> The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home.
In the US, a lot has been made about large investment companies buying up houses, but this is something different entirely:
> This category represents homebuyers with multiple mortgaged properties. This means investors are homebuyers who either:
> * purchase an investment property while maintaining their primary residence, or
> * purchase a new residence to live in while converting their existing residence into an investment property
Specifically, "investors" excludes anyone who didn't use a mortgage to purchase (e.g., all-cash buyers, any buyer with alternative financing). AFAICT, it would even exclude someone with a paid-off house who bought a new investment property with a mortgage.
It seems like it would also include people who are buying a new property to occupy as owners that will be mortgaged, while planning to later sell their existing, also-mortgaged, owner-occupied property.
Those people are not investors by any useful English-language definition, but would be counted as such by this method. This is exactly the situation we were in when we bought our current home, and anecdotally, is not uncommon when people are moving in together from previously separate, owned properties. Sellers prefer zero sales contingencies over one sale contingency and prefer one over two.
I believe those would be called repeat buyers under the Bank of Canada methodology because the Transunion data should connect their new mortgage with the discharge of their previous mortgage.
If someone had a house with a mortgage, bought another house with a mortgage in May, and discharged the original mortgage in October (or the following February), were they a repeat buyer or an investor? Plain English would say "repeat buyer", but I can't tell definitively how they'd be treated in the data.
The one clear reference in the article strongly suggests they'd be categorized as an investor: "The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home."
I don't know. There's no link to the Transunion data set, so it's not possible to dig in. Even the sentence you quote is ambiguous because "maintaining" indicates an ongoing active state. Assuming that the dataset is a point-in-time snapshot, there are probably some repeat buyers classified as investors because of timing.
If there’s an affordability housing crisis at the level of Canada, where home prices are so wildly out of whack relative to median incomes, it’s IMO entirely reasonable to ban the purchase of investment properties in the single family homes market for anyone. This will never happen because of the political backlash, but housing as a speculative asset is fundamentally insane and corrosive to societies. Housing affordability is directly tied to all kinds of broader social outcomes, from crime to public health to educational achievement and it makes zero sense to sacrifice these on the altar of “fuck you, I got my house(s).”
A person I know of outstanding moral character (has adopted 3 kids) boasts about voting against any development in his area. I don't know what it'll take for people to see what you are saying
California seems to be forcing zoning changes onto cities that have not allowed enough new housing to be built (things like expediting approvals for allowed development, also allowing R3 to replace R1).
I assume that their politicians were worried about all the people leaving.
It makes sense to set a lot of zoning policy at the state level, where all people are represented, so that incumbent local property owners can't selfishly micromanage everyone else.
Japan is an example of a place that does a great job with this. Housing there is more affordable and convenient. Residential side streets are off-street parking only, and each property can be a triplex, with one unit allowed to be a low-impact business, off-street. These side streets connected to larger roads with denser retail/apartments leading to planned high-rise areas that are allowed to grow when/if the population grows. Industrial areas are separate, on the other side of town.
I think the problem is that people have a vote. Most people would like things to stay as it is around where they live. I feel in my country there is not so much tools for NIMBYism as people are not listened to so much. I can support better infrastructure on a city level but can’t really do much if it is decided that the train needs to run over my house.
Often laws passed by the federal legislature or provincial legislature that, in practice, only effects people living in a small area. I don't see why decisions related to housing can also not be made at larger level.
To put it another way, it often happens that people will vote for candidates at the provincial/federal level that support increased immigration and/or population growth, and simultaneously vote NIMBY at the local level.
Yes, the same people that agree that there’s a housing crisis and that their city should in general have more affordable housing, just not in their specific neighborhood.
I don’t think people with moral character can be reasonably expected to always have moral views on every subject matter. Not to be political but this is what people mean when they talk about intersectionality. For example a women’s rights advocate might unintentionally exclude disabled women, or be harder on black women they work with than white women for being ghetto or ratchet.
You are being downvoted but you are right. It just depresses me to see that people I look up think this way. I have met others who also can't see that building is the solution because of more exotic reasons: those who want to impose price controls because they think this will somehow finally allow them to own that coveted flat in the center, those unwilling to allow the mass building of lower quality stock because who cares about poor people's houses, etc
A multitude of entitled opinions that in a democracy hinder the construction of houses for the future generation
I suspect the complexity with this approach, is these "investors" are also the source of the majority of rental inventory in the country. As far as I know we don't build rental buildings anymore, it's all condos with 30-80% of the units going to investors who then rent them out.
