Canada bans most foreigners from buying homes
voanews.com
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It wasn't always like this - in 1922 in Australia we realised there was a shortage of 25,000 homes, so they just made it happen [1]. Why are we so impotent today? Do we just not care enough? Are the vested interests too powerful?
[1] https://pbs.twimg.com/media/FlSIML5aYAAVmvf?format=jpg&name=... https://nla.gov.au/nla.obj-2947838631/view?sectionId=nla.obj...
Renters also got co-opted into being NIMBYs out of fear of gentrification.
Totally agree. But the counterpart of that is rising housing costs. If you accept that tradeoff, you aren't a NIMBY. This covers many homeowners. But renters opposed to development while complaining about housing costs are trying to suppress their housing costs by increasing others'. That externalization is textbook NIMBY.
I feel like you have a very arbitrary definition of NIMBY. I'm writing this post right now from the 14th floor of a highrise building in Sydney's inner city, in the apartment I rent from a landlord who lives in mainland China. There are still rows of historic terrace houses in the nearby suburbs that have been heritage listed. I'm sure property developers would love to turn these into more highrise apartments. Even though I'm renting, I don't want these to be replaced with endless new apartments. I could list a dozen reasons too. For one, I don't think this would help create a city that people would actually enjoy living in.
I've been told by people who would know that one of Sydney's big problems is that property developers are able to artificially inflate property value by staggering the release of newly developed property onto the market. So more development isn't necessarily going to solve any of this country's problems with property value. It hasn't so far.
NIMBY means not in my backyard. As in, I want the benefits of a thing but not its cost. Wanting affordable housing while denying development is NIMBY. Saying no development because you want higher property prices is not NIMBY, it's prohibitionism. (Depending on the environment, it could be reasonable and/or heartless.)
> been told by people who would know that one of Sydney's big problems is that property developers are able to artificially inflate property value by staggering the release of newly developed property onto the market
This is prudent pipeline management. Why would you bid up the cost of materials and labor only to dump the finished product at a loss?
On supply and demand: American house prices are elastic, but over long timelines [1]. In Sydney, dense housing is more elastic than detached housing [2]. The abundance of those historic terrace houses, together with long development approval times, cause the high prices and relative price inelasticity.
[1] https://www.sciencedirect.com/science/article/abs/pii/S00941...
[2] https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-8462....
Doesn't this contradict your central thesis? If the supply of housing doesn't exceed the demand, the price isn't going to drop. How can urban consolidation actually benefit the renter class if property developers are able to artificially increase the value by restricting supply until mechanisms like immigration cause demand to catch up?
No. In development-constrained world, particularly one with long approval timelines, you need to make money on margin. In a less-constrained world, you can bring to force economies of scale and make money in volume.
The thesis is: if you have an anti-development environment, developers will maximise margins. This isn’t a conspiracy and it isn’t artificially increasing value. It’s survival. If ten houses will get built but there is demand for twenty, and everyone pays the same for labour and materials and lobbyists, all those houses will be as high end as the market will bear. You’re competing in getting the right to build; the market is inelastic. If anyone can build twenty or thirty houses without years of approvals, you’re going to prioritise your costs, because there is a chance you don’t sell every single house. You’re competing on price and value; the market is elastic. (You also get a learning curve.)
This is why Sydney has price inelasticity for detached housing. The scarcity is a policy choice.
Funny, I would have the opposite opinion. Just because someone was alive and rich back in 1950 or whenever these cute little houses were built, doesn't give them more of a right to live in that area than others, in my opinion.
Let's face it, most of these cute litte historic houses are probably owned by the same mega-rich investors and CCP party members as your apartment building.
1 person having a garden does not justify 15 families not being able to live there.
That’s a literal question. What public policy do you endorse that has the ability to significantly reduce the number of people being born?
If you don’t have one you’re just opposed to building enough houses for the people we have.
Those things are highly correlated with lowered birth rates, though I suspect the last one is probably not applicable to the US.
None of them are applicable to America [1].
[1] https://www.census.gov/content/dam/Census/library/publicatio...
How much lower do you want it to be?
I'd endorse free contraception.
Options I'd oppose but others might favor include not requiring insurance to cover fertility treatments, prohibiting IVF entirely, mandatory birth control until marriage, sterilization as punishment for crime, and removing the child tax credit. Plus restricting immigration and increasing deportations which have a similar effect on the people/housing ratio.
(But I'm in favor of more people being born, and building lots more housing)
In the case of the western world, what population growth? The amount of couples in the first-world having children has slowed to a trickle in the last few decades. This seems to have spooked governments in the western world into enacting policies to encourage immigration, ostensibly to prevent a decline in economic growth coinciding with a shrinking population. The only place where the birth rate is actually increasing is Africa.
My personal theory (which people are free to disagree with) is that the decline in birth rate in the first-world is a reaction to overpopulation. Although I acknowledge that extrapolation from this example is risky, we know that some animals lose their desire to breed when population density increases, and in captivity. Is it so strange that humans could be similar?
There really aren't, though, in the sense that the costs (both societal and individual) drastically outweigh the benefits. Of course prohibitions on new construction are narrowly beneficial to specific individuals. Who wants some guys starting up new construction at 7AM next door? If you like your quiet little block, then why on Earth would you want it to densify? Somebody else's construction project is little more than an annoyance, after all. If you can ban it, then great!
The problem is that these individual preferences come with enormous costs, both economic and with respect to individual freedom. When weighed against the downsides, those banal individual preferences about densification are no longer compelling.
In short, yes, people do have rational, coherent reasons to oppose growth, but, no, those complaints are not in the end valid.
> The problem is that these individual preferences come with enormous costs, both economic and with respect to individual freedom...
What if I don't agree with increasing the population? If I don't want to increase the number of people in the city I'm living in, then why on earth would I want urban consolidation? Does anyone actually enjoy living in a tiny apartment, as opposed to being able to afford a house with a yard? The need for endless population increase is not just some foregone conclusion. Not everyone here is an SWE living in SF, with SF problems, and SF opinions.
> In short, yes, people do have rational, coherent reasons to oppose growth, but, no, those complaints are not in the end valid.
I don't agree with your opinion. Should I just classify all of it as 'invalid'?
In order to answer this question for yourself you need to first accept an iron law of economics: because decisions are not made in a vacuum, there is no such thing as an abstract preference, only constraints and tradeoffs.
My preference is that I have a 10,000 square foot single-family home located on an otherwise empty block of land just south of Central Park. That way I get everything great about single-family living and access to the economic and cultural superpower that is Manhattan.
But, and I mean this technically and in the kindest way possible: literally who gives a shit?
Everything in life is tradeoffs. The NIMBY position is that tradeoffs can be wished away by legislation. But they cannot. It only deranges the situation.
I’m not sure what kind of answer you’re looking for with those “what if” questions. What if you preferred that the human race go extinct? I suppose the answer to all of these “what if” questions is simply that other people will disagree with you and oppose you in various ways.
Society should ignore your whining.
Density is literally the opposite of sprawl.
I believe this also explains the rise of progressive political factions that propose a lot of policies that seem to favour the disenfranchised but in reality benefit the rich and the asset owners. Their policies let the rich and the well off virtue signal without any consequence to their income or wealth. Voting patterns in large cities in Canada, for example in Toronto, supports this.
This, so much. Segregation has once again become overt Democrat Party policy, only now it's disguised as "fighting against gentrification".
Who are these renters who stopped voting? I can only speak for Australia, however the average age of renters has been rising for decades. Most of Gen Y have come to terms with the fact they will likely never own property in a major city. These people keep voting, but their vote isn't accomplishing anything.
> Density hurts landowners by decreasing property values and landowners vote.
How does density actually hurt landowners? If you own a house in a heavily consolidated urban area your property value will hardly have decreased. Look at the value of houses in Ultimo, Chippendale, Pyrmont, for instance. Also consider that maybe people just don't want to live in a highrise legoland, or think that endless urban consolidation is a good thing for our cities.
Correct because, and I can only speak for America, those big cities stopped building. San Francisco alone is short about a quarter million homes, like 33% of the existing population. There’s a whole Wikipedia article on it. That’s why it’s so unaffordable.
> Also consider that maybe people just don't want to live in a highrise legoland, or think that endless urban consolidation is a good thing for our cities.
This is a pretty funny position to take. Those cities didn’t get to high rises because nobody wanted to live in them. You know those buildings are full … right? If nobody wanted to live there prices would be way lower and they never would have built denser housing.
Tokyo is a great example of a major metro where supply and demand are roughly equal and they haven’t seen houses increase in price since 1990. Their units cost a bit more than cost of construction. This is the power of federalizing zoning rules so city councils can’t get between you and building a house on your property.
If they added a quarter million homes, do you think they would still be short another quarter million homes?
Not saying densification is bad. But in some cities the density can keep increasing and not have any drop in demand. Apartment prices in dense cities don’t drop?
Not in this market, haha. The number was based on the quantity of houses added vs the quantity of jobs added in SF and the surrounding area. (From [1]: "For example, from 2012 to 2016, the San Francisco metropolitan area added 373,000 new jobs, but permitted only 58,000 new housing units") But over time? Maybe.
> Apartment prices in dense cities don’t drop?
There are very few cities where supply of housing is allowed to meet demand for housing - but as I mentioned, Japan is a great example. Japan hasn't seen an increase in the cost of housing since edit: [1995, not 1990 as I mistakenly claimed in GP post]. [2] Compare to the US. [3] What happens is that they stop going up in price.
[1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
At the end of the day a lot of people have this very wrong idea that living in the best weather and in the epicenter of a global city with top-tier jobs, food, etc. will ever be “affordable”. It simply will not be. Ever.
Further higher interest rates lead to lower house prices, to an extent (but only to the extent supply exceeds demand) because people buy houses based on monthly mortgage affordability.
People have looked into this. Here are the results. [1]
> The resultant high demand for housing, combined with the lack of supply, (caused by severe restrictions on the building of new housing units) caused dramatic increases in rents and extremely high housing prices.
I'm not saying you'll be able to live in SF for the cost of living in a shack in the corn belt, but there's no reason it'll be "unaffordable forever and there's nothing we can do about it" when that historically wasn't the case and there are other global counter-examples. And a ton of research was done on this.
[1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
Why would you think that I think this? That's really confusing.
I think the issue you have here is that you are thinking in extremely simplistic terms and not really accounting for real supply and demand in this particular market. Instead of looking to Tokyo (which is a generally bad example because Tokyo and Japan are not great generalized models) you should look to New York City to see what will happen if you continue to build housing in the Bay Area. It won't get cheaper, in fact, the more you build the more expensive it'll get for a few of reasons:
Interest rates
Housing standards (environment, earthquakes, etc.)
Developers do not want to build low-margin housing so they'll only build "luxury" housing with cheap, but perceived higher-end finishes so they can charge more rent per sqft
Lack of available workers
Tokyo is incomparable for a few reasons, but you can start by examining Japanese birth rates, immigration policy, and California's comparable car-only infrastructure.
Historical examples aren't very useful here because historically there were far fewer people, travel from the highly populated east coast to California was long and arduous and the benefits were "unknown", and people had a lot less money and stronger family ties. Trying to do global comparisons is generally suspect as well. But I guess if you want to see what things would look like, New York City, Hong Kong (pre commie China takeover) and the similar extremely high housing costs and density are appropriate versions of the future of the Bay Area real estate market. With that being said, who knows what will happen with remote work and the like, but probably won't have much in the way of price reductions there anyway over the longer term.
If you want less expensive housing you'll have to live somewhere else. That's just how the world works.
1) Interest rates make existing housing stock less expensive as people are unable to afford a property of the same price based on fixed monthly payments.
2) Housing standards are relatively consistent, and you know Tokyo is on a fault line right?
3) Developers will happily add any kind of unit they think they can sell, just look at what the city of SF is rejecting on a regular basis. But even if you only build luxury housing, that pushes existing wealth out of less fancy units opening them up to lower wealth tiers. New supply is new supply. Period.
4) Lack of available workers factors into cost of construction, but cost of construction is absolutely dwarfed by market prices. If we were close at all to it, we could include (4) but we're just not.
> Tokyo is incomparable for a few reasons, but you can start by examining Japanese birth rates, immigration policy, and California's comparable car-only infrastructure.
This constrains demand, but the point remains that in their market supply and demand meet. Supply and demand can meet by increasing supply or by decreasing demand. Btw, Japan’s immigration policies are actually very lax, but the perception of their culture as unwelcoming to outsiders creates little actual demand. The US immigration policies by contrast are significantly more stringent.
Density and transit are a chicken and egg problem. More density however allows you to invest more in transit.
> If you want less expensive housing you'll have to live somewhere else.
This wasn’t the case historically and there’s no reason to think it can’t be the case in the future except for lack of zoning reform. Anyways if you want to take up the supply/demand thing feel free to take it up with Wikipedia, which cites plenty of sources that provide contrasting examples.
> That's just how the world works.
I disagree, but thanks for your perspective.
I look forward to your treatise on why supply and demand stops working when it’s nice outside ;) Especially since during COVID rents fell massively in SF as supply outstripped demand - even thought the weather remained lovely.
You are making overly-simplistic assumptions. Interest rates are one factor that can lead to prices going down to balance monthly payments, but you're forgetting that developers have to borrow money as well to build new housing or new condos or apartment units, renovate existing properties, and other things including running their businesses. This causes their IRR to change, and where a fixed monthly income from a new 35 unit apartment for rent or condo building or housing development makes sense at 0% or 1% rates, it may become unattractive at a higher rate or prices and rents have to increase to account for IRR. Don't make the mistake of assuming that higher interest rates simply lead to cheaper housing across the board. Even so, higher rates don't necessarily mean that housing prices go "back" to some historic price, and even then you have to account for various markets. San Francisco is going to be different than Denver, or Miami, or Topeka.
> Housing standards are relatively consistent,
Housing regulations, build rules and quality, size, etc. all these factors are consistent across the US and Tokyo/Japan? If so, that's news to me. I don't recall Ohio where I live having the same environmental reviews (for example) as California, or the need to build to withstand earthquakes. Or are you saying that Tokyo and San Francisco have the same housing standards?
