Does Canada Need Restrictions on Foreign Ownership of Residential Real Estate?
This has become a very hot topic in Vancouver. And we see the same scenario unfolding in Toronto. Is it time for Canada to follow other jurisdictions and restrict foreign ownership of residential real estate?
“Go for a walk through the neighbourhood I told you about..16th to 33rd / Arbutus to Dunbar or Macdonald to make it really obvious. I am not exaggerating one bit. There you will find 4 or 5 homes per block that sit empty… New homes are empty not old homes… I lived there, I saw it- go see for yourself. Not only do they sit empty but they are being bought and sold many times (flipped) and still never lived in. It has nothing to do with me being a renter… the facts are the facts. No kids playing in the yards, nothing. I’m being told one of our city’s reporters is doing a piece on the specific issue, stay tuned. But go for a walk and see for yourself.” … http://vreaa.wordpress.com/2012/04/1...ears/#comments |
Dont need it, won't happen.
Canada is a free market. No government interferance in the free market. |
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What do you mean by free market?
I'm not sure of the best solution but a number of submarkets are out of control and most residents are losing aside from a couple skyscraper geeks getting off on all the towers going up. An educated individual making a decent wage should be able to afford more than a badly designed and finished shoebox in the urban area of a city. With that said, government apparent "lack of interference" somehow still makes them a ton of money. I don't see them touching this cash cow unless the masses revolt. |
What Canada needs are more stringent financing requirements for non-owner occupied units. For example, the down payment on an investment or recreational property should be much higher than it is on on owner occupied property. Currently, it is much easier to leverage an investment property than it is any other type of investment such as a stock.
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that's already in place....required downpayment for an investment property is 20%, whereas for owner occupied is 5%...
edit: also BTW, if you live outside of Canada (offshore buyer), you are required to have a 35% downpayment... |
No.
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No but we need to put an end to the artificially low interest rates. The elite punishing savers is nothing new.
The Bank of Canada needs to be abolished. |
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Downpayments and interest rates aren't even a factor when most are paying cash. |
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By restricting the amount of investment in a market (foreign or otherwise) you will restrict the amount of development, and thus supply, resulting in higher prices as supply will not be able to meet demand as easily. |
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If you check out the link I posted its clear that in Vancouver, lots which contained perfectly livable homes and were worth $500k a decade ago have only become $1.5 million teardowns because there arer external forced driving up the prices. I assure you Vancouver is not awash in great-paying jobs that are fueling that increase. And now we see the same feeding frenzy moving into other Canadian cities: Overseas investors are snapping up properties in Canada's largest cities, driving up prices and pushing ordinary Canadians out of the housing market, observers say. Real estate experts call it the "new reality," and the high price paid for a north Toronto bungalow is the latest evidence. This month, the three-bedroom bungalow, circa the 1960s and without much updating, sold for $421,800 over the asking price, creating a buzz among agents and other buyers. Located in Willowdale, where similar detached houses typically sell for just short of $900,000, the bungalow at 300 Dudley Ave. was listed at $759,000. The winning bid of $1,180,800 came from a university student whose parents live in China and own a business in San Francisco. There were four other bids of more than $1 million... http://www.cbc.ca/news/canada/story/...investors.html |
The market corrects itself, we need to stop trying to micromanage things. Cycles are normal in life and are will always happen in markets no matter how much we try to stop them.
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I agree let the market decide.
There are benefits to foreign investment in Canada. Many of these properties turn up as rental units, something many of our cities need more of. Alternatively if the foreign investor is buying the property and leaving it sitting empty I am not certain that is a bad thing for Canadian society in general, the owner is still paying property tax but not using much of any of the services. |
From that crazy left-wing bastion, the Financial Post this week:
Nearly three times’ more condo high-rises are being built in Toronto than are being built in New York City and nearly seven times’ more than in Chicago, according to Bloomberg News. This development boom, and accompanying price increases, is not about housing to meet a sudden surge in population. It is not about an economic boom. If it was, Calgary and Edmonton would have 128 cranes, like Toronto does, building housing and pushing up all prices. Instead, this is taking place in Toronto and Vancouver where economies are moribund. What is going on here is a deluge of hot money from abroad that is creating an artificial and potentially dangerous real estate bubble Conventional wisdom is that this is the market at work. This is not the market at work. This is manipulation of a government system of open-ended mortgage insurance that is poorly supervised. What is going on here is a deluge of hot money from abroad that is creating an artificial and potentially dangerous real estate bubble. This mania happened in several other countries — where it was shut down — and has spread to Canada. Officials here have been urging restraint but that is not the solution. A ban on foreign buying of residences is the only solution... (bold mine) http://opinion.financialpost.com/201...oreign-buying/ |
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Toronto has had very good luck in keeping around international university students long after they finish their classes, either directly as residents or indirectly through business partnerships with local firms. There is a very good chance that this student and their children will be contributing to Toronto's economy for decades. They also tend to draw the parents into the city as well through business partnerships. Big difference between someone investing sight-unseen and someone buying a family member a place to live. |
I just have to laugh when I hear people talking about a "free market" and "let the markets decide" and that the "market will correct itself" :haha:
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I think we should take a look at what Australia has done, and determine whether that would be appropriate for Canada, or at least for some over-heated Canadian cities. I don't like the fact that people are moving from Vancouver or Toronto due to excessively high real estate prices.... on the other hand, I suppose that this would help weak markets.
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There's a good rundown on what other jurisdictions around the world do to combat runaway foreign ownership in this article:
http://www.rew.ca/articles/240 |
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