Canada ban foreign real estate investors

[TSwizzle]

My point was that there were so many posts that made it look as if the entire real estate market is controlled by Buffet, and real estate isn't really his thing compared to a lot of other big investment organizations. I think Black Rock, if memory serves me correctly, has bought up a lot of real estate in recent years. So, let's blame Black Rock.

I think one post about Buffet buying foreclosed homes. I don’t know if he did or not but he certainly does have real estate holdings. I have seen homes and rental listings from Berkshire Hathaway. In any event, there are plenty of companies that purchase homes and apartments/duplexes etc so there are plenty of companies to blame. Hopefully the domestic investors will be curtailed too.

 

[southernhybrid]

My point was that there were so many posts that made it look as if the entire real estate market is controlled by Buffet, and real estate isn't really his thing compared to a lot of other big investment organizations. I think Black Rock, if memory serves me correctly, has bought up a lot of real estate in recent years. So, let's blame Black Rock.

I think one post about Buffet buying foreclosed homes. I don’t know if he did or not but he certainly does have real estate holdings. I have seen homes and rental listings from Berkshire Hathaway. In any event, there are plenty of companies that purchase homes and apartments/duplexes etc so there are plenty of companies to blame. Hopefully the domestic investors will be curtailed too.

Yes. I agree with you. In fact, the companies who buy apartment complexes are the worst, if what I've read is true. There's a company in California that has bought up a lot of older apartment complexes in metro Atlanta. They don't take care of the properties, leaving the mostly low income tenants with rats, mold, broken plumbing etc. Hopefully, after the investigation done by the AJC, something will be done. But, who knows?

 

[TSwizzle]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

 

[bilby]

It's also stupid to buy a house with an adjustable mortgage.

The ability to fix a mortgage for more than five years simply doesn't exist here. No lender offers fixed interest loans for longer terms, with a "fixed" interest loan always reverting to the standard variable rate after the five, three, or two year term (and typically the fixed rate is higher than the prevailing variable rate, so getting a fixed loan is essentially a gamble that rates will rise during that fixed rate period).

Twenty five or thirty year fixed rate loans appear to be strictly a North American phenomenon; I don't know how things are done in the EU, but certainly Australian and NZ banks don't offer such things.

As a result, rising interest rates can easily force people out of their homes, as they imply rising repayments for almost every homeowner. Those who fixed a low rate a few years ago face a sudden and substantial increase in monthly repayments, and are often particularly hard hit.

Our monthly payments have increased 28.56% since June. Alongside general retail price inflation running at around 7-8%.

A lot of people can't afford that.

 

[Harry Bosch]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

 

[TSwizzle]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

They are speculators taking advantage of people, over paying for “distressed” properties and selling on at an inflated price. And if they can’t get the price they may hold the property or rent. Since mortgage rates have gone up their properties are either languishing on the market or they are reducing the price.

 

[Toni]

It's also stupid to buy a house with an adjustable mortgage.

The ability to fix a mortgage for more than five years simply doesn't exist here. No lender offers fixed interest loans for longer terms, with a "fixed" interest loan always reverting to the standard variable rate after the five, three, or two year term (and typically the fixed rate is higher than the prevailing variable rate, so getting a fixed loan is essentially a gamble that rates will rise during that fixed rate period).

Twenty five or thirty year fixed rate loans appear to be strictly a North American phenomenon; I don't know how things are done in the EU, but certainly Australian and NZ banks don't offer such things.

As a result, rising interest rates can easily force people out of their homes, as they imply rising repayments for almost every homeowner. Those who fixed a low rate a few years ago face a sudden and substantial increase in monthly repayments, and are often particularly hard hit.

Our monthly payments have increased 28.56% since June. Alongside general retail price inflation running at around 7-8%.

A lot of people can't afford that.

Wow. I had no idea. Here, I know a few people who had ARMs or mortgages with large balloon payments, but those balloon payment mortgages were a long time ago.

That sounds like a really difficult scenario.

 

[Harry Bosch]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

They are speculators taking advantage of people, over paying for “distressed” properties and selling on at an inflated price. And if they can’t get the price they may hold the property or rent. Since mortgage rates have gone up their properties are either languishing on the market or they are reducing the price.

That doesn't make sense. If they are overpaying for a distressed property, they are doing the seller a favor. there are many people, like myself, who aren't good working on a home. The maintenance gets deferred. New buyer fixes it up, sells to a willing buyer at a profit (or often times at a loss in a down market), who is hurt?

 

[Harry Bosch]

It's also stupid to buy a house with an adjustable mortgage.

The ability to fix a mortgage for more than five years simply doesn't exist here. No lender offers fixed interest loans for longer terms, with a "fixed" interest loan always reverting to the standard variable rate after the five, three, or two year term (and typically the fixed rate is higher than the prevailing variable rate, so getting a fixed loan is essentially a gamble that rates will rise during that fixed rate period).

