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Investors account for 30 per cent of home buying in Canada, data show

174 points by ilamont 3y ago

__derek__ 3y ago
> The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home. In the US, a lot has been made about large investment companies buying up houses, but this is something different entirely: > This category represents homebuyers with multiple mortgaged properties. This means investors are homebuyers who either: > * purchase an investment property while maintaining their primary residence, or > * purchase a new residence to live in while converting their existing residence into an investment property Specifically, "investors" excludes anyone who didn't use a mortgage to purchase (e.g., all-cash buyers, any buyer with alternative financing). AFAICT, it would even exclude someone with a paid-off house who bought a new investment property with a mortgage. [1]: https://www.bankofcanada.ca/2022/01/staff-analytical-note-2022-1/#Classifying-homebuyers https://www.bankofcanada.ca/2022/01/staff-analytical-note-20...
- bitxbitxbitcoin 3y ago
  Almost as if the large companies would like those unable to buy homes to misdirect their ire.
  - Schiendelman 3y ago
    The large companies just don’t account for very many homes. Once you control out for homes under construction, that just isn’t the issue. The issue is that we dramatically restrict how much housing anyone can build, specifically, upward.
    - ethanbond 3y ago
      Zoning hurts, labor shortage hurts, speculation hurts, sprawl hurts, etc. We don’t really need to look for a single cause. All of these things are happening and interacting with each other.
      - Schiendelman 3y ago
        In general - zoning causes the sprawl and the speculation, and worsens the labor shortage. It is the only root cause.
    - ozmodiar 3y ago
      The city I live in isn't restricting it. Condos are going up as fast as they can be built and the parks are still filling up with tent cities and rents are still doubling. Something just doesn't add up. I'm in Canada (don't want to give exact city, sorry).
      - kiba 3y ago
        Well, without specific numbers and statistics, it's hard to know if demand for housing are being met.
      - Schiendelman 3y ago
        I’m on King on a 504a right now. It’s massively restricted. You just can’t tell by looking. “Lots” isn’t a measurement.
      - Schiendelman 3y ago
        I don't know if you've looked at Canadian housing news in the last few days, but do you really, really think that "condos are going up as fast as they can be built"? Because if you do, I think you're very misinformed.
    - bitxbitxbitcoin 3y ago
      Yes that is an issue. There isn’t only one issue. As an extreme illustration, think about trailer homes and trailer parks as an example.[0] [0] https://www.nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html#:~:text=Real%20Capital%20Analytics%2C%20a%20market,among%20the%20country's%20largest%20landlords https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner....
- bugglebeetle 3y ago
  If there’s an affordability housing crisis at the level of Canada, where home prices are so wildly out of whack relative to median incomes, it’s IMO entirely reasonable to ban the purchase of investment properties in the single family homes market for anyone. This will never happen because of the political backlash, but housing as a speculative asset is fundamentally insane and corrosive to societies. Housing affordability is directly tied to all kinds of broader social outcomes, from crime to public health to educational achievement and it makes zero sense to sacrifice these on the altar of “fuck you, I got my house(s).”
  - xienze 3y ago
    Too many people get hung up on the “house” being the thing rapidly appreciating when in areas like major Canadian metros it’s the _land_ sitting under the house that is becoming more and more valuable as the Canadian government is importing more and more full grown adults who need housing _today_ in those major metros.
    - bugglebeetle 3y ago
      Okay, then do Georgism or some other form of land value tax. Distinction without a difference. Destroying your society for the benefit of real estate speculators is insanity, is my point.
      - carom 3y ago
        It's funny because LVT would reward multi family investment properties while raising taxes for single family home owners.
        CapstanRoller 3y ago
        How is that "funny"? The continued proliferation of cookie-cutter detached single family homes with useless lawns is big part of several problems we currently face as a society. Incentivizing denser housing is a good idea.
- carlosjobim 3y ago
  > it would even exclude someone with a paid-off house who bought a new investment property with a mortgage. That is called an investor, since they purchased an investment.
  - __derek__ 3y ago
    I wrote "AFAICT" because that's my inference of a counterintuitive result of this methodology.
  - belltaco 3y ago
    Right, they're saying those wouldn't be counted under the article's methodology.
  - deleted 3y ago
    [deleted]
- sokoloff 3y ago
  It seems like it would also include people who are buying a new property to occupy as owners that will be mortgaged, while planning to later sell their existing, also-mortgaged, owner-occupied property. Those people are not investors by any useful English-language definition, but would be counted as such by this method. This is exactly the situation we were in when we bought our current home, and anecdotally, is not uncommon when people are moving in together from previously separate, owned properties. Sellers prefer zero sales contingencies over one sale contingency and prefer one over two.
  - __derek__ 3y ago
    I believe those would be called repeat buyers under the Bank of Canada methodology because the Transunion data should connect their new mortgage with the discharge of their previous mortgage.
    - sokoloff 3y ago
      If someone had a house with a mortgage, bought another house with a mortgage in May, and discharged the original mortgage in October (or the following February), were they a repeat buyer or an investor? Plain English would say "repeat buyer", but I can't tell definitively how they'd be treated in the data. The one clear reference in the article strongly suggests they'd be categorized as an investor: "The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home."
