Case against the Foreign Buyers Taxes and Speculation Taxes

[chowhou]

Originally Posted by KincLosddy

I don’t know where you got your ‘fundamental principal’ definition of supply and demand but that ain’t it. This is demonstrably provable with a basic search and not something that is solely the arena of the post-secondary educated.
Supply and demand is the amount of product or service potentially or actually supplied to a market versus the demand and any adjustment related to meet it. Demand dictates supply dictates demand.

For-profit business isn’t hamming about in supply and demand environments devaluing their products or services unless under specific circumstances. Supply and demand dictates that you raise or lower the value of your commodities or services to match the carrying capacity of the end consumer (that is the capacity and/or willingness of the consumer to buy said product or service) If a product or service is being offered in a rarified way it is not unusual for businesses to lower production and/or increase cost to maintain profits or increase demand with the same goal.

The only times where companies devalue their products or services is in a competitive environment or in the spirit of increasing sales by decreasing prices.

And so we agree, companies intentionally devalue their products in competitive environments which is, of course, all markets that aren't monopolized or supply managed. Supply and demand. When profits are high, producers are expected to increase supply to capture more value, and prices drop.

Of course the housing market is supply managed. Every market is, in some way, supply managed. Housing across the world is often hampered in some way by regulatory process. Some of these regulations are in good faith, others in bad. Regulations can distort progress, yes, but in many circumstances they can also influence progress in ways that improve, not worsen distortions like the ones driving our housing crisis.

In an ideal world, yes, we could trust businesses to act in some form of altruism where they don’t take advantage of free markets to make as much money as possible and slowly rig the system to their eternal benefit but we apparently do not live in the world you think we do. If we could trust the companies to build homes and get us out of this market if they had free reign then in the same vain we wouldn’t be facing a colluded gasoline market, a colluded and expensive national cartel of telecom companies, or an ever-rising national grocery price issue (which includes huge profits for all of these companies.)

One thing I find interesting is your attitude about our government in BC pointing blame and doing nothing to fix our problems while also showing how Minneapolis has improved its housing situation. How did Minneapolis do this? One big thing they did was the same style upzoning blanket regulations that our government in BC has recently enacted across the province. All you have done is prove the point that government changes in regulation can and will lead to improvements of these issues and that the regulations our current government is enforcing can and do work.

The necessities of living, when commodfied, can be warped by monopolies and bad faith actors. Pretending otherwise hurts us all. Government regulation can disrupt the forces that create these issues if done wisely of course. All blaming the government for everything and demanding deregulation does is make the rich richer, the poor poorer, and the system of economics and finance more rigged in the favour of those with at the expense of those without.

Stating anything that isn't your view of economics as "Marxian" and big government and making snide comments about basic economics and education... it's not really conducive to a discussion in good faith. We can all have an adult conversation if we act like adults.

Minneapolis deregulating zoning is good, we agree.

"Colluded gasoline markets" is definitely a new one, though.

[KincLosddy]

Originally Posted by chowhou

You sure said a lot here to agree with me that companies intentionally devalue their products in competitive environments which is, of course, all markets that aren't monopolized or supply managed. Supply and demand. When profits are high, producers are expected to increase supply to capture more value, and prices drop.

Basic principles in sales and competition don't seem to have much effect on one of the worst housing bubbles on Earth. Show me the developers on the race to the bottom building cheap, small, no frills affordable units to outsell the competition. Oh wait, that's not happening. They are building "affordable luxury" that isn't affordable where there is no choice but the high cost stuff they build for maximum profit instead of competitive edge.

Market distortions, including investors and investment corporations are ensuring that if the people can't afford it, the rich can, and the supply remains constrained because that area of the housing market is lacking in regulations to protect normal, hard working people who don't have the huge financial means to fight against distorted market forces that are running amok.

Originally Posted by chowhou

Again you seem to say a lot to agree with me. Minneapolis deregulating zoning is good, we agree.

If you want to split hairs on regulation and semantics, sure continue to stroke your ego. As I said before regulations designed to improve market conditions are a good thing. Deregulation is not. Deregulation is the rallying call of those who want to get away with things.

