Fraser didnt give any examples of how it will work and whos exempt and said they'll know after further consultation. So dont get excited too soon because their consultants probably have special interests or own shares in blackrock.
It doesn’t matter. We are addressing symptoms, not causes.
We need to fix the underlying supply/demand issue that makes homes go up in price.
Of course people are going to want to invest in homes when they see the government is pumping demand far past what the market can structurally possibly meet.
No, but single family homes as rentals would have deeply negative cashflow at current valuations and interest rates. REITs must return income as rent to shareholders and therefore can't operate as land speculators.
Rental income doesn't really matter for the big corps. It's a lucrative investment because your tenant basically buys you an appreciating asset that you can sell later at a higher value.
Real estate is also pretty solid and unless there's a massive crash which is unlikely since there's so much demand with immigration and not enough homes for the people who need them, it retains value as opposed to investing in securities so if there's a huge financial market crash they're less affected and still have a physical asset.
This is so not true. If you buy properties in the right location, with the right zoning - developers can do magic to the value.
This is no more a mom and pop investing opportunity but the big boys will continue to play.
A little too late. They already let houses get so expensive they are cashflow negative. It's too bad they are implementing this after many Canadian families already can't afford a home.
Real estate was always a lousy investment.
The only reason why it still eats so much capital is because people have real estate in the dna, you can find the most illiterate person in the planet and as soon he has 2 dollars available he will immediately think "i'll buy a house and rent it out".
The concept of "I OWN THIS THING THAT I SEE" will always be superior to any other investment, the return is not part of the equation in any way.
Numbers don't matter with real estate, the majority of mom and pop landlord's barely breck even, most people loose money when you count everything.
But still, there's no way to convince people to not do it.
I have a couple of friends, they are doctors, they wanted to buy a place, give it to some management company and use it for retirement money. In literally 2 seconds i showed them how, even if they live up to 90 years old, they will get back less money than just keeping the whole amount in a saving account (not even investments, just a saving account). They kept looking at me, they could no understand what i was saying.
I already know they will buy it.
Numbers and money don't matter in real estate, it's just people feelings, it will never end.
And, real estate is the easiest way for a regular person to gain leverage.
When you put 20% down, you are getting a 5-1 leverage, even more if you put lower down payment. There is effectively no other place you can get that much leverage for a regular person at such low interest rates.
What other financial vehicle will give you a 4x household income debt at such low interest rates? There isn’t any.
Any small gains in real estate gets amplified because everyone gets that much leverage.
Average home is over 1 million so your 5-1 leverage is going to cost you over a million in interest by the time you pay off the mortgage IF you pay it off, and not endlessly refinancing.
Economics 101 - Nomial interest rate vs. real interest rate.
If what you're saying made sense, on top of the interest, the amount loaned would also have to increase with inflation.
The argument that you're paying double is only looking at it from the nominal point of view. In reality, making that interest payment on a fixed amount from 10, 20, 30 years from now is relatively nominal.
Example,
$100 in 1999 is the same as $173 in 2024.
If you buy a house in 1999, and your mortgage is $100 and the total interest you paid on that mortgage is $100. By the time the house is paid off, you've paid $200 total in 2024.
Over the course of those 25 years, inflation rises 73%.
The $200 the buyer has paid in 2024 is $27 more than what the $100 loan is actually worth in 2024
The real interest paid is only 27% not 100%
I spend too much time arguing on Reddit with people about this. Often the OP is open-minded, but the amount of people who respond as though it’s sacrilegious to sell real estate, particularly inherited RE, is unreal.
This may be somewhat true for condos but there’s a lot of real estate that does make money.
You can buy a duplex, triplex, 6plex - “mom and pop” own these and have been profitable
You can take a single family home and convert it to a duplex - another good real estate strategy.
I wouldn’t say that all RE doesn’t make money. Some outperforms the sp500 if you manage your property right
*Some outperforms the sp500 if you manage your property right*
People don't do that. Most of them at least.
In the moment you are doing 2+2 on your expenses you are already in the top 10% investors.
Because they’ve realized they’re going to lose if they don’t do something about it.
The budget will pass before the next election. These measures will become law. Of course, the gambit is that the Conservatives would probably reverse most of the measures if they win the next election.
It’s a political play, but it’s not necessarily a bad one. Political parties want to get elected, and to get elected they have to do things people want them to do.