> Developers will happily add any kind of unit they think they can sell, just look at what the city of SF is rejecting on a regular basis. But even if you only build luxury housing, that pushes existing wealth out of less fancy units opening them up to lower wealth tiers.
While it's true that San Francisco in particular may be rejecting units, you are making a mistake by equating "developers will happily add any kind of unit they think they can sell" with "developers will happily add any kind of new unit they think they can sell at an internal IRR based on interest rates and market conditions".
You are also mistaken because you believe that adding "luxury" housing creates a drop in prices for other housing, that does not necessarily follow when there is pent-up demand at the cheaper price points. What you do is just increase the median rent price, not lower it, in markets like San Francisco or New York or other highly desirable areas.
> New supply is new supply. Period.
Overly-simplistic and you can show that this isn't the case by a simple thought experiment where a developer builds nothing but $50,000/month condos or $5mm homes - supply is added but doesn't alleviate housing shortages.
> Lack of available workers factors into cost of construction, but cost of construction is absolutely dwarfed by market prices. If we were close at all to it, we could include (4) but we're just not.
What do you mean "cost of construction is absolutely dwarfed by market prices"? Are you saying that it's cheaper to build new housing and sell it than it is to sell existing housing?
> This constrains demand, but the point remains that in their market supply and demand meet. Supply and demand can meet by increasing supply or by decreasing demand.
Sure but you are oversimplifying things and you can't generalize Tokyo to the US or San Francisco. Do the same thought experiment with Hong Kong, Singapore, or London.
> Btw, Japan’s immigration policies are actually very lax, but the perception of their culture as unwelcoming to outsiders creates little actual demand. The US immigration policies by contrast are significantly more stringent.
I'm not sure this is true anyway, but it doesn't matter if the effect is the same = fewer immigrants. Difficult to compare Japan versus anywhere really so I'm not sure why you continue to do so.
> Density and transit are a chicken and egg problem. More density however allows you to invest more in transit.
Yes but it is still an existing problem which is why I mentioned it. Hard to build new housing when you have mandatory parking minimums and such (I believe but could be wrong that these were removed in California as a whole last year).
> This wasn’t the case historically and there’s no reason to think it can’t be the case in the future except for lack of zoning reform.
By that rationale land in California should be free/extremely cheap because it used to be in 1880.
> I look forward to your dissertation on why supply and demand stops working when it’s nice outside ;)
So climate isn't a factor in housing prices? Why are you taking such extreme positions? "supply and demand stops working" who said that? Certainly not me.
> Especially since during COVID rents fell massively in SF as supply outstripped demand - even thought the weather remained lovely.
I mentioned COVID already but it also primarily applies to office vacancies. San Francisco in particular is still very expensive to live in even despite COVID for obvious reasons - it took a global pandemic and entire shutdown of the city to get rents to drop. Populations ebb and flow, markets go up, they go down, etc.
Which is exactly why we have policies to encourage home ownership rather than rental.
Tell that to these folks:
https://twitter.com/curtlsmlchael/status/1606993882679590912
Upzoning in high-demand areas would unlock billions of dollars in value for existing homeowners.
Density also helps landowners, lots that are zoned for multifamily are worth more.
Land with a skyscraper on it is extremely valuable!
---- Source: https://pursuit.unimelb.edu.au/articles/too-many-eggs-in-the...
Why is it that when some people vote for their principles but against their wallet it’s a good thing but when others do it it’s a bad thing?
Regardless, that’s not the point. The point is that there’s a double standard.
You really shouldn't assume you know more about half a voter base's own interest than they themselves do, regardless of their "side" in an election. People are driven by different things and put different weights on said things than you do.
The only thing this kind of thinking does is infantilize adults at best and demonize them at worst, which is pretty silly when you're talking about half the voting population.
Any government proposal to increase the housing supply directly threatens this. These days, government officials who talk about doing things that decrease existing homeowners' property value get voted out, immediately.
It's incredibly short-sighted, but people vote against their long-term interests all the time.
I just bought a condo three years ago, and while it wouldn't feel good if its value decreased below the purchase price, I would gladly "pay" in that way for a more livable city, and more housing is key to that. I expect in the long run, making the city a nicer place to live would be better for my home's value anyway. But people won't care about their higher home value in 15 years if it drops for the first 3-5.
Before 1900, the governments more or less stayed out of the details of residential housing. There were restrictions on what could be done with a piece of land, but the government generally did not get too involved in whether a single family vs multi-family apartment could be built on a specific parcel.
The 1926 SCOTUS case, Euclid vs. Ambler, changed all this. The SCOTUS ruled it was legal for cities to ban certain types of homes, such as cheaper, denser, apartments. By creating an artificial shortage of homes or by directly forbidding types of homes, the wrong type of poor minorities could be kept out of neighborhoods without officially banning them. Back then this was mainly blacks, but nowadays it’s broadened to include any type of poor minority in disfavor, such as college students.
Houses form a large portion of someone's net worth, moving costs a lot of money and besides, the person you want to force to move may be unable to move.
Why would they vote to let you build university housing next door to them?
Every single aspect of that dorm negatively impacts their quality of life, and further reduces their ability to afford to live anywhere else.
You can say this is "shortsighted" because of urbanist sympathies, but the reality is that voters are basically perpetually punished for allowing any kind of building. Over time, cabals of "absolutely not" form.
Most of what you're seeing in the US is the result of one group pushing another group on a third group and the third group deciding that it's just not worth bothering.
Provinces didn't fill in the gaps the same way. Shrugged their shoulders and mostly downloaded the problem to municipalities.
Municipalities didn't have any sort of revenue generating capacity to build social housing at all, nor did they have the ability to incentivize market housing, so only a limited amount of very profitable market housing gets built.
Just look at the increase in corporate money and lobbying in politics to see a pretty shocking corollary with pretty much every major ill the world is suffering from these days.
2008 was people finding the boundaries of the equation (“just how quickly can we make prices go up?”) and the foreseeable future is a slower continuation of that game: housing will keep getting more expensive but not better because current asset holders will pull all the levers they can (outright blocking supply, making it more expensive to build via things like below-market-rate requirements, etc) to keep the train rolling.
Honestly the inevitable fallout is probably one of the greatest risks to the current societal structure (probably tied with climate change).
Let’s hope Gen Z is up to tackle both.
Beginning with Japanese surpluses and no better place to reinvest, their corps. began picking up real estate as foreign investment.
Today high worth individuals with excess cash are driving worldwide demand. They are not going to live in most of that real estate.
Todays dynamics are different. It looks like Canada is tackling the problem in the right place.
1) build high-rises
2) build more metro lines
Look at Tokio or Shanghai, as an example.
Shanghai has lots of high rises; well, they are mostly 30 story apartment buildings that can be reliably built with concrete and unskilled labor. Yet, there is a lot of speculation market in the China so prices are still high even if supply expands (and many apartments are empty because they are just being used as speculative investments). One of the reason I didn't look at Shanghai was commute times (Microsoft's Shanghai office is in the boonies vs. Beijing where the office is at least inside the 4th ring rood).
Right, but only because of the seismic activity, from what I know. In most other places that wouldn't be an issue.
Nevertheless, Tokio is still relatively dense with tightly packed mid-rises, and actively building.
Maybe I'm misunderstanding what you mean by "high rises", but I don't think this is true. I live in Tokyo, inside a 10+ floor building, that's surrounded by similar buildings.
Just off the top of my head, I can think of a lot of places with multiple blocks full of high rises, such as Ginza, Shibuya, Akihabara, etc
It's been a while since I watched this video but the proposal is for 5 storey high developments along transport corridors that do not tower over suburbs like high density developments, but which also serve to engage with street life more effectively than existing low density.
https://www.youtube.com/watch?v=ZYJpdH-VGwc
It can be done. But obviously needs a departure from existing low density suburban sprawl, and a tight control over overdevelopment. But it can actually result in better amenities, faster transport, for residents.
Looking at Asia now is like what the west used to be like.
I am unsure about the cause but I suspect that a lot of it is that people seem a lot more worried about consultation with locals and such.
In the past the government might just decide “we are building a highway here” or “we are building all this infrastructure for houses there” and there seemed to be a lot less consideration for how people affected would feel about it.
Media has gotten more pervasive, so we might imagine that politicians are more concerned about things flaring up there, but Asia has plenty of media access too, so that doesn’t really explain it.
There is also a related but separate aspect where environmental activists erected barriers to slow down any development. You still feel its effects today where CEQA is weaponized to slow down a small apartment housing.
The lower part of Manhattan would have had a highway through it but instead it'sa cultural epicenter
(https://untappedcities.com/2013/09/11/nyc-that-never-was-rob...)
In Boston they did the reverse of your example. They took a subway and moved it in to fill the void where a highway was supposed to go before it got cancelled. If they hadn’t cancelled the highway that subway would still be where it used to be. As an aside, the people who cancelled it really have a lot of blood on their hands because a bunch of major surface streets got developed into main thoroughfares as a result and we all know how good it is to have a highway speed road that isn’t grade separated from cross streets, pedestrians and cyclists…
People still die on construction projects all the time, on relatively uninteresting things even. eg, in 2019 four people died when a crane working above a Google office building in Seattle collapsed. It was local news for a few weeks, but I'm not sure it had any other effects, regulatory or otherwise.
There is a huge property bubble in China, so I'm not sure if that is good example for us to follow. Japan is a better model, where a declining population and weariness of a huge real estate bubble that popped in the late 80s has made investing property not very feasible.
It never made sense for me to buy property in China (which I was eligible to do after being there for 6 years), since rent prices were so cheap in comparison.
https://usafacts.org/articles/population-growth-has-outpaced...
Cutting that population growth by 1/3rd (or more, really, considering children) sure would help that number, would it not? A huge, huge portion of our population growth is due to illegal immigration.
The spectacular thing about the housing crisis is that you don't even need any big government projects. It just needs to be legal for private actors to build housing. On most plots of land today it is not legal to build anything but a single-family home, so cities are no longer able to naturally densify over time (just like every single modern city did 100 years ago, so that they could become the cities they are today).
There are a fair few housing developments in the UK which provide the quantity and density needed, but eg don't have sufficient roads to support the increased traffic, causing gridlocks. Similar story for schools or shops.
Why is this? Because there's a strong inflow from all over the world and not enough building. Meanwhile prices are going up without regard to incomes, and it is incredibly hard to get even a viewing, let alone be offered an apartment. On top of that, most of the stock is old and not modernized at all.
Even for private owners, it is better to not build and let scarcity drive the price of their investments higher, than to take the risk of building and potentially see rents or prices fall.
We don't need big projects. If popular US cities like Seattle and San Francisco simply allowed people to build 5-story apartment buildings in all the space that's currently set aside for single-family detached homes, you'd see people building millions of small projects to easily meet the demand.
Nevermind issues like "can our sewage pipes handle it?".
In the US, these manifest as so-called 5-over-1 and it's entirely possible to build the same model of work-life balanced neighborhoods using that:
The prices in Paris are fairly high, 1000€ for a 30m² flat. But that's the relatively small heart of "Paris intra muros", excluding the "banlieues" (suburbs) which are cheaper and 30 minutes to an hour with the Métro (or the RER). That doesn't sound more unaffordable than London, not on a tech salary and colleagues have told me co-habitation is not a thing here (whereas most of my friends and colleagues in London lived in shared flats, for example).
What makes Paris impossible to rent in, is the absolutely insane demand for housing that frees real estate agents to do whatever the fuck they please. I spent three weeks calling every day, multiple agencies, only to be told by each and every one of them that they wouldn't let to me because I am a salaried worker in a trial period ("salarié en periode d' essaie", a three-month trial period mandated by French law). Even with my company offering to be my guarantor (which means they would shoulder all the risk of rent arrears) they would not let to me. Not one. My contacts list is still full of numbers of "immobiliers" (real estate agencies), I know 80% of the agencies and I have masochistic fun pointing them out when I pass outside them with friends. Not one of them would let to me. Not. One!
That's without all the absolutely insane amount of documentation they require (three months of recent rent receipts, proof of having paid taxes in France in the last year, etc) which you won't have if you haven't already lived and worked in France for a while, and the complete bollocks demand of earning three times the rent in salary, and being able to afford two times the rent in advance (as a guarantee; we'll see if I get mine back). But I think that's all par for the course in big cities.
In the end I was only able to find an apartment because an estate agent who's friends with my boss did me a favor. And even he wouldn't talk to me until I barged into his office. So I got 15 m² with a 3m² bathroom with no sink (there's a 5lt washing machine in its place) and a "kitchen corner" that's barely enough to make breakfast cereals, all for the price of 720€.
For the record, I'm an EU citizen and I have a doctorate in a tech subject. My French colleagues have shared similar rental horror stories. I have no idea how people manage who are worse off financially, or come from outside the EU.
tl;dr: no, you don't want the housing situation in your city to be like that in Paris.
Having read all of this, I have no doubt that the experience you're relating is true, nonetheless, it makes me wonder how Paris's immigration boom is happening. When I was last there, most of the people I spoke to didn't have Parisian accents, and were mostly recent immigrants. There is no way all of these people outrank someone with a doctorate in a tech field, statistically speaking. I'm curious what other factors are at play here.
Because a lot of immigrants who come to Paris (and any other big metro areas like London, Berlin, New York, San Fran etc.) have no standards regarding housing and don't care about these issues. They're just happy to be in a big rich city with economic opportunities (legal and otherwise) so they can make some money and send to their families back home, regardless if they live in slum like conditions.
Btw, if you're thinking of "other factors" like something dodgy about my personality, there aren't any. If there was something about me so dodgy that nobody wanted to rent to me, it would affect my ability to be employed, first. And yet I got an offer from the first startup to which I applied in Paris, so it can't be that.
Perhaps the recent immigrants you spoke with were comfortable with less ... formal? ways of renting? For example, searching for "why so hard to rent in Paris foreigner" on duckduckgo, I find this account of similar difficulties as mine:
https://howtobecomeparisian.com/2020/04/13/the-struggle-of-f...
<< I arrived in Paris thinking it would be easy to find a place to live, and the end result ended up being years of dodgy landlords, questionable agencies, and a string of short-term leases which made me feel like I always had to be ready to pack up at a moment’s notice. >>
I'm guessing there are many people living in similar precarious accommodation. I didn't want that, so I guess I played on hard mode to begin with. But the point is that the hard mode is hard, and I'm not playing some game, I'm just trying to rent a place to stay and work in a European capital. It shouldn't be hard.