      - __derek__ 3y ago
        I don't know. There's no link to the Transunion data set, so it's not possible to dig in. Even the sentence you quote is ambiguous because "maintaining" indicates an ongoing active state. Assuming that the dataset is a point-in-time snapshot, there are probably some repeat buyers classified as investors because of timing.
- theptip 3y ago
  So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”? While I can see how the delta in this metric is suggestive, it is not clear how it affects the available housing stock (rent+buy). What I think people actually care about is unoccupied investment properties, where someone buys and leaves it vacant. Apparently a lot of Chinese capital is parked in this way due to their capital controls preventing cash from being freely moved out of the country, though to be clear it’s not unique to China. Or if these properties are being flipped, perhaps that has a short-term negative impact on available housing stock as properties are taken off the market while being renovated. (If the marginal second bidder would have moved in to the house as-is, then the winning bid renovating and selling is reducing supply / increasing demand for housing.) As you note, a whole other kettle of fish around REITs that won’t use mortgages. In the US, REITs are a major contributor to new construction for example.
  - pavlov 3y ago
    > ‘So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?’ Of course. The second house is purely an investment to you. I don’t imagine anybody particularly loves being a landlord. It’s sometimes messy compared to owning a stock. If you could get a better return with less risk from some other investment, you’d put your money in that instead. But residential real estate in cities happens to have an appealing risk/return profile that’s not directly correlated with stocks, so there are good reasons why both small and large investors buy housing.
  - Ghostt8117 3y ago
    Yes, you are an investor. You do not live in the home you purchased. You rent it to earn money, i.e., an investment. This creates a huge problem. Rental properties have different regulations in different places. My brother-in-law was not given a lease renewal amnd was forced to move (within 30 days) while, where I live, that is illegal unless there is cause for eviction. It creates instability. Also, my rent increased $550/month in just two years. Who can afford that? This creates a tenuous housing issue. Thankfully, I was able to move and buy a very small condo so I have a set monthly payment and no longer need to worry about losing my home every year when my lease ends. There is a huge difference in how I can plan for the future knowing I am not going to be, potentially, homeless every year.
- epistasis 3y ago
  Honestly I think that owner occupied homes should count as investment homes too. There is scant difference between the economic interests of a landlord and a homeowner. Which is what lets homeowners buy a second home so much more easily than younger people. The asset price inflation of homes in Canada has been remarkable at concentrating the productive labor of working Canadians into the idle hands of homeowners.
- roncesvalles 3y ago
  A much better term is "speculators" since a second mortgage is purely a leveraged investment.
ChumpGPT 3y ago
Canada has very little private land ownership.The Federal Gov hoards land and creates a severe shortage of land for individuals to purchase. They need to open up the billions of acres of accessible land to 1st time buyers and then to existing property owners. Especially in the Province of Ontario. They also intentionally keep interest rates low so existing house/property owners can leverage their properties to buy more. Never allowing a 1st time house shopper a chance. You can't save enough for a down payment because the rate that housing goes up outpaces the rate of your earnings. In my opinion any house in the same city other than your primary residence should have property taxes that are significantly higher, perhaps 3-4 x the current rate. Interest rates for any house that is not your primary residence and considered an investment property should also be much higher. The only exception I would make is if you have cottage/recreational property outside of cities, this type of property like a cottage would fall under the Primary residence category. There is also that fact that the majority of Canadians in the private industry, especially in Tech are severely under payed and underemployed. I'm not sure of the unintended consequences of my proposals, but they couldn't be worse than what is happening now.
- ZeroFries 3y ago
  The federal government doesn't "hoard" land around areas where people would want to purchase a first home. The vast majority of crown land is not around any major urban centers. Canadian tech workers make way above median income levels.
  - acover 3y ago
    Are you sure? GDP per Capita is 71k cad vs a developer salary of 87k cad. Seems pretty average. https://www.glassdoor.ca/Salaries/toronto-software-developer-salary-SRCH_IL.0,7_IM976_KO8,26.htm https://www.glassdoor.ca/Salaries/toronto-software-developer...
    - hotnfresh 3y ago
      GDP per capita isn’t the right figure to compare it to. You want median individual income, since median is what was under discussion.
newbie578 3y ago
I do wonder what country will be the first one to ‘break’ and implement restrictions on buying homes. The current situation is not sustainable, and soon something will need to give.
- marticode 3y ago
  Plenty of countries do, for ex in Asia see Thailand, Singapore, Indonesia, Vietnam, etc.
- deleted 3y ago
  [deleted]
- likenesstheft 3y ago
  [flagged]
  - spicymapotofu 3y ago
    The political environment has associated that stance with right-wing Conservatism, and while that party does hold that belief, it's looked down upon by the Canadian centrists/left-wing parties. I'm not sure how to describe their solution to this issue, because I'm not sure there is a stated plan.
    - likenesstheft 3y ago
      [flagged]
  - pjc50 3y ago
    The real figure seems more like 500k, or about one percent per year. https://en.wikipedia.org/wiki/Canada_immigration_statistics https://en.wikipedia.org/wiki/Canada_immigration_statistics Which categories of Canadian visa do you want closed?
