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I would have thought that the pandemic and travel restrictions would have effectively “banned foreigners from buying homes” for 2 years. If home prices haven’t

by j7ake 5y ago

I would have thought that the pandemic and travel restrictions would have effectively “banned foreigners from buying homes” for 2 years. If home prices haven’t fallen during pandemic, then the reason why prices are high is not because of foreigners. The government is trying to point to a scapegoat rather than trying to get to the root cause.

actually_a_dog 5y ago
This is primarily about foreign investors who are buying sight unseen, then leaving the homes vacant. Note the exception for permanent residences.
OJFord 5y ago
It's foreign investors they're concerned about, not second home holiday-makers and immigrants.
jowsie 5y ago
From what I've read before, the issue isn't foreigners buying the homes to live in, it's foreigners using it as a way to move cash out of their own country to hedge against devaluation/government blocks. A lot of the houses don't even end up being rented out, they just sit vacant.
- sandworm101 5y ago
  This. Too many canadian homes are sitting empty. Those who dont live in the country are less likely to actually live in the homes they buy. It is a hamfisted approach but at least they are trying something direct to address the vacancy issue, something other than moving money around.
- deleted 5y ago
  [deleted]
ClumsyPilot 5y ago
Not at all, you can buy property remotely and you can in vest in clmpanies which buy properties on your behalf. Trouble is that restricting foreign buyers is meaningless unless you also reign in corporate 'investment', as endless shell conpanies obscure the end benefactor What you have to do is reign in buying houses as an investment by people who have no intention of ever living in them.
xyst 5y ago
This. Root cause is crappy city planning and design; and emphasis on single family housing development. Many cities across North America are designed with urban sprawl and car centric travel in mind. Pedestrian and alternative forms of transportation are a second class citizen despite the ability to move people more efficiently than cars will ever do. Don’t get me wrong. Cars have their in place in society but their current role is overstated and NA city design shows it (massive parking lots, expensive housing).
- breakfastduck 5y ago
  This is literally nothing to do with it. It's to do with wealthy foreigners buying properties and leaving them empty basically to use as an 'asset' rather than a home. London has this problem more than anywhere. Blocks full of purchased and empty while locals can't get a sniff.
  - ryanbrunner 5y ago
    That is by no means the entirety of the housing problem in Canada. Foreign ownership is a very small part of the Canadian housing market, and with no other measures, Canadian investors will happily scoop up foreign owned properties. I doubt this by itself will make a significant dent in the market. What we need is foreign ownership taxes / bans combined with heavy taxes on ownership of multiple single-family dwellings and townhouses.
- raziel2p 5y ago
  European cities without the problems you've mentioned are struggling with the exact same housing crisis.
  - deleted 5y ago
    [deleted]
- TimPC 5y ago
  The root cause is a handful of cities winning and experiencing unreasonable growth they were never designed for. Winners grow at up to 300K people a year while losers shrink. Governments need to do more so that their national economies aren’t centred on a small handful of success stories. If there were twenty good cities in Canada, Toronto would be growing by 30K a year instead of 300K a year (pre-COVID).
eps 5y ago
Being from Vancouver and having witnessed with my own eyes mainland Chinese investors in suits on one-day visits driving around in tour buses and buying everything in sight - yeah, this clusterfuck is absolutely rooted in a torrent of Chinese money being parked in Canada. The ban won't do much, obviously, but the cause is the foreign investments. 100%.
sbarre 5y ago
The root cause in Canada is that a lot of the older generation, existing home owners, have put their investments in buying second or third homes as income properties, and for a lot of Canadians (I read that 1/3 of Canadian home owners have one or more additional properties) that's the nest egg now. For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home purchase by using the HELOC for the downpayment, and a mortgage for the rest. This puts a lot of people in (very self-inflicted) financially precarious situations where they are counting on interest remaining low and the value of their investments going up in order to stay ahead of the payments. Regardless of how we got here, due to this situation no government will screw all those people over just to "fix" things for those who haven't been able to get into that market yet. It's a lose-lose.. Leave things the way they are, and you continue to price out an entire generation, which is a huge problem. Make a large corrective change to address this and you potentially force a huge amount of existing owners to sell investments at a loss and face financial distress, another huge problem. Some folks say "too bad for them for getting so leveraged" but all they did was follow the advice given to them by the market, and follow the rules that our government put in place. Anyways, it's a complicated problem. Foreign ownership certainly contributes to the problem but it's not the major factor. This is 100% a "for show" measure.
- stephencanon 5y ago
  > For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home purchase by using the HELOC for the downpayment, and a mortgage for the rest. Banks hate this, but it's legal. If banks actually hated it, they would simply not write the loan. Why do you think they hate it?
  - sbarre 5y ago
    Because it increases the risk of default. I say "banks hate this" as unsubtle shorthand here. Obviously they don't hate it enough to refuse people additional mortgages (it's all secured by tangible assets at the end of the day) but they certainly aren't as happy about it as if people had a 20% downpayment in cash rather than pulling it from a line of credit.
refurb 5y ago
For the hottest market in Canada, Vancouver, the hottest communities had single digit foreign ownership. That doesn't explain why Halifax, Nova Scotia has double in price. But regardless, not sure why travel restrictions would matter. You don't need to see a house to buy it.
- Tiktaalik 5y ago
  This isn't true at all. If any foreign buying stat looked single digit it was only because the metric was so broad so as to include areas where there was zero foreign buying interest. The week the BC Liberals brought in the foreign buyer tax they had data in hand that showed foreign buying in Richmond and Burnaby was (going from memory here) between 15-20% of sales that period. Worth noting that at the time those areas were building lots of new builds so possible that the trend the government was concerned about was new build condo purchases being dominated by foreign capital. That's my speculation only. CoV proper I think was around 11%. Globe and Mail articles on this issue from around 2016 call out some of the data and there are some startling numbers that make it clear why the government acted. Perhaps its available on some government website too I dunno.
  - refurb 5y ago
    They never started collecting actual citizenship/residency data on house sales until a year or two ago. I remember one analysis out of UBC that assume foreign owner if they has a "foreign sounding name". From what I've seen, some neighborhoods are high, but it's at the margin. Canadians snorfing up massive amounts of debt in order to acquire more property is a bigger driver.
    - Tiktaalik 5y ago
      Yes around 2016 they finally started gathering real data and it was so remarkably high in certain areas they brought in the foreign buyer tax. It only took like a month of data before the government, which btw long dismissed that there was any problem, was convinced that there was a real problem.