Also there are situations like, the buyer who buys a run down house to rebuild or do major renovations that would need accounting for in any sort of ban. Or the condo developer who spends millions buying 3-10 houses and turning them into a condo tower for hundreds of people to live in.
Too many people get hung up on the “house” being the thing rapidly appreciating when in areas like major Canadian metros it’s the _land_ sitting under the house that is becoming more and more valuable as the Canadian government is importing more and more full grown adults who need housing _today_ in those major metros.
Okay, then do Georgism or some other form of land value tax. Distinction without a difference. Destroying your society for the benefit of real estate speculators is insanity, is my point.
The continued proliferation of cookie-cutter detached single family homes with useless lawns is big part of several problems we currently face as a society.
It is funny because people always pitch it in threads about investors. Investors are who will build more housing if zoning laws are changed. An LVT basically encourages investment in the land.
I am in favor of this but it doesn't stick it to who everyone is complaining about here, it benefits them.
The humble house owner can already do that now under the current property tax regime (where they would pay less than under a LVT regime). The only change here is that their taxes go up and they're thus "encouraged" to sell. Seems bad from their POV!
The LVT would zero the tax on improvements, and accordingly the tax on land would have to increase to compensate.
A mansion owner for example may have 40% of their bill be related to the expensive mansion building. Some regular humble house owner may only pay 5% of their tax based on the value of the house. So when the portion of the houses are eliminated and the land tax between them normalized, the mansion owner now pays less and the humble house owner pays more.
Listen I like a LVT I'm just pointing out that it's a big time giveaway for the very rich if it's implemented in a very basic way.
The net result is relatively poor homeowners are shoo'd out of their homes and forced to capitulate and move due to high taxes, while mansion owners get a tax cut.
If we want to bring in a LVT then we should also be bringing in some progressive property taxes on the wealthy.
I don't see a problem whatsoever with someone building a mansion out in the country to save money on taxes. LVT is not about that. It's about taxing the luxury condos downtown, and those definitely are more progressive than property taxes.
A sensible endgame is for the state to control all real estate, and we're all effectively renters.
This eliminates the speculation fiasco entirely-- there's no way to bid up a property if the price is determined by a standard, legally-defined formula, and there's no investor to profit from such games. At best, you could try to bribe someone into releasing a unit you wanted in the hopes you could scoop it up.
This also provides valuable levers for other social policy-- rent could be priced to encourage people to live near where they work for environmental reasons, or provide explicit blessings to favoured groups (reduced rent for veterans/schoolteachers/first responders/etc) and leases could be retired when there's a pressing need to replace a property (i. e. unsafe, or needs to be torn down for some new venture)
Honestly I think that owner occupied homes should count as investment homes too. There is scant difference between the economic interests of a landlord and a homeowner.
Which is what lets homeowners buy a second home so much more easily than younger people. The asset price inflation of homes in Canada has been remarkable at concentrating the productive labor of working Canadians into the idle hands of homeowners.
So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?
While I can see how the delta in this metric is suggestive, it is not clear how it affects the available housing stock (rent+buy).
What I think people actually care about is unoccupied investment properties, where someone buys and leaves it vacant. Apparently a lot of Chinese capital is parked in this way due to their capital controls preventing cash from being freely moved out of the country, though to be clear it’s not unique to China.
Or if these properties are being flipped, perhaps that has a short-term negative impact on available housing stock as properties are taken off the market while being renovated. (If the marginal second bidder would have moved in to the house as-is, then the winning bid renovating and selling is reducing supply / increasing demand for housing.)
As you note, a whole other kettle of fish around REITs that won’t use mortgages. In the US, REITs are a major contributor to new construction for example.
Yes, you are an investor. You do not live in the home you purchased. You rent it to earn money, i.e., an investment.
This creates a huge problem. Rental properties have different regulations in different places. My brother-in-law was not given a lease renewal amnd was forced to move (within 30 days) while, where I live, that is illegal unless there is cause for eviction. It creates instability. Also, my rent increased $550/month in just two years. Who can afford that? This creates a tenuous housing issue. Thankfully, I was able to move and buy a very small condo so I have a set monthly payment and no longer need to worry about losing my home every year when my lease ends.
There is a huge difference in how I can plan for the future knowing I am not going to be, potentially, homeless every year.
If no one ever bought houses to use as investment properties then demand would be a lot lower, making houses cheaper and thus more affordable to families. There are plenty of places in cities in Canada where the cost of renting a house today exceeds what it would have cost for a mortgage just a few years ago. Investors buying houses for rental income (and appreciation returns) compete with family home-buyers to drive up prices in desirable areas, especially near schools.