- goethes_kind 3y ago
  Governments should just build a bunch of socialized housing and rent it at a rent just high enough to offset the expenditure (i.e. way below private market value). That would put downward pressure on rents. That is what Vienna did and they are the only popular city in Europe without a serious housing crisis.
transcriptase 3y ago
[flagged]
- likenesstheft 3y ago
  [flagged]
  - slothtrop 3y ago
    It should, but the mouth pieces have stuck with their spiel that their own policies can't be helped, are necessary, because of "labor shortages". In other words, horseshit. I think people at the top are positioning themselves because they made large investments and want their return, so the lobbying efforts are to stall the slowing rate of immigration, or anything else that would increase housing starts / availability.
    - likenesstheft 3y ago
      Labor shortage is such a lie. when they say that they just mean there aren’t enough low-information workers who will work for meager wages in a high taxation environment in a race to the bottom while some political dynasties always skim from the top. I hope you can all muster up the strength to vote in better leaders who put the citizens first.
  - wredue 3y ago
    Immigration remained mostly consistent and “definitely not ‘millions’” till last year when it hit 500,000 for some reason: https://www.statista.com/statistics/443063/number-of-immigrants-in-canada/ https://www.statista.com/statistics/443063/number-of-immigra... The whole “millions of immigrants” is just a property of the recent alt-right attempt at a take over of HN. Looking around, it appears that immigration rates were raised due to aging population issues. While other places around the world are looking at moving retirement to 75. Crony capitalism is causing higher immigration, so it’s somewhat hilarious for these people to think that an even more crony party is going to help offset this.
slothtrop 3y ago
Still not clear whether they are mostly institutional or solo "mom and pop" second/multi-home buyers. Either way this was the inevitability of borrowing at virtually 0 interest for so long, with a high immigration rate guaranteeing perpetually increasing demand. It's like free money. They've recently increased the interest rates but it's woefully insufficient. The rate of housing starts needs to increase (this is fairly inelastic) and/or the rate of immigration (or even loopholes for students and temps) needs to slow down, but instead it's going in the other direction.
- gruez 3y ago
  >They've recently increased the interest rates but it's woefully insufficient. What should it be? I'm sure you can push house prices down even more if you bump interest rates to 10% or whatever, but raising interest rates also increases monthly payments that buyers have to make, which ends up making houses less affordable. At the end of the day I care less about the sticker price of the house than the overall cost I have to pay for it.
  - Fire-Dragon-DoL 3y ago
    Raising interest rates increase rent prices. Here in Vancouver the rent prices increased by 50% in like 3 years and it seems the reason is mostly to cover mortgage + have income. Really bad.
    - carom 3y ago
      >it seems the reason is mostly to cover mortgage + have income That isn't how rent works. It is a market and buyers won't just pay any price the landlord sets. If prices went up, it means people were willing to pay those prices. I wish I could charge $5k per month for a 600 sqft unit, but no one will pay that.
      - mitthrowaway2 3y ago
        That's correct. But the price an investor can charge to renters scales with the opportunity cost of buying, so (house prices x interest rates). Or equivalently, the price an investor will pay for a house scales with (rent - interest payments). If interest rates go up and housing prices don't fall, then market rents must be rising.
matt3210 3y ago
Not sure about Canada, but I make way above the median in tech in California and I have zero interest in buying a home. Having a home would be a huge hassle when I look for new work every 3 or 4 years. The math shows a home in almost any area in the USA is only a financial benefit after 8 or more years of staying in that home (compared to an apartment), when taking closing costs, maintenance, large upfront interest, and other moving costs.
- calderwoodra 3y ago
  I'm guessing you don't have children? I don't either, but I suspect that's folks main motivation for buying a home.
  - paulryanrogers 3y ago
    It's also a hedge against rent, though in that case one must do a lot of maintenance personally. As to kids, those of us who grew up in suburbia have a fondness for a yard, garden, and air gap between living spaces. Now if only the former owner had not put so many landscaping pebbles and bushes...
  - LeeroyWasHere 3y ago
    Bingo, it sucks to live with kids in a condo because condos aren't built for families, neither are the neighborhoods with condos. There's other ways to build density without packing everyone into sad sardine cans.
    - robinson7d 3y ago
      “Home”, for the purpose of this article, includes condos. The data is about all mortgaged properties.
    - moltar 3y ago
      Condos aren’t built for families … in Canada. There’s no inherent limitation on having a family friendly condo. In many European countries families live in condos. And they can have great amenities like a swimming pool and a playground. And quite spacious. With highly dense walkable and even car-free neighbourhoods. Sure you might not have a huge own backyard but there’s probably a park nearby where you can socialize with people.
cvccvroomvroom 3y ago
This is creating an artificial Tulip bulb crisis where people could live instead of these rent-seeking vampires either letting them idle or renting them on Airbnb. Pass a law that homes must be occupied by the owner at least 10% of the time or property taxes go up 900%. Creating a class of land barons and serfs doesn't bode well for the future of humanity.
- livinglist 3y ago
  But how do u enforce the “must be occupied 10% of the time” part?
- esoterica 3y ago
  You realize you are advocating for a massive regressive tax on renters right? Where are people going to live if they are not in a position to or don’t want to buy a house?
