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Foreign investors are buying condos in bulk to rent out


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11 minutes ago, Michael Hardner said:

Well... sort of.  Globalism was unleashed by the fall of the Soviet Union and China succumbing to liberalism.

Capitalism is behaving as we heard it would since 1867

You are correct. Capitalism is reacting to global events exactly how it is expected to. The problem is, like Communism, without checks and balances Capitalism becomes destructive.

No economic or political system can exist to the benefit of all people, without checks and balances. Raw Capitalism is as destructive and raw Communism.

Now if we could just get the politicians to re-learn that simple truth and re-visit cooperation and compromise...we wouldn't have nearly half as many of these types of issue.

Edited by Nationalist
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2 hours ago, ernesthem said:

It's not surprising, the most effective way to invest money is to buy real estate.

They need to put a speculator tax on properties owned by foreigners or people who don't live in the properties they own and make it high enough so that isn't no longer profitable to speculate.

Markets are for investing. Homes are for living in.

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On 6/23/2020 at 5:39 PM, Moonlight Graham said:

So the wealthy foreign investors travel to Canada to look at the condo properties to buy here.  Then they leave Canada.  They buy condos in bulk, and then have their real estate agent rent them to people in Canada.  How in world is this legal?  Canadians are getting screwed.  Foreign investors are helping to drive up Canadian real estate prices.

What would be the mortgage payment on a $750,000 - $1,000,000 property over a 25 year amortization period and how much can they charge for rent?

I think the prices will still depend on what those who live in the units can afford.  If they cannot afford it, the unit remains empty and the "investor" is stuck with the mortgage payments or an overpriced unit if he paid for it in cash.

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58 minutes ago, cougar said:

What would be the mortgage payment on a $750,000 - $1,000,000 property over a 25 year amortization period and how much can they charge for rent?

depends on the interest rate

the interest on the mortgage determines the net amortization

but assuming, for example, a fixed mortgage rate of 5%,  on a 25 year mortgage

the monthly payment on a $1,000,000 property would be $5,845.90

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3 hours ago, Dougie93 said:

depends on the interest rate

the interest on the mortgage determines the net amortization

but assuming, for example, a fixed mortgage rate of 5%,  on a 25 year mortgage

the monthly payment on a $1,000,000 property would be $5,845.90

OK, so who would be able to afford this type of rent? Usually monthly rent is higher than the monthly mortgage payment.   My present mortgage is just below $1,000/month and with $100K/ year  we are just hanging in there. With the 30% rise of food prices and the 60% rise in fuel costs it is becoming near impossible. Rent for my place would be at least $1,400/month which might include electricity and of course maintenance costs.

Then, if one has such high income as to be able to afford $5,800 in rent, would they not also have the ability to outright buy a place ?

I really cannot see  sound justification for the sky high house prices.

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9 hours ago, cougar said:

I really cannot see  sound justification for the sky high house prices.

the prices are sky high because of government policy

the governments are running an inflation bases economy, and it is accelerating

the central banks print money to buy the government bonds

this has driven interest rates down to net negative returns

this has two simultaneous effects

the increased numbers of dollars devalues the currency

while at the same time investors are driven to seek returns in assets, which causes asset class inflation

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6 hours ago, Dougie93 said:

the prices are sky high because of government policy

the governments are running an inflation bases economy, and it is accelerating

the central banks print money to buy the government bonds

this has driven interest rates down to net negative returns

this has two simultaneous effects

the increased numbers of dollars devalues the currency

while at the same time investors are driven to seek returns in assets, which causes asset class inflation

I understand that - growth offset by inflation to the point where there is no growth (but possibly a decline) and the interest the government owes on its debt becomes zero or negative, while the debt shrinks with inflation as well.

What I can't see is the value of a house without someone living in it.  If incomes don't go up, the chances are the house will remain unoccupied and useless.  The value of a useless thing is what?