Basically, laws now mandate every flat to have good thermal isolation, otherwise you can't rent them. Which means approx 30% of the housing in Paris will be banned from the renting market in the next 3 years. It started this very year.
PS: and because we're french, the diagnostic for "energy performance" of a housing is full of boggus formula which overestimate the consumption of your flat by a factor of 3 ( at least).
Sorry, but what stopped the landlords/building managers from insulating the apartments in due time?
I'm assuming there was a notice period given and the insulation mandate didn't spontaneously come out of nowhere.
Could it be that most landlords are just greedy rentseekers who want to have their cake and eat it too by making easy money without investing a dime in maintenance?
- in 2019 a law was passed, scheduled for being in effect starting 2023
- in 2020 they changed the way the evaluation was performed. Instead or relying on energy bills, they decided to create a formula with a tons of parameters.
- in 2021 they realized the shity formula was overestimating consumption waayyy too much, making a lot more housing improper for renting than expected (people saw their mark going from « C » to « F » or even « G »). They adjusted it.
- in 2022, the new formula is still bogus, but nothing changed
As an example, i live in the best insulated appartment i’ve ever lived in Paris (lived there for 40 years). It’s rated G (the worst), simply because it’s on the top floor.
And here we are, in 2023, with the first batch of housing being unauthorized for rental.
We now even have a word for the country they’re turning france into : Absurdistan.
I like the French. It's true there's mad amounts of process and bureaucracy everywhere and as usual, none of it works. I don't think it's really worse than in other places, c'est seulement que les Français aiment grogner plus que les autres. C'est Français ca, grogner :)
Btw, je parle bien Français alors je me demande si sa serait pas encore pire si je cherchais un appart en Anglais. Aie.
That's the big downside of heavy tenant protections - it goes so far, landlords take protective measures like torturing you with requirements.
Sure, there is a 'shortage' of housing - but all desirable, popular international tier 1 cities have this, so the word shortage is a bit of a misnomer. Although, Tokyo has something interesting to say about that, seeing that they are dealing with it better. That said my point above about purchase prices remains: you want to buy in Paris, you pay Manhattan prices with France wages. Good luck if you're not already a foreigner (partial topic of the news we're responding to) or very rich.
International rich like to buy and warehouse apartments in Paris for occasional use.
I was given that explanation by at least one letting agent, but I don't believe it because I was turned down repeatedly even though I told all the agents that my employer offered to be my guarantor. That means they would have to pay rent if I didn't.
In fact, my employer is currently my guarantor, for the apartment I finally rented. My boss had to sign a contract that in the event that I stay in the house without paying rent the company will pay the rent for one year. I'm pretty sure that also includes any costs for repairs if required. That should pretty much take care of all the risk there could possibly be in renting to me. And yet, nobody would rent to me.
So the risk is not the problem. The letting agent who gave me the apartment I'm renting commented that it's just too much hassle letting to someone like me, who doesn't have all their documentation in their "dossier de locateur". It really looks like the only reason nobody wanted to let to me was that they don't give a shit whether I find a house or not and they have plenty of takers. As the French say, ils ce foutent de ma geule.
Berlin would like to step up as a challenger for that title.
But with the general poor state of the city despite the high income taxes, and that terrible housing market over there I can't ever see myself moving there to live permanently today. In hindsight maybe 4-5 years ago, when housing was still easier to find, would have been the better time for that but not in the current housing market. If you lucked out and got a nice flat before housing went to hell, good for you. But then good luck next time you need to move again.
Unless all you care about is tech start-ups and wild parties with drugs and cheap food and beer, the housing market there and general poor state makes it a bad place to live if you're used to high quality of life cities that are well kept, like Vienna for example.
I'd like to live in a place where finding housing that isn't overpriced and poorly maintained, isn't a full time job in of itself where you waste dozens of hours calling agents and fighting with hundreds of people hunger games style just for the opportunity of living in an overpriced shitty uninsulated flat that hasn't seen any renovations or modernization since the early '80s (if you're lucky).
Maybe I'm getting old, but since I'm not a student anymore, the party scene doesn't make up for that huge hassle.
I hear this a lot, and this may still have been the case 4 years ago or so, but I feel this is mostly coming from people who found housing in Berlin before Covid and aren't experiencing the current market.
If it doesn’t it’ll quickly get overwhelmed by people trying to get around in cars.
I live in Barcelona that's mostly 5 or so levels and I haven't driven a car in 4 years and I love it.
On that theory, New York should have insanely cheap apartments due to lack of demand.
New York already has had high density for a century+, but has not been adding apartments at a rate that would match population growth (and income growth) for decades.
In the Bay example, presumably if the new apartments were a one off, prices would initially come down, but would then start to rise again as more people move in and add to demand.
The solution would be to continuously add sufficient new apartments to match population growth (which could be done by liberally allowing builders to build more density to meet demand).
Which is roughly "new units decrease price if there's excess demand". Which is the classic microeconomics theory of how the price point shifts due as the increased supply sets a new equilibrium.
some pretty graphs:
https://mobile.twitter.com/georgiststeve/status/159813526427...
I feel bad for those who are stuck without adequate or inexpensive housing in the meantime, but in the aggregate it may be wise to not overbuild now.
The problem in a place like the US is mostly the distribution of jobs. There are places with abundant housing that also lack for jobs.
Housing sure is cheap in Korea, China, and Hong Kong!
https://www.aljazeera.com/economy/2022/4/28/south-koreans-st...
Just to clarify, that was sarcasm for everyone who thought your statement was serious and didn't open your link.
China has the political will for big projects. China also gets them done, and done fast. Yet China also has a housing problem, much greater than the West.
In China's case, the government deliberately creates a shortage of supply by restricting the usage of land. They also printed money directly into the housing market in 2015 when the housing bubble looked likely to burst. It is not a lack of ability to control housing prices. Instead, they have the ability and does control housing prices, by controlling them upwards.
The practical effect has been the establishment of very complex supply chain management systems in all levels of government.
The outcome has been a dramatic increase in the cost(monetary and bureaucratic) of doing business for government.
Basically government poisoned the well itself and has still yet to really deal with the consequences.
Now things have gone too far, what was once local activism has been taken over by established wealth interests, and development is paralyzed.
Who sits on these boards, lobby, and vote on zoning regulations? Homeowners in the area.
The first thing that happens when a company announces a new building projects, is that they get deluged with protests from the neighboring homeowners. Sometimes this process will take years and years - there's no worse sin than taking away sunlight from neighbors, "visual pollution", and what have you.
https://sf.curbed.com/2017/7/26/16040938/san-francisco-jobs-...
Three generations of people (silent, boomers, and gen x) were told that real estate was the best investment they could make for their ENTIRE LIFE. Millennials also heard this growing up.
In the US we even took extra steps to make sure that homeownership was "the thing". We created non-market solutions (the 30yr mortgage via Fannie & Freddie) that made homeownership available to every American, and then kept going and essentially turned homeownership into the forced savings and retirement program.
Now, *decades* later, home values must go up. They must go up always and forever. The entire world economy revolves on the appreciation of homes in highly developed countries like the US, Canada, Australia, and the UK. People with homes need those homes to go up in value or they can't borrow against them. They can't retire. Governments need the value of homes to go up for tax revenue.
The entire world monetary system, as least as it relates to the dollar, pound and euro needs homes to continue to appreciate and the easiest way to do that is by limiting the supply of homes.
If someone waved some magic wand tomorrow that removed all building restrictions and made it so people could easily build homes, and those homes would be sold at market rates, average home values would plummet and global markets would collapse.
The only "solution" that is ever going to actually happen is more government subsidization. Longer loans. More federal guarantees. More federal tax credits.
Home values must go up. Supply must be kept scarce. Our system is built on this.
Home values must go up. They will go up. You should bet on them going up. Because if, for some reason that were to reverse global finance implodes and nothing else really matters.
A permanent, long term downward trend in home values may as well be the end of "money" as we know it all together. And it sort of would be, literally, since much of money creation these days is via mortgage loans.
I’ve said it before but I will say it again: the government came out and said during Covid that we were essentially running a war time economy. And the war in Ukraine and the disruption it is causing means we’re essentially still in one. During WW2, tax on the wealthiest in society was around 90%. To be quite frank, that kind of tax rate for a few years on the super rich and the globo corps is the only thing that is going to turn the ship around. No-one expects that as a long term solution, no-one is saying that is how it should always be, but in times of real, actual crisis like this, the super wealthy have to step up and take responsibility to save the system they have profited from. Temporary, very high tax rates to get some normality back and then the cycle can start over again. The poor cannot shoulder the burden anymore because they’ve been shouldering it for the last decade. They have nothing left to give and there is nothing left to cut from public services.
The problem we have today is that the super rich now have very little ties to their own countries. They are hyper mobile with private jets, multiple passports, secret tax havens, and armies of lawyers and accountants to hide money and assets. They don’t have the same pride or sense of civic duty they once did in 1939-1945 where many of them took command positions in the war or oversaw industrial production. Nowadays, they are all snapping up mansions in New Zealand and other perceived safe havens in case shit goes sideways and governments decide to play hardball. Getting them to pay their fair share to keep the system running would be exceptionally difficult, perhaps even impossible.
So where does that leave us? With either a form of brutal neo-feudalism and potentially a peasant revolt or, perhaps most likely, a technology driven dystopia where enough of the populous is given just enough support to survive. Creative can kicking accounting from the civil service to quell the threat. To make it more tolerable, the populous will be plowed with endless distractions to sedate them into compliance. Bread and circuses, quite literally the standard playbook for millennia.
Eventually, once the surplus older generations have died off and the global birth rate has declined sufficiently everywhere, all of the world’s wealth will have been concentrated into a smaller set of hands and enough resources will be in circulation that life will be comfortable once again. A generation or two will go by with no direct experience of the hardships of the past and they will start living large again. Borrowing from tomorrow to pay for today. And thus the cycle continues…
As I said in the comment it would be very difficult or perhaps impossible to achieve and the dangers are high (you don’t want a USSR situation happening). You might even need coordinated effort across multiple governments and there is evidence that this is kind of happening with the move towards a global 15% tax rate on corporate business.
At the end of the day, steps need to be taken to tax capital at the same rate or higher than labour. Until that happens inequality will continue to grow. As the scales have been out of balance for so long I don’t think having capital gains and other taxes at parity with or a couple of percentage points above income tax is really going to cut it. A couple of short, sharp years at 90% and all of it invested into major, physical public infrastructure projects to create jobs and filter the money down. Whatever happens, if we continue allowing wealth to concentrate in fewer and fewer hands we are going to end up with a dangerous situation.
And the problem is that it is being framed as “punishment” in the first place rather than as an opportunity to be the actual hero and save your country and fellow citizens from being thrown to the dogs. Once upon a time men used to follow leaders into battle because they had faith in them as leaders. Would we do the same today? Probably not because they’re not acting like leaders, they’re acting like arseholes who would rather get in pissing contests over the length of their super yacht than invest in making their cities and countries a better place.
In theory there are steps that could be taken to fix the massively broken housing market in most of the Western world. Unfortunately the vested interests and massive financial house of cards built on top of property prices make these steps politically impossible. Therefore, what can't continue forever (unsustainable house prices) will not continue forever, but it will end messily & at some unpredictable future time.
I'll go out on a limb & guess you weren't in the UK in the 1970s...
The couple of short sharp years at 90%, even if it were politically possible, may not actually generate as much extra revenue as you'd think (leaving aside the fact that this isn't really how governments raise operating funds in an unbacked fiat currency world) - unless you force the ultra-wealthy and high-income earners both to stay in the country and to carry on working hard, while taking away most of what they perceive as the fruits of their labors - how do you think that would go?
BTW I suspect you and I have very different opinions and politics. I find it rare these days to be able to have a civil debate "across the divide", kudos for that.
I do agree it's not likely to work. I think the war was unique in that it was an existential threat to the rich e.g if you assets are the properties and factories in a country that's being bombed then you have no choice but to do something about it unless you want to lose all your wealth. Now everything is so globalised, even war isn't the existential threat it was. I do think we need to raise taxes on earnings through capital/assets somehow though, at least to parity with income tax.
> BTW I suspect you and I have very different opinions and politics. I find it rare these days to be able to have a civil debate "across the divide", kudos for that.
I used to be left leaning when I was in my teens and early twenties but I've consider myself non-affiliated now. I think that both sides are right and that the approach that should be taken is the one that best suits the situation at hand. I actually think that what this country (UK) could do with at the moment is a cross party government with ministers from multiple parties in ministerial roles to get rid of this nasty divisive streak we've got going on atm and start leveraging the experience and knowledge of everybody for the greater good.
I imagine my original post comes across as quite left wing. I was trying to avoid that by stating that I only saw the high tax rate as a temporary measure but the entire post was quite emotionally laden as well which didn't help. I am quite angry because I think politicians have been leading very poorly over the last decade or so. I feel like they're not only failing to help people maximise their potential, but they're actively sabotaging it with their policies. There are so many lives being wasted as a result.
Sorry, that makes no sense. It's a bold, assertive statement that will render the whole situation hopeless.
And the economy doesn't really depend on housing, it depends on people doing productive things and innovating.
If a lot of people choose to speculate on housing, that's their problem when it stops going up or goes down, just like any speculative asset.
There's multiple issues that need solving now.
1) Being able to purchase a house without ever setting foot in the country. NZ decided to stop foreigners buying houses. There were websites you can go in and people from China would buy houses without ever setting foot in NZ... The buying power of alot of people from China and India is huge. This drives up prices.
Let's not forget, most countries in Asia you literally cannot buy property if you're a foreigner. You have have to have a spouse or buy via a 3rd party who owns it and you pay them fees to hold it for you.
2) Houses are no longer valued based on your income, they are based on what you can earn.
This is difficult to solve. You need rentals to assist with foreign labour. But you want to remove rentals to prevent houses being investment properties.
Maybe they should cap the number of houses a family can own, and a business cannot rent out a home. It's built for sale, not built for rental.
