> During last year’s election campaign, Trudeau’s party also proposed a ban on “blind bidding” for houses -- the prevailing system by which offers are kept secret when someone is auctioning a home.
This is such a huge deal. Anyone who has had to go through the process of buying a home through a bidding war knows how unfair and one-sided this process is. It take a high-pressure emotional situation, and gives all of the information to one side (the sellers), while leaving the buyer stuck guessing at what the real price for the house is supposed to be. An absolutely horrible process that should be banned. Banning this is such a simple reform. I sincerely hope it happens, though I doubt it it will.
You're fighting scarcity. You still won't win the bidding war - it just won't be as one-sided.
Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically.
While you're at it, you could go after other wildly popular policies that lead to high housing prices, like the primary homeowner capital gains tax exemption (probably, by value, the biggest tax dodge in the industrialized world), and Canadian cities' extremely low property tax rates (0.3% of assessed value in Vancouver, for example).
No, they're fighting market inefficiency. A free market requires accurate and timely information to be efficient. This is literally people putting constraints on the market for what they are selling so the information is not available to one side, and the price is inflated.
A rational actor should walk away from a system like this, but if that's all that's available around you because of scarcity, you're forced to work at a disadvantage.
Banning this is akin to banning other anticomptitive behavior, such as collusion and monopolies. That is, it's up to the government to decide whether the harm outweighs the problems regulation introduces (regulation always introduces some level of friction and problems, you just hope to minimize them and maximize the benefits it brings) and is thus worth pursuing.
> Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically.
I'm all for building more houses in cities/high demand areas, but doesn't Canada only have a population growth rate of around 1%/yr? It seems like you could easily build your way past that without giving up the advantages of immigration and a little population growth.
If you cut off foreign buyers then you absolutely will have cut out some competition for the purchase so I don'd see how you can possibly say what you're saying? I mean it's a basic economics principle.
Is it so far fetched to assume some realtors may be juicing the bidding to increase their own commission and to make their firm more uhh "prestigious" by being able to drive up the price for their own marketing purposes further down the line.
Likewise if you dont know who you're bidding against, how do you even know the bidder is even real (foreign or not)? Transparency is good thing.
While there may be some "scarcity" not having full transparency and realtors not in alignment with their own clients needs is a step in the right direction.
(I use scare quotes here because while I know we're not building enough but the current market has a fair share of retail speculation, institutional investors inflating prices, and homes held as purely places to mark money(non-owner occupied). Scarcity is real and building does need to happen, but thats slow and expensive. Millions of homes are kept empty or as poor speculative investments and thats a problem)
> Either we limit Canada's crazy-high immigration rate (1% of population every year)
You could just stop there, it’s clear where your priorities lie. I’m not Canadian (and don’t worry I’m not emigrating), but I welcome a “crazy high” 1% population immigration rate and I don’t see a conflict with that and reasonable housing policy. Many major cities already see this kind of growth regardless of where people are moving from. We should be able to house and sustain that growth.
Limits on immigration don’t slow the growth, they just satisfy anti immigration attitudes for a while.
One of the problems is that once people buy into the system, their entire life's savings (plus often 4x more via leverage) is tied up in the house and the price of the house. At that point, most dont want more development, because they lose their life savings if home prices go down.
Each person entering this horrible system is forced to perpetuate it, or lose it all.
Canada's immigration rate isn't "crazy high" it's been an average of 1% per year for the last 100 years. It's standard. What's not standard is limiting new construction.
In the last year, we've ended up #2 in 6 bidding wars (as disclosed by the listing agents) in one particular area of the GTA. In each case we reached our absolute max and wouldn't have paid any more.
Several times we lost by $100-200k, and once by $250k. These overpayments set new price benchmarks for the area which became sticky. To continue to be competitive, we had to make hard sacrifices to increase our budget throughout the year.
The fact that houses continued to move at the prices determined by these over-payments indicates there are some buyers at the higher prices. However, the market is very thin and the pace of price growth in this speculative market would've been slowed with open bidding.
Beyond the blind bidding issue, I don't know why people focus on foreign and large corporate buyers. Yes, they're scary because they represent potentially large sources of demand. But are they actually buying a large percentage of the homes? No. It's the smaller investors who speculatively bought 40% of homes last fall.
But we should definitely protect mom and pop investors, such as our housing minister wink
Real solution? Reduce the incentive for speculation among these groups by treating all gains on non-primary residences as income.
A better plan would be to increase the friction to buy a home without actually living in it, and tax the living shit out of homes that are empty and not occupied by anyone at all most of the time.
I think that blind bidding is a bit of a scape-goat here: the problem isn't that the bidding process is blind per se, it's the complete lack of transparency. Once a house is sold, the price that it sold for AND all bids should be made a matter of public record — accessible without having to pay a ridiculous amount of money to view.
Not to mention the ridiculous commission fees for realtors, and their well-known practice of "steering" people away from homes with lower commission or prices. A practice that is technically illegal, but not enforced.
But because real estate agents are middlemen in the process, there's an incentive in a hot market to not act as an honest broker.
When the market isn't "hot", a realtor has an interest to move quickly. When the market is hot, they have incentive to move their own listings so they get both sides of the commission. In my case circa 2005, I bid $50k over list via the broker who was managing my home sale. The selling broker "lost" the bid somehow and sold it for $20k over listing price.
7% of 20,000 is close to 3% of 50,000. But... I came to learn later that the selling agent targeted a particular religious community hard, and did a hard sell on insurance, inspection, and even attorneys to buyers, and frequently yielded another 3-5% based on "spiffs" from those providers.
All of these inefficiencies and bad behavior add up and inflate prices.
The lack of transparency makes these deals ripe for fraud. I have heard anecdotes from people I trust of their realtor offering to generate a fake offer (by soliciting one from a third party) to drive up the escalation clause.
Where there is money and little oversight there is bound to be fraud. It grinds my gears to think about this because I bought a house and the escalation clause went to the maximum. Now do you think that was purely coincidence?
Why should not selected bids be made public? If I bid $1.2M on a house 2 months ago and didn’t get it, I don’t want the seller of a house that I just bid $950K on to have access to a datapoint that strongly suggests I’m good for another $250K.
In such a case, I’d predict a lot of partnerships (or whatever the lowest cost legal structure that isn’t traceable over time if not activated) would be bidding for houses. My bid as “123 Main St Partners” can be as public as you want I suppose.
>I think that blind bidding is a bit of a scape-goat here:
Almost everything mentioned in the various comments here is a scapegoat. These all might contribute a little to the escalating prices at the margins, but they are not the root cause.
The root cause is that many capitalist societies have decided that purchasing a house is the most expensive and important investment most people will make in their lifetime. Therefore these societies gradually shape their policies to ensuring these investments continue to increase or else there are widespread repercussions. The end result is we have collectively refused to build enough housing to keep prices stable or decreasing. The prices need to go up. I don't understand why no one is willing to admit this.
All the other problems originate from this. The reason foreigners want to buy homes as speculation or a place to park their money is because governments are committed to ensuring that housing is a safe and profitable investment. It all comes back to us deciding that a basic human need should also be an investment that always is increasing in value.
As someone who recently bid in a hot property market, I'm a huge fan of common sense bans and unwaivable rights.
In a competitive market, filled with buyers of questionable sophistication, i.e. residential real estate, everyone gets to the bottom of maximally-waived, minimal-safeguards pretty quickly to make a competitive offer. And ultimately, that isn't good for anyone, sellers included.
Better to explicitly prohibit the stupidest behavior and require some safeguards. E.g. non-waivable 72 hour cooling off period. Then everyone can compete within those bounds however they want.
It's complex. There are two sides to every equation. Buyer and seller. Sellers aren't necessarily sophisticated either. If I sell my home, and the roof is leaking and I don't know about it, I don't want to be liable down-the-road.
Peace-of-mind is worth a lot. Especially if the buyer is sophisticated, I might take a lower offer if it has the right waivers.
Is it though? I chatted with someone from Australia which has open bidding and you know what .. houses still went way over reserve. At the end of the day, if you have 20+ offers on a house, you're not getting that house without destroying your budget, no matter how you set up the bid system.
The common sense change I wanted to see implemented was to prevent the waiving of a home inspection as a condition of purchase.
It is because Realtors are crooks. That's about it. We also had to tack down assignment clauses so that realtors wouldn't re-sell their client's houses for more and pocket the difference.
I also want to see mandatory home inspection, seems common sense.
I'm not sure why "amount over reserve / list" is a meaningful metric. It's clear that in a lot of cases the list prices are intentionally below market to attract more bidders and produce the appearance of more competition at open houses and the like.
I live in Canada, and the real estate business is such a mafia. They are leeches, and I'm not sure how much value these real estate agents are providing.
It baffles me how this industry has not yet been disrupted by an outsider, like Uber did with taxis. I still remember when taxi licenses costed a fortune, and you had the exact same leeches exploiting it. They were seen as an investment in some cities, like NYC.
I know there are useless regulations that keep these agents being needed, but so there were with taxis as well, and Uber did not give a crap.
Easy. Buildings have problems. It's in your interest to have some clueless salesman talk to buyers and represent whatever they represent than to do it yourself.
We're currently hunting for houses, and lost out on a few listings because we didn't want to overbid. When the sold price was revealed, SO many times we'd think DAMN, we'd prob pay $10-$25K on top of that to get it had we known..