Edited by cougar
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12 minutes ago, cougar said:

I understand that - growth offset by inflation to the point where there is no growth (but possibly a decline) and the interest the government owes on its debt becomes zero or negative, while the debt shrinks with inflation as well.

What I can't see is the value of a house without someone living in it.  If incomes don't go up, the chances are the house will remain unoccupied and useless.  The value of a useless thing is what?

rising interest rates will burst the asset class inflation bubbles

the central banks are politicized, so they are putting off raising interest rates to try to prop up the status quo elites

at some point however, interest rates will have to go above inflation in order to remove dollars from the system

this will cause a stock market crash, which is already in progress, initial stages of

there is a divergence in the Canadian real estate market however

because fully detached homes are in very short supply

so even when there is a massive correction in the real estate market due to rising interest rates

fully detached homes in desirable locations will remain at a premium in relation to condominiums

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7 minutes ago, Dougie93 said:

there is a divergence in the Canadian real estate market however

because fully detached homes are in very short supply

There is one possibility though.   If the money for the house does not come from the investor's pocket but is borrowed from the bank, inflation works for the investor.    The investor has an asset that has to be repaid with cash that is now worth way less and is supposedly much easier to obtain.

This is why the banks interest rates are usually set at the inflation rate plus a couple of percentage points.  Today they are set at what?    4% minus 12% inflation, so a negative 8%.  

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2 minutes ago, cougar said:

There is one possibility though.   If the money for the house does not come from the investor's pocket but is borrowed from the bank, inflation works for the investor.    

again, there is a divergence here as well

there are those who bought before inflation accelerated under the Liberals

if you bought your house before 2015,  then you're a winner

because you bought at an affordable price, so you can afford the interest rate increases

those who have bought lately however, have massively overpaid, so they can't afford the interest rate increases

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2 hours ago, Dougie93 said:

if you bought your house before 2015,  then you're a winner

because you bought at an affordable price, so you can afford the interest rate increases

those who have bought lately however, have massively overpaid, so they can't afford the interest rate increases

I do not think the interest increment will add more costs than what the food and gasoline price increases have added already.  The only question remaining is why we do not see a slew of bankruptcies, or at least a whole bunch of pickups abandoned with nobody wanting to buy them.

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On 6/24/2020 at 8:24 PM, Independent1986 said:

A lot are just kept vacant with no renters.

Is not only foreigners, lots of older generations buy it and they leave it empty.

Not to mention the airbnb units.

We need to look into issues like this because this is gasoline for socialists and they have a point to an extent.

Someone that paid taxes all their life in this country should have priority to housing if they work full time and are productive members of society.

In 5-10 years I will be selling mine and will move to the suburbs. Maybe downtown was never intended for full time housing. 

Are the owners regardless of country of origin, not paying Canadian taxes on the revenue generated by renting them out? 

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12 minutes ago, Army Guy said:

Are the owners regardless of country of origin, not paying Canadian taxes on the revenue generated by renting them out? 

They have to be paying taxes,if they declared this revenue.  They have to be paying property taxes too, that will be higher because of the sale that was way over assessment value.   The new assessment value will reflect the sale and property taxes go up unless all properties in this jurisdiction saw the same increase.

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23 minutes ago, cougar said:

I do not think the interest increment will add more costs than what the food and gasoline price increases have added already.  The only question remaining is why we do not see a slew of bankruptcies, or at least a whole bunch of pickups abandoned with nobody wanting to buy them.

the inflation economy is a trap

it's been thirty years in the making, it's too late to recover things  now

either inflation prices burn out of control, inciting a vicious revanchist right wing  counterrevolution

or they will be forced to raise interest rates, inciting a vicious revanchist right wing counterrevolution

no matter what, a vicious revanchist right wing counterrevoution is coming

yeehaw

 

 

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Just now, Dougie93 said:

the inflation economy is a trap

 

Is it not an opportunity too?

