Canada ban foreign real estate investors

[RVonse]

.

This is happening across Cleveland.

On the surface of it this is very good news indeed. That Cleveland might still be a practical location for middle class americans assuming they can find a job (which is a big if). But Cleveland represents the exception to this thread and exact opposite what the global community would consider a worthwhile investment. The only reason Cleveland could have such low prices (unlike pretty much everywhere else) is that no investor from China or anywhere else would touch Cleveland with a 10 foot pole. Let INTEL or some other chip maker move in with jobs and prosperity.... and see if Cleveland still has good starter homes for affordable prices. That is when I will take notice.

 

[laughing dog]

.

It is a shame that people lost their homes . Some people lost their homes due to their own poor choices. Some people bought homes that they should not have, but were misled by lenders and ending up losing their homes. Some people lost their homes due to bad luck.

Since Warren Buffett does not buy worthless assets, your response is rather confusing.

You can blame the individual people who got into trouble but it is telling that so many people "made their own poor choices" all at the same time.

Telling how? BTW, I am not blaming anyone. Some people did make poor choices. But as I wrote (and you conveniently ignored), some people were misled by lenders and some people had bad luck.

Whether or not Warren Buffet buys worthless assets is not the point. That he bought them in order to make them into productive rentals for the same people who voluntarily gave away ownership of those homes is the point.

You claimed the homes were worthless. The point I made is that were not. Moreover, the "productivity" of those homes did not change on iota from the change in ownership: the function of the homes was not altered by the change in ownership.

 

[RVonse]

.

Yes, Buffet purchased what people got scared and dumped.

That’s something that happens every single day, all day long.

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.

 

[laughing dog]

The whole affair was caused by another private institution called the fed.

he Federal Reserve did not cause the home price bubble. Your claim is counterfactual.

A private institution steering government monetary policy.

The Federal Reserve is quasi-public (or quasi-private). Your claim is based on misinformation.

I think that is the very definition of facism.

You may think that is the very definition of fascism, but your definition is not the commonly accepted one.

 

[Toni]

.

This is happening across Cleveland.

On the surface of it this is very good news indeed. That Cleveland might still be a practical location for middle class americans assuming they can find a job (which is a big if). But Cleveland represents the exception to this thread and exact opposite what the global community would consider a worthwhile investment. The only reason Cleveland could have such low prices (unlike pretty much everywhere else) is that no investor from China or anywhere else would touch Cleveland with a 10 foot pole. Let INTEL or some other chip maker move in with jobs and prosperity.... and see if Cleveland still has good starter homes for affordable prices. That is when I will take notice.

There are lots of places besides Cleveland with affordable housing and a much better jobs market.

But maybe I should stop trying to convince you and keep the Midwest for the smart people.

 

[TV and credit cards]

.

He said that back in the 1930's before the fed and global bankers had the chance to completely fuck the whole world apart. Because back in the 1930's price was still usable as a signal for discovery....long before cash was untied to gold (a real asset) and interest was artificially held low for decades. At this point, its hard to say just what a house really is worth due to lack of real price discovery. And at this point may well make better sense for everyone to rent than to own. Owning a house even at low interest will not make a better citizens if that citizen goes bankrupt after their main investment (home) suddenly deflates to where its price really belongs. Just because a bubble hasn't popped yet does not mean it will not pop in the future.

Why would they go bankrupt? Home valuation is just a number until it's sold. And when a bubble bursts, you call the bank and tell them to refinance at the lower valuation or you'll walk away. It works. The bank doesn't want to own your house and if they take it back, they are still looking at that lower valuation so it's better that they are at least getting a payment from you.
A burst real estate bubble is the one time the little guy can do the screwing.

Is that what happened during the last 2008 bubble? If the main asset becomes worthless enough the keys go back to the bank and that house stands empty.