Also another interesting dynamic is that bids can’t simply be compared by headline price. There’s so many other factors to consider in a bid: contingencies, time to close, reliance on a lender, likelihood of close, etc.
I don’t see how a blind system can take those factors into account to algorithmically select a single winning bid.
> Not sure if buyer or seller is better off using them.
There's a theorem an auction design that says that, under some vaguely reasonable assumptions about bidder information, it doesn't matter what form you use for the auction. Open auction, sealed auction, even second price auction should all give the same winner and same final price: https://en.wikipedia.org/wiki/Vickrey_auction#:~:text=Revenu...
Blind bids prevent bidding wars, but from an idealistic standpoint they don't find the true price of a home. Particularly when you have buying agents routinely advising their clients to bid 50k over what turns out to be the next highest bid.
Though psychology comes into play in a bidding war, at least it's happening because the asset for sale is highly desired. It's efficient.
Why do you think there's such thing as "real price of the house"? I've sold a house recently. I had 4 offers, all for different prices. Which one of them were "real"? Should I have rejected the highest offer because it's "unreal"? Should I be forced to accept the lowest price - I am sure the highest buyer would appreciate to pay less? Why?
And BTW I also bought a house before (no wonder, since I am not that handy, to sell a house I had to buy it first ;) - and if you hire RE agent, which at least in the US most people do, and they are worth anything, they'd get you at least the rough information on how high you should go, and sometimes even the exact numbers. There were situations where we knew exactly how high the highest bid is, and more when we had decent idea if not exact figure. So it wasn't exactly blind.
> gives all of the information to one side (the sellers)
Well, not all the information; just what other people are bidding. But all that matters to the bidder is that that other bidders do not have access to more information.
The fact that someone's bid is higher than yours, is not caused by its temporary secrecy.
Auction theory has so many assumptions that it really can’t be applied to buying a home. The link above assumes the highest bidder knows[1] the highest price the underbidder would pay, which is extremely silly. Apart from the fact that if you know the highest price of another bidder, then the seller also probably knows your highest price, and the seller can just ask for the highest possible price, duhhhh!
Bidding (auction or blind) is used precisely because the prices are not known.
Personally I have been involved with enough home auctions and blind bids to know that there are huge information asymmetries or uncertainties. When you lack information, sometimes you need to make your best bid, and you might value a property a lot higher than the underbidder.
I would like to see more protection against lemon markets, but realistically I can’t think of a fair way to enforce that. Banks and insurance protect some people against doing stupid things.
[1] First price auction: “if each player bids such that they bid the expected value of second highest bid”
There are a number of things like this that I don't think will move the needle on housing prices, but because of the massive seller's market we're in, are politically expedient to do now:
- Make home inspections an unwaivable right.
- Eliminate blind bidding
- Fully open MLS data
- Heavily regulate (specifically buyers') real estate agents to eliminate much of the corrupt practices.
There's nothing unfair about a bidding process. It's an efficient means of price discovery. If you get emotional about it then that's your problem. Some prospective buyers get irrationally attached to a single property, which makes no sense. Just go buy a different home.
Interesting. Is the process for home buying in Canada always blind-bidding or is there a regular practice similar to Australia where people show up for an in-person public auction?
New Zealand has deadline sales, which you sign a blind offer with whatever conditions you want, and then the vendor can choose any offer or change the rules or ask for more money or do basically anything they want.
There are also tenders, which I don’t know much about.
And I have seen auctions where they set the reserve at a ridiculously high amount, and then negotiate with the highest bidder. A few years ago, one place I was underbidder at $280k (for something that I thought should go for about $250k), final bid was $290k, then vendor negotiated that bidder up to $350k! Another I was underbidder at $190k, final bidder was at $200k, then vendor negotiated them up to $250k.
The dirtiest trick that real estate agents do is to convince/pressure vendors to bring the date of sale forward. Sale goes through at a lower price, agent does less work and turns over their properties more quickly (which vastly enhances the agents yearly profits).
New Zealand restricted sales to foreign buyers in 2018, to prevent ballooning property prices for New Zealanders. Also rich foreigners buying large farms and prime coastal real estate was unpopular with most of the voting public?
Edit: when the real estate market was burning hot, lots of sales were deadline (blind). I think deadline sales mean that the winner often has bid their highest price (I certainly did for my home). In auctions you often pay just a little bit over the underbidder, even if your top dollar might have been potentially a lot higher. When selling you mostly care about that one person who really loves your place and that is willing to, and can afford to, pay well over market price for it. All other potential buyers are just wasting time.
I think people are missing the fact that for many Canadians values of their homes represent their live savings. So while homeownership remains high in Canada doing something substantial about re prices would ruin peoples lives.
We are at the point where foreign and Canadian speculation in housing is making housing totally unaffordable for the vast majority of Canadians. In a country of less than 40 million, it's pretty easy to swamp our markets.
We need to take speculation out of the marketplace.
I'd also like to see a ban on corporations purchasing private homes and significant tax increases on non principle residences.
Yeah, about 70% of Canadians are homeowners (almost 15% higher homeownership rate than in the US). Ideally, they find a way to keep home price growth at/below inflation for a few years rather than actually pulling prices down directly. There's very little appetite for reducing the notional price since that 70% is broadly "most voters."
Actually no, because you still need a place to live. So it doesn't really matter if your home is worth $!M or $100K because it would cost you the same to move somewhere else. As such reducing home prices across the board isn't that problematic, because there's no loss in 'value'. You can still sell your apartment in Vancouver and buy a 5-bedroom in Saskatoon.
The issue becomes people with existing outstanding mortgages. If we considerably reduce house values, would outstanding mortgages need to be reduced pro-rata? Who would 'eat' that cost? The government? The bank?
>I think people are missing the fact that for many Canadians values of their homes represent their live savings.
Let's ignore the property itself, which is a depreciating asset which was built and can be improved through manual labor.
That land is going to stay the same no matter how much you pay. Paying more for the same plot of land doesn't make it better. You don't get a bigger plot or a plot of better quality by spending more on the land. The land isn't wealth, it's the community around the land that gives it value. If you have demographic problems, your land is going to be worthless because the community is too old and shrinking.
Betting on ever growing populations is a pyramid scheme by the way.
It wouldn’t ruin lives to reduce wealth that was stolen from people unable to buy homes. It would also help their kids. Something lots of modern homeowners don’t give a shit about at all.
I don’t know the specifics on Canadian real estate market and the specifics of the problems there, but based on my understanding of the problems facing your neighbors to the south - I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians) to redirect attention from the much more likely cause - massive investments made by hedge funds, private capital, REITs which does not appear to be addressed at all?
Thought I do agree that a non-primary-resident investment, whether from citizens, foreigners, or capital should be greatly limited overall and these rules should only loosen to direct investment towards areas that are in dire need of an influx of capital for redevelopment. That is - if it’s not distressed, and it’s not going to be your primary residence - GTFO, you should be last in line to buy.
And I say that as former landlord. I just believe that if I was looking to make some money - I could probably do just fine under these conditions. I don’t see an issue of buying a distressed property needing a rehab, and I think doing so benefits everyone.
I am getting real tired of society getting ever more dystopian just so that someone can make a buck.
"The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach."
If you view housing and ownership of your domicile as something that should be accessible to people, then housing necessarily cannot be viewed as an investment vehicle and large corporations, REITs, wallstreet, etc. need to be excluded so that more supply can be available to "correct" buyers.
Limiting these groups does help on the supply-side. While it may not be the root cause, it's far better than showering the demand-side with cash like tax breaks for first-time home buyers.
Ironically, that quoted excerpt inserted its own "convenient boogeyman" of housing undersupply caused by local opposition.
Also, institutional investors do have a reputation for inciting bubbles and that possibility absolutely needs to be carefully scrutinized, particularly for something as essential and socially compounding as housing.
Real estate is always a good investment (unfortunately), and capital flight from Asia is not a joke. It's happening in Europe too. Personally, I think governments in well developed countries should do their best to dissuade investment in housing as a financial instrument. Why should I compete with a millionaire, be it local or foreign, for a decent house to live in a city I've lived in for years?
> I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners”
There is truth, however. The Wenzhou house wife property speculator trope has some basis in reality, and Chinese markets are already rife with massive speculation that has seeped into foreign markets popular for Chinese emigration (Toronto, Vancouver, and to a much lesser extent NYC and west cost American cities). You don't have to look hard to see the effects in Vancouver, where condo buildings and housing remain empty due to being seen as speculative assets.
American and some western European housing markets (e.g. UK) are a bit unique in that they haven't limited foreigners from buying and speculating on real estate. Whereas in China, many tier 1 and 2 cities have strict residency requirements before you can buy an apartment (but these also apply to Chinese via their hukou residency system).
There is a huge crowd of local Canadian landlords that own or seek to own more than one property. This is the group that benefits from the narrative that Asian foreigners are buying up the local estate.
The really affluent immigrant groups aren't buying multiple properties, they already have a great deal of income, and their properties are well outside most of what HN can afford and do not impact the condo market which is the most competitive, accessible and volatile.
They already taxed and stopped foreign buyers but the home prices in Vancouver keep going up as sales amongst local Canadians make up most of the volume.