- konschubert 3y ago
  Just build more houses. North America is big. Stop fighting over scraps.
  - VHRanger 3y ago
    The fact that it's big doesn't matter. Building a million homes in North Dakota won't help anyone. People need to live near cities, where jobs are. Outside our privileged white collar world where remote work is easy, others need to live in metro areas. We need to build in and near cities, and improve the transit infrastructure.
    - CapstanRoller 3y ago
      We also need to create cities, and revitalize dying ones. There are many small towns in the US and Canada where I'd love to buy a house, but they all tend to suffer from the same terminal decline pattern: crumbling infrastructure, lack of opportunities, and a single WalMart supplying everyone while choking out all other business.
anonzzzies 3y ago
I wish the country I live in had the same as many Asian countries; you can only buy if you have a passport of the country or if the building is owned by more than 50% of passport holders.
- Tiktaalik 3y ago
  At this point various jurisdictions in Canada have layers upon layers of foreign buyer taxes, bans, and empty homes taxes and the issues remain. Foreign buyers and such can be problems, but at this point looking at Canada's experience here, it's abundantly clear it's not at all the problem and there are deeper systemic problems that are causing the misery.
proxiful-wash 3y ago
[flagged]
ejb999 3y ago
Not sure you will ever be able to ban investors from owning properties that are rented out long-term - a fair amount of the population wants to, or can only afford to, rent - and someone needs to be the landlord. On the otherhand, it seems like AirBnB's, i.e. short-term rentals, are ripe for some legislation to undo the negative affects they are having on many communities.
- 26fingies 3y ago
  > Not sure you will ever be able to ban investors from owning properties that are rented out long-term Why not? We are making up the rules as we go. The government has the guns, it can do what it wants. > - a fair amount of the population wants to, or can only afford to, rent Well a fair amount of the population wants to buy a home remotely close to where their job and family is, but it turns out there's a population representing 30% of all sales that thinks they ought to be landlords. > - and someone needs to be the landlord. Doubt.
  - therealdrag0 3y ago
    Why doesn’t someone need to be a landlord? Without landlords you gonna have a lot more homeless people.
    - 26fingies 3y ago
      Landlords dont build housing.
      - therealdrag0 3y ago
        Right but not everyone can live in a house they own all the time.
        26fingies 3y ago
        Housing co-ops are a thing that exist. Governments can also conceivably own rental properties. It’s property management that does most of the work anyway and they get paid like anyone else to do a job. Landlords are a drain on the economy and there are viable alternative models. We do not need landlords.
26fingies 3y ago
Canada's housing market is F'd and this is the reason. There's a lot of noise made about "foreign investors" (which is really just an epithet for Chinese people) but the investors screwing everything up are Canadians themselves.
- Tiktaalik 3y ago
  Maybe from the POV from someone who badly wants to buy a condo, but from the POV of a renter who will never buy, these investors are the ones that are creating their housing.
  - chongli 3y ago
    No they're not. This is like saying the scalpers who bulk-buy all the concert tickets and resell at huge markups are "ticket creators." If you take investors (30 percent of home buyers, according to TFA) out of real estate then demand goes way down, taking prices with it and making housing a lot more affordable.
    - Tiktaalik 3y ago
      There's a Canadian specific nuance here. In Canada for decades there has been virtually no construction of purpose built rental housing. The primary new rental housing that is being created is wholly through condos being built and people renting out their condos. Accordingly the only new product being created for renters is being created by investors buying condos. Like it's bad that this is the case and this should change, but I'm just pointing out the reality right now of this present environment. There would need to be enormous systemic changes to the dynamics of the Canadian housing market if we wanted to start banning investors from buying and renting homes. Otherwise rental vacancy will plunge even further and rents will go up.
      - chongli 3y ago
        I live in Waterloo. There's tons of rental housing being built here but all of it is targeted at students. It's third-rate shoddy construction by an unsavoury developer. Students complain endlessly about these rental companies but they have little recourse. I'm not convinced that what we need is more of this low-quality "affordable" housing. I think the problem would be solved by cracking down on all the people buying second, third, fourth, ... single family homes and converting them into Airbnb flophouses.
dang 3y ago
Related ongoing thread: The U.S. housing market vs. the Canadian housing market - https://news.ycombinator.com/item?id=37446790 https://news.ycombinator.com/item?id=37446790 - Sept 2023 (88 comments)
Tiktaalik 3y ago
Seems like an alarmingly big scary number, but due to the fact that there has been extremely low amounts of rental housing created by purpose built rental (PBR) housing for decades, and virtually all rental housing is created via condo creation and secondary rental of condos, necessarily if there is going to be any rental housing creation at all, it will be due to investors buying condos and renting them out. As rental demand spikes as it has been, it makes perfect sense that investor interest and share of the market would also increase. Now obviously, one can point out "near zero purpose built rental development seems bad!" and many have, but so long as condos dominate what is being built, a relatively high investor share is actually normal and required. If investors for example were limited or banned at this moment, the most immediate net result would be increased scarcity for renters, and higher rents. In the long term clearly there needs to be more PBRs, non-profit rental and publicly owned rental housing.
appleaday1 3y ago
Protests when?