How does an investor who is renting drive up the cost of housing? Barring certain oddities (e.g. college towns tend to have higher rental costs than purchase due to the transient nature of the populace) rents and mortgages should obtain parity very quickly, especially for families looking to stay longer than the transaction cost of the loan.
Because real estate prices are highly location-specific. People looking to buy a home in a nice, safe neighbourhood with a school in walking distance are forced to compete with investors buying houses and turning them into Airbnbs. As the article says, 30 per cent of home buyers are investors looking to grow their portfolio, not people looking for a place to live and raise a family. If those investors put their money into the stock market instead then that would free up the limited resource of homes near schools, causing prices to fall and making it more affordable to start a family.
Imagine what life would be like if we let billionaires buy up all the lakes, rivers, and other freshwater reservoirs. Water prices would shoot through the roof and we'd all be forced to pay the "water barons" whatever they decide to charge. It would be a dystopian nightmare and absolutely toxic to society. If you're curious, this is the premise of the classic sci-fi book Dune.
I spoke to the owners of the last 3 Airbnbs I stayed in. All of them were converted from long-term rentals. The landlords in all 3 cite much higher profits from Airbnb as the reason for conversion.
That's fine, but isn't evidence that short-term rentals dominate the rental housing market. They don't. Short-term rentals make up less than 1% of the housing stock.
Obviously, the housing that short-term rentals use has to come from the housing stock somehow, so it's not interesting to point out that Airbnb's cannibalize the long-term rental market.
(Over the medium-long term this is a problem that'll be solved by a combination of more construction, which is desperately needed anyways, and ordinances regulating Airbnbs, like NYC just passed.)
Within capitalism, we could have some kind of system to provide equity to tenants. They are effectively already paying a mortgage (just not their own).
I don't know how such a system would work exactly, but I know it would require that we stop treating houses like speculative assets and start treating them like a basic need (shelter).
In Switzerland they tax imputed rent. If you buy a house and live in it, you are paying extra taxes for the privilege. For strongly related reasons the rate of living in a home you also own is only about 35% in that country.
> ‘So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?’
Of course. The second house is purely an investment to you.
I don’t imagine anybody particularly loves being a landlord. It’s sometimes messy compared to owning a stock. If you could get a better return with less risk from some other investment, you’d put your money in that instead. But residential real estate in cities happens to have an appealing risk/return profile that’s not directly correlated with stocks, so there are good reasons why both small and large investors buy housing.
> If I buy a second house, do it up, and rent it, I am an “investor”?
Clearly yes.
Under-occupation is a separate issue; it's tempting to argue for an unoccupied homes tax, and politically attractive, but it has to be fairly small otherwise at the margin some houses in poor condition get demolished so the land can sit empty and accumulate value.
The large companies just don’t account for very many homes. Once you control out for homes under construction, that just isn’t the issue. The issue is that we dramatically restrict how much housing anyone can build, specifically, upward.
The city I live in isn't restricting it. Condos are going up as fast as they can be built and the parks are still filling up with tent cities and rents are still doubling. Something just doesn't add up. I'm in Canada (don't want to give exact city, sorry).
I don't know if you've looked at Canadian housing news in the last few days, but do you really, really think that "condos are going up as fast as they can be built"? Because if you do, I think you're very misinformed.
Canada's housing market is F'd and this is the reason. There's a lot of noise made about "foreign investors" (which is really just an epithet for Chinese people) but the investors screwing everything up are Canadians themselves.
Bingo. If the system allows significant money to be made then it continue to be an investment vehicle regardless of who does the investing. You can't make housing a good investment while simultaneously making it affordable.
Land value tax would have fixed this decades ago, and it would still work today. I would love to see a single-issue political party push for it at this point.
Maybe from the POV from someone who badly wants to buy a condo, but from the POV of a renter who will never buy, these investors are the ones that are creating their housing.
No they're not. This is like saying the scalpers who bulk-buy all the concert tickets and resell at huge markups are "ticket creators." If you take investors (30 percent of home buyers, according to TFA) out of real estate then demand goes way down, taking prices with it and making housing a lot more affordable.
In Canada for decades there has been virtually no construction of purpose built rental housing. The primary new rental housing that is being created is wholly through condos being built and people renting out their condos.
Accordingly the only new product being created for renters is being created by investors buying condos.
Like it's bad that this is the case and this should change, but I'm just pointing out the reality right now of this present environment.
