These are boogieman policies that have zero influence on the root cause.<p>Foreign investors jump into the housing market because the current system ensures that the supply of housing is limited so it is an attractive way to park your wealth.<p>But that is not the root cause.<p>The root cause is the system that is geared to keep houses always appreciating via supply constraints: aggressive zoning, discretionary permitting, NIMBYism.<p>Until we liberalize zoning, legalize building, and reject the idea that houses have to be appreciating assets, the issue will continue.<p>As it is often the case, politicians go for the headline with the highest electoral ROI, rather than tackle the real issues.
I'm a homeowner in Toronto and I don't think this will help. They've eliminated a small number of buyers from the market but have added other incentives like a first home buyers tax credit that will only fuel the fire - Australia tried this with tragic results.<p>>> working with provinces and territories to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding.<p>Blind bidding is where multiple parties submit a sealed bid on a property. The realtor and seller review these bids behind close doors and then often request subsequent rounds of bids from the bidders *without telling them the current winning bid, or who's bid is winning*. Bidders end up out-bidding themselves.<p>IMHO blind bidding is an unethical practice that should be outlawed regardless of its impact on housing prices.
A quick look at the data suggests only about 2% of properties in Toronto and Vancouver are owned by overseas investors. Yes, housing is priced at the margin, but this won't do anything at all to prices over the long term.<p>I'm sure this will be wildly popular politically, because people LOVE the idea that some foreign boogieman is the reason their children can't afford homes anymore.<p>It's much easier to outsource your problems to some outside "other" then deal with the much harder task of introspection over the poor housing policy that you and your neighbors have voted for over the last 60 years.<p>Like all cities in areas with heavy-handed zoning regulations, abuse of historic preservation clauses, and filibuster-style city council meetings blocking new construction...the issue is one of supply.<p>It's the same problem in literally every developed country on earth right now. The industrious, forward-looking people who originally built the cities during the major growth phase died...and then their kids grew up believing that the way things ended up was somehow divinely ordained. Never to be changed or built upon again.
Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measure will do nothing to stop this practice.<p>The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and everyone is talking about it.
Im one of those 'greedy' old farts who owns more than one home. We have one for ourselves and 5 rentals.
Im starting to agree with those who are feeling priced out of the market. What would make me stop buying homes? A graduated tax would.<p>If there were no sales tax on the first two, and then 15% tax on the third, 25% tax on the 4th, and going up by 10% for each subsequent house, it would definitely make me quit buying likely by the 3rd or maybe the 4th house. Too expensive after that.<p>Then that money could go half to the gov, and half to subsidizing first time homeowners by giving them no interest loans for downpayments, or even grants if they qualify at a low enough income. I wouldnt object to that - real estate has been good to me, I think it would be fine if my taxes were helping others to start out.
Related, I’m concerned about the trend of megacorporations gobbling up single-family homes which appears to be happening in the US and Canada.<p>I wonder if it’s possible to construct a law that would limit corporate ability to acquire these assets while making it possible for families to do so.<p>Unfortunately, even if there is, politicians at least in DC seem to have zero motivation to solve political problems unless they belong to megacorps or the 0.01% income class.
The country is ruined for non owners and it will never get better. The only options left are moving to the prairies or living in a neo-feudal shithole. This is only being introduced so they can officially give up after pretending to fix anything.<p>Quality of life has almost nothing to do with income anymore so it’s impossible to work for a better future. Being born 5 years later is the difference between tax free, 6 figure equity gains every year, or renting forever. Boomer janitors are richer than a new Dr. will ever be. The system is broken.<p>Pray for the collapse
Having your housing stock bought up as holdings by nonresidents is not great. It hollows out the communities by having choice housing sit empty and it raises the cost of living for everyone who is actually there.<p>I'm interested to see how this plays out. It seems pretty heavy handed. Zoning denser housing or placing limited restrictions on square footage may proved smarter in the long term. That said, two years is pretty short term in this context.
When ever this topic comes on people are like “ohh it doesn’t work”<p>Well it doesn’t matter if it doesn’t work. It’s stopping something that shouldn’t be allowed to begin with.<p>In NZ you could go on a website and buy a house despite the fact you had never set foot in the country.<p>Even if this is only 5% of all buyers they are ruining the market for 90% of buyers because they cause prices to go up when they pay above market rates because they are wealthy.<p>The irony of this is if you’re from Thailand, Japan, China, India, etc. you can buy property in NZ. But I cannot buy property in these countries.<p>Thankfully NZ put a stop to this. And I believe 2022 saw the first actual drop in prices. Maybe one day I can afford to buy a property in NZ.<p>Edit: someone replied pointing out you can buy property in China which is correct. If you live and work in China you can buy but you’re limited to 1 property and I believe you need to sell if you leave China.<p>Thailand you can kinda buy but it’s done by a company that buys for you and you pay them a fee so technically they own it.<p>Japan I don’t really know. All countries in asia are different but it’s all better than what was allowed in NZ.