Lets say you have $10,000 in cash savings and $100,000 in debt for assets you have.  If there is a huge inflation where the currency is devalued to almost nothing - lets say 1:1,000 like in Argentina or Zimbabwe, you would have lost the buying power of your $10,000 but you would have gained assets worth $100,000 for close to nothing.

Now imagine you had $100,000 in cash savings and only $10,000 in debt (a more unlikely situation).  In this case after the inflation hits, you clearly lose.  You no longer have the buying power of your $100,000 and extinguishing your $10,000 debt will be no consolation for you.

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14 hours ago, cougar said:

Is it not an opportunity too?

of course

the time to buy is when there is blood in the streets

but the average bourgeois person is not inclined to that

we are talking about the masses here

the average person is going to get wiped out

Edited by Dougie93
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On 5/27/2022 at 4:09 PM, cougar said:

What would be the mortgage payment on a $750,000 - $1,000,000 property over a 25 year amortization period and how much can they charge for rent?

I think the prices will still depend on what those who live in the units can afford.  If they cannot afford it, the unit remains empty and the "investor" is stuck with the mortgage payments or an overpriced unit if he paid for it in cash.

True.  The problem with housing is that with a lack of housing people will always try to bid up to what they can afford.  If everyone in the middle-class made 100k more a year then we wouldn't get richer, housing prices and mortgages would just go up because everyone is still bidding against each other.  This has already happened with the rise in dual income families and increase in women working over the last 40-50 years.  Families aren't richer with 2 incomes, their mortgages are just higher.  Household income increases are just going to the housing developers and the banks.

If you're looking to invest i'd highly recommend buying stocks in Canadian banks.

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17 minutes ago, Moonlight Graham said:

if you're looking to invest i'd highly recommend buying stocks in Canadian banks.

no

we are entering a secular bear market again

in that case,  you want to hold energy, commodities & gold

the banks are going to burn in the fire of inflation

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On 6/27/2020 at 3:33 AM, Independent1986 said:

Instead of focusing on poor immigrants working minimum wage in the big cities the question should be how come the government allows priority to foreign investors to own property than a tax payer individual and on top of that it allows them to keep it empty.

My guess is that a lot if it has to do with money laundering - snow washing as its called when Canadians do it.  Apparently we're very good at it.  By some accounts $130 billion was moved into Canada last year alone.

https://nationalpost.com/opinion/terry-glavin-canadas-rankings-in-the-corruption-perceptions-index-have-plummeted-under-trudeau

If Canadians truly want to do something about corruption ( I honestly don't think enough of us do) we better be prepared for a dramatic drop-off in property values.  Until such time as this happens ordinary Canadian property owners will be stuck between a pillow and a soft place.

Sucks to be us?

https://toronto.citynews.ca/2021/11/16/ownership-registry-snow-washing-gta-real-estate/#:~:text=Cohen believes there's an increasing,-washing%2C” said Cohen.

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again, the problem is not foreign investment

the problem is inflation

the governments in Canada have tapped out their ability to borrow at low interest rates

in order to prop up the exponential government spending

the Bank of Canada prints dollars to buy the governments debt

thus, there are too many dollars chasing too few properties, causing inflation

the government is the problem, the government is stealing from you to fund itself, by devaluing your money

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12 hours ago, eyeball said:

if Canadians truly want to do something about corruption

Canada, Sweden & New Zealand have the highest housing prices in the world

Sweden & New Zealand are ranked as two of the least corrupt countries on earth

so high housing prices do not actually correlate to corruption

rather, it is macro economics : interest rates being kept artificially low by the central banks

this drives investors into asset classes to seek returns

while at the same time prints too much money

this is incites compounding inflation, you money is worth less, while the markets flee to real estate for returns

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15 hours ago, cougar said:

Now imagine you had $100,000 in cash savings and only $10,000 in debt (a more unlikely situation).  In this case after the inflation hits, you clearly lose.  You no longer have the buying power of your $100,000 and extinguishing your $10,000 debt will be no consolation for you.