There would need to be enormous systemic changes to the dynamics of the Canadian housing market if we wanted to start banning investors from buying and renting homes. Otherwise rental vacancy will plunge even further and rents will go up.
I live in Waterloo. There's tons of rental housing being built here but all of it is targeted at students. It's third-rate shoddy construction by an unsavoury developer. Students complain endlessly about these rental companies but they have little recourse.
I'm not convinced that what we need is more of this low-quality "affordable" housing. I think the problem would be solved by cracking down on all the people buying second, third, fourth, ... single family homes and converting them into Airbnb flophouses.
Scalpers would be more like sub leasers here. The actual builders build the housing, but you aren't going to pay your rent to 1000 different people who all played a part in building it, and those builders want to be paid now, not over 30 years. So the landlord pays them all out now and consolidates the debt.
Landlords provide housing in the same way the supermarket provides food. They didn't grow the food, but they did enable it to get to you.
Not sure about Canada, but I make way above the median in tech in California and I have zero interest in buying a home. Having a home would be a huge hassle when I look for new work every 3 or 4 years. The math shows a home in almost any area in the USA is only a financial benefit after 8 or more years of staying in that home (compared to an apartment), when taking closing costs, maintenance, large upfront interest, and other moving costs.
i live in Canada and luckily bought a house about 5 years ago before this all went crazy. one of the main reasons I bought is because my mortgage payment is and was half of what rent would be in a comparable house and i get all my money back if I decide to sell and move on . i don't make a ton of money but my house is a great safety net and by the time i retire i will have zero monthly payments be it rent or mortgage.
its crazy tho , my friend is looking to buy the same house as mine , same layout etc and its more than double what i paid for mine in the span of 5 years. our kids will never be able to enter the real estate market and will be living with roommates or in dads basement for ever.
> Having a home would be a huge hassle when I look for new work every 3 or 4 years.
Most people want to put down roots somewhere; that might be you as well one day. And those people will not want to rent forever, because that puts them at the risk of reno-viction. Imagine having to move every few years, not for a better job, but because your landlord jacked up the rent massively and there aren't any laws preventing them from doing that.
Bingo, it sucks to live with kids in a condo because condos aren't built for families, neither are the neighborhoods with condos. There's other ways to build density without packing everyone into sad sardine cans.
There’s no inherent limitation on having a family friendly condo.
In many European countries families live in condos. And they can have great amenities like a swimming pool and a playground. And quite spacious. With highly dense walkable and even car-free neighbourhoods.
Sure you might not have a huge own backyard but there’s probably a park nearby where you can socialize with people.
It's also a hedge against rent, though in that case one must do a lot of maintenance personally.
As to kids, those of us who grew up in suburbia have a fondness for a yard, garden, and air gap between living spaces. Now if only the former owner had not put so many landscaping pebbles and bushes...
Historically the breakeven point is 5-7 years. It changes though: it can go down to 3 years if property values are rising quickly, and can go up to 10 years if property values tank right after you purchase.
In our current high-inflation environment it makes a little more sense than usual to borrow money and sink that money into an appreciating asset, which is why there's still such strong demand for homes despite the higher interest rates. In a high inflation environment, rents go up, home values go up, salaries go up, but mortgage amounts do not.
The advice remains the same. If you know you're going to stay in the same spot for a decade (if you have young children for example) you should probably buy a spot if you can afford it. If you know you're definitely going to move in less than 5 years you should probably rent. If you're somewhere in between, you should make the decision that's best for you. There are non-financial advantages to owning a home and non-financial advantages to renting.
Local laws vary a lot in how much protection they give to renters. Here in the UK I absolutely wouldn't want to be renting, you have very little security and can be (legally) kicked out with a couple of months' notice in most cases. Whereas in Germany it's my understanding that renters essentially can never be kicked out unless they do something egregious, and it's usual for people to choose to rent for life.
> Whereas in Germany it's my understanding that renters essentially can never be kicked out unless they do something egregious
That's a double edge sword. Would you rent your place to people knowing they can stop paying and trash your place and you can't get rid of them? I'm not a landlord but this scenario would scare the hell out of me, which is probably why German landlords ask for so may documents(bordering on privacy violation), and are so picky when choosing tenants that apartment hunting is basically a part time job in Germany.
>it's usual for people to choose to rent for life
Most people don't choose the rental life, but they don't have a choice, since property prices in German cities are far out of reach of the middle class who doesn't have inherited wealth or financial assistances from parents.