I would like governments in countries with housing crisis to do something different - soft limit how many properties can a person own by inducing taxes that drastically increase with each new owned property. Most people just want to own a roof over their head without getting into debt for life, but because some people treat housing as an investment and buy properties in bulk - which results in prices skyrocketing - they become unaffordable for an avarage Joe who has no other choice but to rent forever and just make the landlords richer.
I love Canada - but our government has always been idiotic. The ban is against 'foreign investors'. But the thing is, Canada has a corporate designation called CCPC: Canadian Controlled Private Corporation. Directors of said corporation have to be > 50% resident Canadians.<p>A corporation can be created for the purchase of this property, with a Canadian controlling, and being the director. This will literally do nothing other than add about $300 to the cost of an existing transaction. Shareholders can pre-execute a sale of shares at the existing value - to be executed later. This is completely legal.<p>Canada would have to reform the various types of corporate entities. That's simply not going to happen.
I think this will me largely ineffective but I’m glad it’s happening. Why? Because it’s acknowledgement that there’sa problem.<p>Housing should he first and foremost by the locals for the locals.<p>On the owning side, treat any owners as tax residents and tax their full worldwide income.<p>S much as people hate landlords, someone needs to provide rental units. The solution isn’t for everybody to buy. Not everyone wants that. Not everyone is in a position to do that.<p>But you can give landlords the same treatment: treat them as tax residents and tax their worldwide income. If they’re already local this is no different.<p>Property tax should he based on assessed value. There should Mee no caps (eg Prop 13). If you want to aspire seniors not to be forced out of their homes (a common defense that results in Dismey’s property tax bill in California being straight or if the 60s) then you can carve out exemptions and rebates rather than also including the Larry Ellisons of the world.<p>Second and subsequent properties should have much higher property taxes. Having a property without a beneficial owner should be illegal.
This is really, really stupid. It reeks of economic illiteracy.<p>If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them?<p>Taxing is almost always more economically efficient than banning.<p>You can even pay out (part of) the tax take to the people you think are harmed.<p>(In general, a land value tax for everyone would be a good idea. But if political reasons dictate that only foreigners should be taxed, so be it. Still better than a ban.)
I would have thought that the pandemic and travel restrictions would have effectively “banned foreigners from buying homes” for 2 years.<p>If home prices haven’t fallen during pandemic, then the reason why prices are high is not because of foreigners.<p>The government is trying to point to a scapegoat rather than trying to get to the root cause.
Here are some suggestions for improving housing affordability<p>- Land value tax. This incentivizes more efficient land use, such as building denser housing units (eg. apartments) and less wasted space like giant outdoor parking lots
- Tax on non-primary residence
- Tax on foreign home buyers
- Build more housing. I'm not familiar with Canada, but the U.S has many issues with overly restrictive zoning laws preventing the building of affordable housing. Also public housing gets a bad rep, but it works pretty well in Singapore, Korea, Japan, etc.
Every country should have zoning like Japan.<p>Of course, this would absolutely dilute and depreciate houses as an investment over the long-term, but people would just funnel money into stocks instead. Why would corporations be against this?<p>US zoning is a complete shitshow that’s ruining our country and fostering inconvenient suburban sprawl.
Canada has more housing supply per-capita than the US and many other western countries, but housing prices that are multiples higher (when adjusted for household income).<p>Many analysts have pointed out that Canada in general does not have a housing supply problem. Or not a particularly bad one.<p>What we have is a more generalized housing market problem: bad or badly regulated realtor practices, excessively low interest rates, and excessive speculative investment.<p>Foreign investment does not appear to be the cause, but it's a nice strawman if you want to win elections.
Housing cannot be both affordable and a good investment / retirement plan.<p>Most people's primary savings are the equity in their home. Governments are in for a real sticky treat.
According to the government's announcement linked to in the article, the actual proposal is subtly but importantly different:<p>"<i>imposing a two-year ban on foreign capital coming into Canada to buy residential real estate</i>".