I do appreciate that your entire takeaway was "Oh you agreeee with me."

I am a staunch supporter of rational regulatory changes. I am not a supporter of policies or people that look to completely unleash the so called "free market forces" that, without regulation, always end up in monopoly, oligarchy, collusion and conspiracy. Our housing is not a damned commodity to be controlled by those with all of the economic reach. We don't need kings and lords to our serfs. The only thing that can prevent a slow and steady failure of our system into monopolization is smart, rational regulations and policies which prevent the housing market from being an investors wonderland.

[chowhou]

Originally Posted by KincLosddy

Basic principles in sales and competition don't seem to have much effect on one of the worst housing bubbles on Earth. Show me the developers on the race to the bottom building cheap, small, no frills affordable units to outsell the competition. Oh wait, that's not happening. They are building "affordable luxury" that isn't affordable where there is no choice but the high cost stuff they build for maximum profit instead of competitive edge.

Market distortions, including investors and investment corporations are ensuring that if the people can't afford it, the rich can, and the supply remains constrained because that area of the housing market is lacking in regulations to protect normal, hard working people who don't have the huge financial means to fight against distorted market forces that are running amok.

In a supply managed market where developers are only allowed to build and sell a fixed number of condos a year, why wouldn't they build 100 high price condos instead of 100 cheap ones? When DeBeers had the diamond market monopoly and was supply managing diamonds they didn't flood the market with cheap ones either. The market distortion is the government (and really ultimately the voters) deciding to manage the supply of new development, not investors buying housing (and renting it out of course!) "People who I don't like are buying products" is not what "market distortion" means.

If you want to split hairs on regulation and semantics, sure continue to stroke your ego. As I said before regulations designed to improve market conditions are a good thing. Deregulation is not. Deregulation is the rallying call of those who want to get away with things.

I do appreciate that your entire takeaway was "Oh you agreeee with me."

This really is a hair splitter. One man's "deregulation" is another man's "regulation reform". I think we both agree that there is inevitably going to be some regulation (fire safety for one?). When I say "deregulation" I'm generally referring to reforming regulation in such a way that blocks less development. The fact of the matter is Minneapolis became more permissive of development. This was a good thing.

I am a staunch supporter of rational regulatory changes. I am not a supporter of policies or people that look to completely unleash the so called "free market forces" that, without regulation, always end up in monopoly, oligarchy, collusion and conspiracy. Our housing is not a damned commodity to be controlled by those with all of the economic reach. We don't need kings and lords to our serfs. The only thing that can prevent a slow and steady failure of our system into monopolization is smart, rational regulations and policies which prevent the housing market from being an investors wonderland.

Our food and clothing are damned commodities "controlled" by the globalist farmers and textile producers of the world. It seems like our needs are well taken care of there. (In fact, we actually provide government subsidies to the farmers to pad their profits and ensure a steady supply of food!)

[KincLosddy]

Originally Posted by chowhou

"People who I don't like are buying products" is not what "market distortion" means.

Housing should not be something that major corporations and the ultra-rich can buy mass amounts of. How is it not a distortion when the people with the most money buy up huge amounts of housing to rent out and hold for later sale? Corporate ownership is a market distortion when the same market is shared with individual working class families.

[chowhou]

Originally Posted by KincLosddy

Housing should not be something that major corporations and the ultra-rich can buy mass amounts of. How is it not a distortion when the people with the most money buy up huge amounts of housing to rent out and hold for later sale? Corporate ownership is a market distortion when the same market is shared with individual working class families.

https://en.wikipedia.org/wiki/Market_distortion The "wrong" buyers purchasing a good is not a market distortion if it's the FMV of the good.

Corporate ownership is often talked about as a "bad" thing but the fact of the matter is corporate ownership does not consume housing supply. There are no vacant properties being hoarded by corporate property owners, they're all (for the most part) rented out and lived in.

In fact, corporate ownership is good because corporations are now the only entities which can pool the capital necessary to redevelop lower density housing into higher density housing.