Renting is fine when you're young and employed, but owning your place of living outright by the time of your retirement, is still better for you financially, than having to pay rent as a retiree, as most likely rental costs will go up faster than inflation and wage growth as per current trajectory, and your pension will be too small to pay for living costs and rent on top of that meaning you'll struggle with poverty like some retirees in Germany today, but on a larger scale. Whereas if you pay off your mortgage until then, your retirement will be much less stressful.
Oh, and it will get even worse from here as Germany is refusing to build, to reduce CO2 emissions apparently, and increase migration will put additional pressure over existing housing stock. Great for throe who already own, not for those new to the market.
House prices in Germany are 120% of the average for the whole EU and looking at the graph they seem to be slightly higher than the middle of the pack. They certainly don't seem to be outrageously unaffordable, unlike Ireland. (source: https://ec.europa.eu/eurostat/cache/digpub/housing/bloc-2a.h...)
Yet percentage wise more people own in Ireland than in Germany. Ireland saw the bigger growth rate in the last 10 years, but Germany was already quite expensive in that period.
Yep, 100% true. Have seen first-hand the difference between Germany and Australia, Australia being like the UK here.
Now that doesn't make me interested in owning a series of investment properties, but I can totally understand a family that wants the security of owning their home in the UK/Australia
Tech workers in California are outliers. For most people in developed countries buying/investing real-estate is the only way to build wealth. Profits from real estate speculation is the only income that has low taxes here in Denmark.
I do wonder what country will be the first one to ‘break’ and implement restrictions on buying homes. The current situation is not sustainable, and soon something will need to give.
Governments should just build a bunch of socialized housing and rent it at a rent just high enough to offset the expenditure (i.e. way below private market value). That would put downward pressure on rents.
That is what Vienna did and they are the only popular city in Europe without a serious housing crisis.
That would be so perverse if the government gave itself a monopoly on building housing. Just change zoning and make it legal for the private market to meet the need. Look at all the builders remedy projects in Santa Monica to see that this works.
Housing is more or less maxed out with respect to zoning laws in a lot of places. Those come from the government. Rezone to allow higher density and people will build. It is functionally illegal to build more housing.
Yes, because of NIMBYism. Existing property owners benefit from an undersupply of housing, so they lobby for restrictions in order to reduce competition which would drive down prices and rents.
The point is not to get the socialized housing yourself. The point is that the private market rent prices go down, which is objectively true of Vienna.
Yes, I follow the point. I am disputing your characterization of "popular city in Europe without a serious housing crisis". On the strength of available evidence, Vienna has what can be fairly described as a serious housing crisis.
The UK had this system (council housing) and then basically dismantled it in the 80s. Then imposed some even more stupid rules. https://www.bbc.co.uk/news/uk-41324305
It hasn't been dismantled. In fact, 20% of the private rental market is supported by the government.
All that happened is that councils stopped building homes and sold some of the ones they had to current occupants (and councils actually also have control over planning permission, so they did this and blocked anyone from building new houses at all).
There is other stuff going on (it is likely impossible for the UK to build enough housing given demographic trends atm) but this is all caused by not building enough houses (the reason why investors are buying houses in Canada is because there aren't enough of them, it is all the same problem).
Government are some of the largest employers in most areas. You WFH as many employees as possible, and you will see a measurable decrease in traffic, improvement in air quality, and reduction in urban housing competition as WFH employees can move to lower COL areas.
But many of the housing benefits are only possible if it is permanent WFH. The problem during COVID was that employers weren't willing to commit and therefore employees has to maintain the ability to resume commuting.
It is strange to me that WFH isn't brought up relating to housing affordability.
I do wonder what country, besides Japan, will be the first one to 'break' and realize that, when you restrict supply in the face of rising demand, prices rise. The current situation is sustainable for as long as voters keep voting in NIMBY politicians. Something may give, but something may not.
It's absolutely about NIMBYs, but I wouldn't blame "NIMBY politicians" as they are responding to the demands of their voters (else they fairly soon wouldn't be politicians).
An interesting article about the UK has never really built houses, except for a very short time before the second world war: https://worksinprogress.co/issue/why-britain-doesnt-build If we haven't built sufficient houses for this long it's hard to see what could change to allow us to build more.
The problem is that it's a location supply problem, rather than a housing supply problem. People all want to live in the same locations, that are already full of houses.