Everyone's situation is unique to them but if you were unlucky enough to buy at the top of the market and over the next two years you watch your home valuation drop by 40%, how are you going to feel about making monthly payments on that original purchase price? It's decision time.
Mortgage lenders don't want to own empty homes, cut the grass, pay property tax. So they end up selling them to Blackrock and the like who snap up all these homes at depressed valuations and rent them out. They can play the long game and wait for prices to come back around.

 

[ZiprHead]

In the 1940's you could buy a starter home for 2 times your annual income. Where can you do that today? If the home cost $300k its in a location where average income is probably around $80k or less.

About four blocks away from me.

Nextdoor

Find real estate listings on Nextdoor, the neighborhood hub.

nextdoor.com

 

[ZiprHead]

I remember seeing last year localities are instituting ordinances that residences must be occupied within a short period of time after the sale to discourage investors from buying property and just sitting on it waiting for the values to increase.

 

[Toni]

.

Yes, Buffet purchased what people got scared and dumped.

That’s something that happens every single day, all day long.

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.

People like Buffett do buy up assets that other people are dumping. Every day. All day long.

In the 1940's you could buy a starter home for 2 times your annual income. Where can you do that today? If the home cost $300k its in a location where average income is probably around $80k or less.

About four blocks away from me.

Nextdoor

Find real estate listings on Nextdoor, the neighborhood hub.

nextdoor.com

That's not a bad house!

 

[Toni]

.

He said that back in the 1930's before the fed and global bankers had the chance to completely fuck the whole world apart. Because back in the 1930's price was still usable as a signal for discovery....long before cash was untied to gold (a real asset) and interest was artificially held low for decades. At this point, its hard to say just what a house really is worth due to lack of real price discovery. And at this point may well make better sense for everyone to rent than to own. Owning a house even at low interest will not make a better citizens if that citizen goes bankrupt after their main investment (home) suddenly deflates to where its price really belongs. Just because a bubble hasn't popped yet does not mean it will not pop in the future.

Why would they go bankrupt? Home valuation is just a number until it's sold. And when a bubble bursts, you call the bank and tell them to refinance at the lower valuation or you'll walk away. It works. The bank doesn't want to own your house and if they take it back, they are still looking at that lower valuation so it's better that they are at least getting a payment from you.
A burst real estate bubble is the one time the little guy can do the screwing.

Is that what happened during the last 2008 bubble? If the main asset becomes worthless enough the keys go back to the bank and that house stands empty.

Everyone's situation is unique to them but if you were unlucky enough to buy at the top of the market and over the next two years you watch your home valuation drop by 40%, how are you going to feel about making monthly payments on that original purchase price? It's decision time.
Mortgage lenders don't want to own empty homes, cut the grass, pay property tax. So they end up selling them to Blackrock and the like who snap up all these homes at depressed valuations and rent them out. They can play the long game and wait for prices to come back around.

F* your feelings: It's stupid to sell your house because the market changed. It's also stupid to buy a house with an adjustable mortgage. And it's really stupid to panic and default on your mortgage unless you absolutely cannot financially continue to make payments---NOT because you no longer think you got a good deal. It's the same house you bought. You wait it out unless you've lost your job or had some financial set back or have to relocate to a different state.

I also think it's foolish to purchase a house thinking you will turn a big profit on it in a few years--or ever. Speculation is just that: speculation. You can lose money just as easily as make it. If you purchase a home, then you need to think of it that way: as a HOME.

The smart thing to do is to buy something you really like and can see yourself living in long term because it's well designed and in a good location for your life. Stay away from trends and go with basic. You may end up needing to do some updates at some point but so what? We updated our house knowing full well that Victorian houses in our area are vastly undervalued and we won't 'turn a profit' on our house, even though we've owned it for more than 30 years. We updated it because we felt the house needed and because the location of the house is still convenient for us. I don't expect that we will lose money that we invested in the house--we could but probably not. But I also don't expect to make any money on it, either. We don't live in the right place for that sort of thing.

OTOH, people can and do re-negotiate their mortgages. We did that when interest rates dropped. So have two of my kids...

 

[Jimmy Higgins]

The whole affair was caused by another private institution called the fed.

he Federal Reserve did not cause the home price bubble. Your claim is counterfactual.