[KincLosddy]

Originally Posted by chowhou

https://en.wikipedia.org/wiki/Market_distortionCorporate ownership is often talked about as a "bad" thing but the fact of the matter is corporate ownership does not consume housing supply. There are no vacant properties being hoarded by corporate property owners, they're all (for the most part) rented out and lived in.

In fact, corporate ownership is good because corporations are now the only entities which can pool the capital necessary to redevelop lower density housing into higher density housing.

Holy moly. It does consume housing supply. It consumes stock that can no longer be owned by regular people. That in itself is one of the categories of housing that is in desperate need. Affordable homes for purchase, not rental. It shifts purpose-built purchase homes into rentals. This causes the purpose built purchase property supply to continue to be constricted.

Also I am not talking about corporations buying land to redevelop. I am talking about corporations and people that specifically buy single family homes and condos to rent them out and prevent others from being able to competitively purchase them.

Unless you are saying that people just don't want to own homes anymore. I don't know many people who would choose a rental over ownership if they had the choice. It creates an atmosphere of stress and impermanence which makes raising a family harder and harder these days.

[chowhou]

Originally Posted by KincLosddy

Holy moly. It does consume housing supply. It consumes stock that can no longer be owned by regular people. That in itself is one of the categories of housing that is in desperate need. Affordable homes for purchase, not rental. It shifts purpose-built purchase homes into rentals. This causes the purpose built purchase property supply to continue to be constricted.

Also I am not talking about corporations buying land to redevelop. I am talking about corporations and people that specifically buy single family homes and condos to rent them out and prevent others from being able to competitively purchase them.

Unless you are saying that people just don't want to own homes anymore. I don't know many people who would choose a rental over ownership if they had the choice. It creates an atmosphere of stress and impermanence which makes raising a family harder and harder these days.

It also provides housing stock to the rental market than can now be rented to people, increasing the supply and reducing the cost of rentals. You say this as if no one wants or needs to rent, but this has always been and will always be the case. Right now it's generally cheaper to rent than to buy so all else being equal it's the smart financial choice to make right now. Really it's probably a zero sum game. Rental housing and homeownership are always going to find an equilibrium. Regardless of that fact, the overall supply of housing remains unaffected by that process. The issue you should have is with municipalities supply managing housing, artificially restricting housing stock.

In a healthy housing market, you also want people (and corporations) to be investing in the supply of new housing. It's not entirely reasonable for prospective homeowners to enter into presale contracts with developers on projects that are 4-5 years out from completion. It's a hard pill to swallow for some but a lot of these landlord investors into presale condos are the literal definition of "housing providers". That unit would not have been built if not for the investment of owners in that building.

[KincLosddy]

Originally Posted by chowhou

It also provides housing stock to the rental market than can now be rented to people, increasing the supply and reducing the cost of rentals. You say this as if no one wants or needs to rent, but this has always been and will always be the case.

What I say is that people should have a choice. What we have is a situation where financial means and choice aren't entirely valid anymore because the market has distorted into a completely rich controlled game. Investors are buying up the condos. The apartment buildings. The single family homes. What hope does the average person have in that competition? Not a whole lot.

It is more effective at lowering rental prices to increase stock with efficient, densely constructed rental buildings... not capturing the single family home and condo market specifically for corporate controlled rentals. What you are saying is as daft as "turning rental apartments into for-sale homes won't effect the rental market supply". It's a completely different market category.

You state the obvious: It increases rental stocks. Yes, that is as obvious as the sky is blue but if you take a home from one market and move it to a completely different market it will have an effect on the original market. It's not like you are copy and pasting the house with different attributes. Regardless of rent or own there are people that are in need for each of these categories.

Originally Posted by chowhou

Regardless of that fact, the overall supply of housing remains unaffected by that process.

If you buy up single family homes and rent them out, the people in the market for single family homes to buy who are outbid by rental companies and the wealthy investors will not be able to buy those homes. They aren't going to say "oh fiddle dee dee, I guess I'll just rent it instead." They will move onto somewhere else with this loss of actually purchasable homes lowering available buyers stock and constricting or flatlining the market for buyable homes.

