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Comment by paulgb | Hacker News Reader

> Freeland will introduce legislation that allows Canadians under the age of 40 to save as much as C$40,000 ($31,900) for a home downpayment within a new tax-exempt vehicle, the person said.

I'm not an economist but this seems pretty dumb? To the extent that it helps someone afford a home that they can save tax-free for it, the same is true of some of the people they're bidding against, driving up the price they ultimately pay for it. The government is just transferring their own future tax revenue to people who own homes, not people in the market for them.

It seems that governments have a reflex of dealing with a supply crisis by showering money on the demand side (see also: gas tax decreases, higher education subsidies, etc.), which just drives up prices further.

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Ridiculous ageist policy. If you don't have a home and you're above 40, I'd argue you need the benefit even more.

Agreed, this should be a tax code line with a small number of ORed entry conditions.

- OR - at least one of

* First time home buyer

* Total homes owned plus being purchased will remain at one after the transaction is completed, and net-worth is under 20% the cost of a median home within the home's metro area.

* Qualified for a federal benefits program excluded from the upper 60% of society

The phrasing on the last one is specific, it's the wording required to select for economically disadvantaged individuals in a mechanically testable way. The exact number might be tweaked, this is just a back of the napkin ballpark. Other entry qualifiers can be added to the list. The second allows someone to move homes and if they need the benefit, not be locked out of assistance moving to an economically 'hotter' area that might have better jobs.

What about no age discrimination at all?

The home ownership rate is already >70% for people 40+.

This is just pandering to young people in Vancouver & Toronto.

Any tax savings will be passed on to owners in the form of higher prices.

The only thing you'll do is pay higher property taxes and insurance.

Just so you don't get angry for no reason: the actual policy says nothing about a specific age. You could be 60 and use it to buy a house.

It also doesn't have to be your first one. If you had a house than sold it and lived in an apartment for 4 years you are eligible again. If you own your house but your spouse doesn't they can use this for your next house.

> the same is true of some of the people they're bidding against

I think you're assuming that everyone bidding will be a first time home buyer under 40 years old. While that may be the bulk of buyers, there are also many investors also in the mix who are buying up houses to rent/flip them.

A house goes to the highest bidder, so if you decrease the cost of capital for some participants you increase the price for everyone. I agree that it’s not a perfect transfer, but I suspect it’s a pretty good one, on the assumption that first-time buyers represent most of the capital entering the system. E.g. someone buying a first house for $500k puts $500k in the market, whereas someone moving from a $500k house to a $600k house is only bringing $100k of new capital into the system.

I realize that people also leave the system, so maybe my logic is flawed.

They tried something like this in. nl and that was pretty much exactly what happened: make some of the cash-limited house buyers be able to pay more increased prices.

The desired effect typically is not achieved because such measures are aimed at the least affluent buyers. Giving those ways to bid more will not decrease prices. It just means someone else is now the least affluent buyer - typically not investors.

We have a similar scheme in the UK, where you can save £4000/yr and get a 25% top-up from the government if you use the pot to buy your first home. Everything invested in this scheme is tax free: income and growth.

You're completely right, it just drives up prices further... but they're vote winning policies and using these pots makes conveyencers a nice profit.

You can't open a help to buy ISA any longer, the government honours existing accounts though.

You can use a LISA for a first property.

Lifetime ISAs as a different scheme than help to buy ISAs and are still available https://www.moneysavingexpert.com/savings/lifetime-isas/

I don't think these drive up prices higher.

LISA specifically mentions that it has to be your first house anywhere in the world, so it is targeted at home ownership. People speculating shouldn't be able to take advantage of this.

Though LISA is pretty much useless in London. Good luck finding even a good 1 BHK under 450k inside Zone 4

That doesn't matter. It increases the amount the first-time buyer can bid from $x to $y, which just means the investor has to bid $y + 1 instead of $x + 1. Since $y is higher than $x all that's happened is prices have risen.

Yeah, but the idea is to try to give buyers a leg up from investors. It is another story that most investors have way more money to be outbid this way.

>I don't think these drive up prices higher.

It's a demand-side policy to what is a supply-side problem. If the demand is already there, and you induce more demand by providing subsidies, prices will go up. If you want to reduce prices you must either increase supply (building housing) or decrease demand (remove someone, hopefully speculators, from the market).

However, given housing has become a defacto investment asset for Americans and Canadians, I don't see this issue ever being resolved without a political revolution or an economic depression.

> housing has become a defacto investment asset for Americans and Canadians

Is there a major economy where this is not true? In fact it becomes comical in some developing countries.

Cities in India have NY/London like prices for much worse infrastructure and much lower purchasing power.

Japan, Germany, arguably, Britain. I'm not saying these places don't have exorbitant housing costs, but housing is not the primary way of securing your retirement.

It is not actually possible to increase the supply of good suburbia. The virtue of a suburban home is to be on a large plot of land with low-intensity neighbors and convenient vehicle access to places, and this genuinely can’t scale very far. Even if you have infinitely much land, you will never build enough roads or lanes.

We can increase the supply of other things which are also called “housing” but are fundamentally different products, and not what most people in North America are talking about when they talk about wanting to buy or own homes.

One large reason for high priced real estate in some places is the geographically uneven distribution of disposable income. Historically, people moved to cities because the jobs were there (i.e., physical factories that had to exchange physical goods).

No commuting for work = much less need for roads. If commuting and working in a centralized location is viewed as exceptional rather than normal, society could easily switch to lower density living, which is highly beneficial to most mammalian species (reduced stress, reduced aggression).