A private institution steering government monetary policy.

The Federal Reserve is quasi-public (or quasi-private). Your claim is based on misinformation.

I think that is the very definition of facism.

You may think that is the very definition of fascism, but your definition is not the commonly accepted one.

Typical RVonse post, only blame the government when just about all the top players had large amounts of blame for instigating or being negligent about the bubble.

The Fed most certainly was a substantial instigator to the housing bubble. Congress was negligent, as housing was the only thing driving the economy. The lenders were giving homes to anyone. I remember getting a near 0 down mortgage but only bought about half of what banks would lend me. Then the banks started going ARM which was fraud and negligence. And finally the ratings agencies were either too complicit or too ignorant to manage the ratings of high risk short term mortgages which put industrial level investors at terrible risk.

 

[Harry Bosch]

The whole affair was caused by another private institution called the fed.

he Federal Reserve did not cause the home price bubble. Your claim is counterfactual.

A private institution steering government monetary policy.

The Federal Reserve is quasi-public (or quasi-private). Your claim is based on misinformation.

I think that is the very definition of facism.

You may think that is the very definition of fascism, but your definition is not the commonly accepted one.

Typical RVonse post, only blame the government when just about all the top players had large amounts of blame for instigating or being negligent about the bubble.

The Fed most certainly was a substantial instigator to the housing bubble. Congress was negligent, as housing was the only thing driving the economy. The lenders were giving homes to anyone. I remember getting a near 0 down mortgage but only bought about half of what banks would lend me. Then the banks started going ARM which was fraud and negligence. And finally the ratings agencies were either too complicit or too ignorant to manage the ratings of high risk short term mortgages which put industrial level investors at terrible risk.

Yes, lenders reduced their underwriting to absurd levels prior to the 2009 crash. However, ARMs are just a tool. In the right situation, they can be very beneficial. I bought a second home several years ago with ARM that is at 1.79%! At the time, the prevailing rate for a fixed 30-year rate was around 3.5%. But I didn't want a long-term rate. The ARM was good for five years. It's scheduled to rerate in about 4 months. The rate will go up to at least 7% then. No problem. I have the cash set aside. I'll pay off the loan in full and never have consumer debt again.

 

[jonatha]

Xenophobia is always shortsighted.

So is okiophobia.

It is sublimely appropriate that you misspelled oikophobia...

 

[Harry Bosch]

.

He said that back in the 1930's before the fed and global bankers had the chance to completely fuck the whole world apart. Because back in the 1930's price was still usable as a signal for discovery....long before cash was untied to gold (a real asset) and interest was artificially held low for decades. At this point, its hard to say just what a house really is worth due to lack of real price discovery. And at this point may well make better sense for everyone to rent than to own. Owning a house even at low interest will not make a better citizens if that citizen goes bankrupt after their main investment (home) suddenly deflates to where its price really belongs. Just because a bubble hasn't popped yet does not mean it will not pop in the future.

Why would they go bankrupt? Home valuation is just a number until it's sold. And when a bubble bursts, you call the bank and tell them to refinance at the lower valuation or you'll walk away. It works. The bank doesn't want to own your house and if they take it back, they are still looking at that lower valuation so it's better that they are at least getting a payment from you.
A burst real estate bubble is the one time the little guy can do the screwing.

Is that what happened during the last 2008 bubble? If the main asset becomes worthless enough the keys go back to the bank and that house stands empty.

Everyone's situation is unique to them but if you were unlucky enough to buy at the top of the market and over the next two years you watch your home valuation drop by 40%, how are you going to feel about making monthly payments on that original purchase price? It's decision time.
Mortgage lenders don't want to own empty homes, cut the grass, pay property tax. So they end up selling them to Blackrock and the like who snap up all these homes at depressed valuations and rent them out. They can play the long game and wait for prices to come back around.