You speak as though taking two completely different market categories and flip flopping between them won't have any knockdown effects on supply on either side.

Corporations have one agenda in mind: Make as much money as they can. This does not bode well for the average working citizen who can't afford a bidding war for homes that were SPECIFICALLY not designed to be rentals. So they can easily outbid any average working person, then take the home and rent it out for exorbitant rates. Considering most of these homes are extremely low density, this does nothing but turn the home into a corporate money maker instead of furthering the work towards easing the crisis.

A complete ban on the conversion of single family homes and condos to rental properties by corporate entities should be enacted followed by regulations and zoning reforms to inspire larger investments in rental apartments and density.

Corporate ownership of purchasable homes is a parasitic, society damaging way of making money. I was thinking in our talk here we could find some common regulatory ground but your blind support for not only maintaining but intensifying our housing woes by supporting the very issues that further commodify our housing supply makes me think that is a hopeless goal.

These companies and investors are in it to make loads of cash. If we had turned those opportunities away decades ago we wouldn't have a housing crisis to begin with. Here we are, though. Now we face a future where people want even more corporate interest in buying up all the homes. They seem to think the old serf and lord manor system is the best way to live in a modern society. I guess the people who support these policies also think they'll be in the "in" crowd should the market worsen.

[Kisai]

Originally Posted by chowhou

Why is it okay for a family to do renovations on a house but not someone else? Shouldn't we ban all cosmetic upgrades to houses because they reduce affordability?

I think that's missing the forest from the trees.

"House flipping" is barely more than doing the minimum renovation (eg a new coat of paint, maybe removing a wall to destroy the buildings intended airflow and low it's heating efficiency.)

A properly designed "home"

- All bedrooms can fit at least queen size bed and a computer desk and still have room to walk (200sq ft each)
- All bedrooms have closets 3' deep and 12' wide or better
- All bathrooms are full 4pc (shower, tub, toilet sink) or 3pc if attached to a bedroom (shower, toilet, sink) (50sq ft)
- Full kitchen as intended (eg you can open the fridge door and not hit anything, you can open the oven door and not hit anything), double-sink, stove, vented to the outside range hood, fridge, dishwasher, microwave (space), or built into the range hood.
- Living room is big enough to support a full furniture and entertainment unit setup. Many 1200sq homes are actually too small to support this. And yet developers insist on building sub-500sq ft microsuites that you can't fit a bed or couch in.

The fact is, developers and landlords lie in Vancouver. All of them. You want to buy or rent a 2 bedroom home, what you get is a 1 bedroom+ useless den with a closet 3 inches deep. Every time. Listings are full of mistakes and no floor plans to actually verify what is in the listing.

You want to make a comparison to Asaia? Well Japan and Korea actually have standard building configurations. "2LDK" = 2 Actual bedrooms, Living Room, Dining Room, Kitchen. The problem is those are typically 500sq ft for two bedrooms and if you actually look at the floor plans, the living room, dining room and kitchen are all one room because Japanese people live in uninsulated buildings and use the kotatsu to save energy.

That is not BC. At all. Yet that is what every developer has been offering for the last 20 years. Small buildings with even smaller living spaces. Humans are not shrinking, yet somehow the fools will come out of the woodwork to say "deregulate", and the consequences of that is we end up Japanese style pod hotels when they finally decide people can live without their own bathroom.

You know, like what all the SRO's become.

[Sheba]

Oh my - it's happening elsewhere in the world too!

Why is Spain considering a 100 per cent tax on homes bought by non-EU buyers?

Spain is planning a raft of measures to address its brewing housing crisis, including an up to 100 per cent tax on properties bought by people who are neither citizens nor residents of the European Union.

Spanish Prime Minister Pedro Sanchez announced the plan this week to tackle housing affordability and high rents in the Southern European nation. He said that the overall goal was to provide "more housing, better regulation and greater aid."

"The West faces a decisive challenge: To not become a society divided into two classes, the rich landlords and the poor tenants," Sanchez said as he announced the plan.

However, it remains unclear if the plan put forth by Sanchez's minority coalition will pass in parliament.