As part of housing reform, we can also make more locations worth living in. There are plenty of small towns that could use the help (e.g. the Rust Belt)
I know in Indonesia it's basically impossible for a foreigner to own land. Of course there's workarounds, but for the most part you at least need to have some local connections for some time to be able to access the less-than-legal workarounds, so it's still quite good
If you read the article, there are already restrictions on purchases. This 30% pertains to people that have taken out a mortgage on a property, when they already have an existing property mortgage. What case is there for restricting that?
I’ve read the article but don’t see details on there about Canada having restrictions on buying homes. Can you elaborate on what the restrictions are, outside of the price being too high for many people?
I imagine the person you’re replying to means restrictions more along the lines of limits on one home per person, or increased taxes on secondary or investment homes, or restrictions on who can buy an home, etc.
Canada has already banned foreign buyers, in some cases even if they are legally living/working in Canada. (This is despite the fact that it’s mostly an ongoing domestic speculation problem, as indicated here, … and despite the fact that Canadians own billions of dollars of property in the US and elsewhere.)
it would be nice if it werent sustainable and something had to change. unfortunately i don't see any reason why it cant just continue to get worse. it could get a lot worse.
The political environment has associated that stance with right-wing Conservatism, and while that party does hold that belief, it's looked down upon by the Canadian centrists/left-wing parties. I'm not sure how to describe their solution to this issue, because I'm not sure there is a stated plan.
I wish the country I live in had the same as many Asian countries; you can only buy if you have a passport of the country or if the building is owned by more than 50% of passport holders.
At this point various jurisdictions in Canada have layers upon layers of foreign buyer taxes, bans, and empty homes taxes and the issues remain.
Foreign buyers and such can be problems, but at this point looking at Canada's experience here, it's abundantly clear it's not at all the problem and there are deeper systemic problems that are causing the misery.
Still not clear whether they are mostly institutional or solo "mom and pop" second/multi-home buyers. Either way this was the inevitability of borrowing at virtually 0 interest for so long, with a high immigration rate guaranteeing perpetually increasing demand. It's like free money. They've recently increased the interest rates but it's woefully insufficient. The rate of housing starts needs to increase (this is fairly inelastic) and/or the rate of immigration (or even loopholes for students and temps) needs to slow down, but instead it's going in the other direction.
>They've recently increased the interest rates but it's woefully insufficient.
What should it be? I'm sure you can push house prices down even more if you bump interest rates to 10% or whatever, but raising interest rates also increases monthly payments that buyers have to make, which ends up making houses less affordable. At the end of the day I care less about the sticker price of the house than the overall cost I have to pay for it.
Raising interest rates increase rent prices.
Here in Vancouver the rent prices increased by 50% in like 3 years and it seems the reason is mostly to cover mortgage + have income.
Really bad.
>it seems the reason is mostly to cover mortgage + have income
That isn't how rent works. It is a market and buyers won't just pay any price the landlord sets. If prices went up, it means people were willing to pay those prices.
I wish I could charge $5k per month for a 600 sqft unit, but no one will pay that.
I completely agree with what you are saying, I'm just describing what ACTUALLY happened. With 99% occupancy, this is literally what the price happened. Otherwise I can't explain how my rent was 1400$/month for a 2 bedroom 3 years ago and now it's 2700+$, which is insane
Yep! It's because of continuous near zero rental vacancy in Vancouver.
Landlords can continue to increase the rent at the maximum allowed every year and tenants are forced to stick around because where else are they going to go? Move to what apartment? There are none.
So long as there's practically no available apartments landlords will feel free to keep cranking up rent. If we ever get to the point where renters could genuinely have the ability to benefit from moving, then landlords will think twice before raising rents.
Briefly ever so briefly at the start of the pandemic when all the students left rents plunged. That shows what needs to happen. Not kicking out all the students of course, but the creation of a huge amount of surplus homes. Only in such a healthy vacancy environment will rent increases go below inflation.
Indeed!
From my understanding, they are going to make a bunch of very high density towers in north vancouver and kitsilano that should resolve a good chunk of these problems, or that's the hope.
That's correct. But the price an investor can charge to renters scales with the opportunity cost of buying, so (house prices x interest rates).
Or equivalently, the price an investor will pay for a house scales with (rent - interest payments). If interest rates go up and housing prices don't fall, then market rents must be rising.
You need to break the positive feedback loop of historical house price appreciation -> more buyers as "investment" -> more house price appreciation -> more buyers...
High interest rates can do this once affordability becomes almost impossible that there are no more buyers. Prices fall, lower interest rates to stabilize, just keep adjusting interest rates to keep a level price. Then price and monthly payments will equalize to a reasonable premium on construction costs.