F* your feelings: It's stupid to sell your house because the market changed. It's also stupid to buy a house with an adjustable mortgage. And it's really stupid to panic and default on your mortgage unless you absolutely cannot financially continue to make payments---NOT because you no longer think you got a good deal. It's the same house you bought. You wait it out unless you've lost your job or had some financial set back or have to relocate to a different state.

I also think it's foolish to purchase a house thinking you will turn a big profit on it in a few years--or ever. Speculation is just that: speculation. You can lose money just as easily as make it. If you purchase a home, then you need to think of it that way: as a HOME.

The smart thing to do is to buy something you really like and can see yourself living in long term because it's well designed and in a good location for your life. Stay away from trends and go with basic. You may end up needing to do some updates at some point but so what? We updated our house knowing full well that Victorian houses in our area are vastly undervalued and we won't 'turn a profit' on our house, even though we've owned it for more than 30 years. We updated it because we felt the house needed and because the location of the house is still convenient for us. I don't expect that we will lose money that we invested in the house--we could but probably not. But I also don't expect to make any money on it, either. We don't live in the right place for that sort of thing.

OTOH, people can and do re-negotiate their mortgages. We did that when interest rates dropped. So have two of my kids...

Both you and TV make great points. Yes, lenders do not want the homes. They never want to take collateral from a borrower in default. Borrower's do have negotiation ability due to this. But yes, appraised values in homes goes up and down. They are based on market value, which changes daily! I had three homes in 2009. Didn't lose a dime as I didn't sell when the market values were down.

 

[southernhybrid]

There is plenty of misinformation in this thread, but can we at least stop making the claim that Warren Buffet bought up a lot of real estate when the market collapsed. Buffet doesn't invest in real estate.

Buffet has said for years that he considers real estate a bad investment. I can agree to some extent, since we've lost plenty of money on most of the homes we've bought and the ones that we did make money on wasn't that much. Considering we had to live somewhere, it wasn't the worst thing that could happen, but it's stressful when you move and have to rent out your former home because it's impossible to sell at that time. The real estate market varies over the years, but since the housing collapse around 2008, builders haven't kept up with the demand for new homes, so over the past few years, demand has been higher than supply, which along with historically low interest rates, has keep the housing market rising.

Some people do make a lot of money in real estate but it's often risky and you have to deal with upkeep etc. It's fine for the average person to buy a home, pay off the mortgage and have that home as their primary asset into old age, and while plenty of investment groups did buy up a lot of homes in recent years, Buffet wasn't one of them. He only invests in stocks that he thinks will do well in the long term.

The real estate collapse that happened around 2008 was partly due to giving mortgages to people who couldn't afford them and didn't understand this. The recession also impacted real estate during that period. People lost jobs and could no longer afford their mortgage payments. It's hard to foreclose on a house in some states, but it's very easy on other states. Georgia is one of the states that, imo, makes it too easy to foreclose on a home. I think one only has to be behind by two payments to lose their home. It can take years to foreclose on a home in NJ. These things vary by state laws.

The reason real estate prices have been rising. rapidly over the past few years is due to the historically low interest rates, and supply and demand. This is one of many areas that has caused the fed to increase interest rates in an attempt to reign in inflation. That is always risky and sometimes leads to recession, but there aren't many tools to help lower inflation. The problem that continues in the real estate market is that demand is still greater than supply. Prices are dropping in some areas but they continue to rise or be stable in others. Homes in my town are still somewhat affordable for the average person, even with interest rates back to what to what they were historically. In fact, they are still a bit lower than they were in some decades. We never had a mortgage rate lower than 7 or 8%, until we refinanced in the early oughts and then paid off our mortgage. We temporarily had a rate of 13% during the early 80s.

I don't see what would traditionally be called starter homes being built, as even in my city, most new homes start in the. 400s, while smaller, older renovated homes can still be purchased for between 100 and 250K, depending on the location. Only a professional couple or a single person with a very good income and lots of savings can afford a 400K home. At least taxes are fairly reasonable here, compared to a lot of places.