Now they announce this virtue signaling to appease the other Canadians who can't afford homes but the problem will not change.
In fact, without outside capital constantly coming in, the Vancouver real estate market is not sustainable. It literally is just another game of musical chairs, it is the news of some Chinese communist elite member buying a mansion in West Vancouver that gets local Canadians eager to own properties.
I'm no stranger to the anti-asian sentiments in Vancouver, just head over to r/vancouver to see people regularly blame Asians for the fact that they can't afford to live there. In fact in the 80s, they blamed Japanese, 90s they blamed Hong Kongers, 2000s they blame Taiwan, Mainlanders.
It's really disgusting to see the blatant racism against one group that is normalized but not for others. It literally is the same attitude that people with anti-semitic views constantly deride Jews of their financial success that largely came out of merit.
"foreigners" make up 50% of Canadas largest cities - where all the money is. The richest of the world can afford to move there but farmboy from Peterborough is SOL if he ever wants to make real money. Im fine with putting your own citizens interests before the rest of the world.
Even if those “citizens” are massively capitalized corps seeking returns on their investments? Who cares if they are domestic or foreign (and if foreign becomes difficult - they’ll just open a subsidiary).
I don’t really know whether you have read the rest of what I wrote or just got triggered by me seemingly defending “foreigners” and hit the Reply button.
I don’t mean to single you out specifically, there other posts that seem oddly similar.
Anyway, I think there’s a big distinction between immigrants (who cease to be immigrants at some point, how many years does it take in your opinion by the way? Who is more worthy of being helped to buy a home - a immigrant who came to the country 30 years ago, or a natural-born 25 year-old citizen?… but I digress.) and investment real estate that requires an intervention.
Let’s say we put a huge tax on all real estate that isn’t a primary residence, I am all for making it super unprofitable to hold so that rents cannot cover the expense - to force all these REITs having to fire-sale their holdings to people who want to live in them.
> I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians)
Yeah the Right loves to blame poor foreigners while the Left prefers to blame rich foreigners but at the end of the day they at least agree that it is never the voters themselves who are to blame.
Weird, I know the left likes to blame the rich, but I’ve never seen specifically rich foreigners.
Also for real how can the voters (ie the average citizen) be the problem? The average citizen has no money and no political or regulatory power. The average citizen just exists in a system they have no control over and responds to incentives. Hoping that en mass people won’t do that is like politely asking a river to move.
>> I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians)
> Yeah the Right loves to blame poor foreigners while the Left prefers to blame rich foreigners but at the end of the day they at least agree that it is never the voters themselves who are to blame.
Generally speaking I think you're mostly correct, but there are exceptions, and nuances.
I am one of the odd outliers who believes that much of the blame lies with voters, but at the same time it is a bit of a chicken and egg problem. It's ~true that voters "should" "vote for better politicians", but consider:
- what if the particular flavour of democracy that we practice does not make this possible?
- what if the public's ability to make optimal decisions is a function of the quality of education they received, which is largely a consequence of government policy (and other things, like culture)?
Take HN for example: observe how many comments there are in this subthread (or the overall thread) asserting that "The problem is X", as if the causality behind the situation is due to a single variable. Might this error be to some degree (perhaps even a large degree) a consequence of causality (philosophy, epistemology, logic, etc) not being first class subjects in school (and culture/society), on par with science, math, and language?
And if one's answer to this question is something along the lines of "Oh, they didn't mean that literally, they were just speaking loosely, or expressing their opinion, etc", then I ask: why is it that we have ~culturally normalized (if not worse) speaking (and I would say: thinking) so inaccurately and imprecisely about so many matters that are extremely important, be it housing prices, immigration, war, politics, you name it? Might it be possible that we (~everyone) are "doing it wrong", at massive scale?
If I was forced to nominate a single variable that lies behind not just this problem, but perhaps ~all problems (mostly excluding natural disasters), it would be the inability of the population of this planet to think and speak/listen/conceptualize/understand at a level that is adequate to rise above the local optima we find ourselves stuck in (note: there's substantial unaddressed complexity here: some things are improving on a relative basis, etc - I am speaking in an absolute sense, which includes that which is beyond our current knowledge, or ability to know).
There are many likely reasons for the explosion in housing prices - but we can't pretend that immigration isn't one of them. A solution will likely need to be multi-factored, but reducing demand by reducing immigration will probably have to be part of that solution. To ignore that is to limit how effective your measures in reducing the cost of housing can be.
I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians) to redirect attention from the much more likely cause - massive investments made by hedge funds, private capital, REITs which does not appear to be addressed at all?
Sorry friend, but you're wrong. First, the issue of foreign ownership in the real estate market has already been studied. So, they have evidence supporting the moratorium. And second, this budget also announced that they are going to investigate the role of hedge funds, private capital, REITs, etc. Early actions could be announced before the end of the year.
You need to provide evidence for this assertion. I've never seen any kind of analysis of this problem produce a clear signal that supports the idea that foreign ownership is a primary factor.
> I don’t know the specifics on Canadian real estate market and the specifics of the problems there, but based on my understanding of the problems facing your neighbors to the south - I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians) to redirect attention from the much more likely cause - massive investments made by hedge funds, private capital, REITs which does not appear to be addressed at all?
Can you not do this and also seek to identify hedge funds, private capital, REITs, and other entities which may be more difficult to regulate at a later time? Maybe this first piece of legislation is the quick win?
Are you saying that foreigners who do not reside at all in Canada should be able to buy a primary home in Canada? Because that's what this bill is preventing. If you're a "foreigner" it's not relevant so long as you're actually a resident of Canada.
> Can you not do this and also seek to identify hedge funds, private capital, REITs, and other entities which may be more difficult to regulate at a later time? Maybe this first piece of legislation is the quick win?
You can, and I specifically pointed out that I generally agree with what is being proposed, and certainly hope that it isn’t an attempt at diversion by throwing out the usual scapegoat.
Action for home affordability needs to be taken, but I’m always weary of simply blaming foreigners, especially in Vancouver where there was always (since the 1800s) a lot of ethnically Chinese people. Way too many people use “foreigners” as a dog whistle term for “Chinese” and include Chinese Canadian ownership but exclude American foreign ownership (which is quite high if I remember correctly). I recall one controversial article from about 5 years ago that investigated “foreign ownership” by checking records for Chinese-sounding names since at the time citizenship wasn’t publicly available in real estate records. Clearly the wrong way to check, given that there are hundreds of thousands of ethnically Chinese Canadian people in the Vancouver area.
> I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners”
As a Canadian, I agree with this.
Part of the problem is that the federal govt doesn't have jurisdiction over the actually issues causing the problem. I _think_ the provinces own it but delegate it to the cities. But for some reason, this isn't an issue in those elections. BC had an election less than a year ago and housing wasn't an issue outside of Reddit. And BC has the second worse housing market in the country (Vancouver).
EDIT: Actually, that BC election was a year and a half ago. I even looked that up before posting and got it wrong. The covid time warp strikes again.
I live in Canada. In Canada foreign investment is a massive problem. This is NOT the only problem. But it is a big part of the problem.
And arguably housing crisis in Canada started with foreign investment. Now domestic players and instituitional investors are also involved in housing market. Together there are enough parties involved not to let housing prices go down.
The problem with “capital” vs “foreign individuals looking to buy a home” in my mind - is that capital will find a way to camouflage as domestic capital if foreign capital is no longer allowed. It will move the money, register a subsidiary etc and buy a billion worth of housing while we are celebrating that a foreign family couldn’t buy a vacation home.
I am sure banning that wealthy family from China will do “something” to help alleviate the crisis, but I think putting restrictions on capital being used to buy up homes that aren’t primary-residence should be a priority and will have much larger effect.
And to be clear - as it stands with the situation in real estate being what it is right now, I am in favor of massive taxes on real estate investments that are to be used to finance affordable housing to be made available exclusively to first-time buyers and primary residents.
I mean it's a few percent in some cities. Is it a factor? Sure. Is the fact that housing debt is higher than it's ever been for Canadians themselves more important? Yes.
I hear about people pulling out equity in the form of HELOC's to put a downpayment on another home. That's a pretty big chunk of Canadian "investors". And that should scare the shit out of anyone considering that was a major problem in 2008 in the US. People vastly over-leveraging themselves under the assumption that housing only goes up.
Others who have replied offered their point of view. Some agreed, some disagreed. You, though, shouldn’t have even bothered. Next time hit that downvote button and move on.
You nailed it. You don't need to be in the Canadian real estate to realize that the most people coming to open houses are in fact local Canadians (also from other provinces) looking to move to the warmest part of the country or add another property or two to their portfolio.
The landlords that run the real estate holdings companies are mostly White. They buy up the properties, apartments, condos when they are cheap with the sole purpose of renting them out. Guess who influences local media and politicians. It's not some rich Chinese communist fu er dai they could care less.
The fact is that Canada isn't the all shining socialist paradise that outsiders make out to be. In fact places like Vancouver almost gets a pass when race issues are mentioned because its automatically chalked up as a "social liberal progressive city" compared to other American cities that often get thrown into the "shithole conservative counties"
> massive investments made by hedge funds, private capital, REITs which does not appear to be addressed at all?