3) Housing shortages. Housing supply should be assisted by the government via BTO's. Built to Order. Rather than taking huge loans from banks, you can buy a house from the government at a fixed price, that you will pay back. If you don't pay the government takes it back, otherwise you cannot sell that house for the first 10 years of ownership. You cannot rent it out for the first 5 years of ownership. Somewhat similar to how Singapore runs their BTOs.
If housing shortage was solved then that also kills the profit motive of renting out all but the most ideal houses for renting.
The root cause in Canada is the neoliberal policy that started in the 90s that ended government building low income housing. They left the free market to do its thing. And this is the end result of decades of free enterprise. We’ve built lots of housing for upper middle class because that’s profitable for builders and largely left the poor/young to be screwed.
I don't disagree that there is disincentive for developers to build mid-level properties. They want huge expensive homes or the ability to cram many people into one space. I think this is a problem, but is not the only reason for the lack of availability, as described by the grandparent and in my former paragraph.
This is a simple supply-demand problem, not anything complicated. The solution is equally simple - make zoning laws basic and limited in scope.
Is that true? I'd imagine building a big block of, say, 100 units to be far more capital efficient than building a few freestanding homes, if zoning laws allowed it.
Other than Singapore are there any blocks of units that don’t get run down over time and left to rot? (Seriously question as I’m curious)
We need policy that requires mixed units. Some for the affluent, some for service workers, etc.
Did the free market supply the homeowner and title insurance ?
Did the free market determine the rules for zoning that plague most large metro areas and adjoining suburbs?
If I understand correctly if you own a HDB, you can buy a Condo? But if you have a Condo you cannot buy an HDB? And then in some scenarios you must pick which one you will keep.
Since I'm not Singaporean I'm not well versed in the ins and outs of the system but I do think on the surface its much better than most other countries.
You are essentially say that the presence of car collectors leads to car shortages.
Cars and Houses do not perform in the same way financially.
Houses tend to increase in value, Cars tend to decline in value.
There are, of course, outliers in both markets.
this is an observation that may be mostly supported by data right now, but also is not super meaningful.
WHY do houses appreciate? why do cars depreciate?
The answer is supply and demand: supply of housing is far more regulated than supply of cars - height limits and zoning are frequent reasons, but any sort of building approval process with unnecessary hurdles can increase supplier risk and cost. Most of these processes aren't set up with demand in mind. whereas if you are an automaker and want to churn out another 10000 cars, there's no laws stopping you (fuel efficiency / emissions requirements notwithstanding).
The problem with houses is that since a large portion of the population thinks they are investments, anything that would increase supply would devalue their investment, so fixing the regulations around them is a political quagmire.
I suppose cars, as machines, also have increasing maintenance costs over time. the same is true of houses, just over a much longer timescale... if houses depreciated instead of appreciated, we might see more torn down after 30-50 years rather than always repairing everything. Certainly the tradeoffs would start to look different.
<ducks>
They don't have to. This happens when an area gets popular and zoning regulations don't allow enough new supply to meet the demand.
And when land appreciates in value (aka by being near schools, hospitals, and well-paying jobs), we distribute the higher cost of the land among multiple homes by building taller, denser types of housing. This is presently illegal in much of the US however.
Still cheaper than a 2 bedroom apartment in Beijing.
The beauty of new homes is that they give the Amazon tech bro something to buy instead of coming into your neighborhood and bidding up the price of the older homes. That’s the good things about new homes: They help keep old homes cheaper.
In the USA, anyways, many people left the home construction industry after the 2008 crash, and didn't come back when things picked up again. That means...no apprentices were trained up, experience was lost, etc...so labor costs have shot through the roof because experience is quite limited.
And try even renovating an old home! You get quotes of like $150k just to do a kitchen.
> You are essentially say that the presence of car collectors leads to car shortages.
The price of a old car, a new car, a cheap car, and an expensive luxuary car, all vary greatly. Cars are more or less open for purchase by everyone.
Houses a fixed in a location, you cannot pick it up and move it. Let's look at each point.
1) If a house in a street costs $200,000. And you have a ton of money and go online and find the house and for you it doesn't even tickle your bank account. But you want to get some money out of your own country and into another country as a safty net or investment. Or maybe you move to said country and your buying power is much greater than the locals.
"Oh, its ONLY 200k? Heres cash"
The house next door is like "huh, the market value of this street is 170k and he sold his house for 200k? I'm gonna list mine for 220k"
"Oh, it's ONLY 220k? Heres cash"
The house next door is like "huh, the market value of this street is 170k and he sold his house for 220k? I'm gonna list mine for 300k"
"Oh, it's ONLY 300k? Heres cash"
Mean while the locals are like "oh I only needed a 20k deposit, now I need 30, 40... 100... 200k deposit"
Locals are getting priced out of their own country. This happened in NZ and Australia.
2) This I don't know how you can dispute. It's a fact that 100 years ago, houses were an asset, not an investment. Why do people need to own more than 2 houses? There are people who own, 5, 10, 30, and even more. There are businsses setup around buying property to rent it out.
What has happened is people got into the market early, with houses that cost 100k, 200k, maybe even close to 1 million dollars. And each time they buy and remortgage the house to leverage buying another property, to rent it out, use that to pay the mortgage payments, which in alot of cases rent is MORE than the mortgage.
Yet the people PAYING Rent are not in a position to get a loan to buy the same house. You often here "oh just buy a house, because renting you're paying someone elses mortgage". How to you do that when you cannot get a loan to buy the same house? How is it fair?
3) Housing Shortage. 100 years ago, people would buy property, and pay a builder to build a house on it. At some point this more or less got flipped and its builders and property developers who buy property, build a house, then sell it.
You do not need governments to build houses to solve the problem. People are simply priced out of being able to build houses. It's MUCH harder to buy an empty lot, and get a loan from a bank to build a house on that lot now.
Can governments assist with housing shortages, ABSOLUTELY. But you cannot simply blame the government on the housing shortage aspect because they aren't building enough. There are much bigger issues causing the problem.
No it’s not
https://www.lendingtree.com/home/fha/getting-an-fha-construc...
Also the US still has states you can find good jobs in with houses that are still 200k. In the likes of NZ You have Auckland and wellington and prices that far exceed majority middle income workers.
Imagine all the usual shitty mis-communication and last-minute paperwork of dealing with a mortgage agent... plus last-minute fun with contractors, who are used to answering on a very different schedule. E.g. "Oh, I need 2 more competitive quotes for the same work in the next 2 days, even though you've already found your contractor" or "Oh, these quotes don't specify exactly the same work, so need to be redone."
At the end of the day, the process requires you to waste a lot of contractors' time soliciting bids for work you're never going to hire them for.
Hindsight 20/20, I would encourage finding any other method of financing work. Make your mortgage as simple as possible, so there's a chance the agent might not @&$# it up. Then deal with contractors on your own timeline.
I did that twice…
Both times in metro Atlanta.
I'd hope the new build market is a little more professional.
Although I saw a couple strip-to-frame-and-rebuild houses worked on and then failed code (word on the street was improper framing nailing, ouch) near another house in Kirkwood, so I guess there's dipshits the world over.
I will make one point: in the US, it’s never been the government’s job to build homes. That’s always been left primarily to the private sector. Right now however, governments won’t allow the private sector to build enough homes. They’ve made it illegal, especially apartments.
It’s like if the government banned the production of new cars. In a few years time, a 1995 Honda accord would be worth $20,000.
The US however is a huge plot of land with varying housing prices across the country, even if you had foreigners buying properties, it doesn't have the same impact on the country as it does in NZ/AU/Canada.
Populations:
Canada: 38m
Australia: 25m
New Zealand: 5m
US: 332m
The impact hurts us more than the US.
That might be technically correct on the build part, but the US government used to subsidize home ownership through loans as described in [1], e.g.
> GI Bill benefits that guarantied home loans helped many Americans buy houses and move into the suburbs.
But the actual building of homes is left to the private sector, which is frequently banned from building new homes by local governments.
It’s a strange situation: the Feds promote home ownership, while local governments make home ownership difficult by limiting the number of homes that can be built. It’s little wonder the housing market is so dysfunctional.
if they cannot get a loan to buy a yacht, or a lambo, how come you don't make the same argument?
Owning a house is not some natural right. Being able to afford shelter is, and renting accomplishes that. If rent is skyrocketing, then there's a problem and the gov't needs to address it. But rents have not grown in relation to the cost of the house - in fact, rent is cheaper in most cases.
> You do not need governments to build houses to solve the problem.
no, but not because of the reason you said. It's because the gov't (or more correctly, the local councils) is preventing new builds via zoning, as well as cultural preferences for standalone house, rather than dense living in high rises.
> "Oh, it's ONLY 300k? Heres cash"
i dont know if you've been misinformed, but foreign buyers haven't been a problem in australia (and NZ and canada) for a while - ever since 2018-2019. Most of the demand for real estate are from locals. Using foreigners is a scapegoat.
> Owning a house is not some natural right. Being able to afford shelter is, and renting accomplishes that. If rent is skyrocketing, then there's a problem and the gov't needs to address it. But rents have not grown in relation to the cost of the house - in fact, rent is cheaper in most cases.
Its in your best interest for someone to own their own property. Owning property is one of the key aspects of retirement. If people have no money or property at retirement then you end up as a tax payer, paying for the persons retirement. That causes you to need to have higher taxes to fund peoples retirements.
Owning property is also a safety net, if you lose your job, atleast you have a roof over your head. If not, well, youre gonna pay for it as a tax payer by giving the person the benefit or dole.
> i dont know if you've been misinformed, but foreign buyers haven't been a problem in australia (and NZ and canada) for a while - ever since 2018-2019. Most of the demand for real estate are from locals. Using foreigners is a scapegoat.
Just because after 2018 they didn't influence prices doesn't mean the market didn't get inflated because of them. I've met people in Singapore who are not PR or Citizen in Australia who own property in Australia and just rent it out to make more money. I've met 1 person from China who owns multiple properties in NZ and AU. Who had holidayed in AU but never been to NZ.
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The main problem here is people don't want to pay taxes, but want the government to bail them out at every possible road block. They want the government to protect them when it suits them, but 'fix' it if it suits someone else but not them.
So if you remove the government then you need property ownership to go up, if you want more government involvement, you need higher taxes and more rentals at lower costs.
That doesn’t impact the normal market though.
Your comment would be ok without that first bit.
Normally I'd never do that without getting your permission first, so if you object, please let me know and I'll put it back forthwith!
2) I am unclear why one would cap the number of houses or prevent rental. Or how that would solve the problem. Affordablity is only one reason people rent. There are alot of people that do not WANT to own. Hell I am a home owner and have often thought about selling and going back to rental. I might if I ever need to move cities again
3) Price fixing and having government take over the housing market is not a solution to what is largely a government created problem in the first place. Zoning, non-saftey based building standards (i.e min square footage, min lot size, bans on Multifamily, etc) and other government actions are the direct cause of the housing shortage. Change Zoning Laws and allow builders to only have to adhere to actual safety based building standards and housing shortage would be over.
Government putting its hands on the scales of the market for over 50 years is the root cause of the problem, everything from FHA to Fannie/Freddie, to Zoning laws all created this problem.
There will always be a need for rentals. Moving to another city/state/town/country, etc, will require rentals so people can live. What I'm against is people owning MANY homes for the sole purpose of renting them. If you had a balance of people owning 1-3 homes, or people who rent their home out while they live somewhere else maybe for work or they retired. It would be ok.
When I was 20, just before I left NZ, I bumped someone I went to school with who had just bought his 7th house, he had quit his job because the rent income exceeded his day job and he was beginning to look for an 8th house. I'm not considering moving back to NZ as I have a family now, and looking at the prices I'm questioning if I can afford a house at all... Looking at the prices over the last 10 years, houses that wer 190k are now like 1.3 million...
3) Governments just building (or in this case not building) houses isn't the problem. Theres many government level issues to resolve. Absolutely fixing zoning laws, development laws, etc. 3 is a huge topic that could branch out into like 20 different things. I'm simply suggesting in terms of building aspect is taking some ideas from Singapore around the way BTOs are done and restrictions in place to prevent profiteering.
Hard pass on that, I want nothing in way of governmental ideas from Singapore. Hard pass on any authoritarianism for me.
The answer might be to have regulations that fit the current needs and constraints, not the ones from 60 years ago.
Government: If you think you have problems now, wait until you see our solutions
Because it seems to me that we can probably find all kinds of ways to reduce a house's market value without reducing its livability. Especially if its owners are on a different continent and not around to stop us. Once they cave and sell at a loss, we've got the local cost of housing going down and whatever the deficit is stays in the local economy.
The only reason homes can be considered investments is that governments limit supply so much that prices are forced to increase.
And re the "huge margins" the relationship between supply and demand isn't linear. If you have 10% more households than homes, bidding wars will drive prices up way more than 10%.
1. While the overall population may not have increased significantly in some countries, people have been migrating to cities from rural areas. This influx puts price pressure on urban housing. The US, for instance, likely has enough housing overall, it’s just spatially misallocated. A derelict, vacate home in Detroit doesn’t help someone in SF.
2. Many forms of denser housing are now illegal or have been torn down. Boarding houses are gone for instance. Boarders now compete for studios or one bedroom apts.
3. Smaller family sizes. It’s no longer common for a six person family to live in a three bedroom house. This used to be commonplace. Those six people are now two couples with a child each.
4. Related to point three, governments have made it illegal to reconfigure or replace larger homes with smaller homes more appropriate for smaller families or empty nesters. Think of the retired Boomer living in the 6 bedroom single family home, or the childless couple in a three bedroom condo with two of bedrooms being an office or guest room. Closely related, people often demand more space than they did 80 years ago.
5 This a big one: higher urban wages. After decades of wage stagnation, wages have been going up, especially in places like SF, NYC, and Boston. This is a GOOD thing. Not so good, is that these same places have kept their housing supply relatively static, forcing those with good jobs to compete amongst themselves for housing. The old joke: VC $$$ ——> Startup —-> Developer ——> Landlord, has a lot of truth to it.
“The old joke: VC $$$ ——> Startup —-> SOFTWARE Developer ——> Landlord, has a lot of truth to it.”
Outlawing owning >x% of a market's housing supply (for some low x) doesn't sound like the worst idea.