> The Canadian government will ban foreign homebuyers for two years, AP reported Monday.<p>What does "foreign homebuyer" even mean? If I, as a foreigner, register an LLC (or the Canadian equivalent) in Canada, can this LLC then buy real estate or not? What if that LLC is entirely owned by another Canadian LLC which is then maority-owned by me?
Homes are being used as investments by institutions and nonresidents, in the West broadly, because there's a widespread belief (especially among homeowners) that homes should have a large ROI rather than being more of a consumption good, and so policies have slowly gravitated toward furthering that end -- NIMBYism and restrictive zoning laws, basically, but various other stuff too.<p>Call me optimistic, but perhaps if more voters appreciated that "homes should be a good investment for the people owning and living in them" and "homes should be a good investment even if you're not living in them" and "the rent should be too damn high forever" all describe basically the same state of affairs, absent exceptionally well-designed policy that makes those <i>not</i> the same state of affairs, we'd see a slow drift over time away from this regressive nonsense.
When British Columbia brought in its 15% Foreign Buyer tax (later raised further) it was at the end of a long campaign by activists to <i>simply collect data</i> on foreign buying.<p>The government shared this data as they were collecting it, and it was only a few weeks before they were so shocked by some of the buying trends that they brought in the tax. In certain municipalities, foreign buying was approaching 20%.<p>So all that experience has me wondering, why hasn't the Feds shared their data? Where is the troubling foreign buying trend?<p>The fact that they haven't done this makes me feel like maybe there is no foreign buying, that BC and Ontario's taxes have pretty much done the job, and that this is a disingenuous attempt to make it appear that they're doing something relevant around housing, while still fundamentally maintaining the status quo approach that has been ineffective for years and years.
I remember friends squatting in foreign bought apartments in downtown Vancouver 15 or so years ago. Like, floors of luxury buildings empty because it was all a parking space for cash. I have no idea if this will have a significant effect, but, it was so bizarre for me (I'm originally from Detroit) to see these basically empty luxury buildings. It was such a topic when I started University in Vancouver, I can't count the number of times it came up. I personally think the city looks depressing, and Toronto isn't far behind. This is just a personal opinion based on my experiences, but it's so strange when a "dense" area is empty, it feels like a ghost town, like the amount of residential space in Vancouver and the way the streets felt was just so bizarre to me.
Blaming foreigners for your problems is an eternal classic. Appeals to our tribal instincts I guess.<p>In reality, foreigners invest in Canadian real estate <i>because</i> it is quickly rising in price. Not the other way.<p>It's hard to get causality directions right sometimes. Especially when xenophobia implies one direction.
I see the "{place} should be affordable for anyone who wants to live in {place}" folks are out again.<p>I'm pretty sure that there are at least 100k, if not 10M, people who'd like to live in Yosemite Valley. Should they be accommodated?<p>Okay, that's transforming "pastoral" to "urban" and they don't mean that.<p>I'm pretty sure that there are 10M more people who'd like to live in London (current metro population 14M, London city is 9k, with 500k workers) and at least 2M more people who'd like to live in San Francisco (current population under 900k).<p>Should those people be accomodated?<p>I ask because whatever it is that makes London and SF "good" will likely change significantly with the addition of that many people.<p>Why are the current residents obligated to accept that change?
There is a difference between a foreign investor, and a foreign resident. I would be furious if my right to buy a home in the country of my residence was influenced solely by the fact i'm not a citizen.
It's interesting how housing in some countries is seen as a store of value (mostly the anglosphere) whereas in others it's seen as primarily a utilitarian purchase (continental europe and japan)<p>If I had to choose between the 2 models I'd probably pick the euro/japan one, just out of the logic that you need a house to live and hoarding them for wealth generation seems to have a lot of negative externalities on the economy. It's not really a productive use of capital.
This article also said<p>> The government will also impose higher taxes on people who sell their home within a year.<p>Why would they raise taxes on people who decide to sell? Raising taxes on sales will decrease the number of sellers. If the goal is to decrease the price of housing, they should want to increase the number of sellers (partly by reducing taxes on sales) to increase the supply of housing.<p>So backwards.
The problem with housing costs going up, is that they need to be permanently higher or it will have a bubble burst like effect. Imagine if the state of California did something that cut the real-estate prices down 30%... Well now people who bought when real-estate was 10% lower than the original value are upside down and will panic sell.
We have how many foreign investment agreements? Banning foreign investment is not possible at all.<p>The data is public as well, foreign investors aren't the problem. To say you are doing this would not only be punitively not allowed. So you're literally telegraphing that you intend to do nothing. Or for that matter try to make things worse.