Seems like an alarmingly big scary number, but due to the fact that there has been extremely low amounts of rental housing created by purpose built rental (PBR) housing for decades, and virtually all rental housing is created via condo creation and secondary rental of condos, necessarily if there is going to be any rental housing creation at all, it will be due to investors buying condos and renting them out.
As rental demand spikes as it has been, it makes perfect sense that investor interest and share of the market would also increase.
Now obviously, one can point out "near zero purpose built rental development seems bad!" and many have, but so long as condos dominate what is being built, a relatively high investor share is actually normal and required.
If investors for example were limited or banned at this moment, the most immediate net result would be increased scarcity for renters, and higher rents.
In the long term clearly there needs to be more PBRs, non-profit rental and publicly owned rental housing.
This is creating an artificial Tulip bulb crisis where people could live instead of these rent-seeking vampires either letting them idle or renting them on Airbnb. Pass a law that homes must be occupied by the owner at least 10% of the time or property taxes go up 900%. Creating a class of land barons and serfs doesn't bode well for the future of humanity.
The fact that it's big doesn't matter. Building a million homes in North Dakota won't help anyone.
People need to live near cities, where jobs are. Outside our privileged white collar world where remote work is easy, others need to live in metro areas.
We need to build in and near cities, and improve the transit infrastructure.
We also need to create cities, and revitalize dying ones. There are many small towns in the US and Canada where I'd love to buy a house, but they all tend to suffer from the same terminal decline pattern: crumbling infrastructure, lack of opportunities, and a single WalMart supplying everyone while choking out all other business.
You realize you are advocating for a massive regressive tax on renters right? Where are people going to live if they are not in a position to or don’t want to buy a house?
I think the solution to this issue is a Henry George-style Land Value Tax (LVT) [1]. Properly implemented, this sort of tax would totally wipe out any returns from buy-and-hold investment in real estate, essentially turning it into a depreciating asset. Holders of unproductive/underproductive real estate would be forced to sell to developers or continue to lose money.
LVT is also nice because it cannot be passed on to tenants in the form of rent increases. Raising rent causes the value of the land to go up with it, leading to higher taxes which claw back all of the gains from the rental increase. If the landlord chooses to continue raising rent to stay ahead of the taxes, this upward spiral will price the property right out of the rental market, leading to high taxes and vacancy, causing the landlord to lose money.
The whole “millions of immigrants” is just a property of the recent alt-right attempt at a take over of HN.
Looking around, it appears that immigration rates were raised due to aging population issues. While other places around the world are looking at moving retirement to 75.
Crony capitalism is causing higher immigration, so it’s somewhat hilarious for these people to think that an even more crony party is going to help offset this.
I was looking separately and I think I found where the claim comes from:
> The federal government's latest immigration levels plan, released last fall, would see Canada welcome 500,000 immigrants annually by 2025. In contrast, the immigration target for 2015 was under 300,000.
Can you please not post in the flamewar style to HN, and also please stop using HN for ideological battle? We're trying for something different here.
I'm not going to ban your account right now because it looks like you've also posted other things using HN in the intended spirit, but I saw quite a bit of this other kind of thing in your history too and that's definitely not ok.
We've banned this account for using HN for flamewar and ideological battle. Please don't create accounts to do that. It's not what this site is for, and destroys what it is for—so we have to ban accounts that do it, regardless of what they're battling for or against.
That’s a lot of people. Where are all those people going to be housed? Where will the resources for their education and gainful employment come from? Is the Canadian job market exploding with a huge amount of well paying jobs such that Canada’s children have multiple options to pick from, or will everyone be competing for scraps?
So I don’t know how much you know about economics but it’s well known that gaining an increased population of working aged adults is actually pretty good for the economy, because they generate demand (create jobs) and then also take up jobs (generate supply). Immigrants are more likely to be entrepreneurs and statistically consume less social services.
It should, but the mouth pieces have stuck with their spiel that their own policies can't be helped, are necessary, because of "labor shortages". In other words, horseshit. I think people at the top are positioning themselves because they made large investments and want their return, so the lobbying efforts are to stall the slowing rate of immigration, or anything else that would increase housing starts / availability.
Labor shortage is such a lie. when they say that they just mean there aren’t enough low-information workers who will work for meager wages in a high taxation environment in a race to the bottom while some political dynasties always skim from the top. I hope you can all muster up the strength to vote in better leaders who put the citizens first.
Not sure you will ever be able to ban investors from owning properties that are rented out long-term - a fair amount of the population wants to, or can only afford to, rent - and someone needs to be the landlord.