by j7ake 5y ago

actually_a_dog 5y ago

This is primarily about foreign investors who are buying sight unseen, then leaving the homes vacant. Note the exception for permanent residences.

OJFord 5y ago

It's foreign investors they're concerned about, not second home holiday-makers and immigrants.

jowsie 5y ago

From what I've read before, the issue isn't foreigners buying the homes to live in, it's foreigners using it as a way to move cash out of their own country to hedge against devaluation/government blocks. A lot of the houses don't even end up being rented out, they just sit vacant.

sandworm101 5y ago
This. Too many canadian homes are sitting empty. Those who dont live in the country are less likely to actually live in the homes they buy. It is a hamfisted approach but at least they are trying something direct to address the vacancy issue, something other than moving money around.
deleted 5y ago
[deleted]

ClumsyPilot 5y ago

Not at all, you can buy property remotely and you can in vest in clmpanies which buy properties on your behalf. Trouble is that restricting foreign buyers is meaningless unless you also reign in corporate 'investment', as endless shell conpanies obscure the end benefactor What you have to do is reign in buying houses as an investment by people who have no intention of ever living in them.

xyst 5y ago

This. Root cause is crappy city planning and design; and emphasis on single family housing development. Many cities across North America are designed with urban sprawl and car centric travel in mind. Pedestrian and alternative forms of transportation are a second class citizen despite the ability to move people more efficiently than cars will ever do. Don’t get me wrong. Cars have their in place in society but their current role is overstated and NA city design shows it (massive parking lots, expensive housing).