This is mostly for show, it won't do much at all. Nimbyism is Canada's only true national ideology and is strongly supported by all major parties across all levels.<p>Here the feds want to be seen as doing something, but have little actual power so this is a good way to say the did something. Ontario is ruled by a conservative government that's up for reelection this summer. There was a big housing affordability task force that recommended building more houses (shocking!). The government will not be implementing any of its substantial recommendations, but will fiddle around and say they're "cutting red tape". Municipal governments like Toronto are obsessed with controlling development, from suburban conservative councillors trying to outlaw rooming houses, to downtown progressives decrying gentrification. Any correction will come despite all these efforts.
How odd...<p>There's a housing crisis in Canada, and Australia, both vast countries. Oh, and also the US coasts, and well actually in the Midwest prices also doubled. And the whole of Europe, including low density eastern Europe.<p>...and still, surely the problem for all of this must be in some local zoning law, or "foreign investors". If only we tweak a little tax or policy here and there and defeat the boogeyman "NIMBY" all of this goes away.<p>Except that it won't. You cannot keep adding boat loads of people to a tiny 5% "hot" area of any of these countries and think it will fit. Any amount of (typically small) new supply is immediately in use, and what about next year? And the year after?
Relevant Satire : <a href="https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-homebuyers-who-refuse-to-set-up-dummy-corporations/" rel="nofollow">https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-h...</a><p>> “Perhaps these foreign homebuyers don’t understand how easy it is to set up an anonymous shell corporation in Canada. Perhaps they stubbornly refuse to spend the extra ten minutes it would take to do so. Perhaps they just don’t like the word ‘shell’,” Trudeau explained. “But rest assured, for this incredibly tiny fraction of international homebuyers, the party is over.”
Banning all foreign home buyers does not seem too smart, especially for a country that wants to massively increase its population. Also, what happens after those two years? Are they expecting foreign moguls to vanish into thin air?
We need this so bad in the Netherlands right now!
Listing price of a house in Amsterdam 525K, bidding price 641K, someone else with 660K comes and takes it away.
Cries in pain after 10th bidding war lost :(
To be clear, no they didn't.<p>The federal government announced they "intend to propose" a bill on the issue. They haven't proposed anything yet and there's currently no date to do so.
Perhaps this is an attempt by Canada to keep the American's out? Any investor that believes in climate change has got to be looking at the areas of the world that used to be colder and seeing opportunity. The closer someone lives to the equator the more desirable northern properties are going to look. It's not just the bugs, plants, and animals that are shifting north, the people are also.
> Some exceptions will be made for permanent residents<p>With how easy it is to get a permanent residency while on visa in Canada, this is a fair way to keep immigrants happy.<p>> Some exceptions will be made for foreign students.<p>Isn't 'Chinese investors buying canadian property and enrolling their children in schools there' why vancouver's housing market is broken. Allowing foreign students to buy houses will let the big loophole continue as is.
Their whole approach is asinine. If foreign buyers are the level of problem they suggest then removing them from the market is less likely to depress home prices and more likely to convince people they shouldn't put their homes on the market because they can't get top prices.<p>In the end I expect this to have no impact as it seems more likely this is just government attempting to deflect attention away from problems they've created.
Good idea. It'd be great to see this in the US, along with very limited speculative (no intent to dwell-in) purchasing of second homes until the market for first-time home-owners (and the demand) shrinks dramatically.<p>The use of homes as gambling chips ("investments") has to be stopped. The economic and social costs are egregious, inhuman, self-destructive.
That's good but not good enough. Because many foreign buyers are Canadian in name only. So the measure will not succeed.<p>The Astronaut families(1) need to be cut out of the housing market. An Astronaut family is a privileged family where typically the husband works in Asia for high income and low or no tax, while the wife and children live in Canada. They don't declare their foreign income (2).<p>>A revealing new “super-diversity” website created by a University of B.C. geographer, Daniel Hiebert, shows nine of 10 recent Chinese immigrants arrive in Metro Vancouver with enough money to immediately buy homes. But only half hold down jobs during their first five years in Canada, while four of 10 report they’re surviving on low incomes.<p>They are eligible for low income benefits, free healthcare, subsidized education at world class universities (3). They make money in a low tax, low social safety net jurisdiction and live in a high income tax high safety net one.<p>They are taking advantage of an income/tax arbitrage that needs to be closed.<p>Many disadvantaged POC immigrants want to come to Canada to improve their lives and the country. But the privileged families take away their spots, increase housing prices, segregate themselves, and contribute little.<p>(1) <a href="https://en.wikipedia.org/wiki/Astronaut_family" rel="nofollow">https://en.wikipedia.org/wiki/Astronaut_family</a><p>(2) <a href="https://vancouversun.com/opinion/columnists/douglas-todd-how-chinese-filipino-and-other-immigrants-differ" rel="nofollow">https://vancouversun.com/opinion/columnists/douglas-todd-how...</a><p>(3) <a href="https://www.narcity.com/vancouver/ubc-ranked-one-of-the-best-universities-in-the-world-in-these-subject-areas" rel="nofollow">https://www.narcity.com/vancouver/ubc-ranked-one-of-the-best...</a>
Good. Yet, prices also accelerate because of ever increasing regulations. Maybe that's a good thing, but we have to make sure that housing is also affordable for everyone. After all it's a basic necessity.