it's not that inflation "hits"

the inflation is constant, the government is printing money to pay for its spending constantly

the whole economy is based on inflation

all that is happening is that the Liberals have massively increased spending

the Liberals are pumping hundreds of billions of newly printed dollars into the economy

so the inflation has simply accelerated beyond what they can contain by having the central bank buying the debt

inflation is caused by printing too much money

too many dollars chasing too few investments, causes prices to rise

interest rates remove dollars from the system, thus containing inflation

the central bank, the Bank of Canada, is a private cartel owned by the big banks

the Bank of Canada is supposed to keep interest rates high enough to contain the inflation

the government however does not want to pay the political price for that

so the banks are propping the Liberals up by printing money for them

the central bank prints dollars to buy government bonds, lowering the interest rates

the government avoids the bond market raising rates, by having the central bank buy its own bonds

the interest rates have been net negative for years now, in the wake of 2008

this is causing runaway inflation, the prices are rising exponentially now

in order to contain the inflation, the interest rate would have to be set well above the inflation rate

but that would cause a market crash & recession

so the Bank of Canada & the Liberals are colluding to kick the can down the road

make it some other governments problem some time into the future

the Bank of Canada is supposed to keep inflation at 2%

but years of net negative rates have caused inflation to rise to more like 10%

in order to contain that now, the BoC would have to raise interest rates back to 1980's levels

18% mortgage rates

that would wipe out all the Canadians who borrowed more than they can actually afford

it would be a massive market crash & brutal recession, a secular bear market

that would wipe the Liberals out politically

so the Banks are helping the Liberals in the near term, by not raising the interest rates significantly

because they are in collusion, it's one big cabal of elites in Toronto, Montreal & Ottawa

-1x-1.jpg

Edited by Dougie93
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16 hours ago, cougar said:

 If there is a huge inflation where the currency is devalued to almost nothing - lets say 1:1,000 like in Argentina or Zimbabwe, you would have lost the buying power of your $10,000 but you would have gained assets worth $100,000 for close to nothing.

it's unlikely that Canada would reach the threshold of hyperinflation

the Canadian economy is valuable enough that the bond markets would continue to buy Canada's debt

eventually however, the Bank of Canada will be forced to stop printing money to pay for the government spending

the printing money to buy the government debt is going to cause inflation so severe that the BoC will have to stop

then the bond markets will determine the interest rates, the market will set the price of Canada's debt

so interest rates will rise suddenly, they will go from 3% to 18%

that will get passed through to Canadians as the mortgage rates

those who can only afford to pay their mortgage at the 3% rate will then go bankrupt

and there is no bankruptcy protection in Canada for your mortgage

so not only will they lose their homes, they will still owe the bank the money, the bank will sue them for it

this will be a disaster which will reorder Canada politically

so the status quo ruling elite are doing everything they can to stave this off for as long as possible

they are trapped now, either inflation burns out of control, or interest rates do

so all they can do is delay the inevitable, try to make it some other governments problem later

96440fa8-5d24-4f2a-b7a7-2f4e699ae2da.jpg

Edited by Dougie93
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2 hours ago, Dougie93 said:

Canada, Sweden & New Zealand have the highest housing prices in the world

Sweden & New Zealand are ranked as two of the least corrupt countries on earth

so high housing prices do not actually correlate to corruption

Maybe it does in our case though.  As pointed out in the National Post article Canada's ranking is slipping and we're not looking closely enough to know exactly what is going on. 

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5 minutes ago, eyeball said:

Maybe it does in our case though.  As pointed out in the National Post article Canada's ranking is slipping and we're not looking closely enough to know exactly what is going on. 

the corruption is that the central bank is compromised

the Bank of Canada is supposedly at arms length from the government

but in reality, they are all the same elites, so they are colluding

rather than do what is best for the economy, the Bank of Canada is propping the Liberals up

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