If corporations buying houses was actually affecting the purchase market prices, then we'd see an equal effect on rental prices going down. A corporation can't live in a house, so they'd be renting it out. If these evvvill corporations were keeping houses vacant just to screw over regular hard working folks, resulting in no effect on the rental market prices, then we'd see it in the vacancy stats. But that's never actually mentioned by housing conspiracy theorists because the vacancy stats show that the areas with highest prices have extremely low vacancy rates, because demand for housing is so much higher than supply, because not enough housing has been built.
In Toronto alone ~40% of new homes being built are being scooped up by investors that obviously have more cash on hand to pay above asking price. With interest rates so low and demand so high, why would they not be driving up the price? It works in their favor.
How on earth would higher home sale prices by corporations bidding housing up push rent down? It has the exact opposite effect, rents go up if a property costs more..
This is a total and complete non sequitur. No reason rental prices would go down. I just looked at materials of one such company touting 50% increases.
> Freeland will introduce legislation that allows Canadians under the age of 40 to save as much as C$40,000 ($31,900) for a home downpayment within a new tax-exempt vehicle, the person said.
I'm not an economist but this seems pretty dumb? To the extent that it helps someone afford a home that they can save tax-free for it, the same is true of some of the people they're bidding against, driving up the price they ultimately pay for it. The government is just transferring their own future tax revenue to people who own homes, not people in the market for them.
It seems that governments have a reflex of dealing with a supply crisis by showering money on the demand side (see also: gas tax decreases, higher education subsidies, etc.), which just drives up prices further.
Agreed, this should be a tax code line with a small number of ORed entry conditions.
- OR - at least one of
* First time home buyer
* Total homes owned plus being purchased will remain at one after the transaction is completed, and net-worth is under 20% the cost of a median home within the home's metro area.
* Qualified for a federal benefits program excluded from the upper 60% of society
The phrasing on the last one is specific, it's the wording required to select for economically disadvantaged individuals in a mechanically testable way. The exact number might be tweaked, this is just a back of the napkin ballpark. Other entry qualifiers can be added to the list. The second allows someone to move homes and if they need the benefit, not be locked out of assistance moving to an economically 'hotter' area that might have better jobs.
Just so you don't get angry for no reason: the actual policy says nothing about a specific age. You could be 60 and use it to buy a house.
It also doesn't have to be your first one. If you had a house than sold it and lived in an apartment for 4 years you are eligible again. If you own your house but your spouse doesn't they can use this for your next house.
> the same is true of some of the people they're bidding against
I think you're assuming that everyone bidding will be a first time home buyer under 40 years old. While that may be the bulk of buyers, there are also many investors also in the mix who are buying up houses to rent/flip them.
A house goes to the highest bidder, so if you decrease the cost of capital for some participants you increase the price for everyone. I agree that it’s not a perfect transfer, but I suspect it’s a pretty good one, on the assumption that first-time buyers represent most of the capital entering the system. E.g. someone buying a first house for $500k puts $500k in the market, whereas someone moving from a $500k house to a $600k house is only bringing $100k of new capital into the system.
I realize that people also leave the system, so maybe my logic is flawed.
We have a similar scheme in the UK, where you can save £4000/yr and get a 25% top-up from the government if you use the pot to buy your first home. Everything invested in this scheme is tax free: income and growth.
You're completely right, it just drives up prices further... but they're vote winning policies and using these pots makes conveyencers a nice profit.
LISA specifically mentions that it has to be your first house anywhere in the world, so it is targeted at home ownership. People speculating shouldn't be able to take advantage of this.
Though LISA is pretty much useless in London. Good luck finding even a good 1 BHK under 450k inside Zone 4
It is not actually possible to increase the supply of good suburbia. The virtue of a suburban home is to be on a large plot of land with low-intensity neighbors and convenient vehicle access to places, and this genuinely can’t scale very far. Even if you have infinitely much land, you will never build enough roads or lanes.
We can increase the supply of other things which are also called “housing” but are fundamentally different products, and not what most people in North America are talking about when they talk about wanting to buy or own homes.
> It is not actually possible to increase the supply of good suburbia.
Dallas seems to be doing it by organically creating a multi-core urban metropolis. Infinite suburbia only fails if you assume that each metropolitan area can only have a single urban core.
In other words, people will be forced to weigh options and tradeoffs, just like they have to do with everything else. If you want a SFH very near to an urban core, then you'll have to pay what that's actually worth relative to alternative uses for that land.
One large reason for high priced real estate in some places is the geographically uneven distribution of disposable income. Historically, people moved to cities because the jobs were there (i.e., physical factories that had to exchange physical goods).
No commuting for work = much less need for roads. If commuting and working in a centralized location is viewed as exceptional rather than normal, society could easily switch to lower density living, which is highly beneficial to most mammalian species (reduced stress, reduced aggression).
If the most lucrative information-age jobs (tech, finance) become remote-first (or better, remote-only) and dominated by shape rotators, people will be able to move away from cities (and take the money with them). Only wordcels, who grift on social interactions, really need high density humanity to thrive.
You actually could, basically, if you really wanted to do it. If there was an efficient high-speed corridor into the major metro area, suburbs could be much further out along it and it'd still work out well.
It is dumb and will likely add fuel to the fire and the politicians know this. Canada has like a 68% home ownership rate meaning actually doing something to lower housing prices would be political suicide.
Yes, but crucially it's actually land that's valuable, not the housing that sits on it. The worry that allowing more density will tank home values is misguided. Land prices will keep going up as long as the land underneath the houses remains desirable. In fact, upzoning means more allowed uses, which means higher land values, which means more money for landowners.
There are two implications of this: 1) NIMBYs need to realize that allowing more housing isn't going to tank prices; if you're worried about prices tanking, you need not be; 2) YIMBYs need to realize that NIMBYs aren't exclusively motivated by greed. When they tell you that they don't want their neighborhood to densify they actually mean it. It's not covering for racism or greed. People genuinely don't want their neighborhoods to change.
There's hope in this. If the state forces upzoning, then people are going to grumble about it. And some of them won't be happy no matter what. But the average homeowner isn't going to be that upset about it once they realize there's money to be made.
I don't think that's totally right. The idea is to give Canadians a leg up vs. foreign buyers (once the immediate 2 year foreign buyer ban expires, I assume). If your operating model is that foreign bidders are driving up the price and winning the marginal bid, then this is effectively a subsidy to allow Canadians to compete with the foreigners. Yes it will drive prices a bit higher and thus transfer more wealth to sellers. But the mix should be different, with more ownership ending up with Canadian purchasers than foreign ones (vs. today).
It's an exersize in shifting money from relatively lower income renters who will never have enough money for a downpayment and who will never own a home, toward the relatively rich on the cusp of being able to buy.
Of course the main winner here is the home builder.
Giving individual citizens/permanent residents a one time benefit to buy a house will at least give them an advantage over second home buyers or foreign speculators. It would definitely drive prices up (to be honest, tax exempt $31,900 isn't enough to do much though), but it should be a net win for those that have it vs. those that don't.
A more extreme version of this is the public housing Singapore sells at a subsidy to each citizen (as long as they get married, and there is still a waiting list since supply can't keep up with the benefit).
The data is public, less than 5% of homes are going to foreigners. Don't see how they even accomplish banning foreigners when there are free trade and free investment agreements. The problem is that bonds have negative yields. Retirement funds are forced into buying real estate, because housing is a safe investment right?
The federal government knows this and knows they can't do anything. If they targeted retirement funds like they should... what happens? Housing bubble pops, retirement funds lose tons of money. They are busy attacking the oil industry because they know they cant extract anything out of Finance, Real Estate, or insurance.
5% isn't a lot, but it could have a disproportionate impact.
Housing isn't a federal responsibility, so the provinces are more to blame for the crisis. Ontario just totally whiffed implementing a report on how to reduce housing costs, so I expect the problem to continue.
The bigger issue is the multitude of exceptions. A ban on foreign buyers except for permanent residents, students, and recreational properties isn't much of a ban at all. Canadian permanent residency is incredibly easy to obtain, and students are frequently used as straw purchasers for their foreign parents (just look at the number of UBC students who own multimillion dollar homes despite having zero income). It also doesn't address foreign citizens buying through Canadian shell companies, a strategy used in Vancouver to avoid their foreign buyer tax.
I was about to post the same comment: price is set at the margin.
Also, if you look at the 5% in different ways, it becomes more significant. In your neighbourhood across Canada, 1 in 20 of the houses is owned by a foreigner. Now if you concentrate that in to Vancouver and Toronto... lets say 1 in 10 is owned by a foreigner... really starting to have an impact.
The demand for the housing drives the price, modulo short-term speculation. The investor buys it with an eye towards the cash-flow from renting, and by definition, it's rented to someone living there.
I don't know how real estate market works in Canada, but I can totally see how 5% of buyers could mess up the market in the U.S..
House pricing is set based on 'comps' (comparable homes and the price they sold for). That means that a small percentage of buyers can essentially bump (initial) pricing for all homes.
The problems of the housing market is the exact same as any other expensive city in the US or anywhere else. Home-owners with local power messing with zoning laws to limit supply and boost the price of their homes. It's always a supply issue.
>I don't know how real estate market works in Canada, but I can totally see how 5% of buyers could mess up the market in the U.S..