...

Spain plans to build more public housing and allocate around 2 million square metres (21.5 million square feet) of residential land to a newly created public housing agency.

Other proposed measures include higher taxes on holiday rentals, tax breaks and protections for landlords who provide affordable housing, and amending laws to speed up construction processes and expand the availability of land for private construction.

...

[chowhou]

This just sounds to me like Spain realized that post-Brexit they can squeeze British snowbirds for more money to support their stagnating economy.

I personally don't want to take any economic lessons from chronic 12% unemployment Spain.

[GenWhy?]

Originally Posted by chowhou

This just sounds to me like Spain realized that post-Brexit they can squeeze British snowbirds for more money to support their stagnating economy.

I personally don't want to take any economic lessons from chronic 12% unemployment Spain.

For their housing crisis I think this element of the article is more relevant:

"Spain plans to build more public housing and allocate around 2 million square metres (21.5 million square feet) of residential land to a newly created public housing agency.

Other proposed measures include higher taxes on holiday rentals, tax breaks and protections for landlords who provide affordable housing, and amending laws to speed up construction processes and expand the availability of land for private construction."

[GenWhy?]

I understand that unemployment and economic hard times don't aid in the ability of folks to afford housing there as well, all these things can be true - and delt with - at the same time.

[chowhou]

Not to mention that Spanish real estate still hasn't recovered from the 2008 financial crisis. Property values there are still ~35% lower than they were in 2008.

Spanish house prices recover to level of 2008
Posted on January 12, 2024

Data recently published by the National Institute of Statistics (INE) on Spanish housing prices in the third quarter of last year shows prices recovering to where they were back in 2008, at least in nominal terms.

It has taken fifteen years for the average Spanish house price to get back to where it was at the tail end of the last boom, reveal the latest Spanish property price figures from the INE, as illustrated in the chart above.

Although the average Spanish house price has recovered to where it was fifteen years ago in nominal terms, in real terms (adjusted for inflation) the average price is still 35pc below the level of Q1 2008. Prices have risen 50pc in nominal terms since 2015 but anyone who invested in the bubble period that was already deflating by 2008 is probably still nursing negative equity.

Moreover, the INE’s house price index is the only one that has finally recovered all the ground it lost since 2008. The other most-watched indices published by the Housing Ministry, the notaries, and the property portal Idealista (asking prices) are still below where they were fifteen years ago, as you can see from the next chart.

https://www.spanishpropertyinsight.com/2024/01/12/spanish-house-prices-recover-to-level-of-2008/

I recommend that everyone be very careful when comparing our policy to what is obviously populist economic policy in Spain. You might realise that ours is a case of populism too. At least Spain is allegedly also taking steps to reduce construction regulation alongside the populist rhetoric. It would be nice if we could do the same.

[chowhou]

I figure that this graphic is also pretty relevant for this discussion:

New housing units approved in Spain 1992-2023

[whatnext]

Doesn’t that just reinforce the incredible amount of overbuilding leading leading up to their bubble popping in 2008?

[chowhou]

Originally Posted by whatnext

Doesn’t that just reinforce the incredible amount of overbuilding leading leading up to their bubble popping in 2008?

It's all just to show that the Spanish real estate situation is 1. completely dissimilar to ours and 2. completely unrelated to "Non-EU residents (i.e. Brits and Arabs) buying up all the homes!"

[Kisai]

Originally Posted by chowhou

It's all just to show that the Spanish real estate situation is 1. completely dissimilar to ours and 2. completely unrelated to "Non-EU residents (i.e. Brits and Arabs) buying up all the homes!"

You sure about that?


In a perfect situation, there were be no corporate ownership of any SFH, only MDU's, and each MDU would be ONE corporate ownership where the rental/strata fees go 100% into the maintenance of the building. Not surprise rent increases, or sudden surprise "leaky condo remediations" because the cost to rent/live in it was set too low to cover for emergency repairs.