What we'd want is there to be (a) enough rental housing stock, (b) enough rental owning companies of comparable size to create a healthy market on rental prices, & (c) a sane balance between the number of rental and owner-occupied homes.
Part of the current imbalances are a consequence of low interest rates though, as investors could get a lot more leverage to acquire properties for rent.
Finding a balance is very difficult, any way you tip the scale its difficult to stop it from continuing to tip causing new problems :(
It's easy to point out problems, difficult to come up with solutions.
One thing I believe is that mortgage payments, and accessible mortgages should always be lower than the rental price so those who want to own rather than rent, it makes it a easier/better option. (does that make sense?)
Why is there such an emphasis on ownership? Yes I’ve owned five properties - two to live in permanently, one to live in half the year (the other half we travel), and two investment properties. The tenants I had in my rental properties were in no position to buy a home or for that matter to rent a whole house. I rented by the room.
I actively discourage young people from buying homes. They need the flexibility to move to where the jobs are.
Besides, are you really going to discourage building multi unit housing for rents? How is that going to help housing affordability?
Preventing anyone from ever owning a home. Mortgage payments should be less than rental payments.
Also not EVERYONE will be able to afford homes. But when the middle class are priced out of owning a home, as is the issue, thats a problem.
Edit: you also seem to ignore that house prices have sky rocketed while income hasn’t. So thank you for contributing to the housing issue that causes young people to not be able to afford a home.
Isn’t that the ultimate “let them eat cake”?
The alternative would be for the eight people to be homeless?
Are all of the people buying property and focusing on student housing also keeping people from buying houses? Were the college students with no income who were only going to be in town for four years and living off of student loans also going to buy houses? Should they have also been forced to buy homes or be homeless?
> So thank you for contributing to the housing issue that causes young people to not be able to afford a home
I assure you those eight people (two houses) were happy to be able to afford to have a roof over their head.
Do you suggest no one be allowed to be renters and everyone buy a home?
The guy with the cheapest room was paying less than $4200 a year all utilities included. Did I do him a disservice?
Are you saying that renters shouldn’t exists or do you think no one should be allowed to rent a single family house under no circumstances and you should either rent an apartment or buy a house?
But you didn’t answer the questions.
Should everyone who wants to live in a house be forced to buy no matter what stage of life they are in?
What shouid the people do who can’t afford to buy?
A few ideas to start
1) Get rid of the mortgage interest deduction
2) Tax imputed rent same way that rent payments are taxed (so you would have to pay tax on the money you would have paid to rent from yourself)
3) Get rid of capital gains exemption ($250K per person, 500K for married couples)
or the more extreme version
Land Value Tax.
In Switzerland, 58% of the population are renters. Notably, the tax advantages of owning above are missing in Switzerland, making renting a more attractive proposition. That's what should be fixed. Don't push everyone to buy a home, but don't keep shoveling money in regressive transfers to those who do.
(I didn't even mention prop 13 in California here which locks in your property tax - that is a complete abomination and should never have been passed. It's a regressive giveaway to homeowners)
Just a useless talking point. Especially with the changes in the tax law, the standard deduction is so high, most people don’t take advantage of the interest tax deduction.
https://smartasset.com/taxes/how-did-the-trump-tax-bill-affe...
> Tax imputed rent same way that rent payments are taxed (so you would have to pay tax on the money you would have paid to rent from yourself)
So now increasing taxes are going to help make houses more affordable?
And if you do that, and want to start treating home ownership as if you are renting from yourself at “market rate”, you are now back to also allowing deductions from ownership as you would if you were a landlord - interest deduction, expenses, deductions for depreciation where you can depreciate the cost of your house over 17 years, etc
> Get rid of capital gains exemption ($250K per person, 500K for married couples)
If you make it more punitive to sell, less people are going to be willing to sell their house when they outgrow it. That makes for less housing to come onto the market.
> That's what should be fixed. Don't push everyone to buy a home
So now you want more landlords?
I don't know how familiar you are with Switzerland, but if you are trying to paint this as a good thing, it is not. Go to www.homegate.ch or www.immobilier.ch and see how much a house costs. Hint: very few are below 1 mio CHF for a family home in a good area. That's an insane amount of money, even for a good earner. People in Switzerland don't rent long-term because its a great financial decision, they rent because they can't afford to buy.
Interest-only mortgages are common here. That means you take out a mortgage and don't even try to pay it back fully, only paying back the interest your whole life and then when you die, the bank sells the house and takes its share of the capital back. There are also some tax rules around (2) from your point above, plus negative interest rates for a long time, leading to Swiss property prices going parabolic the last few decades.
People will only rent a house for a price that they're willing to pay therefore this isn't a bubble as you imply (people are only buying because prices go up), so presumably it's a supply / demand issue.
It's extremely easy to say "reee, why don't the government build more homes!!", but where exactly do you build more homes in central London?
Oh no, sorry, you meant build more homes where there's free land? Sure, but people don't want to live there.
The issue is actually far more to do with urbanisation than anything. For example here in the UK there are plenty of places that are extremely affordable to live, the issue is that they're in rural and generally undesirable areas so no one wants to live there. When people say house prices are too high, what they actually mean is that they can't afford a house in London or some other attractive city they want to live. It's not that an average wage wouldn't get you a decent house in say Middlesbrough where the average property price is ~£150k - it's that an average wage won't get you a decent house in a nice city location. A first time buyer could easily get a two bed house in Middlesbrough for around £100k.
In my opinion the solution is counter intuitively to stop building more houses in cities. The more you build in cities the more jobs and more people relocate there. And that feeds on itself because then more people want to live there because that's where all the action is.
If instead we invested in places like Middlesbrough and offered employees incentives to relocate we could distribute the demand for housing away from over populated cities.
We could also couple this with investment in public transportation and incentivise remote working which would allow people to comfortably live further out of city centres.
Though, I suspect this is understood fairly well by governments. I think they actually see urbanisation as a good thing because it's more efficient for business to have a pool of labour and consumers concentrated in a small geographic area. The only real cost is congestion and house prices, but that's a cost to humans, not businesses.
This makes me wish we had a reciprocity rule. E.g., "A foreigner can only buy a house in America if Americans can buy houses in the foreigner's home country".
A few large Home Building Companies have recently collapsed.
We also have a shortage of qualified tradespeople that are capable of contributing to the building of homes.
I'd link sources, but a quick Google will tell you all you need to know!
Material costs have risen sharply too!
Snarky notwithstanding, my point simply is that if the trades are not a desired occupation, that must be for a reason, likely a socioeconomic one. You cannot force people to enter an undesired occupation.
Commercial real estate is architected around tax avoidance strategies. 1031 exchanges, depreciation rules, etc. In many cases, it’s literally possible to build a commercial development with zero out of pocket. Residential is all about building asset value through mortgages.
Key markets like California are distorted to be even worse because the property tax laws encourage holding and not improving property. Unless there’s a constitutional convention or ballot, you’ll have homes worth $100M in 2080 paying property taxes based on a $100k valuation in 1980.
In this city, all the people that own houses are worth at least a million dollars, because they have a house that's worth that.
Now, a bunch of uppity kids want to build a TON of housing. What's that going to do to your property values based on supply and demand?
Oh right, it's going to drop.
Doesn't matter if you are a republican or democrat, if you're a home owner you defend your home values. When they say "all politics is local" THIS is what it means.
A property value drop means:
1) you are underwater in your mortgage (for newer buyers)
2) you are losing a lot of your retirement savings (for older voters, and boy howdy do they like to vote and protest)
A large influx of properties will affect the property market which will affect the industries that affect the housing industry and the consumer confidence and wipe out retirement funds
With all due respect and not in anyway being rude, Is this fundamentally different from Saying let’s print more money and give it away to people (directly or indirectly)
Perhaps we need a reshoring powered return to a higher growth productive economic topology in the west rather than the predominantly rent seeking norms, so that boomers, pension funds and REITs have someplace else to shift their capital attention when cashing out their chips.
1. Corporate lobbying has insane control over decision making.
2. Highly vocal and critical constituents who are spurred on by propaganda and hatred.
Now politicians who want to survive pass the buck and pass toothless laws like the one in Canada claiming to making housing affordable while adding fire to the crisis by bringing in 1,000,000 immigrants a year to stave off a recession which would hurt the corporations.
NIMBY - Any time anything is proposed the locals consider how it could remotely impact them and protest.
They protest ANYTHING. As a quick example - we built wind farms, people protested, we built Solar farms, protesting..
Try building anything in Canada and you will meet NIMBY protesters. I ride my bike a lot and there are areas where they can infill and proposed a modest three story unit. The entire area is full of signs about how this small unit "doesnt fit with the area"? This very same area is desperate for housing?
Politicians dont care about the citizens, they care about getting reelected so they qualify for their gold plated pensions.
Trying to address the NIMBY issues and actually build housing could cost them an election so inaction is their best strategy.
Sure the environment is important but people need a place to live and this crisis is totally out of control.
I think this is upside down.
Canada has a migration policy completely at odds with reality, and, foreign home ownership as a form of international export which is a deeply corrosive to civil life.
There is a much easier way to solve the problem and that is to limit the externalisations.
Migration returned to normal levels (and 'normal' for Canada is still higher than most other places) and a total ban on foreign ownership of residential policy that should have been enacted 30 years ago.
As the world 'globalises' things like 'homes' in wealthy, well-run countries become global commodities, which is extremely bad for the population - they need to be removed from that context. FYI we might be able to sell foreign investors something else. Or - we could introduce a heavy foreign ownership tax that made the situation actually net beneficial to Canada as a whole to make more of a 'win-win'. If foreign entities want money to be in something 'safe' we should be able to provide that.
On the migration side, since half of the Canadian migration policy is oriented around goodwill and helping others, Canada should probably seek to export the one and only real thing Canadians do well and that is consistent, b-grade governance: nothing is done very well, but almost everything is done 'well enough' and that creates some very prosperous conditions. I think there is a ton of good that could possibly be done, especially in places like the Caribbean with some deeper economic and social integration. And win-win economic outcomes as well, aka 'money to be made', a bit of prosperity and surplus for everyone if we can just get things working bit more consistently.
https://www.youtube.com/watch?v=6OZJClSdZ28&list=PLTNrJFli7o...
I mean if anyone could build housing wherever they wanted, that would make land and house prices go down, which would mean rich people who own lots of land and lots of houses would therefore be less rich, so that will obviously never happen. Much better for the rich to stay rich and for the rest of us to be homeless according the powers that be.
I don't have access to the data, our realtor showed us many times data across the last 50 years.
https://old.reddit.com/r/canadahousing/comments/zz92li/prohi...
It appears that the law is well-designed to avoid such abuses and loopholes.
Relevant xkcd: https://xkcd.com/1494/
This seems like a massive gap though, and the counterargument doesn't make sense. Surely high-density housing is (should be) cheaper than the alternatives, and provides fine homes for many people who can't afford/don't want a suburban single family home with all the expenses that entails? (Car, maintenance, etc.)
And certainly the higher cost of purchase will influence the amount the new owner charges tenants to live there.
I don't think it will hurt tenants if their building sells for more money, unless there are any legal limitations based on sale price of a building with regard to raising the rents. But just market forces shouldn't really react at all.
>Offence
>6 (1) Every non-Canadian that contravenes section 4 and every person or entity that counsels, induces, aids or abets or attempts to counsel, induce, aid or abet a non-Canadian to purchase, directly or indirectly, any residential property knowing that the non-Canadian is prohibited under this Act from purchasing the residential property is guilty of an offence and liable on summary conviction to a fine of not more than $10,000.
Emphasis mine. Eh, who cares? 10 grand isn't anything when held up against the average Canadian house price. And, yes, it's 10 grand from each involved party, but that's it. Sure, there's some language later on which allows a province's superior court to order that the house be sold. Be sold. What a punishment! And unless it's some massive televised case, the superior courts don't have time for that.
This should be seen more as the Canadian government getting their cut.
"If a non-Canadian is convicted of having contravened section 4, the superior court of the province in which the residential property to which the contravention relates is situated may, on application of the Minister, order the residential property to be sold in the prescribed manner and under prescribed conditions."
IANAL, but between the two sections we've excerpted, and the already-posted, short law, it doesn't seem particularly well-designed, except as a temporary budgetary boost to the government.
I know that for immigration and citizenship cases, officers at the border are called minister's delegates in certain contexts: they do things that the law authorizes the minister of immigration to do.
It's not like the minister has to get personally involved. It just means the ministry is in charge of referring cases to the court, so they will create an office and hire a bunch of bureaucrats to do this.
Given the government's storied, multilateral, multi-decade unwillingness to do anything about the housing crisis (many MPs and MPPs are landlords!), I just don't see this law as anything but a $10,000 cost of doing business.
1. I sincerely doubt that the courts will let the law remain unenforced. Let's agree to disagree on that.
2. The reddit post goes into details (which I agree with) about how this law changes the incentives, so real estate agents, sellers, lawyers, etc. are unlikely to want to aid foreign nationals in circumventing it.
3. Selling is a punishment. Everyone gets fined, the house is sold, and the seller cannot get any of the upside from the sale. At best, they break even (minus the fine).
> Marginal note:Paragraph (1)(c)
> (2) Regulations made under paragraph (1)(c) must provide that no non-Canadian receive from the proceeds that results from a sale of a residential property ordered under section 7 more than the purchase price they paid for the residential property.
Then you don't know Canadian enforcement very well. I've been a Canadian for 35 years and I can say with conviction that most laws around real estate or commercial corruption aren't enforced.
Almost all my Chinese friends who aren't already wealthy let overseas "investors" use their accounts to transfer 50k/y. They open an account, and allow a lawyer/banker to do transfers in their behalf. Then the lawyer transfers 50k in it, transfers it to their client, leaves 2-3k. There have been dozens of lawyers and accountants that were caught aiding in this scheme, but the fine is around 70k, so it's just the cost of doing business.
Step 1: Create a Canadian company. Own 100% of its shares.
Step 2: Buy property in all-cash transactions.
Step 3: Enjoy ownership as a foreign buyer.