On the otherhand, it seems like AirBnB's, i.e. short-term rentals, are ripe for some legislation to undo the negative affects they are having on many communities.
> Not sure you will ever be able to ban investors from owning properties that are rented out long-term
Why not? We are making up the rules as we go. The government has the guns, it can do what it wants.
> - a fair amount of the population wants to, or can only afford to, rent
Well a fair amount of the population wants to buy a home remotely close to where their job and family is, but it turns out there's a population representing 30% of all sales that thinks they ought to be landlords.
Housing co-ops are a thing that exist. Governments can also conceivably own rental properties. It’s property management that does most of the work anyway and they get paid like anyone else to do a job.
Landlords are a drain on the economy and there are viable alternative models. We do not need landlords.
Landlords are the people that own the property and take profit for it. Sometimes they manage the property, in a lot of cases they don’t. Sometimes they are corporations, sometimes they aren’t. In any case they are collecting rents and taking profit from those rents solely by virtue of owning the property.
In the alternatives I mentioned, co-ops and government, neither of those entities need profit. Co-ops are just owned by the collective of the residents. They would pay their rent in order to pay off taxes and utilities and maintenance expenses.
Canada has very little private land ownership.The Federal Gov hoards land and creates a severe shortage of land for individuals to purchase. They need to open up the billions of acres of accessible land to 1st time buyers and then to existing property owners. Especially in the Province of Ontario.
They also intentionally keep interest rates low so existing house/property owners can leverage their properties to buy more. Never allowing a 1st time house shopper a chance. You can't save enough for a down payment because the rate that housing goes up outpaces the rate of your earnings.
In my opinion any house in the same city other than your primary residence should have property taxes that are significantly higher, perhaps 3-4 x the current rate. Interest rates for any house that is not your primary residence and considered an investment property should also be much higher. The only exception I would make is if you have cottage/recreational property outside of cities, this type of property like a cottage would fall under the Primary residence category.
There is also that fact that the majority of Canadians in the private industry, especially in Tech are severely under payed and underemployed.
I'm not sure of the unintended consequences of my proposals, but they couldn't be worse than what is happening now.
The federal government doesn't "hoard" land around areas where people would want to purchase a first home. The vast majority of crown land is not around any major urban centers.
Canadian tech workers make way above median income levels.
San Francisco tech salaries are not representative for the entire US tech industry. And on top of that, San Francisco salaries drive up housing prices, so i'm not sure if working in SF results in a higher discretionary income.
I just checked and in EU big cities like Munich, tech salaries are also around 1.0x-1.2x GPD per capita, making EU just as bad as Toronto. Man, the US is really in a league of its own for tech wages.
Well, if they live in a small town in some rural area they either inherit a house, or build their own, with substantial financial help from from their parents.
If they live in a city they are screwed, unless they are lucky enough to get a really well-paying job.
Bingo. Canada is empty. It has the second lowest population density in the world. Most land is owned by the crown and is simply parcelled out to the friends and family's of the ruling class.
Adding to that, you have some of the worst zoning and development practices in the modern world. Most of the country is simple a piggy bank for money laundering in the form of empty condo towers.
A great many people tried to use crown land in the past and gave up because it was useless bog too remote and not worth it. See: Haida Gwaii Naikoon. Cape Scott colony, and more.
When folks don't live somewhere, there's usually a reason, and it's usually "the land is terrible" not the government is forcing people to not use it.
>I'm not sure of the unintended consequences of my proposals, but they couldn't be worse than what is happening now.
I wonder how large the percentage of buyers would be who would buy on-behalf of someone -- e.g. person A is an existing homebuyer, their cousin person B is not, and to avoid the prohibitive tax rate, person A gets B to buy it on their behalf so that it is legally not an investment.
This practice is sadly already common in certain circles, and it will surely get a boost should your proposal (which I do like btw) come into effect -- the question is how big of an effect would that be.
In the US, a lot has been made about large investment companies buying up houses, but this is something different entirely:
> This category represents homebuyers with multiple mortgaged properties. This means investors are homebuyers who either:
> * purchase an investment property while maintaining their primary residence, or
> * purchase a new residence to live in while converting their existing residence into an investment property
Specifically, "investors" excludes anyone who didn't use a mortgage to purchase (e.g., all-cash buyers, any buyer with alternative financing). AFAICT, it would even exclude someone with a paid-off house who bought a new investment property with a mortgage.
[1]: https://www.bankofcanada.ca/2022/01/staff-analytical-note-20...