I look at real estate in Indianapolis on a daily basis, and have found the same thing there. Location continues to be one of the most important factors that influence price. For example, there are two streets near me that are considered highly desirable. Those homes still sell in days if the price is. under 300 and they have been renovated. There are other areas of town, while not unattractive imo, are simply not considered as desirable. The homes are much smaller and they would make good starter homes for those willing to give up their dream to live near downtown etc. Those homes sell for far less and usually take longer to sell. Crime rates in an area often impact price as well. That may be why sites like realtor.com have taken the crime section off of their site. I've enjoyed following real estate for fun my entire life, but I hesitated to invest in it, due to having to deal with renters and upkeep.

It's nonsense that price isn't important. If you need to sell your home and you paid 500K for it and the market collapses, but you still owe 450K, but the house is now only worth 400K and you need to move, you're screwed unless you have a lot of cash that allows you to pay off that mortgage. Been there, done that. Sometimes the seller needs to bring their check book to the closing to pay off the rest of the mortgage if the house sold for less than was owed. I know this from personal experience. Real estate is a good investment after the market collapses. For example, there were condos selling in ATL for 40K after the collapse around 2008. They now are selling for at least 200K.

Anyway, I agree it's problematic when foreign investment firms buy up lots of real estate, but it's also a problem when large investment firms connected to their own country buy up lots of real estate. This makes it harder for the average buyer and it can drive up prices and rental rates. Many of the homes bought by investment firms have been used as rentals. I've read a lot about this issue. But, even worse is when large investment firms buy up rental properties and then don't keep them up. That is a huge problem in parts of Atlanta. The AJC has done extensive investigations on this topic. Let me just add that it's very sad that so many Americans can't afford decent housing regardless if they rent or buy. The reasons are complicated.

 

[Loren Pechtel]

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.

 

[Loren Pechtel]

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.

 

[TSwizzle]

There is plenty of misinformation in this thread, but can we at least stop making the claim that Warren Buffet bought up a lot of real estate when the market collapsed. Buffet doesn't invest in real estate.

Actually Buffett has a burgeoning mobile home empire. Which is screwing many low income people. I would consider that to be real estate.

 

[Toni]

Low interest rates contribute to rising home values/prices. Rising home prices create less demand for home purchasing and so also contribute to lower interest rates because banks make money when they make loans.

When one is going to apply for a mortgage, the lender knows how much money you can afford to pay on a mortgage (based on what info you give them about income, other debts, credit score, etc). Say, for simplicity's sake that you are rated at being able to afford to pay $2000/month. How that will be divided out between principle and interest depends on interest rates. If interest rates are low, you can buy a more expensive house for your $2000/month. When interests rise, your $2000/month will allow you to purchase a less expensive house; more of your payment goes towards interest.

To be fair, it is not always easy to know if you are in a bubble market or where on the bubble you are. Sometimes people are overly optimistic. Sometimes they are really fearful that if they do not jump into the market now, they will be priced out of home buying altogether.

It is particularly a struggle for families with children. Suitable rentals for families of 4 or more are difficult to come by, and expensive. It is difficult to save for a down payment if you are paying high rent. It can be a very vicious cycle. Of course the 'smart' thing to do is to buy a home before one has children but that does not always work out. For women, especially, waiting until one is in her forties, having established a career, saved for and purchased a home will mean more uncertainty and more difficulty in conceiving and carrying a healthy pregnancy. And life happens. People are married, have children, and then something happens: there is a death or a divorce, or a job loss and necessary relocation and suddenly, one must find another home, and one suitable for children. Life does not go according to plan.

 

[southernhybrid]

There is plenty of misinformation in this thread, but can we at least stop making the claim that Warren Buffet bought up a lot of real estate when the market collapsed. Buffet doesn't invest in real estate.

Actually Buffett has a burgeoning mobile home empire. Which is screwing many low income people. I would consider that to be real estate.

Ok. I'm not aware of that. I have just read that he doesn't like investing in real estate because he believes it's too risky. He's always been a stock man. I'm not a fan, but I find him to be an interesting character and at least he gives most of his money away. But, I digress.

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.