Twenty five or thirty year fixed rate loans appear to be strictly a North American phenomenon; I don't know how things are done in the EU, but certainly Australian and NZ banks don't offer such things.

As a result, rising interest rates can easily force people out of their homes, as they imply rising repayments for almost every homeowner. Those who fixed a low rate a few years ago face a sudden and substantial increase in monthly repayments, and are often particularly hard hit.

Our monthly payments have increased 28.56% since June. Alongside general retail price inflation running at around 7-8%.

A lot of people can't afford that.

Wow. I had no idea. Here, I know a few people who had ARMs or mortgages with large balloon payments, but those balloon payment mortgages were a long time ago.

That sounds like a really difficult scenario.

I didn't know that either. But I'd bet that the Australian residential bankers are far more conservative. I'm sure there arn't many 100% financing options there.

 

[TSwizzle]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

They are speculators taking advantage of people, over paying for “distressed” properties and selling on at an inflated price. And if they can’t get the price they may hold the property or rent. Since mortgage rates have gone up their properties are either languishing on the market or they are reducing the price.

That doesn't make sense. If they are overpaying for a distressed property, they are doing the seller a favor. there are many people, like myself, who aren't good working on a home. The maintenance gets deferred. New buyer fixes it up, sells to a willing buyer at a profit (or often times at a loss in a down market), who is hurt?

They are preventing individuals from purchasing a home because they overpay for the property, they can afford to do that. Multiple properties in a neighborhood at that. The end product is overpriced but the buyers pay it because of limited housing available.

 

[RVonse]

Wrong. Buffet purchased homes that people lost due to factor's completely beyond his control or their control. Neither Buffet nor the people who lost homes had anything to do with the asset bubble that was built up and collapsed due to low interest rates set by a private federal reserve institution. While it is true that Buffet saw underlying value he was under no obligation to purchase those homes involuntarily lost by the owners. He could have just let the homes sit there and rot (which some of them actually did).

The whole affair was caused by another private institution called the fed. A private institution steering government monetary policy. Which I believe is the very definition of facism.

Completely beyond their control??? Sorry, but buying into a bubble market is almost certainly under their control.

Just to clarify, it is fed policy that is beyond everyone's control. Whether they are owners or investment firms buying those homes, it is the fed who held interest rates to a level which created the asset bubbles to exist in the first place.

 

[RVonse]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

On the surface of it, the flippers provide a service of convenience for buyers and sellers. No problem with that.

But with the fed blowing up asset priices, the flippers are an additional nuisance to the housing market. They serve as one more speculator in the mix competing with buyers helping to blow the bubble bigger.

The fed is the big problem of all of this. Laughing Dog and/or other economists may call it a qusi term or whatever. But in the final analysis, the fed was not elected by the people yet their policies have ruined the lives of many US home owners.

 

[Harry Bosch]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

They are speculators taking advantage of people, over paying for “distressed” properties and selling on at an inflated price. And if they can’t get the price they may hold the property or rent. Since mortgage rates have gone up their properties are either languishing on the market or they are reducing the price.

That doesn't make sense. If they are overpaying for a distressed property, they are doing the seller a favor. there are many people, like myself, who aren't good working on a home. The maintenance gets deferred. New buyer fixes it up, sells to a willing buyer at a profit (or often times at a loss in a down market), who is hurt?

They are preventing individuals from purchasing a home because they overpay for the property, they can afford to do that. Multiple properties in a neighborhood at that. The end product is overpriced but the buyers pay it because of limited housing available.

Amigo: you are incorrect here. Flippers make their money by buying distressed properties at a lower price (not higher); fixing them up, then selling at the market rate. Any flipper buying a distressed property at a higher than market rate will be out of business tout suite.

 

[Toni]

It seems like a short sighted policy. The major cost of buying a house is not the sale price, but the interest on the mortgage. If the Canadian government was truly concerned about Canadians being able to buy a house, a program of low interest guaranteed loans with low down payments, targeted at specific segments of the economy, such as first time home buyers would be much more effective.

But what people can afford is the payment, not the total price. Thus low interest loans just drive up the price. Look at what has happened to US real estate recently--soaring, but now crashing as interest rates go up.

You contradict yourself. If a person can afford the payment, they can afford the price. As I said before, selling price is more important to the seller than the buyer.
It is demand for short supply that drives up prices. If house prices are the problem, more houses is the solution.

What I'm saying is that low interest loans simply drive up house prices, they don't help the situation.

More houses is a good thing but that's limited by how much space you have to put houses.

Low interest rates don’t drive up home prices. People competing for a limited supply of housing drives up demand. Lower interest rates facilitate the ability to purchase higher priced homes. Higher interest rates keep home prices lower. Which one is best for you depends on whether you are buying or selling. And whether or not you can come up with a down payment and how much.