174 points by ilamont 3y ago

> The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home. In the US, a lot has been made about large investment companies buying up houses, but this is something different entirely: > This category represents homebuyers with multiple mortgaged properties. This means investors are homebuyers who either: > * purchase an investment property while maintaining their primary residence, or > * purchase a new residence to live in while converting their existing residence into an investment property Specifically, "investors" excludes anyone who didn't use a mortgage to purchase (e.g., all-cash buyers, any buyer with alternative financing). AFAICT, it would even exclude someone with a paid-off house who bought a new investment property with a mortgage. [1]: https://www.bankofcanada.ca/2022/01/staff-analytical-note-2022-1/#Classifying-homebuyers https://www.bankofcanada.ca/2022/01/staff-analytical-note-20...

bitxbitxbitcoin 3y ago
Almost as if the large companies would like those unable to buy homes to misdirect their ire.
- Schiendelman 3y ago
  The large companies just don’t account for very many homes. Once you control out for homes under construction, that just isn’t the issue. The issue is that we dramatically restrict how much housing anyone can build, specifically, upward.
  - ethanbond 3y ago
    Zoning hurts, labor shortage hurts, speculation hurts, sprawl hurts, etc. We don’t really need to look for a single cause. All of these things are happening and interacting with each other.
    - Schiendelman 3y ago
      In general - zoning causes the sprawl and the speculation, and worsens the labor shortage. It is the only root cause.
  - ozmodiar 3y ago
    The city I live in isn't restricting it. Condos are going up as fast as they can be built and the parks are still filling up with tent cities and rents are still doubling. Something just doesn't add up. I'm in Canada (don't want to give exact city, sorry).
    - kiba 3y ago
      Well, without specific numbers and statistics, it's hard to know if demand for housing are being met.
    - Schiendelman 3y ago
      I’m on King on a 504a right now. It’s massively restricted. You just can’t tell by looking. “Lots” isn’t a measurement.
    - Schiendelman 3y ago
      I don't know if you've looked at Canadian housing news in the last few days, but do you really, really think that "condos are going up as fast as they can be built"? Because if you do, I think you're very misinformed.
  - bitxbitxbitcoin 3y ago
    Yes that is an issue. There isn’t only one issue. As an extreme illustration, think about trailer homes and trailer parks as an example.[0] [0] https://www.nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html#:~:text=Real%20Capital%20Analytics%2C%20a%20market,among%20the%20country's%20largest%20landlords https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner....
bugglebeetle 3y ago
If there’s an affordability housing crisis at the level of Canada, where home prices are so wildly out of whack relative to median incomes, it’s IMO entirely reasonable to ban the purchase of investment properties in the single family homes market for anyone. This will never happen because of the political backlash, but housing as a speculative asset is fundamentally insane and corrosive to societies. Housing affordability is directly tied to all kinds of broader social outcomes, from crime to public health to educational achievement and it makes zero sense to sacrifice these on the altar of “fuck you, I got my house(s).”
- xienze 3y ago
  Too many people get hung up on the “house” being the thing rapidly appreciating when in areas like major Canadian metros it’s the _land_ sitting under the house that is becoming more and more valuable as the Canadian government is importing more and more full grown adults who need housing _today_ in those major metros.
  - bugglebeetle 3y ago
    Okay, then do Georgism or some other form of land value tax. Distinction without a difference. Destroying your society for the benefit of real estate speculators is insanity, is my point.
    - carom 3y ago
      It's funny because LVT would reward multi family investment properties while raising taxes for single family home owners.
      - CapstanRoller 3y ago
        How is that "funny"? The continued proliferation of cookie-cutter detached single family homes with useless lawns is big part of several problems we currently face as a society. Incentivizing denser housing is a good idea.
carlosjobim 3y ago
> it would even exclude someone with a paid-off house who bought a new investment property with a mortgage. That is called an investor, since they purchased an investment.
- __derek__ 3y ago
  I wrote "AFAICT" because that's my inference of a counterintuitive result of this methodology.
- belltaco 3y ago
  Right, they're saying those wouldn't be counted under the article's methodology.
- deleted 3y ago
  [deleted]
sokoloff 3y ago
It seems like it would also include people who are buying a new property to occupy as owners that will be mortgaged, while planning to later sell their existing, also-mortgaged, owner-occupied property. Those people are not investors by any useful English-language definition, but would be counted as such by this method. This is exactly the situation we were in when we bought our current home, and anecdotally, is not uncommon when people are moving in together from previously separate, owned properties. Sellers prefer zero sales contingencies over one sale contingency and prefer one over two.
- __derek__ 3y ago
  I believe those would be called repeat buyers under the Bank of Canada methodology because the Transunion data should connect their new mortgage with the discharge of their previous mortgage.
  - sokoloff 3y ago
    If someone had a house with a mortgage, bought another house with a mortgage in May, and discharged the original mortgage in October (or the following February), were they a repeat buyer or an investor? Plain English would say "repeat buyer", but I can't tell definitively how they'd be treated in the data. The one clear reference in the article strongly suggests they'd be categorized as an investor: "The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home."
    - __derek__ 3y ago
      I don't know. There's no link to the Transunion data set, so it's not possible to dig in. Even the sentence you quote is ambiguous because "maintaining" indicates an ongoing active state. Assuming that the dataset is a point-in-time snapshot, there are probably some repeat buyers classified as investors because of timing.
theptip 3y ago
So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”? While I can see how the delta in this metric is suggestive, it is not clear how it affects the available housing stock (rent+buy). What I think people actually care about is unoccupied investment properties, where someone buys and leaves it vacant. Apparently a lot of Chinese capital is parked in this way due to their capital controls preventing cash from being freely moved out of the country, though to be clear it’s not unique to China. Or if these properties are being flipped, perhaps that has a short-term negative impact on available housing stock as properties are taken off the market while being renovated. (If the marginal second bidder would have moved in to the house as-is, then the winning bid renovating and selling is reducing supply / increasing demand for housing.) As you note, a whole other kettle of fish around REITs that won’t use mortgages. In the US, REITs are a major contributor to new construction for example.
- pavlov 3y ago
  > ‘So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?’ Of course. The second house is purely an investment to you. I don’t imagine anybody particularly loves being a landlord. It’s sometimes messy compared to owning a stock. If you could get a better return with less risk from some other investment, you’d put your money in that instead. But residential real estate in cities happens to have an appealing risk/return profile that’s not directly correlated with stocks, so there are good reasons why both small and large investors buy housing.
- Ghostt8117 3y ago
  Yes, you are an investor. You do not live in the home you purchased. You rent it to earn money, i.e., an investment. This creates a huge problem. Rental properties have different regulations in different places. My brother-in-law was not given a lease renewal amnd was forced to move (within 30 days) while, where I live, that is illegal unless there is cause for eviction. It creates instability. Also, my rent increased $550/month in just two years. Who can afford that? This creates a tenuous housing issue. Thankfully, I was able to move and buy a very small condo so I have a set monthly payment and no longer need to worry about losing my home every year when my lease ends. There is a huge difference in how I can plan for the future knowing I am not going to be, potentially, homeless every year.
epistasis 3y ago
Honestly I think that owner occupied homes should count as investment homes too. There is scant difference between the economic interests of a landlord and a homeowner. Which is what lets homeowners buy a second home so much more easily than younger people. The asset price inflation of homes in Canada has been remarkable at concentrating the productive labor of working Canadians into the idle hands of homeowners.
roncesvalles 3y ago
A much better term is "speculators" since a second mortgage is purely a leveraged investment.