First, the reason the Netherlands is in a similar situation as Canada (400K home prices, very tight supply) is not because the government has restricted (much) of anything. It's because in the aftermath of the 2008 financial crisis, very few homes got built. All the way up to 2014. Builders build homes, not governments. Builders do not build homes without a buyer, and nobody buys in a crisis.
Hence, a 6 year deficit in supply in comparison to implied demand from population growth. Even in our tiny country this adds up to hundreds of thousands of homes not built. Not because of zoning. The deficit would be there with or without zoning. This is the true reason for the restricted supply.
Second, low interest rates are the multiplier as they expand lending capacity.
These two factors combined, not continuing to build in an economic downturn and low interest rates, is what I believe is responsible for the housing situation in many parts of the world. And when you think about this, it totally makes sense. The entire world faced the financial crisis and its impact, yet zoning is very local and diverse.
And there's of course secondary factors to add insult to injury. Homes are more expensive to build due to more expensive materials, more environmental regulation, and a shortage of workers that have increasing wages.
Don't get me wrong, zoning can be a factor in restricting supply, but there's far more going on.
1) It's extremely difficult to get approval for new housing
2) There's a large backlog of developers attempting to build new housing
...which should convince anyone that regulation is the binding constraint, not a lack of willingness to build.
You've taken the most notorious large city in terms of zoning but that does not represent the entirety of the issue of homes being absurdly expensive across the board. Which is not a SF issue, it's a widespread issue. Zoning doesn't explain the wider issue.
Regardless, 400K is unaffordable to the vast majority of people.
Why? Why did the government just watch this crisis develop? Why not... build some homes?
I know some places in Northern Europe have managed to build nice and mixed income public housing, but the US failed miserably.
https://tradingeconomics.com/netherlands/building-permits
What you are saying seems more anecdotal than evidential.
Also looking at other sources it says that the wait time for a new build has blown out to 2 years:
> Why has this shortage taken place? There are a couple of reasons. Fewer building permits are being issued, as a result of stricter environmental regulations, which aim to mitigate the nitrogen crisis. Then there is the mere problem of time: from the moment a building permit is issued, it takes about two years for a house to be ready.
https://dutchreview.com/news/housing-shortage-will-continue-...
This sounds entirely like a zoning and supply issue, not a "builders won't build" issue.
So Canada has shed a small portion of demand. That might lower prices over the short-term. However, it's not going to fix a growing population and an increasing percentage of people that want to live in major cities where opportunity is. They've shed some demand, but there's going to be plenty of demand as the Canadian population keeps growing and the percentage of Canadians who want to live in cities increases. Let's say demand is going up 1% per year and foreign demand is 5% of the market. Well, you dumped 5% of the demand, but 6 years from now the market will be worse off than it is today.
Many countries stopped building as many residential units as they needed after the 2008 crisis. However, many cities restricted building a lot when the market was really hot and labor/materials were cheap (2012-2019). A lot of homes would have been built if governments didn't restrict it. I can't speak to the Netherlands in particular, but in the UK, Ireland, and America, residents fight against new housing being built near them for many reasons: traffic, parking, shadows, not wanting "those people" living near them (which is usually just thinly veiled racism), etc. At the same time, these cities have built a lot of new commercial development bringing lots of jobs and people with good salaries to those cities. San Francisco has been building office space at a 5:1 to 10:1 ratio with housing - only 1 home for every 5-10 new jobs.
You really can't blame not building on the 2008 crisis. That doesn't explain the incredible number of units that weren't built as housing markets went crazy after that.
Plus, the pause in building in most places started a long time before the 2008 mortgage crisis. LA built around 150,000-250,000 units every decade 1940 through 1990. Since 1990, we've seen around 75,000 units per decade: http://www.betterinstitutions.com/blog/2021/3/25/what-housin.... This is a pretty familiar story in a lot of areas.
I'm not really sure what you mean by "low interest rates are the multiplier as they expand lending capacity." Low interest rates would allow builders to borrow at low cost and create new units cheaper. Low rates do mean that people can afford to spend more on a home, but most countries don't have fixed mortgages the way the US does so borrowers would need to anticipate rates going up.
It's not just zoning, but an attitude of being against new development unless it will benefit you personally. For so many owners, there's no reason to want new housing in their area - they lament traffic, parking competition, and they are actively hoping for prices to rise due to lack of supply.
Restricting who can buy (which would be a demand restriction) can be a stop-gap measure. However, it's not going to prevent the problem from returning. If the government can use the few years they'll get from this measure to make major changes, they can address the problem. However, it's not an easy thing to do. For example, in the United States around two-thirds of households own their home and it's often their life's savings. If you tell two-thirds of households "we're going to make housing cheaper - not for you since you already own, but for the young people you think are ruining the world and the immigrants you hate. Oh, and it's going to involve more traffic, less parking, and lower income people living in your expensive neighborhood," they're going to be quite angry. Zoning is local, but every locality has people that want the same thing: for their investment to go up.
Housing construction costs are really cheap compared to the cost of housing - close to 10-15% of the cost in expensive cities. The issue isn't building the housing. The issue is getting things approved. In many locations, people have gotten really good at stalling projects and the longer a project is stalled, the more interest the project has to pay, the more labor time wasted, etc. Let's say you're a builder. You take out a loan and buy a piece of land for $1M. You want to put up 3 1,500 square foot units costing you $600,000 and will go for $850,000 each, but the neighbors want you to put up a 2,000 square foot single-family home costing you $1.3M ($1M for the land + 150/sq ft construction) and which would go for $1.5M. You'd much rather build the 3-unit place - you're looking at $750,000 in profit rather than $200,000 in profit because you're splitting the land cost among three units. You need to get a zoning variance. The board hears some bad comments from neighbors and doesn't deny your project, but says they'll come back to it next quarter. Next quarter, they ask about the design or parking or shadows and put it off another quarter. A year later, you're $50,000 in the hole on interest plus a lot more in the professional labor necessary to deal with these meetings. Then they want an environmental review. More money gone, more time gone and you still haven't gotten the first approval. At some point, they'll basically bankrupt the project on interest if they can string it out long enough. You relent, build the single-family which has now cost you $1.4M instead of $1.3M, sell it for $1.55M (a little higher), lost a bit of potential profit, and move on.
If you could simply build housing in expensive cities, people would be doing it. Splitting a $1M plot of land between 5 units makes a lot of building projects very attractive. The problem is that you usually have to buy the land and then hope you can get an approval. If there's an existing structure that's worth $150/sq ft, you can still tear it down and rebuild if the land is worth so much. Let's say you have a 2,000 sq ft plot of land with a 2-story 3,000 sq ft building on it. Let's say the land is worth $1.5M and the building is worth $400,000 for a total of $1.9M purchase price. You tear down the building and build a 5-story building with 9,000 sq ft (1,800 per floor) at a cost of $1.4M. You're now in for $3.3M, but have 9,000 square feet of space. If you can sell 5 1,800 sq ft units for $912,000 a piece (20% lower per square foot than the single-family), you're at $4.6M netting you a pretty nice profit on the project.
The issue is that we won't let people split the cost of land easily. We drag out the process. If we let people split the cost of the land easily, we'd be doing it a lot more.
One of the reasons that people talk about zoning is that even expensive building costs usually pale in comparison to the cost of land in expensive cities. However, you often aren't allowed to build in a way that splits the cost of land without putting in a lot of time, money, and suffering a lot of uncertainty.
If home prices have risen during that time to levels people now find uncomfortable, then the only conclusion we can draw is that there has been a ton of demand, and thus many available buyers. So I don't get how you can argue that no one was building due to lack of buyers.
You will drag along this deficit into the future, it has a vast impact on supply and thus price. And this is about to happen again. The Netherlands needs about a million new homes built by 2030 to meet projected demand based on population growth. A logistically impossible task even in good economic conditions. Thus a deficit in supply will remain and even grow.
Why can't San Francisco be as dense as New York City (11000/km2)?
Why can't New York City be as dense as Barcelona or Seoul (16000/km2)?
These are the most productive cities, with the most opportunities, and more people want to move there. Why should they be forced to live in less desirable places?
"The Canada Mortgage and Housing Corporation — the national housing agency — said in a June report that close to 19 million housing units will be needed by 2030."
Widen your view! These 19 million homes aren't going to be built in 1 or 2 cities.
Meanwhile corporate and rich investors are snapping up any property they can get their hands one.
In Ontario the Premiere is reclassifying conservation land owner by his buddies to allow them to build developments. In Toronto they tore down a vital section of the main highway to allow their buddies to build condos. The also allowed polluted lands to be developed a residential by simply putting a thin layer of top cover over the industrial pollution.
The foreign ban is only for high density areas. Small towns and rural land have become unaffordably for the people who grew up there.
It is a major catasrophe that is not being solved, just postponed by a year.
https://www.canada.ca/en/immigration-refugees-citizenship/ne...
The number of asylum claimants is overstated in my opinion. Even if 100% are granted, which is unlikely, it is a very small number in terms of population growth.
https://www.canada.ca/en/immigration-refugees-citizenship/se...
Where we stand today, the absolute number of temporary residents are consuming some percentage of housing but I suggest that is the current baseline and is less useful discussing how to solve the problem going forward, unless anyone is advocating for a net reduction in the absolute number going forward. However, I haven’t seen that as part of the discourse and would consider that an extremely short term measure with its own set of ramifications.
What a coincidence, this is exactly what the Century Initiative wants. Toronto would go from 8.8 to 33.5 million people. Vancouver from 3.3 to 11.9 million.
Mars, Moon, and some places on Earth defnitely are not habitable (unless very supported), but calling most of the Canada "unhabitable" is more than a stretch.
And that's precisely the problem! Carbon footprint per capital is very high in Canada and for remote and colder locations it would be even higher!
That remote part of Canada would still be an issue though because it doesn't look like there are any train lines, major rivers or sea access.
[0] https://ourworldindata.org/environmental-impacts-of-food?ins...
[1] https://theconversation.com/suburban-living-the-worst-for-ca...
BC for example is pretty much all mountain and has dammed and flooded many of its habitable river valleys.
In the Prairies the land is already valuably used to export food across the world.
In other parts of Canada it's muskeg and inhospitably cold.
The other thing that everyone always forgets about is that all this "free" land out there is not at all free for the taking: it is under land claims by First Nations. These longstanding unresolved issues will need to be resolved before people can start cutting down forests somewhere and laying out a new main street.
There's plenty of room for more Canadians in the parts of Canada that are already developed, but not a terribly compelling reason for expansion beyond that.
Arm chair critics are a dime a dozen, what are your ideas on how to address the housing problems?
Why stop at 6? Why limit it at all?
However it is politically challenging because it also affects local monied interests, who under Canada's anti-foreigner law are able to continue exacerbating the housing problem without check.
Is this correct ?
Under these new laws a foreigner can still purchase farm, or ranch land or, for instance, a ski chalet in Golden ?
Asking for a friend ...
I've not looked at a map to see how much area that covers, but it sounds like foreign buyers could still purchase rural properties.
https://www.cmhc-schl.gc.ca/en/media-newsroom/notices/2022/e...
Investment in housing and price increases are related. But it's the price increases that cause the investments, not the other way around.
That number doesn't change because foreigners can't buy.
Owning housing produces a certain income for the owner. Either as the rent you can charge from tenants, or increase in the resale price. Both depend on the local supply/demand situation.
Who ultimately owns the properties does not really enter into the price equation.
I know the stories of how foreigners are so greedy that they buy houses but decide to forego the income from renting them out. Those anecdotes don't pass my smell test. Greedy people like to have income!
Housing has a value as an investment, and leaving the housing unoccupied reduces the cost to maintain the investment. Tenants have a lot of protections in many jurisdictions, and an owner is responsible for maintenance, depreciation and damages, while a tenant cannot be evicted by the landlord who wants to sell a unit without a substantial waiting period, if at all.
https://bostonagentmagazine.com/2018/09/11/study-bostons-new...
https://nypost.com/2021/08/05/nearly-half-of-luxury-units-em...
https://www.nytimes.com/2017/07/21/upshot/when-the-empty-apa...
A: People who want to live in a city need housing and are ready to either 1: pay X/month (rent) or 2: buy the house.
B: This law do not create new unit to be rented or bought, and do not do anything for the cities attractiveness, IE the migratory trend will stay the same
C: The renting price is complex and while location and regulation do have an effect, the price is based on supply and demand, not on "how much did you pay for this house" (unless you have rent limits in canada).
D: The buying price is complex but also half based on the renting price. I think AirBNB jacked things up, and we now see housing as a commodity so the number could be higher, but when i was a kid the common sense was: monthly rent * 12 * 20 > house price: buy, else don't.
If A,B, C and D are all true, then i don't see how this law can change prices. If i'm wrong on any point, it might.
And with a small but significant population of potential buyers excluded, the property prices will not not rise nearly as much and they may even fall. If there are enough rich Canadians in the coming generations then prices may rise again, making the investment worthwhile, but there is significant risk there.
[0] https://www.investopedia.com/terms/p/price-to-rent-ratio.asp
many of the properties are left empty for extended periods of time because the owners value liquidity over rental income, and having a renter makes it more difficult to sell quickly when market conditions change (or if you simply want to shift your portfolio).
Many of the purchases remaining as rentals or unoccupied
banning foreign ownership will help, even if only a little bit.
If the actual problem is vacant units, then punish vacancy.
Failing to do that is admitting that xenophobia is easier than good policy.
So what? That's the point. Locals are already being punished!
there is no good reason to buy a house you don't plan to live in.
I don't think history reflects this view. You might remember something like the Revolutionary War, et al. One country often targets and exploits other groups of people. In modern terms, "foreigners" is a practical way to describe the exclusion of a specific nation's members and it's allies. In the USA/China sometimes there's policy that's populist misinformation. In retrospect (decades later) the sentiment is seen as reasonable.
Let's take for granted that you meant "in housing markets". In Canada and the Seattle^ area, luxury homes and goods were commonly considered to be dominated by wealthy Chinese "investors". I dont remember the exact Chinese tax law change enacted by Xi (which effectively taxed foreign holdings), but it caused a mass exodus of Chinese investment and crashed the luxury good market for the Bellevue area over a handful of months. I had left the area by then, so I didn't track it too closely. Seattle is back as a top destination for Chinese millionaires...but I don't know much about that either.