5% foreigner owned is not big enough to have an appreciable difference. How about funds buying real estate? What used to be around 10% went to 20% in 2020 and then went to 40% in 2021. Nobody will buy negative yielding bonds. It only leaves a couple other options.
That's a great video, and I agree with the points made - essentially that affordability is mostly a supply problem. That said, I don't think your parent was blaming foreigners, but just noting that even if foreign buyers made up a small percentage of the total, reducing that demand could still impact prices.
>It's amazing to me how some people are so entrenched in believing that foreigners are to blame that they will perform such mental gymnastics.
Imagine you're a boomer who is about to retire. You told your advisor to go into safe investments but you're not going into savings accounts, money market, or bonds. Maybe you pick up some corporate bonds? But that's higher risk. Once you eliminate all these negative yielding options... you're really just left with real estate.
Then you look at Canada's economic breakdown. Oil/Gas industry is under constant attack by the federal government. Manufacturing in quebec and ontario has practically died.
The only things holding Canada together economically is Finance, Insurance, and Real Estate. FIRE. The only thing holding Canada's economy from being in a depression is banks and insurance on over priced real estate.
As a politician, you dont dare touch the housing market. If that explodes, you take the blame AND you have to actually fix the economy? lol!
5% can do a lot of damage considering how prices are set based on "comps", and the fact that a lot of this foreign capital comes from illicit sources, and they are more than willing to pay above market rate to secure the purchase.
Canada has always been a paradise for rich crooks worldwide, and government has always chosen to turn a blind eye.
As far as I know, that oft-cited 5% number does not include "students" whose parents abroad suddenly gift them > $1 million in cash to buy one, two, or more properties.
Does the 5% stat include those kinds of situations, in which on paper it's not a "foreign investor" buying the property, but in reality it's just that?
In a real estate market (ie slow moving, most inventory turns over after several years) changing the demand of 5% of the buyers could have a massive impact.
Liberal governments will do everything but the one thing that will solve the problem: make it much, much easier to actually build more housing. Everything else is just pointless busywork.
This is not really guaranteed to solve the problem. It will only be a part of the solution.
In many countries, including Europe, new properties are quickly snatched by investment companies that have much easier access to capital than private individuals and can easily afford to pay above market prices. People shouldn’t really have to compete with companies or “investors” on the housing market.
>In many countries, including Europe, new properties are quickly snatched by investment
Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.
Investors in real estate make money by either selling or renting; either way, more homes still means lower prices. Keep providing more supply until it meets demand.
It shouldn't matter all that much. Rented homes are an excellent (not perfect but very close) substitute for purchased homes.
People don't like to rent because of instability or unpredictability of pricing. But a large and growing long term rental market where it's straightforward to find a new place and nobody has an incentive to kick you out or raise your rent is really just fine.
You might be thinking, right but if you rent you'd be giving up the ability to make all that money from appreciation that homebuyers get BUT THAT IS ACTUALLY THE PROBLEM WITH THE ENTIRE SYSTEM because you can't have affordable housing and also have housing as a guaranteed investment that always builds wealth the two concepts are fundamentally incompatible with each other and when you get that you're really starting to understand the problem.
I mean... it has to eventually. If my country has a population of 50 million and I build 800 million homes, will investors keep buying them all at above market rates (read: more than I spent building them)? Then I can build 100 million more and keep collecting infinite money?
> This is not really guaranteed to solve the problem.
In Europe, new properties are not readily snatched up. Just look at Italy.
A growing supply that outpaces demand is literally the only solution. Every other solution will cause a black market.
The 100 year old building I live in would never have been approved under current requirements; the approval meetings would be going in circles about how it has too many units, not enough parking, not enough green space etc.
Not sure if you mean "liberal" or "Liberal" but in BC for instance the provincial government is considering overriding municipalities that are not approving enough residential development. I don't know how much the federal government can do here? I'd appreciate any insight.
Isn't Toronto a pretty unique case in North America? If I understand this [1] correctly, then they're 4x the next largest city in terms of construction cranes. I thought I remembered reading that part of the reason why is that there's a regulation that developers use that let's them construct condo towers with substantially less regulatory overhead, but I can't seem to find it.
This seems like the only real, market based solution. Various taxes that could be implemented (or bans like from this article) will either have no effect or unforeseen consequences.
The market, right now, is constrained by regulations. Adding more regulations is unlikely to fix things.
Is it really easy to build more housing in a place like downtown Bozeman? Like if a developer wants to buy up a block of single family homes and replace it with a large condo building, can they do that?
> Liberal governments will do everything but the one thing that will solve the problem
Construction permitting is mainly a municipal issue, with a bit of provincial thrown in there. Municipal representatives are not aligned with particular parties, and provinces are mostly not governed by Liberals at the moment (7 conservative, 2 Liberal, 2 independent, 1 NDP, 1 Saskatchewan "we aren't conservative, pinky swear!" Party.
The federal Liberals don't have much control over the situation (though there are other specific actions I think they should take)
Just like building roads can't reduce traffic, building houses can't either. It will just cause induced demand as more people will go to that area to live. Instead we should encourage people to carpool - live as roommates, or have small apartments, instead of each person getting their own single family home.
If you have all the cash you need and a bare lot in Vancouver with services set up, you're still two years away from getting shovels in the ground. The permitting is straight out of a Joseph Heller novel.
It's only considered a provincial responsibility now because the Fed Liberals of the 1990s completely got out of housing involvement with their big austerity budgets of the era.
The Federal government was deeply involved in funding both for-profit and non-profit housing in the 1970s, the last era where Canada built a lot of housing.
It is full loopholes like people with 10 year visas, work visas, student visas are exempt. We have University students with $31million Vancouver mansions in their name. Our tax system is screwy where we have very low property taxes and high employment tax. The whole west side of Vancouver claims poverty level incomes on average (like qualifies for government tax rebates bad), yet it is the most expensive land in the country.
Astronaut families are a problem and I feel leach on the society. Paying very low taxes, using all the social services, yet making income outside of the country so not paying anything.
I’m mostly familiar with Vancouver since my wife has relatives there. About half a dozen years ago they imposed a 15% tax on foreign real estate investors. I heard 2015 figures suggesting foreign Chinese investors accounted for one third of the $29 billion market in 2015. Vancouver real estate prices had been rising a lot for a long time but I think they felt the foreign investors exacerbated the problem for locals, especially since a lot of investors would just buy homes and no one would live in them.
Well it's complicated. Foreign investors would be buying mansions that locals couldn't afford anyways. And the locals are just bidding against themselves for the cheaper stuff armed with low interest rates and bank of Ma and Pa. My statistic says that only 20% of RE is foreign owned.
That's not complicated, it's a second negative externality. Foreigners buying and not-occupying large amounts of valuable real estates drives up the cost of new housing, with no benefit the city, even if you squint really hard. A lack of new housing means high prices for the existing housing that the locals are "just bidding against themselves" on. It's a practice that should be taxed into oblivion.
If developers are building "mansions" entirely for a foreign market, that is a very bad for local housing. It means that those houses actually purely speculation vehicles.
Also, "only" 20%? That's a massive number for housing.
> Foreign investors would be buying mansions that locals couldn't afford anyways.
If nobody is around to buy that mansion, it would eventually be sold to a developer who either turns it into apartments, or tears it down and builds an apartment building there. I've seen this happen numerous times in my neighborhood.
Well my anecdotal evidence from certain real estate agent says otherwise. She told me she would regularly show foreign buyers around new low/high rise developments only to have them buy entire floors in the Vancouver area. There was once where she had a foreign buyer who didn't know what he wanted. She showed him around at houses, condos, etc... and got no visual indicators he was happy with anything. When she was done and finally asked him if there was any he was happy with he said he would take them all. All foreign buyers she worked with were from China (as she spoke fluent mandarin).
Readit News
This is such a huge deal. Anyone who has had to go through the process of buying a home through a bidding war knows how unfair and one-sided this process is. It take a high-pressure emotional situation, and gives all of the information to one side (the sellers), while leaving the buyer stuck guessing at what the real price for the house is supposed to be. An absolutely horrible process that should be banned. Banning this is such a simple reform. I sincerely hope it happens, though I doubt it it will.
Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically.
While you're at it, you could go after other wildly popular policies that lead to high housing prices, like the primary homeowner capital gains tax exemption (probably, by value, the biggest tax dodge in the industrialized world), and Canadian cities' extremely low property tax rates (0.3% of assessed value in Vancouver, for example).
No, they're fighting market inefficiency. A free market requires accurate and timely information to be efficient. This is literally people putting constraints on the market for what they are selling so the information is not available to one side, and the price is inflated.
A rational actor should walk away from a system like this, but if that's all that's available around you because of scarcity, you're forced to work at a disadvantage.
Banning this is akin to banning other anticomptitive behavior, such as collusion and monopolies. That is, it's up to the government to decide whether the harm outweighs the problems regulation introduces (regulation always introduces some level of friction and problems, you just hope to minimize them and maximize the benefits it brings) and is thus worth pursuing.
I'm all for building more houses in cities/high demand areas, but doesn't Canada only have a population growth rate of around 1%/yr? It seems like you could easily build your way past that without giving up the advantages of immigration and a little population growth.
Likewise if you dont know who you're bidding against, how do you even know the bidder is even real (foreign or not)? Transparency is good thing.