breakfastduck 5y ago
This is literally nothing to do with it. It's to do with wealthy foreigners buying properties and leaving them empty basically to use as an 'asset' rather than a home. London has this problem more than anywhere. Blocks full of purchased and empty while locals can't get a sniff.
- ryanbrunner 5y ago
  That is by no means the entirety of the housing problem in Canada. Foreign ownership is a very small part of the Canadian housing market, and with no other measures, Canadian investors will happily scoop up foreign owned properties. I doubt this by itself will make a significant dent in the market. What we need is foreign ownership taxes / bans combined with heavy taxes on ownership of multiple single-family dwellings and townhouses.
raziel2p 5y ago
European cities without the problems you've mentioned are struggling with the exact same housing crisis.
- deleted 5y ago
  [deleted]
TimPC 5y ago
The root cause is a handful of cities winning and experiencing unreasonable growth they were never designed for. Winners grow at up to 300K people a year while losers shrink. Governments need to do more so that their national economies aren’t centred on a small handful of success stories. If there were twenty good cities in Canada, Toronto would be growing by 30K a year instead of 300K a year (pre-COVID).

eps 5y ago

Being from Vancouver and having witnessed with my own eyes mainland Chinese investors in suits on one-day visits driving around in tour buses and buying everything in sight - yeah, this clusterfuck is absolutely rooted in a torrent of Chinese money being parked in Canada. The ban won't do much, obviously, but the cause is the foreign investments. 100%.

sbarre 5y ago

The root cause in Canada is that a lot of the older generation, existing home owners, have put their investments in buying second or third homes as income properties, and for a lot of Canadians (I read that 1/3 of Canadian home owners have one or more additional properties) that's the nest egg now. For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home purchase by using the HELOC for the downpayment, and a mortgage for the rest. This puts a lot of people in (very self-inflicted) financially precarious situations where they are counting on interest remaining low and the value of their investments going up in order to stay ahead of the payments. Regardless of how we got here, due to this situation no government will screw all those people over just to "fix" things for those who haven't been able to get into that market yet. It's a lose-lose.. Leave things the way they are, and you continue to price out an entire generation, which is a huge problem. Make a large corrective change to address this and you potentially force a huge amount of existing owners to sell investments at a loss and face financial distress, another huge problem. Some folks say "too bad for them for getting so leveraged" but all they did was follow the advice given to them by the market, and follow the rules that our government put in place. Anyways, it's a complicated problem. Foreign ownership certainly contributes to the problem but it's not the major factor. This is 100% a "for show" measure.

stephencanon 5y ago
> For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home purchase by using the HELOC for the downpayment, and a mortgage for the rest. Banks hate this, but it's legal. If banks actually hated it, they would simply not write the loan. Why do you think they hate it?
- sbarre 5y ago
  Because it increases the risk of default. I say "banks hate this" as unsubtle shorthand here. Obviously they don't hate it enough to refuse people additional mortgages (it's all secured by tangible assets at the end of the day) but they certainly aren't as happy about it as if people had a 20% downpayment in cash rather than pulling it from a line of credit.

refurb 5y ago

For the hottest market in Canada, Vancouver, the hottest communities had single digit foreign ownership. That doesn't explain why Halifax, Nova Scotia has double in price. But regardless, not sure why travel restrictions would matter. You don't need to see a house to buy it.

Tiktaalik 5y ago
This isn't true at all. If any foreign buying stat looked single digit it was only because the metric was so broad so as to include areas where there was zero foreign buying interest. The week the BC Liberals brought in the foreign buyer tax they had data in hand that showed foreign buying in Richmond and Burnaby was (going from memory here) between 15-20% of sales that period. Worth noting that at the time those areas were building lots of new builds so possible that the trend the government was concerned about was new build condo purchases being dominated by foreign capital. That's my speculation only. CoV proper I think was around 11%. Globe and Mail articles on this issue from around 2016 call out some of the data and there are some startling numbers that make it clear why the government acted. Perhaps its available on some government website too I dunno.
- refurb 5y ago
  They never started collecting actual citizenship/residency data on house sales until a year or two ago. I remember one analysis out of UBC that assume foreign owner if they has a "foreign sounding name". From what I've seen, some neighborhoods are high, but it's at the margin. Canadians snorfing up massive amounts of debt in order to acquire more property is a bigger driver.
  - Tiktaalik 5y ago
    Yes around 2016 they finally started gathering real data and it was so remarkably high in certain areas they brought in the foreign buyer tax. It only took like a month of data before the government, which btw long dismissed that there was any problem, was convinced that there was a real problem.