^ https://www.nytimes.com/2014/09/21/business/in-suburban-seat...
^ https://www.seattletimes.com/business/real-estate/seattle-be...
p.s. I do think there's some strange belief that people making broad claims are stupid or less connected and informed than in the past. Almost anyone can talk to brokers and realtors and get this information, as opposed to random internet assumption of inaccuracy.
China doesn't tax property even in China, so I would be surprised if it taxed property held in America. I haven't heard of any specific tax laws on foreign holdings (and in general, China unlike the USA does not tax worldwide income for its citizens and residents). What could have happened is something more informal, like a threat to the upper class to reign in their excess, but Bellevue, at least, is still heavily being populated by Chinese (primarily techies, not investors, who wouldn't be affected by whatever Xi said anyways).
1. Believe that their domestic real estate market is overpriced or will respond very quickly to market pressures that will make any investment undervalued. 2. Believe there is non-market benefits to owning foreign real estate that compensate for any additional risk associated with investing overseas.
I believe that both of these factors are at play, Canadian real estate rules make markets dysfunctional so property values tend to increase disproportionally compared to what they should. But it is also the case that a upper-middle class Chinese person looking to secure assets outside the purview of the authoritarian government they are forced to live under will pay a premium.
Ideally what we all want is a situation where the Canadian market is very dynamic and investments provide a reasonable return but any foreign investors that are investing for non-market benefit reasons are compelled to put their properties into the market for rental at market rate for economic reasons but still get to enjoy the bit of freedom that foreign investment affords them.
I think this plays such a significant role in the motives behind the foreign investment that even if housing was going down they would still make this trade.
Another good rule of thumb is to not dismiss issues just because they don't fit an over-generalized idea of how all situations must work.
The housing situation in Canada is weird. I visited a friend who lived in a high rise and barely saw anyone else come and go from the building the entire week I was there. From the windows we could see into other nearby high rises, most of which were empty. Empty not because they were for sale, but because they had been purchased as investment vehicles by foreign investors who had no intention of ever living there. An entire industry had popped up to cater to these foreign investors and help facilitate their purchase of these properties.
I can't say if this law will be able to curb that weirdness, but it should at least make a dent.
A foreign investor would need to arrange for straw purchasers to avoid the law, but that in itself would be an act of consciousness of guilt for breaking this law.
Something that's not been brought up much in this discussion is that foreign real estate investment is a diversification tactic: they're buying to get money into a different market than the rest of their wealth. That's why it isn't Canadians driving most of this. Foreign real estate is primarily a safe offshore hedge.
Above, 'PragmaticPulp wrote that:
> I visited a friend who lived in a high rise and barely saw anyone else come and go from the building the entire week I was there. From the windows we could see into other nearby high rises, most of which were empty. Empty not because they were for sale, but because they had been purchased as investment vehicles by foreign investors who had no intention of ever living there.
And my question is how they knew that those apartments were empty because they were owned by some foreign investor (who presumably also wasn’t interested in making money on rent)?
I don’t understand how rules about conveyancing answer that question.
Then charge a vacancy tax.
If nobody is doing the following in a week, I am: set up Canadian entities, pay Canadians to manage it, buy houses and raise offshore capital with variable-rate notes tied to some index that's basically the value of the underlying homes.
My point: if it wasn’t rental only, I really wonder how many neighbours I’d have in a development like this, which seems like it would be a prime target for shoebox buyers around the upper-middle of the market
Foreigners are just a correlate.
Going after foreigners for this is like banning men from all bars in Canada because of the high correlation between date-rape drug usage and being a man.
https://www.toronto.ca/services-payments/property-taxes-util...
This is what drives me crazy about this story. The vast, vast majority of evidence suggests that the problem is with domestic investors. But because of a nice little story, suddenly it’s foreigners who are the problem.
Because its not about just buying for property buying sake. It's just an asset. People invest in assets to hopefully see a return. The fact they are buying in vancouver and not detroit is because these investors expect to see a substantial gain with the vancouver asset versus the detroit one. SPY is down 20% this year while vancouver properties actually saw a gain, its even better to invest in vancouver real estate than the stock market currently.
So how do you walk this back and not make housing in vancouver such a great speculative asset? Easy, you devalue housing, by allowing for apartments to be built in the ~80% of vancouver that is limited to single family or low density development.
The current trend is that people from nations that were colonisers are the cause of, and are responsible for, the woes of descendants of colonised peoples. It's good to see that you can see through the bullshit too.
There are only select groups that can invest in property, they must reach the baseline investment sum and ongoing payback before they can play the game. Having unchecked offshore ownership is massively damaging to the local people, it raises the bar all that much more. Offshore control of property can easily be weaponised, where it's not about investment but instead about legal denial of property to the locals.
NZ suffers from some of this.
What? I don't think that's what the OP is saying at all? If the descendants of colonizers and the colonized peoples have been living in the same country for centuries, what does this have to do with foreign investment in local assets?
Feel free to point out where he didn't make two distinct statements.
> If the descendants of colonizers and the colonized peoples have been living in the same country for centuries...
Good to see we're on the same page.
> ...what does this have to do with foreign investment in local assets?
Perhaps you missed the rest of my comment.
>NZ suffers from some of this.
Given all of the geopolitical problems China's creating now that was absolutely the right call. Of course the country's still massively exposed with more than 30% of the economy built on trade with China. We've effectively handed an authoritarian regime a button which when pushed will trigger the outright destruction of our economy, and there aren't any politicians in parliament with the intelligence or foresight to see why that's a problem.
There are middle men who do the finding then flip the property for 500% of what they buy the house off a little old lady for, on selling it to a rich person from overseas, who use the house for 2 weeks of the year, price all the local would be family buyers out and now, because the investor paid so much for it, it will likely never been affordable to the people of this area again.
The interesting thing about all this is that for the people buying, it's still so cheap it's like buying a car for them, so it's a massive detriment to the local community, and for those buying, it's like a rounding error in their bank account.
Do you call this "blaming foreigners" wrong? Because the people who are organizing this scheme do understand they're ruining the local culture. I'm pretty sure people who are buying the houses are aware they're just storming in using their cash and not really trying to integrate at all, they're not stupid.
What annoys m the most about these parasites, is they don't pay tax, they buy a property, use all the local resources I pay for as a tax payer, contribute zero to the local area.
It is a type of invasion whether you like that word or not.
> What annoys m the most about these parasites, is they don't pay tax, they buy a property, use all the local resources I pay for as a tax payer, contribute zero to the local area.
Why are they exempt from property taxes?
The property taxes are a flat rate for everyone who lives here. This is to be fair everyone I guess. Anyway, whatever the tax is, it’s easy for the people with money to pay it, it’s not a disincentive.
Property tax and income tax are different things. The people who own holiday houses don’t pay income tax here. Which is the bulk of the tax I pay.
Didn't you benefit from the taxes their windfall transaction generated?
There is a middle man, a foreigner who is not from this area, who is paying the locals little money, through coercion, dishonesty, taking advantage of kindness etc.
He is also paying locals off to convince other locals, mostly elderly people to sell their places at a fairly low price, they're elderly and mostly just kind people who don't think about what's going on. They lie and tell them stories about why they need the property over others with less money.
This sounds bad too, but there is a mentality with the locals that foreign people are nice, special, and they try to help them...I don't quite understand it but it exists.
There is one other very important and interesting dynamic at play here which is this: Local people, are ashamed to leave the community, like they're letting the place down. Sometimes though, they know it would be best / easier if they left to be closer to hospitals etc. These people doing the property deals know this and they offer them confidentiality. Like, "if you come to me, and sell to me directly, I won't tell anyone anything". While this in itself sounds like almost a good service, it has one significant drawback for the seller, there is zero transparency on how much money they "could" be getting.
Didn't you benefit from the taxes their windfall transaction generated?
I'd say not really enough to matter, it's a once off payment, and honestly, what I think they're doing is, the "middle man" buys the house at say $50,000 USD, then sells it for the same, but they do the rest of the transaction off shore using "gift money" or other schemes to avoid the taxes.
Honestly it's a total racket, the "middle man" is your classic rich guy type, lives here with security, priceless paintings, smokes cigars and drinks expensive whiskey, it's quite hilarious how much of a stereotype he is. I actually don't hate the person, I actually speak with him, he has told me he has had his life threatened before because of his work. People around here often joke about accidentally running the dude over.
Nice job I guess?
I will say that in a lot of cases, the local government could be doing more, so maybe that's why people say there's no point in blaming foreigners, but if they do implement something, apparently it will be "side stepped" according to 99% of Hackernewsers.
They don't just have a lot of disposable cash, they would rather get some of it out of their country and out from its control as insurance. An authoritarian government can completely wipe you out next week without much safeguards, so people in this country hedge like crazy.
Not saying there's anything "wrong" with any ethnic group, but there are sources of money in this world and some are particularly more present than others.
I don't know why but I'd say Chinese foreign ownership is much lower in the USA than in Australia, parts of Asia. Either way, I'd say 4% is still a pretty large part of American real estate ?
Our theory is that for the foreign owners of the properties, it's mostly a status symbol, like a gucci bag or something, to say "I've got a place in blah, please come visit sometime".
But yeah, as most have said, even for a wealthy person from this country, they generally aren't a match if a bidding war kicks off, they'll lose.
Also as I said earlier, there is a weird preferential treatment given to "white people", it's really hard to understand but it does exist as much as I hate to say it. Even though mostly properties end up being owned by foreigners from Asia, the white people are the face of the operation.
Like I said, I hate to say it, but it's just facts, it's sad it's happening really.
There are efforts for local intervention, such as a "council" who seems to be trying to put together a fund to buy places before they move to offshore ownership, they just seem a bit slower than the property pros.
If you keep allowing for building and taxing to pay for infrastructure, however, growth will continue at a more sustainable rate until demand is eventually satiated and builders have less work, and there won't just be infinite demand either. There are limiting factors here too: maybe the ski resort has a finite number of lift tickets being sold per day, or maybe the local airport only sees so many flights per day.
But a lot of it has been. Vancouver has for many decades massive influx of Chinese buyers:
https://www.fortunebuilders.com/one-third-of-vancouvers-real...
Companies such as Westbank were making projects like Oakridge, Alberni, Butterfly, Canada House with condo units specifically designed as pied-a-terres, marketed with storefront showrooms in major cities across Asia.
Even setting aside the whole issue of prices, when the actual product being made, the thing that is drawing huge amounts of local labour for years, is not designed with the needs of locals in mind (ie. tiny hotel-like pied-a-terre) that is a huge long term problem.
As soon as the tax was brought in pretty much overnight Westbank dumped this business model and started building purpose built rental for a local renter market. As things should be.
Why not keep building these condos and rake in the money?
But the real problem is that building housing is a physical process that takes time and limited manpower. If we're devoting our trades to building empty condos for rich people, then they are not spending their time building housing for regular local workers. That means there is less supply of regular housing, increased scarcity and rising rents and prices. Unhappy local workers.
There's no simple matter of just training more trades because that takes time and effort too, so when you think about all this in an environment of rapidly rising prices where we need a solution NOW not later, it makes a lot of sense to destroy foreign investor demand at a stroke of a pen and effectively force local development companies to focus their product once again on a local buyer.
That makes some pragmatic sense, but to me, it's at best short-sighted.
At worst it's a cover for NIMBY-ism and/or xenophobia.
With this new Fed ban I'm not so sure what the data that is driving it is, maybe it is just politics with this one, but I do feel confident that with the earlier Foreign Buyer Tax brought in in BC there was real data and troubling trends to support the notion.
Adding to this: various parts of America still homestead [1].
[1] https://www.cnbc.com/2010/11/16/7-Towns-Where-Land-is-Free.h...
The provinces hand over crown land to municipalities for development all the time.
Land isn't the problem. The lack of density within desired metropolitan areas is the problem.
I'm not sure what your suggestion would solve.
I'm happy they've taken a step in the right direction, an I'm hopeful they'll take more.
Not really. Vancouver, one of the worst places in Canada for foreign investment driving up prices, has been adding new high density housing as fast as it can for 20 years now. One of the primary constraints is the construction trade that can't keep up with demand.
Here is the zoning map of Vancouver, 80% of it is zoned for low density development and this is the root of the problem: https://i.redd.it/xy30s6tayvo91.png
The local governments zoning laws might benefit investors but that may not have been goal of the government. What should they do to support workers?
Zone for more housing.
The only policy that impacted this was the Bank of Canada’s interest rate policy. Houses were rocketing up right until the moment rates started increasing.
> Foreign national: A person who is not a Canadian citizen or a permanent resident.
https://www.canada.ca/en/services/immigration-citizenship/he...
This is not a topic I am super familiar with, but I believe the answer is yes. For example, in Canada, permanent residents have the right to enter the country, similar to Canadian citizens. In other words, they enter the country by right, not at the discretion of CBSA officers. This is not necessarily the case in the US. Trump's travel ban initially prevented green card holders who happened to be outside of the US when it came into force from re-entering. This was loosened later on after protests [1].
Another example is that new immigrants to the US (those who have gotten their green card within the last 5 years) are not eligible to buy Medicare [2] or if low-income, to get Medicaid [3]. Permanent residents of Canada have the same rights and access to public healthcare as Canadian citizens.
In the US, American citizens do not have to carry or present any form of ID, but according to a law that is thankfully rarely enforced, not having your green card on your person at all times is a criminal offence. ("Failing to have your green card with you is a criminal misdemeanor. If you are found guilty you can be fined up to $100 and put in jail for up to 30 days. (I.N.A. Section 264(e), 8 U.S.C. Section 1304.) " [4]). Canada does not have discriminatory laws like this applying only to permanent residents.
So the difference is both in specific laws, and the general attitude in lawmaking. Existing Canadian laws and new legislation tend to give the same rights to permanent residents as Canadian citizens (with some exceptions), but in the US, the legal framework creates a bigger gap between the rights of those two groups.
[1] https://www.reuters.com/article/usa-trump-immigration-idUSL1...
[2] https://www.insubuy.com/medicare-for-new-immigrants-green-ca...
[3] https://www.healthcare.gov/immigrants/lawfully-present-immig...
[4] https://www.nolo.com/legal-encyclopedia/do-i-really-need-car...
What benefit does it provide to a country or its residents if home purchase is opened to foreign residents?