If the most lucrative information-age jobs (tech, finance) become remote-first (or better, remote-only) and dominated by shape rotators, people will be able to move away from cities (and take the money with them). Only wordcels, who grift on social interactions, really need high density humanity to thrive.

In other words, people will be forced to weigh options and tradeoffs, just like they have to do with everything else. If you want a SFH very near to an urban core, then you'll have to pay what that's actually worth relative to alternative uses for that land.

> It is not actually possible to increase the supply of good suburbia.

Dallas seems to be doing it by organically creating a multi-core urban metropolis. Infinite suburbia only fails if you assume that each metropolitan area can only have a single urban core.

You actually could, basically, if you really wanted to do it. If there was an efficient high-speed corridor into the major metro area, suburbs could be much further out along it and it'd still work out well.

It is dumb and will likely add fuel to the fire and the politicians know this. Canada has like a 68% home ownership rate meaning actually doing something to lower housing prices would be political suicide.

Yes, but crucially it's actually land that's valuable, not the housing that sits on it. The worry that allowing more density will tank home values is misguided. Land prices will keep going up as long as the land underneath the houses remains desirable. In fact, upzoning means more allowed uses, which means higher land values, which means more money for landowners.

There are two implications of this: 1) NIMBYs need to realize that allowing more housing isn't going to tank prices; if you're worried about prices tanking, you need not be; 2) YIMBYs need to realize that NIMBYs aren't exclusively motivated by greed. When they tell you that they don't want their neighborhood to densify they actually mean it. It's not covering for racism or greed. People genuinely don't want their neighborhoods to change.

There's hope in this. If the state forces upzoning, then people are going to grumble about it. And some of them won't be happy no matter what. But the average homeowner isn't going to be that upset about it once they realize there's money to be made.

> NIMBYs need to realize that allowing more housing isn't going to tank prices. ... When they tell you that they don't want their neighborhood to densify they actually mean it.

Ya, a lot of NIMBYs don't care about housing prices since they aren't thinking about selling anytime soon, they just don't want the traffic and (perhaps) crime that goes along with density.

I get what they mean since I became home owner. I don't want my view to go away, and crime is already a problem (having some random person come into my drive way to check if my car doors are unlocked is quite unnerving when you can see it happen in real time through your cameras). I bought in an already upzoned area, however, so I'm more concerned if my son can get in the local choice school (which is heavily oversubscribed given the density).

> they just don't want the traffic and (perhaps) crime that goes along with density.

Something I've been trying to think through recently is that people clearly have some kind of proximity theory of crime. If there is a murder in the building next door to me, then that's going to make me uncomfortable, whether there is one family living in that building or 10. The obvious urbanist (or generic intellectual) response to this is to say, you know, obviously there will be more crimes in a neighborhood with more families, but you should only care about the per capita numbers, not absolute totals.

And increasingly I just think, yeah, obviously that's right, but that answer isn't good enough. Fear of interpersonal violence is lodged deep in our brains and I just don't think you can talk people out of it. You could make everybody in the city attend a class on crime statistics and quiz them at the end to make sure they understand per capita rates, but when those people get home that night they're still going to be worried about the murder that happened next door. And I don't think it's because they're dumb.

Our per capita property crime numbers are horrible, and it doesn't have much to do with our neighborhoods being dense so much as it has to do with Seattle being a welcoming place for unhoused neighbors (encampments and derelict RVs on the street drive much of the crime). So we get all the problems from a large region that isn't so welcoming.

in general, per capita crime is higher in cities though. some of that is misleading: truly random murders are rare pretty much everywhere. but you're a lot more likely to be the victim of crimes of opportunity (armed robbery, car/home break-ins, etc) when you live in a dense area.

Rural areas can have horrible crime, like rural New Mexico or the Mississippi delta. It is all very region specific. Alaska is one big example of a state where rural crime is greater than urban crime on a per capita basis.

In general, cities are more dangerous:

https://twitter.com/RyanRadia/status/1461904766238404611

> 2) YIMBYs need to realize that NIMBYs aren't exclusively motivated by greed. When they tell you that they don't want their neighborhood to densify they actually mean it. It's not covering for racism or greed. People genuinely don't want their neighborhoods to change.

In my experience this is almost 100% the real truth. I haven't met many people that are looking at their house price when they think about changes to the neighborhood. First consideration is usually traffic. Second consideration is character. In neighborhoods where almost everyone owns, they very much don't want to see it become a rental neighborhood.

How does classicism differ from racism? The fact a neighbourhood association would welcome a Black cardiologist but not a white barista doesn't make it any less nefarious.

I don't think that's totally right. The idea is to give Canadians a leg up vs. foreign buyers (once the immediate 2 year foreign buyer ban expires, I assume). If your operating model is that foreign bidders are driving up the price and winning the marginal bid, then this is effectively a subsidy to allow Canadians to compete with the foreigners. Yes it will drive prices a bit higher and thus transfer more wealth to sellers. But the mix should be different, with more ownership ending up with Canadian purchasers than foreign ones (vs. today).

It is dumb.

It's an exersize in shifting money from relatively lower income renters who will never have enough money for a downpayment and who will never own a home, toward the relatively rich on the cusp of being able to buy.

Of course the main winner here is the home builder.

Giving individual citizens/permanent residents a one time benefit to buy a house will at least give them an advantage over second home buyers or foreign speculators. It would definitely drive prices up (to be honest, tax exempt $31,900 isn't enough to do much though), but it should be a net win for those that have it vs. those that don't.

A more extreme version of this is the public housing Singapore sells at a subsidy to each citizen (as long as they get married, and there is still a waiting list since supply can't keep up with the benefit).

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