Instead the status quo here is people who do not live here, owning property. The building I live in? Owned by some guy in Florida. There's 360 units in it. I'm less objecting to the idea that "someone owns the building" but more objecting to that the rents being charged are not in line with how much it costs to maintain the property. How is it that I have a unit half the size but am paying twice as much as the next unit? And they want to raise the rent for maintenance that happened to the building a year before I moved in?

I'm sorry, but if the owner of the building was required to live in it, they would know exactly what the condition of the building is and who they're renting to. Which is why "AirBnB/VRBO" should always have that requirement. Because you know what happens here? Someone who doesn't live in BC, buys a SFH, and rents it out to two groups of people (one on the top floor, one in the basement) and then when there is a fight between them, the property is inevitably damaged because the owner isn't aware of anything until the damage has been done.

When a BC corporation owns the BC building, and the owners and staff live in the building then they know what is going on. They will do things in the interest of preserving the quality of life in the building. When the people who actually own the building don't live in the country their only interest is in extracting as much rent out of the property, regardless of the equity in the building. At some point if the building becomes too expensive to the foreign owner, they will just sell it to a developer, kick everyone out, and then the property will be left to rot for a decade or fall into recievership, like we've seen over and over again.

There needs to be a requirement that buildings must be operated/owned by people who live in the building, and the revenue from that building must go back into the building, and not into another property or the pockets of a foreigner.

We even see this problem with the big properties like Metropolis at Metrotown, where the owners of the mall seem to not give a care about the maintenance of the property anymore ever since the city changed the zoning. They were supposed to rebuild the pedestrian overpass once the old one was cut off in 2018. it's now 7 years later, no pedestrian overpass, and people are being hit by cars.

We need to "owners" of property in BC, to actually live in BC, otherwise we're going to keep seeing situations where properties in BC are left to rot because the land owner decides to not pay the electricity or gas bill, and lets the building decay.

[chowhou]

Originally Posted by Kisai

You sure about that?

Yes.

In a perfect situation, there were be no corporate ownership of any SFH, only MDU's, and each MDU would be ONE corporate ownership where the rental/strata fees go 100% into the maintenance of the building. Not surprise rent increases, or sudden surprise "leaky condo remediations" because the cost to rent/live in it was set too low to cover for emergency repairs.

Instead the status quo here is people who do not live here, owning property. The building I live in? Owned by some guy in Florida. There's 360 units in it. I'm less objecting to the idea that "someone owns the building" but more objecting to that the rents being charged are not in line with how much it costs to maintain the property. How is it that I have a unit half the size but am paying twice as much as the next unit? And they want to raise the rent for maintenance that happened to the building a year before I moved in?

I get the feeling you're coming close to critiques of rent control, not foreign ownership.

When a BC corporation owns the BC building, and the owners and staff live in the building then they know what is going on. They will do things in the interest of preserving the quality of life in the building. When the people who actually own the building don't live in the country their only interest is in extracting as much rent out of the property, regardless of the equity in the building. At some point if the building becomes too expensive to the foreign owner, they will just sell it to a developer, kick everyone out, and then the property will be left to rot for a decade or fall into recievership, like we've seen over and over again.

There needs to be a requirement that buildings must be operated/owned by people who live in the building, and the revenue from that building must go back into the building, and not into another property or the pockets of a foreigner.

Why do you think BC Corporations are uniquely communist while foreign owners are uniquely capitalist? Everyone wants to get an ROI on their assets, and there's no reason to expect a BC Corp to be any more benevolent than a foreign owner. And it seems like you're rallying against corporate profit which is just another way of saying you don't want foreign owners or domestic owners or anyone ever investing in housing again. Why would we want that?

[Sheba]

Originally Posted by Kisai

We even see this problem with the big properties like Metropolis at Metrotown, where the owners of the mall seem to not give a care about the maintenance of the property anymore ever since the city changed the zoning. They were supposed to rebuild the pedestrian overpass once the old one was cut off in 2018. it's now 7 years later, no pedestrian overpass, and people are being hit by cars.

Actually that walkway is shared between the mall, TransLink and Burnaby. I'm not sure but I think it's the city that's holding up replacing it with a new walkway (at the other end of the bus loop). I just wish they'd remove the old one as it's such a useless eyesore.