This is a false step. You can still purchase a home through a shell, which literally negates this law entirely. Most of the people who are the issue, are using shells with purchases like this. zzzz
No one talks about the fact that we focus development on the core cities only. Between Calgary and Edmonton there is Red Deer and small towns. No one city half the size of YEG.
I appreciate an effort, but how can a student afford a house ? Is it possible that a rich parents can invest in properties through their kids on a student visa?
What's a foreigner to a country that allows more than 1 citizenship? What's a foreigner in a country that has a "foreign" royal as head of state? Why were foreigners allowed to buy homes in the first place?<p>Most importantly, why does a country with a population of 35 million and a landmass stolen from the natives the size of china have problem housing their population? Certainly, even if much of canada is tundra, they don't lack the land/resources/etc.<p>If they are having problems housing their population, why are they increasing immigration?<p>Nothing adds up.
Thats doesn't solve much of the problem tbh. They need to build more homes. Much like the problem in the UK also. But in the UK we need to push back on normal people wanting this property empire and massively over leveraging themselves<p>> The government will also impose higher taxes on people who sell their home within a year.<p>Nice!
Canada's housing market is a destination for capital flight from other countries. Imo, the market is completely financialized and not producing actual homes.<p>That money is also made in countries without the same levels of taxation Canada has, and that puts citizens at a huge disadvantage in their own market. Why should a 21yr old from North Bay or Timmins in Ontario have to compete for bidding on a house with the someone in the top 10% of earners in Hong Kong, Delhi, or Tehran - let alone their REITs? I'm a huge believer in positive sum economics, where people can be trusted and bet on to find a way and create new businesses and value, but that only works when there is a diversity of markets based on geography and not a single zero sum managed global one.<p>Whether one calls this "nationalism," or just a government being responsible for the people who elected it, the dynamic is clear. Canada's economy has been hollowed out by two decades of globalization, whereby all that "empty space" is not economical to inhabit because we can import everything people could produce in that new town at higher volumes and cheaper from asia. There is nothing "local," to be produced or manufactured for export that would facilitate growth, and therefore no incentive to build new housing to serve that local market. Precisely due to Canada's theory driven agricultural supply management laws against entrepreneurship and smallholders, there are no local markets either.<p>Even though I don't trust this govt to implement the rule in an effective way, it's the bare minimum necessary to mitigate a crisis. If millenials and gen Z and beyond do not have homes, they aren't going to have kids (after losing 2+ years on that path to covid), and the govt is using this policy to try and mitigate an imminent disruptive population bust. Boomers are coming to terms with the fact that generally, they aren't getting grandchildren (unless you count "fur babies"), and now Gen X is about to experience the same. As a signal that your society is damaged, consider that the only time any creatures on earth cease to have kids is during war or famine, or in captivity. The greater issue of the culture being broken and physically dying off isn't going to be stopped by banning foreign ownership, and unfortunately it may keep the people responsible for these policies in power even longer to do even more harm, but it's a sign they apprehend the disaster they have caused, imo.
public housing will probably have to be the major accomodation provider.<p>Since the economy is a scam, expecting it to house everybody in a decent and sane way is just utopia, no better than communism.<p>I heard about Singapore (80%?) and Vienna (65%?, Austria), I am unable to check that or find other places: this information is really tough to get. In my country, it is extremely opaque and _very discret_ (secret?) in the fear of massive abuse from foreigners.
This is virtue signalling from the Liberals. It is a known fact here in Canada that the foreign buyers have anchor proxies as international students who drives Porsche buying up a lot of homes in Canada so that they can "study in peace and quiet of a detached home". Toronto, Montreal and especially Vancouver. This ban is not going to fix anything.