experience.

FredPret 5y ago

All this is true and bad but the Canadian market is primarily driven by supply issues, not red tape. There just aren’t enough houses/condos. The resulting price boom isn’t a mere 5-10% increase, but hundreds of percent over the course of only 5-10 years. I’ve seen condo prices double three times in five years in places.

rapind 5y ago
> All this is true and bad but the Canadian market is primarily driven by supply issues, not red tape. There just aren’t enough houses/condos. You forgot cheap debt. There's also a ton of speculation. Jack up those interest rates and see where we're at.
- TheCowboy 5y ago
  Jack up interest rates to trigger a recession, and now not only do you still have a housing market that exists in its current form due to perpetual undersupply but with a recession on top. Making it too expensive to buy a home does 'help' with prices, but it's more like treating the symptom than the cause. The result is there still isn't enough affordable housing in places where it is needed.
  - rapind 5y ago
    If raising interest rates causes a recession then we’re already in one and just pretending we’re not. Consider the long term consequences of this debt economy. We’re just kicking the can down the road. It won’t magically get better. The sooner we (society) learn that massively over borrowing has consequences, the better. I agree though that building more housing (or maybe radically changing the way housing works) should also happen. Maybe once everyone wakes up from this real estate debt fantasy there’ll be the political will to actually do something about it. Average house price in Canada has ballooned. It’s like a crypto scheme, only instead of a bunch of shady YouTubers selling it, we have an entire industry of snake oil pushers. I don’t think your average Jane really gets how ridiculous it is… yet.
TuringNYC 5y ago
>> All this is true and bad but the Canadian market is primarily driven by supply issues, not red tape. My point is that if you reduce the red tape (and deadweight loss) there are actually people who want to sell, but wont sell if they are losing a ton of money on the sale. Reduce the loss and more supply appears. In the US this is a huge issue. If you switch cities twice and sell each time, your entire downpayment has disappeared in fees/taxes. You literally have nothing left to buy your next home with. So people stick around in houses they dont want in cities without ideal jobs because they have no choice.
- smugma 5y ago
  When markets are rising so rapidly, there are very few people who might lose money on a sale. There’s a lot of fat in the process, but it’s not particularly relevant when prices are going up double digits each year.
- pmfgpmfg 5y ago
- dghlsakjg 5y ago
  That isn’t what’s happening in the Canadian market is what we’re telling you. It is not that there are people that aren’t selling, it’s that there aren’t enough houses for the number of people in the country. House prices have risen enough to cover all of the fees, except that there is nowhere in the country you can move to where this isn’t happening.
- kelnos 5y ago
  Unless potential sellers are leaving the country or are choosing to rent after they sell, wouldn't more sellers also increase the number of buyers (because those sellers have to live somewhere else after they sell), and it all will end up being a wash? (And if they are choosing to rent after they sell, that just shifts unaffordable home prices to unaffordable rents, as rental demand increases without a corresponding increase in supply.)

nradov 5y ago

No one is required to pay a 5-6% commission. Use a discount real estate broker. You won't get much in the way of marketing or staging service, but in a hot market that hardly matters.

passerby1 5y ago
Looks like a valid for a non-canadian, why is this downvoted?
- RocketOne 5y ago
  Because there are realtors here?

PaulDavisThe1st 5y ago

If the broker fee isn't worth it, then sell your house yourself. It's not that hard, but it's not zero work either. In addition, it's increasingly likely that many modern transactions involve a buyer and a seller broker, reducing their commission to half of whatever you pay. I've sold 3 houses myself, and bought 3 without a broker.

TuringNYC 5y ago
In the US, The buyer AND the seller fees are paid by the seller. Even if you have no seller agent, you lose practically every buyer without a buyer agent because many agents will not show you a home not offering a fee. Its a shakedown.
- PaulDavisThe1st 5y ago
  I sold one of the 3 houses I've owned & sold to someone using a buyer broker. The broker reached out to negotiate the fee, and we settled on 2.5% (a bit too easily, I suspect I could have pushed it down to 2%). The last house I sold we almost sold via a buyer agent, and they did the same thing. They are doing work, so the real question is whether you feel they are overcharging or not for whatever it is that they do. Also, I think you meant to say "you lose practically every buyer WITH a buyer agent". This has not been my experience.