 

[Toni]

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

On the surface of it, the flippers provide a service of convenience for buyers and sellers. No problem with that.

But with the fed blowing up asset priices, the flippers are an additional nuisance to the housing market. They serve as one more speculator in the mix competing with buyers helping to blow the bubble bigger.

The fed is the big problem of all of this. Laughing Dog and/or other economists may call it a qusi term or whatever. But in the final analysis, the fed was not elected by the people yet their policies have ruined the lives of many US home owners.

In California I believe there is a new tax for homes that are being flipped. Flippers anre a scourge. And Airbnb are getting their wings clipped in San Diego.

Flippers buy distressed properties, fix them up, then sell at a profit. What's the problem with that?

On the surface of it, the flippers provide a service of convenience for buyers and sellers. No problem with that.

But with the fed blowing up asset priices, the flippers are an additional nuisance to the housing market. They serve as one more speculator in the mix competing with buyers helping to blow the bubble bigger.

The fed is the big problem of all of this. Laughing Dog and/or other economists may call it a qusi term or whatever. But in the final analysis, the fed was not elected by the people yet their policies have ruined the lives of many US home owners.

Bull hockey.

 

[Harry Bosch]

It seems like a short sighted policy. The major cost of buying a house is not the sale price, but the interest on the mortgage. If the Canadian government was truly concerned about Canadians being able to buy a house, a program of low interest guaranteed loans with low down payments, targeted at specific segments of the economy, such as first time home buyers would be much more effective.

But what people can afford is the payment, not the total price. Thus low interest loans just drive up the price. Look at what has happened to US real estate recently--soaring, but now crashing as interest rates go up.

You contradict yourself. If a person can afford the payment, they can afford the price. As I said before, selling price is more important to the seller than the buyer.
It is demand for short supply that drives up prices. If house prices are the problem, more houses is the solution.

What I'm saying is that low interest loans simply drive up house prices, they don't help the situation.

More houses is a good thing but that's limited by how much space you have to put houses.

Low interest rates don’t drive up home prices. People competing for a limited supply of housing drives up demand. Lower interest rates facilitate the ability to purchase higher priced homes. Higher interest rates keep home prices lower. Which one is best for you depends on whether you are buying or selling. And whether or not you can come up with a down payment and how much.

Yep! You are absolutely correct.

 

[RVonse]

Low interest rates don’t drive up home prices.

Low interest most certainly drives up the price of all real assets.

If you can't see this clearly it helps to take an example the extreme limit; negative interest rates. If the bank pays you to borrow money eeryone borrows and buys anything real at any price because they can make a living out of the interest received from borrowing.

 

[Toni]

Low interest rates don’t drive up home prices.

Low interest most certainly drives up the price of all real assets.

If you can't see this clearly it helps to take an example the extreme limit; negative interest rates. If the bank pays you to borrow money eeryone borrows and buys anything real at any price because they can make a living out of the interest received from borrowing.

Interest rates affect price, sure. Not as much as supply and demand.

If the interest rate is zero, that does not mean that a buyer would be willing to spend $10M on a home. Sure, some buyers would but relatively few.

Moreover, lenders would not be willing to lend very many people money at a rate of 0% or less. Why would they?

 

[TSwizzle]

Amigo: you are incorrect here. Flippers make their money by buying distressed properties at a lower price (not higher); fixing them up, then selling at the market rate. Any flipper buying a distressed property at a higher than market rate will be out of business tout suite.

I understand what flippers do which is as what we both agree on. However, the difference is that investors/flippers have the capital to pay more than what the typical home buyer has available to purchase these “distressed” properties and therefore keep ordinary home buyers from getting in. The flipper is not competing with potential home buyers, they are competing against fellow speculators. Investors/flippers also have the capital to give the property a makeover and inflate the price. This forces the “retail” buyer to borrow more than the house is really worth which lenders are keen to do, lend more money. It’s a shitty state of affairs in my opinion.

In any event, California is onto the game and have some additional taxes in place. Whether that helps the situation or not, we shall see.

 

[Loren Pechtel]

My point was that there were so many posts that made it look as if the entire real estate market is controlled by Buffet, and real estate isn't really his thing compared to a lot of other big investment organizations. I think Black Rock, if memory serves me correctly, has bought up a lot of real estate in recent years. So, let's blame Black Rock.

I think one post about Buffet buying foreclosed homes. I don’t know if he did or not but he certainly does have real estate holdings. I have seen homes and rental listings from Berkshire Hathaway. In any event, there are plenty of companies that purchase homes and apartments/duplexes etc so there are plenty of companies to blame. Hopefully the domestic investors will be curtailed too.

The name on a real estate sign is usually the company marketing it, not the owner. Even rentals are often listed by the property management company, not the owner.