Housing is a necessity, and should be limited to residents, IMHO at least.
I say we should prioritize housing: it is a basic necessity with few alternatives, if any. If you want to invest your money, (1) it means you already have money so you aren't struggling and (2) you can invest elsewhere that isn't as harmful for others.
Also, I doubt that buying a house is a condition to becoming a resident in most countries.
The only real solution is to build more and more housing in places where people want to live, increasing density where necessary. I know a lot of people don't like this for a variety of reasons, but: tough shit. Buying a house doesn't give you the right to stop time. Yes, increased density does bring some negatives, but I don't see a world where those negatives are worse than the effects of skyrocketing housing prices.
In my opinion, a simple, progressive land tax would go a long way in addressing the housing shortage.
Who knows how the market would have gone had that not happened.
There's heaps of people from mainland china coming over here to retire in Vancouver, becoming a permanent resident and so forth. I don't think the government cares about that at all.
The concern is the foreign investors with no interest in moving to Canada (read: foreign capital), people who look at secondary condo ownership in Hong Kong and get sticker shock and decide "oh I'll buy a bunch of condos in Canada instead."
Worse than that are the super rich who were buying condos to leave empty as pied a terres and not even rent them out.
The problem is that the "attacked" country could just seize the homes for themselves in a moment - you end up just giving an enormous fortune to your enemy.
The only way it would work does would require quite the conspiracy: thousands of buyers of homes colluding in secret over many years without raising suspicions, until the other country is weakened by decades of poor housing and then striking before they have a chance to pull the rug.
"Many experts have also said" : garbage "journalism." Who are these "experts"?
https://en.wikipedia.org/wiki/Canadian_Immigrant_Investor_Pr...
https://www.quebec.ca/en/immigration/immigrate-business/inve...
https://www.quebec.ca/en/immigration/immigrate-business/inve...
Applications have been on hold for a while now, with no talk of re-opening it. There is no active immigrant investor program in Canada. There are several other immigration paths open to many skilled tech professionals, but the details of one's specific situation matter greatly and it is quite far from open immigration.
We also have an "investment" class visa and almost everyone who has used this bought a house to meet the "minimum requirements"
https://www.cic.gc.ca/english/helpcentre/answer.asp?qnum=653...
So.. earlier they encouraged foreigners to buy houses in order to get PR cards, now they ban it??
Yes, because at one point they thought they had enough property and could use more money. Either they were wrong or at some point that changed, and now they’ve reacted in acknowledgment that Canadians need local property more than they need foreign cash.
It's probably not surprising that for all the things to get upset about, re: lack of housing supply, people always choose the foreign boogeyman route.
That's not the case. More like "making everyone suffer the consequences of inflation more". And even more stronger point is that Canadians shouldn't be more wealthier. Especially so if the excess wealth comes from foreign countries. And if the country of wealth origin belongs to the third world it's outright evil, nothing less. It's just another form unholy imperial colonialism and I can't believe somebody still defends that kind of immorality.
Given that we are talking about attracting immigration, that’s a really weird definition of colonialism you’ve got there.
Visited recently and there seemed tons of empty housing and it’s quite cheap.
https://www.jdsupra.com/legalnews/british-columbia-finalizes...
What is more likely is that some foreigner would use a relative in Canada, who has PR or citizenship, to buy the property on their behalf.
But foreigners buying home in Canada was never that big of an issue. I think in the hottest areas it was high single digits. It did have an impact no doubt, but it was mostly Canadians running amuck on cheap debt that ran home prices into the stratosphere.
But the funny part is that home prices are already dropping fast (due to rising interest rates) so I can't wait until some politician claims this legislation works.
And worldwide, people might want cheaper housing but they din’t want their own house value to decline. The former occurs in the neocortex while the latter seems to lie deep in the lizard brain.
Wanting an asset you purchased on 10 times leverage, with a 5% interest rate on the debt to decline in value would be total and utter insanity.
So it’s definitely a good investment when it’s affordable. In current environments, it’s actually less of a good investment than how it used to be used (stable, inflation-protected hedge) because it’s more in the asset class of stock and intertwined with other asset classes. That’s good for you on the upswing (which is why you think it’s incompatible with affordability) but not so good on the downswing. Also high volatility and even rapid growth isn’t something most people look for in housing and housing-related costs. In other words, people now treat housing stock the same way as company stock which does make it incompatible with affordability but it’s traditional role is a hedge in your portfolio.
Conversely, for something to remain affordable over a long period of time, its price must grow no faster than inflation.
The root causes are thanks to the policies of the Bank of Canada and CMHC.
Are the price rises because 1 person bought a penthouse for $100mil or because a million 'normal' people outbid each other for the 100k house in the suburbs?
I dont see that as much of a problem personally.
However, after all tTis whole thing is just another reason to live in rural areas because rental predators are pretty much non-existent. Of course not everyone is so privileged, but those who are should seriously consider leaving cities for their own good.
"The Act has a $10,000 fine for any non-Canadian or anyone who knowingly assists a non-Canadian and is convicted of violating the Act. If a court finds that a non-Canadian has done this, they may order the sale of the house."
I would assume opening a numbered corp to own the house would fall under this category?
Most of the "super-rich" owned houses in Canada are already owned by corporations to leverage the protections corps have.
https://www.scmp.com/week-asia/society/article/2158716/speci...
The foreigner does not keep any appreciation.
https://www.bennettjones.com/Blogs-Section/New-Rules-for-For...
The law doesn't seem to consider Canadian entities to be non-Canadian. Buying through a local entity thus isn't bypassing the law, but following it.
I believe other provinces are looking into similar things.
(Just asking whether it's theoretically possible).
1 person - 1 property.
Commercial property should be state owned with perpetual leases.
39M Canadians[2]
Looks like there isn’t enough property to go round.
Maybe the problem is that people want to live in places where they get paid, and not share with parents/roommates and they’re competing to occupy dwellings where there aren’t enough? But what do I know? I just wrote down some numbers that aren’t equal.
[1] https://www12.statcan.gc.ca/census-recensement/2016/as-sa/98...
I think the problem is that, for lots of people, they can’t have what they want because there aren’t enough housing.
> 1 person - 1 property
Maybe it isn’t clear, but I don’t agree with the comment.
Read it from the horse's mouth, Redfin: in Q3 2021 investors bought 18% of single-family homes sold in the United States. 1 in 5. https://www.redfin.com/news/investor-home-purchases-q3-2021/
In 2016, 2017, 2018 we were averaging around 50,000 to 60,000 homes being bought each quarter by institutional investors. Then, when the pandemic fun bucks got released (and I'm not talking about the $1200 'relief' checks that went out) we were looking at 80,000 to 90,000 homes bought by institution investors each quarter in Q2 2021 and Q3 2021, respectively.
Add in Airbnb / the short-term rental markets decimating housing stock in many cities and countries, plus intentionally restrictive zoning ordinances in the US and in Canada, and it's no wonder that North America's housing market looks the way it does in 2022.
Also from that Redfin article: > Investors Have the Highest Market Share in Atlanta, Phoenix > >In Atlanta, nearly one-third (32%) of homes that sold in the third quarter were purchased by investors—the highest share of the 40 U.S. metropolitan areas Redfin analyzed. Next came Phoenix (31.7%), Charlotte, NC (31.5%), Jacksonville, FL (28.3%) and Miami (28.1%). > > Atlanta also saw the largest year-over-year gain, with investor market share rising to 32% in the third quarter from 12.9% a year earlier (+19.1 ppts). The second-biggest jump was in Charlotte (+18.2 ppts), followed by Phoenix (17.7 ppts), Jacksonville (+15.2 ppts) and Las Vegas (+14.6 ppts).
I'm curious (and hopeful) to see how the Canadian situation plays out. I hope that increased enforcement of antimoney laundering laws will also result in a return of many thousands of single-family housing units to the market. If the Canada law works well it would be encouraging to see it applied in the United States with additional funding at the federal level for the construction of dense apartment housing in cities near transportation hubs as well dense housing in suburbs/exurbs with the creation of mini walkable downtowns in those denser pockets.
Can you imagine being forced to live in slum like conditions without a half-acre yard or at least 3 parking spots? We are a developed country, do you expect us to park on the streets like the 3rd world ?
If only Canada had access to hammers & wood & nails. They could have built something. But, where might someone be able to buy any of those I wonder ?
____________
Watching sprawly nations one up each other with moral grandstanding while acting as if no one sees the elephant in the room is frustratingly funny.
If you are going to go this route, at least institute a high tax penalty for unit vacancy.
_________
edit: didn't think it was possible for people to miss such obvious sarcasm, but here we are
Wondering what you mean by "sprawly nations".
By sprawly the parent means nations that don't build upwards with highrise approaches as a solution to building more residences (and instead sprawl sideways, taking up large amounts of land per residence).
Canada and the US lead the way.
The city is obsolete in the era of WFH. Let these unnatural aberrations recede. Humans were meant to live in small tribes and we see how their programming breaks down in cities rampant with crime and antisocial behavior.
https://www.bloomberg.com/opinion/articles/2022-06-07/is-new...
Normal countryside villages are disgusting to you?
Ironically, the most desirable villages build densely around a small core and the farms spread out radially around the village itself.
[1] https://www.roadaffair.com/most-beautiful-villages-in-the-wo...
> The city is obsolete in the era of WFH
The first thing I did after negotiating WFH is to move to a dense neighborhood of NYC (soon).
> Demand for nicer living conditions
I am. I want to walk down to local markets & restaurants. I want to go anywhere in the city without exposing myself to the main cause of youth death (cars). When I am travel to another part of town, I'd rather absentmindedly read a book, than be stuck paying attention in bumper2bumper traffic.
I want 100s of activities, cuisines & communities to be at my disposal when I want to access them. I don't want to have to ferry my future children around everywhere. I would much prefer a big bustling park with trees like Boston Common or Central Park, than a lousy unsustainable private mound of grass.
I love fresh air & low noise pollution. I wonder what's causing them. Can't be the folks in cars commuting from their beautiful suburbs can it ? [1] [2] [3]
Why do people think that cities have to concrete jungles with no social life & huge amounts of crime. Cities (esp. NYC) are safer than almost everywhere in the US. Having friends & tons of activities nearby encourages social behavior and having parks be in shared spaces means that they continue to be well funded and environmentally sustainable means you can be a lot more ambitious about the kind of big trees and gardens that can have.
[1] https://web.archive.org/web/20230102070924/https://www.nytim...
Also, suburbs have provably less pollution and noise.
I get what you're saying, but it's kinda funny since Canada is enormous and most of it is mostly empty.
They do have a ton of land in all the rest of Canada, but for reasons of access to services, climate, etc.. most people in Canada are crammed into the Quebec-Windsor Corridor.
https://en.m.wikipedia.org/wiki/Southern_Ontario
The population of southern Ontario is ~13.5 million people (roughly a third of Canada).
North Korea has a similar area (slightly larger), but approximately twice the population. South Korea also has a similar area (slightly smaller), but approximately twice the population of North Korea = four times the population of southern Ontario.
In particular, ~13.5 million more people live in South Korea (which has an area smaller than southern Ontario) than in the entirety of Canada.
My point is, that looking at the population density for the entirety of Canada is misleading because most Canadians don't live in Yukon Territory. The population density of the part of Canada people actually live in is much closer to what you'd expect from a typical developed country.
Here in Canada's smallest province I've never seen so many apartment buildings, condos, and homes being built. A field that was empty year ago now has about a dozen apartment buildings, maybe a dozen homes. And that's just one area. The sprawl is taking over farmland.
Meanwhile people have no place to live and anyone who does gets kicked out for a "renoviction". Supposedly repairs and upgrades but often it's just a coat a paoint and rent is doubled. Or it's covered to Air Bnb or other short term rentals STR. I've never seen so many homeless people in my life here.
So many buildings yet nowhere to live.
Basically, all land on Earth has an owner. Be it individuals, corporations or governments. It's finite, so highly valuable.
I'm currently unable to return safely to my homeland because the current land owners marked me as an adversary. I wish it wasn't the case but societal rules have been this way since ever.
It's thousand times easier to me to build something, by using software, in the metaverse/on internet. In the real world, I now have no place to call home, except refugee camps and squats in abandonned buildings.
is this really true? you can definitely do things to it that would make it uninhabitable, no longer "fertile", or any other terms that essentially come to the same conclusion of the land being essentially destroyed.
at least as far as the context of desirability to be owned
> is this really true?
Practically speaking, yes. The value of a parcel is largely from its location/proximity to metro areas. I've never heard of someone destroying residential property directly through chemicals or radioactivity, though value can be greatly diminished by local antagonistic developments or rezoning it unfavorably.
Are you kidding me? Look up Superfund sites, and tell me they didn’t affect property values around them.
We just haven't yet gotten to the point where we can access any of the land not on this planet.
Even using the ocean as a fresh water source — which is right here on earth — is a challenge with significant hurdles to overcome.
Even with near infinite land it will presumably be a long, long time before common people can set out into this new frontier and carve out anything like a familiar, safe, let alone comfortable life.
All ownership works like that.
I buy a plot of land, on the other hand? The lazy sellers won't even deliver it to my home :)
So once you agree that permission to build needs to be organized, you need to figure out how to allocate that permission, which in situations of scarcity is going to be to the highest bidder.
But people aren't going to invest in building structures that will last for decades unless they know they'll continue to hold permission to occupy those structures for decades.
So either you hand out things like 100-year leases or you hand out ownership outright. In the end, most of the world has settled on ownership because 100-year leases tend to cause massive headaches once you hit the 100-year mark, for a whole host of reasons.
So land ownership is just what works from a practical perspective.
(That being said, I am personally intrigued by a system where the government would lease all land yearly according to market rates, but where higher rates for longer [e.g. 15- or 30-year] terms could be locked in with private banks, much like fixed rate mortgages. The classic problem, of course, is how a government is going to reliably determine "market rates" for land that changes hands only very infrequently. Property taxes already attempt that, but they also often result in value that are obviously not "market". It's much the same problem with assessing non-liquid wealth for wealth taxes.)
This is a great playlist around the subject:
https://www.youtube.com/playlist?list=PLTNrJFli7ocgtZNW5IzFs...