ChumpGPT 3y ago

Canada has very little private land ownership.The Federal Gov hoards land and creates a severe shortage of land for individuals to purchase. They need to open up the billions of acres of accessible land to 1st time buyers and then to existing property owners. Especially in the Province of Ontario. They also intentionally keep interest rates low so existing house/property owners can leverage their properties to buy more. Never allowing a 1st time house shopper a chance. You can't save enough for a down payment because the rate that housing goes up outpaces the rate of your earnings. In my opinion any house in the same city other than your primary residence should have property taxes that are significantly higher, perhaps 3-4 x the current rate. Interest rates for any house that is not your primary residence and considered an investment property should also be much higher. The only exception I would make is if you have cottage/recreational property outside of cities, this type of property like a cottage would fall under the Primary residence category. There is also that fact that the majority of Canadians in the private industry, especially in Tech are severely under payed and underemployed. I'm not sure of the unintended consequences of my proposals, but they couldn't be worse than what is happening now.

ZeroFries 3y ago
The federal government doesn't "hoard" land around areas where people would want to purchase a first home. The vast majority of crown land is not around any major urban centers. Canadian tech workers make way above median income levels.
- acover 3y ago
  Are you sure? GDP per Capita is 71k cad vs a developer salary of 87k cad. Seems pretty average. https://www.glassdoor.ca/Salaries/toronto-software-developer-salary-SRCH_IL.0,7_IM976_KO8,26.htm https://www.glassdoor.ca/Salaries/toronto-software-developer...
  - hotnfresh 3y ago
    GDP per capita isn’t the right figure to compare it to. You want median individual income, since median is what was under discussion.

newbie578 3y ago

I do wonder what country will be the first one to ‘break’ and implement restrictions on buying homes. The current situation is not sustainable, and soon something will need to give.

marticode 3y ago
Plenty of countries do, for ex in Asia see Thailand, Singapore, Indonesia, Vietnam, etc.
deleted 3y ago
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likenesstheft 3y ago
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- spicymapotofu 3y ago
  The political environment has associated that stance with right-wing Conservatism, and while that party does hold that belief, it's looked down upon by the Canadian centrists/left-wing parties. I'm not sure how to describe their solution to this issue, because I'm not sure there is a stated plan.
  - likenesstheft 3y ago
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- pjc50 3y ago
  The real figure seems more like 500k, or about one percent per year. https://en.wikipedia.org/wiki/Canada_immigration_statistics https://en.wikipedia.org/wiki/Canada_immigration_statistics Which categories of Canadian visa do you want closed?
goethes_kind 3y ago
Governments should just build a bunch of socialized housing and rent it at a rent just high enough to offset the expenditure (i.e. way below private market value). That would put downward pressure on rents. That is what Vienna did and they are the only popular city in Europe without a serious housing crisis.