While there may be some "scarcity" not having full transparency and realtors not in alignment with their own clients needs is a step in the right direction.
(I use scare quotes here because while I know we're not building enough but the current market has a fair share of retail speculation, institutional investors inflating prices, and homes held as purely places to mark money(non-owner occupied). Scarcity is real and building does need to happen, but thats slow and expensive. Millions of homes are kept empty or as poor speculative investments and thats a problem)
You could just stop there, it’s clear where your priorities lie. I’m not Canadian (and don’t worry I’m not emigrating), but I welcome a “crazy high” 1% population immigration rate and I don’t see a conflict with that and reasonable housing policy. Many major cities already see this kind of growth regardless of where people are moving from. We should be able to house and sustain that growth.
Limits on immigration don’t slow the growth, they just satisfy anti immigration attitudes for a while.
One of the problems is that once people buy into the system, their entire life's savings (plus often 4x more via leverage) is tied up in the house and the price of the house. At that point, most dont want more development, because they lose their life savings if home prices go down.
Each person entering this horrible system is forced to perpetuate it, or lose it all.
If the country can't figure out how to deal with a population growth of ~1%/year, the problem is not the growth, the problem is somewhere else.
In the last year, we've ended up #2 in 6 bidding wars (as disclosed by the listing agents) in one particular area of the GTA. In each case we reached our absolute max and wouldn't have paid any more.
Several times we lost by $100-200k, and once by $250k. These overpayments set new price benchmarks for the area which became sticky. To continue to be competitive, we had to make hard sacrifices to increase our budget throughout the year.
The fact that houses continued to move at the prices determined by these over-payments indicates there are some buyers at the higher prices. However, the market is very thin and the pace of price growth in this speculative market would've been slowed with open bidding.
Beyond the blind bidding issue, I don't know why people focus on foreign and large corporate buyers. Yes, they're scary because they represent potentially large sources of demand. But are they actually buying a large percentage of the homes? No. It's the smaller investors who speculatively bought 40% of homes last fall.
But we should definitely protect mom and pop investors, such as our housing minister wink
Real solution? Reduce the incentive for speculation among these groups by treating all gains on non-primary residences as income.
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Not to mention the ridiculous commission fees for realtors, and their well-known practice of "steering" people away from homes with lower commission or prices. A practice that is technically illegal, but not enforced.
But because real estate agents are middlemen in the process, there's an incentive in a hot market to not act as an honest broker.
When the market isn't "hot", a realtor has an interest to move quickly. When the market is hot, they have incentive to move their own listings so they get both sides of the commission. In my case circa 2005, I bid $50k over list via the broker who was managing my home sale. The selling broker "lost" the bid somehow and sold it for $20k over listing price.
7% of 20,000 is close to 3% of 50,000. But... I came to learn later that the selling agent targeted a particular religious community hard, and did a hard sell on insurance, inspection, and even attorneys to buyers, and frequently yielded another 3-5% based on "spiffs" from those providers.
All of these inefficiencies and bad behavior add up and inflate prices.
Where there is money and little oversight there is bound to be fraud. It grinds my gears to think about this because I bought a house and the escalation clause went to the maximum. Now do you think that was purely coincidence?
In such a case, I’d predict a lot of partnerships (or whatever the lowest cost legal structure that isn’t traceable over time if not activated) would be bidding for houses. My bid as “123 Main St Partners” can be as public as you want I suppose.
Almost everything mentioned in the various comments here is a scapegoat. These all might contribute a little to the escalating prices at the margins, but they are not the root cause.
The root cause is that many capitalist societies have decided that purchasing a house is the most expensive and important investment most people will make in their lifetime. Therefore these societies gradually shape their policies to ensuring these investments continue to increase or else there are widespread repercussions. The end result is we have collectively refused to build enough housing to keep prices stable or decreasing. The prices need to go up. I don't understand why no one is willing to admit this.
All the other problems originate from this. The reason foreigners want to buy homes as speculation or a place to park their money is because governments are committed to ensuring that housing is a safe and profitable investment. It all comes back to us deciding that a basic human need should also be an investment that always is increasing in value.
Steering is a problem.
In a competitive market, filled with buyers of questionable sophistication, i.e. residential real estate, everyone gets to the bottom of maximally-waived, minimal-safeguards pretty quickly to make a competitive offer. And ultimately, that isn't good for anyone, sellers included.
Better to explicitly prohibit the stupidest behavior and require some safeguards. E.g. non-waivable 72 hour cooling off period. Then everyone can compete within those bounds however they want.
Peace-of-mind is worth a lot. Especially if the buyer is sophisticated, I might take a lower offer if it has the right waivers.
Is it though? I chatted with someone from Australia which has open bidding and you know what .. houses still went way over reserve. At the end of the day, if you have 20+ offers on a house, you're not getting that house without destroying your budget, no matter how you set up the bid system.
The common sense change I wanted to see implemented was to prevent the waiving of a home inspection as a condition of purchase.
I also want to see mandatory home inspection, seems common sense.
It's a very manipulated and manipulable metric.
Just bring your inspector along to a showing or open house, etc. Owners won’t even be there.
It baffles me how this industry has not yet been disrupted by an outsider, like Uber did with taxis. I still remember when taxi licenses costed a fortune, and you had the exact same leeches exploiting it. They were seen as an investment in some cities, like NYC.
I know there are useless regulations that keep these agents being needed, but so there were with taxis as well, and Uber did not give a crap.
In the case of Uber, supply (people who own vehicles) was effectively unlimited and independent.
Why sellers want to pay tens of thousands in commission in a bidding war environment is a mystery to me.
We're currently hunting for houses, and lost out on a few listings because we didn't want to overbid. When the sold price was revealed, SO many times we'd think DAMN, we'd prob pay $10-$25K on top of that to get it had we known..
Blinds bids prevent bidding wars. They use them in Scotland. Not sure if buyer or seller is better off using them.
I don’t see how a blind system can take those factors into account to algorithmically select a single winning bid.
There's a theorem an auction design that says that, under some vaguely reasonable assumptions about bidder information, it doesn't matter what form you use for the auction. Open auction, sealed auction, even second price auction should all give the same winner and same final price: https://en.wikipedia.org/wiki/Vickrey_auction#:~:text=Revenu...
Though psychology comes into play in a bidding war, at least it's happening because the asset for sale is highly desired. It's efficient.
And BTW I also bought a house before (no wonder, since I am not that handy, to sell a house I had to buy it first ;) - and if you hire RE agent, which at least in the US most people do, and they are worth anything, they'd get you at least the rough information on how high you should go, and sometimes even the exact numbers. There were situations where we knew exactly how high the highest bid is, and more when we had decent idea if not exact figure. So it wasn't exactly blind.
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Probably, less than people think. Sealed bid auctions do not increase revenue to the seller, according to auction theory.
https://en.wikipedia.org/wiki/Revenue_equivalence
> gives all of the information to one side (the sellers)
Well, not all the information; just what other people are bidding. But all that matters to the bidder is that that other bidders do not have access to more information.
The fact that someone's bid is higher than yours, is not caused by its temporary secrecy.
Auction theory has so many assumptions that it really can’t be applied to buying a home. The link above assumes the highest bidder knows[1] the highest price the underbidder would pay, which is extremely silly. Apart from the fact that if you know the highest price of another bidder, then the seller also probably knows your highest price, and the seller can just ask for the highest possible price, duhhhh!
Bidding (auction or blind) is used precisely because the prices are not known.
Personally I have been involved with enough home auctions and blind bids to know that there are huge information asymmetries or uncertainties. When you lack information, sometimes you need to make your best bid, and you might value a property a lot higher than the underbidder.
I would like to see more protection against lemon markets, but realistically I can’t think of a fair way to enforce that. Banks and insurance protect some people against doing stupid things.
[1] First price auction: “if each player bids such that they bid the expected value of second highest bid”
- Make home inspections an unwaivable right.
- Eliminate blind bidding
- Fully open MLS data
- Heavily regulate (specifically buyers') real estate agents to eliminate much of the corrupt practices.
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If you want open bid/ask, there is always the stock/futures/options markets.
There are also tenders, which I don’t know much about.
And I have seen auctions where they set the reserve at a ridiculously high amount, and then negotiate with the highest bidder. A few years ago, one place I was underbidder at $280k (for something that I thought should go for about $250k), final bid was $290k, then vendor negotiated that bidder up to $350k! Another I was underbidder at $190k, final bidder was at $200k, then vendor negotiated them up to $250k.
The dirtiest trick that real estate agents do is to convince/pressure vendors to bring the date of sale forward. Sale goes through at a lower price, agent does less work and turns over their properties more quickly (which vastly enhances the agents yearly profits).
New Zealand restricted sales to foreign buyers in 2018, to prevent ballooning property prices for New Zealanders. Also rich foreigners buying large farms and prime coastal real estate was unpopular with most of the voting public?
Edit: when the real estate market was burning hot, lots of sales were deadline (blind). I think deadline sales mean that the winner often has bid their highest price (I certainly did for my home). In auctions you often pay just a little bit over the underbidder, even if your top dollar might have been potentially a lot higher. When selling you mostly care about that one person who really loves your place and that is willing to, and can afford to, pay well over market price for it. All other potential buyers are just wasting time.
