Canada bans foreign homebuyers for two years to cool market

[2HOTinPHX]

Just read this article. Seems pretty extreme to limit who can purchase homes like that. Wonder what kind of impact this will have on the housing market there and in US?
https://www.seattletimes.com/busine...utm_medium=Referral&utm_campaign=RSS_business

 

[ShokWaveRider]

Sounds like it could be a smart move. Government supporting its average citizens, not just the top 5%. Canada's home prices have been escalating into in the stratosphere for over 15 years. Maybe it will help, maybe it won't, the damage is done. Canada never had a real home correction like the USA did. Even with no mortgage assistance, the market is strong. Imagine if the USA had no mortgage assistance, then we would see a REAL home price collapse. Although, I am for phasing out the Mortgage deduction. In the long run it probably would stabilize.

 

[Letj]

The government of California needs to do the same thing.

 

[FLSUnFIRE]

I'd be interested in public policy.... if there is a market, there will be someone to come in and fill that demand if not stopped by an outside force (gov't/geography).



Zoning favoring SFH and restricting smaller homes, multi-family units, etc add to the problem. Throw in rent control which suppresses the supply side and increases the demand just makes things worse. I am on Nextdoor.com and the same people gripe about housing prices and rent and also gripe whenever a high-rise or other high density development is announced... can't have it both ways. I do not engage there but they advocate for policies that worsen the housing shortage as they complain. I don't know if they don't understand rudimentary economics or if they are just blinded by misguided ideology (that developers are bad and housing should be plentiful/cheap).


There are a lot of speculative buyers in FL too and I wonder if that is the case up north as well.

 

[Freedom56]

Back in 2011 when we were shopping for real estate in Florida, Canadians were buying up a lot of distressed and foreclosed properties. There were also buyers from South America and Europe. That helped recover the residential real estate market from the abyss to where it is today. Commercial real estate (retail space) has a serious oversupply problem everywhere. The Canadian government would be wise to encourage foreign investment and transformation of those properties to residential space where there is a shortage.

 

[Koogie]

[mod edit]

A 2 year moratorium will accomplish little (and has loopholes anyway). It will also do little to actually make housing more affordable as the problem we do have with foreign buyers in Canada is limited pretty much to the top 3 cities and to high end properties.

As others have alluded to, we never bit the bullet up here after the 2009 debacle. Some areas near Toronto have seen price appreciation in the 25-50% range in the last year alone ! Add in the most flagrantly over generous COVID response amongst G7 countries and vast amounts of money printing over the last 4 years. Vast.amounts.

They oughta ban the import of needles. The bubble is that dangerous at this point.

 

[Sunset]

If Canada wanted to slow the property purchases by foreigner's (and non-resident Canadians), all they would have to do is clearly explain the taxation when a foreigner goes to sell the property

25% of the selling price has to be paid as a tax prepayment for a normal house, if it's a rental then 50% of the selling price is a tax prepayment.

One can do a tax return at the end of the year to possibly claim some back, but non-residents are taxed extra with large surcharges. Quebec is an additional problem.

 

[TheHobbit]

This is political theater. The international student carve exemption is the big tell. Typically rich families send their kids over and they buy the homes — this can still be done.

Allowing this is absurd. Why and how do “students” need multimillion dollar homes exactly? For a student, what sort of unreasonable hardship would renting be exactly?

Secondly. they are still allowed to buy vacation/recreational homes (outside metro areas), so get ready for much of the money to move there.

If they were serious, they’d do something which would actually work: raising interest rates substantially. Of course they don’t want the stench of people losing their homes on them, so they opt for the theater instead. Given inflation, they will likely be forced down this road, anyways.