transcriptase 3y ago

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likenesstheft 3y ago
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- slothtrop 3y ago
  It should, but the mouth pieces have stuck with their spiel that their own policies can't be helped, are necessary, because of "labor shortages". In other words, horseshit. I think people at the top are positioning themselves because they made large investments and want their return, so the lobbying efforts are to stall the slowing rate of immigration, or anything else that would increase housing starts / availability.
  - likenesstheft 3y ago
    Labor shortage is such a lie. when they say that they just mean there aren’t enough low-information workers who will work for meager wages in a high taxation environment in a race to the bottom while some political dynasties always skim from the top. I hope you can all muster up the strength to vote in better leaders who put the citizens first.
- wredue 3y ago
  Immigration remained mostly consistent and “definitely not ‘millions’” till last year when it hit 500,000 for some reason: https://www.statista.com/statistics/443063/number-of-immigrants-in-canada/ https://www.statista.com/statistics/443063/number-of-immigra... The whole “millions of immigrants” is just a property of the recent alt-right attempt at a take over of HN. Looking around, it appears that immigration rates were raised due to aging population issues. While other places around the world are looking at moving retirement to 75. Crony capitalism is causing higher immigration, so it’s somewhat hilarious for these people to think that an even more crony party is going to help offset this.

slothtrop 3y ago

Still not clear whether they are mostly institutional or solo "mom and pop" second/multi-home buyers. Either way this was the inevitability of borrowing at virtually 0 interest for so long, with a high immigration rate guaranteeing perpetually increasing demand. It's like free money. They've recently increased the interest rates but it's woefully insufficient. The rate of housing starts needs to increase (this is fairly inelastic) and/or the rate of immigration (or even loopholes for students and temps) needs to slow down, but instead it's going in the other direction.

gruez 3y ago
>They've recently increased the interest rates but it's woefully insufficient. What should it be? I'm sure you can push house prices down even more if you bump interest rates to 10% or whatever, but raising interest rates also increases monthly payments that buyers have to make, which ends up making houses less affordable. At the end of the day I care less about the sticker price of the house than the overall cost I have to pay for it.
- Fire-Dragon-DoL 3y ago
  Raising interest rates increase rent prices. Here in Vancouver the rent prices increased by 50% in like 3 years and it seems the reason is mostly to cover mortgage + have income. Really bad.
  - carom 3y ago
    >it seems the reason is mostly to cover mortgage + have income That isn't how rent works. It is a market and buyers won't just pay any price the landlord sets. If prices went up, it means people were willing to pay those prices. I wish I could charge $5k per month for a 600 sqft unit, but no one will pay that.
    - mitthrowaway2 3y ago
      That's correct. But the price an investor can charge to renters scales with the opportunity cost of buying, so (house prices x interest rates). Or equivalently, the price an investor will pay for a house scales with (rent - interest payments). If interest rates go up and housing prices don't fall, then market rents must be rising.

matt3210 3y ago

Not sure about Canada, but I make way above the median in tech in California and I have zero interest in buying a home. Having a home would be a huge hassle when I look for new work every 3 or 4 years. The math shows a home in almost any area in the USA is only a financial benefit after 8 or more years of staying in that home (compared to an apartment), when taking closing costs, maintenance, large upfront interest, and other moving costs.

calderwoodra 3y ago
I'm guessing you don't have children? I don't either, but I suspect that's folks main motivation for buying a home.
- paulryanrogers 3y ago
  It's also a hedge against rent, though in that case one must do a lot of maintenance personally. As to kids, those of us who grew up in suburbia have a fondness for a yard, garden, and air gap between living spaces. Now if only the former owner had not put so many landscaping pebbles and bushes...
- LeeroyWasHere 3y ago
  Bingo, it sucks to live with kids in a condo because condos aren't built for families, neither are the neighborhoods with condos. There's other ways to build density without packing everyone into sad sardine cans.
  - robinson7d 3y ago
    “Home”, for the purpose of this article, includes condos. The data is about all mortgaged properties.
  - moltar 3y ago
    Condos aren’t built for families … in Canada. There’s no inherent limitation on having a family friendly condo. In many European countries families live in condos. And they can have great amenities like a swimming pool and a playground. And quite spacious. With highly dense walkable and even car-free neighbourhoods. Sure you might not have a huge own backyard but there’s probably a park nearby where you can socialize with people.

cvccvroomvroom 3y ago

This is creating an artificial Tulip bulb crisis where people could live instead of these rent-seeking vampires either letting them idle or renting them on Airbnb. Pass a law that homes must be occupied by the owner at least 10% of the time or property taxes go up 900%. Creating a class of land barons and serfs doesn't bode well for the future of humanity.