Dead Comment
We need to take speculation out of the marketplace.
I'd also like to see a ban on corporations purchasing private homes and significant tax increases on non principle residences.
The issue becomes people with existing outstanding mortgages. If we considerably reduce house values, would outstanding mortgages need to be reduced pro-rata? Who would 'eat' that cost? The government? The bank?
Canadian Real Estate is pretty clearly in bubble territory. Something can happen now or later, but it only gets worse with time.
Let's ignore the property itself, which is a depreciating asset which was built and can be improved through manual labor.
That land is going to stay the same no matter how much you pay. Paying more for the same plot of land doesn't make it better. You don't get a bigger plot or a plot of better quality by spending more on the land. The land isn't wealth, it's the community around the land that gives it value. If you have demographic problems, your land is going to be worthless because the community is too old and shrinking.
Betting on ever growing populations is a pyramid scheme by the way.
Just in case, I do own the house.
Thought I do agree that a non-primary-resident investment, whether from citizens, foreigners, or capital should be greatly limited overall and these rules should only loosen to direct investment towards areas that are in dire need of an influx of capital for redevelopment. That is - if it’s not distressed, and it’s not going to be your primary residence - GTFO, you should be last in line to buy.
And I say that as former landlord. I just believe that if I was looking to make some money - I could probably do just fine under these conditions. I don’t see an issue of buying a distressed property needing a rehab, and I think doing so benefits everyone.
I am getting real tired of society getting ever more dystopian just so that someone can make a buck.
https://www.fool.com/investing/stock-market/market-sectors/r...
I can't recommend this article enough on that subject:
https://www.vox.com/22524829/wall-street-housing-market-blac...
"The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach."
If you view housing and ownership of your domicile as something that should be accessible to people, then housing necessarily cannot be viewed as an investment vehicle and large corporations, REITs, wallstreet, etc. need to be excluded so that more supply can be available to "correct" buyers.
Limiting these groups does help on the supply-side. While it may not be the root cause, it's far better than showering the demand-side with cash like tax breaks for first-time home buyers.
Perfect is the enemy of good.
Also, institutional investors do have a reputation for inciting bubbles and that possibility absolutely needs to be carefully scrutinized, particularly for something as essential and socially compounding as housing.
Dead Comment
There is truth, however. The Wenzhou house wife property speculator trope has some basis in reality, and Chinese markets are already rife with massive speculation that has seeped into foreign markets popular for Chinese emigration (Toronto, Vancouver, and to a much lesser extent NYC and west cost American cities). You don't have to look hard to see the effects in Vancouver, where condo buildings and housing remain empty due to being seen as speculative assets.
American and some western European housing markets (e.g. UK) are a bit unique in that they haven't limited foreigners from buying and speculating on real estate. Whereas in China, many tier 1 and 2 cities have strict residency requirements before you can buy an apartment (but these also apply to Chinese via their hukou residency system).
The really affluent immigrant groups aren't buying multiple properties, they already have a great deal of income, and their properties are well outside most of what HN can afford and do not impact the condo market which is the most competitive, accessible and volatile.
They already taxed and stopped foreign buyers but the home prices in Vancouver keep going up as sales amongst local Canadians make up most of the volume.
Now they announce this virtue signaling to appease the other Canadians who can't afford homes but the problem will not change.
In fact, without outside capital constantly coming in, the Vancouver real estate market is not sustainable. It literally is just another game of musical chairs, it is the news of some Chinese communist elite member buying a mansion in West Vancouver that gets local Canadians eager to own properties.
I'm no stranger to the anti-asian sentiments in Vancouver, just head over to r/vancouver to see people regularly blame Asians for the fact that they can't afford to live there. In fact in the 80s, they blamed Japanese, 90s they blamed Hong Kongers, 2000s they blame Taiwan, Mainlanders.
It's really disgusting to see the blatant racism against one group that is normalized but not for others. It literally is the same attitude that people with anti-semitic views constantly deride Jews of their financial success that largely came out of merit.
I don’t really know whether you have read the rest of what I wrote or just got triggered by me seemingly defending “foreigners” and hit the Reply button.
I don’t mean to single you out specifically, there other posts that seem oddly similar.
Anyway, I think there’s a big distinction between immigrants (who cease to be immigrants at some point, how many years does it take in your opinion by the way? Who is more worthy of being helped to buy a home - a immigrant who came to the country 30 years ago, or a natural-born 25 year-old citizen?… but I digress.) and investment real estate that requires an intervention.
Let’s say we put a huge tax on all real estate that isn’t a primary residence, I am all for making it super unprofitable to hold so that rents cannot cover the expense - to force all these REITs having to fire-sale their holdings to people who want to live in them.
Yeah the Right loves to blame poor foreigners while the Left prefers to blame rich foreigners but at the end of the day they at least agree that it is never the voters themselves who are to blame.
Also for real how can the voters (ie the average citizen) be the problem? The average citizen has no money and no political or regulatory power. The average citizen just exists in a system they have no control over and responds to incentives. Hoping that en mass people won’t do that is like politely asking a river to move.
> Yeah the Right loves to blame poor foreigners while the Left prefers to blame rich foreigners but at the end of the day they at least agree that it is never the voters themselves who are to blame.
Generally speaking I think you're mostly correct, but there are exceptions, and nuances.
I am one of the odd outliers who believes that much of the blame lies with voters, but at the same time it is a bit of a chicken and egg problem. It's ~true that voters "should" "vote for better politicians", but consider:
- what if the particular flavour of democracy that we practice does not make this possible?
- what if the public's ability to make optimal decisions is a function of the quality of education they received, which is largely a consequence of government policy (and other things, like culture)?
Take HN for example: observe how many comments there are in this subthread (or the overall thread) asserting that "The problem is X", as if the causality behind the situation is due to a single variable. Might this error be to some degree (perhaps even a large degree) a consequence of causality (philosophy, epistemology, logic, etc) not being first class subjects in school (and culture/society), on par with science, math, and language?
And if one's answer to this question is something along the lines of "Oh, they didn't mean that literally, they were just speaking loosely, or expressing their opinion, etc", then I ask: why is it that we have ~culturally normalized (if not worse) speaking (and I would say: thinking) so inaccurately and imprecisely about so many matters that are extremely important, be it housing prices, immigration, war, politics, you name it? Might it be possible that we (~everyone) are "doing it wrong", at massive scale?
If I was forced to nominate a single variable that lies behind not just this problem, but perhaps ~all problems (mostly excluding natural disasters), it would be the inability of the population of this planet to think and speak/listen/conceptualize/understand at a level that is adequate to rise above the local optima we find ourselves stuck in (note: there's substantial unaddressed complexity here: some things are improving on a relative basis, etc - I am speaking in an absolute sense, which includes that which is beyond our current knowledge, or ability to know).
Sorry friend, but you're wrong. First, the issue of foreign ownership in the real estate market has already been studied. So, they have evidence supporting the moratorium. And second, this budget also announced that they are going to investigate the role of hedge funds, private capital, REITs, etc. Early actions could be announced before the end of the year.
Can you not do this and also seek to identify hedge funds, private capital, REITs, and other entities which may be more difficult to regulate at a later time? Maybe this first piece of legislation is the quick win?
Are you saying that foreigners who do not reside at all in Canada should be able to buy a primary home in Canada? Because that's what this bill is preventing. If you're a "foreigner" it's not relevant so long as you're actually a resident of Canada.
You can, and I specifically pointed out that I generally agree with what is being proposed, and certainly hope that it isn’t an attempt at diversion by throwing out the usual scapegoat.
As a Canadian, I agree with this.
Part of the problem is that the federal govt doesn't have jurisdiction over the actually issues causing the problem. I _think_ the provinces own it but delegate it to the cities. But for some reason, this isn't an issue in those elections. BC had an election less than a year ago and housing wasn't an issue outside of Reddit. And BC has the second worse housing market in the country (Vancouver).
EDIT: Actually, that BC election was a year and a half ago. I even looked that up before posting and got it wrong. The covid time warp strikes again.
And arguably housing crisis in Canada started with foreign investment. Now domestic players and instituitional investors are also involved in housing market. Together there are enough parties involved not to let housing prices go down.
I am sure banning that wealthy family from China will do “something” to help alleviate the crisis, but I think putting restrictions on capital being used to buy up homes that aren’t primary-residence should be a priority and will have much larger effect.
And to be clear - as it stands with the situation in real estate being what it is right now, I am in favor of massive taxes on real estate investments that are to be used to finance affordable housing to be made available exclusively to first-time buyers and primary residents.
I hear about people pulling out equity in the form of HELOC's to put a downpayment on another home. That's a pretty big chunk of Canadian "investors". And that should scare the shit out of anyone considering that was a major problem in 2008 in the US. People vastly over-leveraging themselves under the assumption that housing only goes up.
The landlords that run the real estate holdings companies are mostly White. They buy up the properties, apartments, condos when they are cheap with the sole purpose of renting them out. Guess who influences local media and politicians. It's not some rich Chinese communist fu er dai they could care less.
The fact is that Canada isn't the all shining socialist paradise that outsiders make out to be. In fact places like Vancouver almost gets a pass when race issues are mentioned because its automatically chalked up as a "social liberal progressive city" compared to other American cities that often get thrown into the "shithole conservative counties"
I wouldn’t call it a paradise but it’s definitely communist
If corporations buying houses was actually affecting the purchase market prices, then we'd see an equal effect on rental prices going down. A corporation can't live in a house, so they'd be renting it out. If these evvvill corporations were keeping houses vacant just to screw over regular hard working folks, resulting in no effect on the rental market prices, then we'd see it in the vacancy stats. But that's never actually mentioned by housing conspiracy theorists because the vacancy stats show that the areas with highest prices have extremely low vacancy rates, because demand for housing is so much higher than supply, because not enough housing has been built.
Dead Comment
I'm not an economist but this seems pretty dumb? To the extent that it helps someone afford a home that they can save tax-free for it, the same is true of some of the people they're bidding against, driving up the price they ultimately pay for it. The government is just transferring their own future tax revenue to people who own homes, not people in the market for them.
It seems that governments have a reflex of dealing with a supply crisis by showering money on the demand side (see also: gas tax decreases, higher education subsidies, etc.), which just drives up prices further.
- OR - at least one of
* First time home buyer
* Total homes owned plus being purchased will remain at one after the transaction is completed, and net-worth is under 20% the cost of a median home within the home's metro area.
* Qualified for a federal benefits program excluded from the upper 60% of society
The phrasing on the last one is specific, it's the wording required to select for economically disadvantaged individuals in a mechanically testable way. The exact number might be tweaked, this is just a back of the napkin ballpark. Other entry qualifiers can be added to the list. The second allows someone to move homes and if they need the benefit, not be locked out of assistance moving to an economically 'hotter' area that might have better jobs.
This is just pandering to young people in Vancouver & Toronto.
Any tax savings will be passed on to owners in the form of higher prices.
The only thing you'll do is pay higher property taxes and insurance.
It also doesn't have to be your first one. If you had a house than sold it and lived in an apartment for 4 years you are eligible again. If you own your house but your spouse doesn't they can use this for your next house.
I think you're assuming that everyone bidding will be a first time home buyer under 40 years old. While that may be the bulk of buyers, there are also many investors also in the mix who are buying up houses to rent/flip them.
I realize that people also leave the system, so maybe my logic is flawed.
You're completely right, it just drives up prices further... but they're vote winning policies and using these pots makes conveyencers a nice profit.
LISA specifically mentions that it has to be your first house anywhere in the world, so it is targeted at home ownership. People speculating shouldn't be able to take advantage of this.
Though LISA is pretty much useless in London. Good luck finding even a good 1 BHK under 450k inside Zone 4
We can increase the supply of other things which are also called “housing” but are fundamentally different products, and not what most people in North America are talking about when they talk about wanting to buy or own homes.
Dallas seems to be doing it by organically creating a multi-core urban metropolis. Infinite suburbia only fails if you assume that each metropolitan area can only have a single urban core.
No commuting for work = much less need for roads. If commuting and working in a centralized location is viewed as exceptional rather than normal, society could easily switch to lower density living, which is highly beneficial to most mammalian species (reduced stress, reduced aggression).
If the most lucrative information-age jobs (tech, finance) become remote-first (or better, remote-only) and dominated by shape rotators, people will be able to move away from cities (and take the money with them). Only wordcels, who grift on social interactions, really need high density humanity to thrive.
There are two implications of this: 1) NIMBYs need to realize that allowing more housing isn't going to tank prices; if you're worried about prices tanking, you need not be; 2) YIMBYs need to realize that NIMBYs aren't exclusively motivated by greed. When they tell you that they don't want their neighborhood to densify they actually mean it. It's not covering for racism or greed. People genuinely don't want their neighborhoods to change.
There's hope in this. If the state forces upzoning, then people are going to grumble about it. And some of them won't be happy no matter what. But the average homeowner isn't going to be that upset about it once they realize there's money to be made.
It's an exersize in shifting money from relatively lower income renters who will never have enough money for a downpayment and who will never own a home, toward the relatively rich on the cusp of being able to buy.
Of course the main winner here is the home builder.
A more extreme version of this is the public housing Singapore sells at a subsidy to each citizen (as long as they get married, and there is still a waiting list since supply can't keep up with the benefit).
The federal government knows this and knows they can't do anything. If they targeted retirement funds like they should... what happens? Housing bubble pops, retirement funds lose tons of money. They are busy attacking the oil industry because they know they cant extract anything out of Finance, Real Estate, or insurance.
"supply 100, demand 99, price goes down. Supply 100, deman 101, price goes up."
5% isn't a lot, but it could have a disproportionate impact.
Housing isn't a federal responsibility, so the provinces are more to blame for the crisis. Ontario just totally whiffed implementing a report on how to reduce housing costs, so I expect the problem to continue.
Also, if you look at the 5% in different ways, it becomes more significant. In your neighbourhood across Canada, 1 in 20 of the houses is owned by a foreigner. Now if you concentrate that in to Vancouver and Toronto... lets say 1 in 10 is owned by a foreigner... really starting to have an impact.
House pricing is set based on 'comps' (comparable homes and the price they sold for). That means that a small percentage of buyers can essentially bump (initial) pricing for all homes.
https://www.youtube.com/watch?v=6OZJClSdZ28
5% foreigner owned is not big enough to have an appreciable difference. How about funds buying real estate? What used to be around 10% went to 20% in 2020 and then went to 40% in 2021. Nobody will buy negative yielding bonds. It only leaves a couple other options.
The Myth of 1.3 Million Vacant Investor Homes in Canada:
https://www.youtube.com/watch?v=evYOhpjMql0&t=6s
https://youtu.be/6OZJClSdZ28
Imagine you're a boomer who is about to retire. You told your advisor to go into safe investments but you're not going into savings accounts, money market, or bonds. Maybe you pick up some corporate bonds? But that's higher risk. Once you eliminate all these negative yielding options... you're really just left with real estate.
Then you look at Canada's economic breakdown. Oil/Gas industry is under constant attack by the federal government. Manufacturing in quebec and ontario has practically died.
The only things holding Canada together economically is Finance, Insurance, and Real Estate. FIRE. The only thing holding Canada's economy from being in a depression is banks and insurance on over priced real estate.
As a politician, you dont dare touch the housing market. If that explodes, you take the blame AND you have to actually fix the economy? lol!
Canada has always been a paradise for rich crooks worldwide, and government has always chosen to turn a blind eye.
Does the 5% stat include those kinds of situations, in which on paper it's not a "foreign investor" buying the property, but in reality it's just that?
What attack? Have they rolled back any of the billions of subsidies?
In many countries, including Europe, new properties are quickly snatched by investment companies that have much easier access to capital than private individuals and can easily afford to pay above market prices. People shouldn’t really have to compete with companies or “investors” on the housing market.
Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.
People don't like to rent because of instability or unpredictability of pricing. But a large and growing long term rental market where it's straightforward to find a new place and nobody has an incentive to kick you out or raise your rent is really just fine.
You might be thinking, right but if you rent you'd be giving up the ability to make all that money from appreciation that homebuyers get BUT THAT IS ACTUALLY THE PROBLEM WITH THE ENTIRE SYSTEM because you can't have affordable housing and also have housing as a guaranteed investment that always builds wealth the two concepts are fundamentally incompatible with each other and when you get that you're really starting to understand the problem.
If well below, you haven’t an argument.
https://globalnews.ca/news/8641905/bc-local-governments-hous...
For example, in Toronto, you get about 30-40k new housing starts a year in a city of 3M. https://ycharts.com/indicators/toronto_on_housing_starts. >1% / year isn't terrible.
Your statement isn't wrong, but I don't know how much it applies to Canada Real Estate particularly.
[1] https://www.rlb.com/americas/insight/rlb-crane-index-north-a...
The market, right now, is constrained by regulations. Adding more regulations is unlikely to fix things.
Construction permitting is mainly a municipal issue, with a bit of provincial thrown in there. Municipal representatives are not aligned with particular parties, and provinces are mostly not governed by Liberals at the moment (7 conservative, 2 Liberal, 2 independent, 1 NDP, 1 Saskatchewan "we aren't conservative, pinky swear!" Party.
The federal Liberals don't have much control over the situation (though there are other specific actions I think they should take)
/s (sort of)
Mega tower condos could solve housing issues, but the NIMBY folks and local governments need to get out of the way - https://citylimits.org/2018/10/26/cityviews-proposed-mega-to...
The Ontario provincial Conservatives commissioned a report into how to make housing affordable, and then completely ignored almost everything it said.
This summer, I'm voting for whoever promises to actually implement the Housing Affordability Task Force report.
The Federal government was deeply involved in funding both for-profit and non-profit housing in the 1970s, the last era where Canada built a lot of housing.
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Astronaut families are a problem and I feel leach on the society. Paying very low taxes, using all the social services, yet making income outside of the country so not paying anything.
I agree, but I think we both know how well fixing that will go down with the absolutely massive voting group that is seniors.
The US is the exception to that rule. Canada mirrors most of Europe.
Also, "only" 20%? That's a massive number for housing.
If nobody is around to buy that mansion, it would eventually be sold to a developer who either turns it into apartments, or tears it down and builds an apartment building there. I've seen this happen numerous times in my neighborhood.
Also 20% is huge.
It looks like more in the "hundreds" given that it's 3%/year of the assessed value. But still, a good start I'd say.