livinglist 3y ago
But how do u enforce the “must be occupied 10% of the time” part?
esoterica 3y ago
You realize you are advocating for a massive regressive tax on renters right? Where are people going to live if they are not in a position to or don’t want to buy a house?
konschubert 3y ago
Just build more houses. North America is big. Stop fighting over scraps.
- VHRanger 3y ago
  The fact that it's big doesn't matter. Building a million homes in North Dakota won't help anyone. People need to live near cities, where jobs are. Outside our privileged white collar world where remote work is easy, others need to live in metro areas. We need to build in and near cities, and improve the transit infrastructure.
  - CapstanRoller 3y ago
    We also need to create cities, and revitalize dying ones. There are many small towns in the US and Canada where I'd love to buy a house, but they all tend to suffer from the same terminal decline pattern: crumbling infrastructure, lack of opportunities, and a single WalMart supplying everyone while choking out all other business.

anonzzzies 3y ago

I wish the country I live in had the same as many Asian countries; you can only buy if you have a passport of the country or if the building is owned by more than 50% of passport holders.

Tiktaalik 3y ago
At this point various jurisdictions in Canada have layers upon layers of foreign buyer taxes, bans, and empty homes taxes and the issues remain. Foreign buyers and such can be problems, but at this point looking at Canada's experience here, it's abundantly clear it's not at all the problem and there are deeper systemic problems that are causing the misery.

proxiful-wash 3y ago

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ejb999 3y ago

Not sure you will ever be able to ban investors from owning properties that are rented out long-term - a fair amount of the population wants to, or can only afford to, rent - and someone needs to be the landlord. On the otherhand, it seems like AirBnB's, i.e. short-term rentals, are ripe for some legislation to undo the negative affects they are having on many communities.

26fingies 3y ago
> Not sure you will ever be able to ban investors from owning properties that are rented out long-term Why not? We are making up the rules as we go. The government has the guns, it can do what it wants. > - a fair amount of the population wants to, or can only afford to, rent Well a fair amount of the population wants to buy a home remotely close to where their job and family is, but it turns out there's a population representing 30% of all sales that thinks they ought to be landlords. > - and someone needs to be the landlord. Doubt.
- therealdrag0 3y ago
  Why doesn’t someone need to be a landlord? Without landlords you gonna have a lot more homeless people.
  - 26fingies 3y ago
    Landlords dont build housing.
    - therealdrag0 3y ago
      Right but not everyone can live in a house they own all the time.
      - 26fingies 3y ago
        Housing co-ops are a thing that exist. Governments can also conceivably own rental properties. It’s property management that does most of the work anyway and they get paid like anyone else to do a job. Landlords are a drain on the economy and there are viable alternative models. We do not need landlords.

26fingies 3y ago

Canada's housing market is F'd and this is the reason. There's a lot of noise made about "foreign investors" (which is really just an epithet for Chinese people) but the investors screwing everything up are Canadians themselves.

Tiktaalik 3y ago
Maybe from the POV from someone who badly wants to buy a condo, but from the POV of a renter who will never buy, these investors are the ones that are creating their housing.
- chongli 3y ago
  No they're not. This is like saying the scalpers who bulk-buy all the concert tickets and resell at huge markups are "ticket creators." If you take investors (30 percent of home buyers, according to TFA) out of real estate then demand goes way down, taking prices with it and making housing a lot more affordable.
  - Tiktaalik 3y ago
    There's a Canadian specific nuance here. In Canada for decades there has been virtually no construction of purpose built rental housing. The primary new rental housing that is being created is wholly through condos being built and people renting out their condos. Accordingly the only new product being created for renters is being created by investors buying condos. Like it's bad that this is the case and this should change, but I'm just pointing out the reality right now of this present environment. There would need to be enormous systemic changes to the dynamics of the Canadian housing market if we wanted to start banning investors from buying and renting homes. Otherwise rental vacancy will plunge even further and rents will go up.
    - chongli 3y ago
      I live in Waterloo. There's tons of rental housing being built here but all of it is targeted at students. It's third-rate shoddy construction by an unsavoury developer. Students complain endlessly about these rental companies but they have little recourse. I'm not convinced that what we need is more of this low-quality "affordable" housing. I think the problem would be solved by cracking down on all the people buying second, third, fourth, ... single family homes and converting them into Airbnb flophouses.

dang 3y ago

Related ongoing thread: The U.S. housing market vs. the Canadian housing market - https://news.ycombinator.com/item?id=37446790 https://news.ycombinator.com/item?id=37446790 - Sept 2023 (88 comments)

Tiktaalik 3y ago

Seems like an alarmingly big scary number, but due to the fact that there has been extremely low amounts of rental housing created by purpose built rental (PBR) housing for decades, and virtually all rental housing is created via condo creation and secondary rental of condos, necessarily if there is going to be any rental housing creation at all, it will be due to investors buying condos and renting them out. As rental demand spikes as it has been, it makes perfect sense that investor interest and share of the market would also increase. Now obviously, one can point out "near zero purpose built rental development seems bad!" and many have, but so long as condos dominate what is being built, a relatively high investor share is actually normal and required. If investors for example were limited or banned at this moment, the most immediate net result would be increased scarcity for renters, and higher rents. In the long term clearly there needs to be more PBRs, non-profit rental and publicly owned rental housing.

appleaday1 3y ago

Protests when?