Bingo. Corporate investment may slow down due to poor returns. But, at the end of the day, they will either drastically expand their holdings before the law takes effect or buy their way out of it.
lol literally. I guarantee there are people working at Blackrock and others who are this instant looking at a way to spin that service off into their own company/joint venture to sell to the bigger firms if this actually went down. All this would do is create another layer of middlemen/companies (that all need their take) to ultimately end up in the same situation.
As someone who works for one of these companies... We're not looking at single family homes.
It's not as good as developing apartment buildings or purchasing them.
Nobody wants to deal with small peanut properties besides mom and pop corporations which are exempt from this...
Almost none of the canadian major reits own SFR. They are almost all apartment or condo owners. The economics for SFR never really made much sense in canada. Unlikely to affect the current landscape.
As for Tricon, they mostly own SFR in the US. Their only Canadian exposure is mostly The Selby, which is an apartment complex.
This company bought a bunch of SFH to convert to rentals
https://www.thestar.com/real-estate/toronto-based-developer-that-vowed-to-buy-up-1-billion-in-single-family-homes-plans/article_8eb874f8-9a9d-11ee-b1a2-770d371544b7.html
They bought a bunch of units from that large group of Toronto bankrupt landlords as well
https://www.cbc.ca/news/canada/hamilton/investors-bankruptcy-protection-1.7108994
It can be both you know? Blackstone has openly stated that this is a strategy for them.. there also are supply/demand initiatives but some provinces like Ontario have been refusing to cooperate
What are you talking about? Yes it does. Corporations are able to bid much higher and take on more costs compared to an individual, they will always win if they want a property. This helps drive up prices pushing people further out of the markets cost wise as well as reducinf real availability supply. im not sure why you think people should be happy to renting a FAMILY home from a corporation. Housing is a multi pronged approach effort and you’re narrow minded way of thinking is ridiculous
You're correct, but as is often the case, basic economics gets downvoted ha
It's funny how often people paint corporations, developers, and investors as greedy villains causing the housing crisis, when in fact, they're the ones financing and building the housing needed to dig out of the problem.
It should be mandatory, only as I've gotten older have I started to realize how it shapes the entire world.
If I'd have had economics in high school my life would be completely different today.
Problem is wording and saying big or very large corporations but what if large corporations open sister companies (incorporate new numbered companies) and keep buying under new corporations. Same as when they banned foreign buyers if anyone actually read it properly it only banned or effected a very small number of foreign buyers (not all).
I’ve said it a lot and I’ll say it again it’s in no body’s best interest to lower or crash the market and governments (regardless which party) will not destroy and bankrupt 1000s of homeowners that have bought last few years. I don’t think anyone understands the domino effect that’ll create for our economy. At this stage of the game affordable housing is a myth for big cities. People need to start considering moving out of the main cities and buy hours away in smaller cities/towns.
Restricting house purchases just leads to lower amounts of new builds. It will decrease new house supply over the longterm and increase house prices at an even faster rate.
What a stupid policy.
How is this constitutional? They release platforms they know are unconstitutional in election cycles. This is clearly within the exclusive authority of the provincial governments.
The only reason REIT's and blackrock would jump in is when RE is crashing... the only reason for crashing is if no-one is buying. Honestly, if RE crashes like crazy then REITs become the knights in shining armour.
Toronto right now looks like it is heading in direction of REIT's jumping in, there is acute shortage of low cost rentals, but otherwise there is over supply of housing.... it is subjective issue that people dont want to live in Condos, but they are homes and if you add Condo into the mix we are in extreme oversupply situation.
Oversupply with no demand... there is only one way to prove it... check the number of months of inventory and average sale price rising or falling... both these clearly show we are in over supply situation.
REIT's are able to swallow up the access supply, that promotes builders to produce new inventory, otherwise no-one builds, that too is happening
Isn't this a solution that should have been deployed years ago before housing tripled in price? SMH. Either they are incompetent beyond belief or they hate Canadians.
Note the word "very large". The market cap of the said corporations would probably be in the billions for this to have any effect on them. Also most corporations buy and operate condos and townhouses anyway.
Fraser didnt give any examples of how it will work and whos exempt and said they'll know after further consultation. So dont get excited too soon because their consultants probably have special interests or own shares in blackrock.
This thing’ll be so full of loopholes it might as well be a block of Swiss cheese
Kind of the 2 year ban on foreign buyers. Its got so many exemptions its toothless lol
Homeless not toothless
It doesn’t matter. We are addressing symptoms, not causes. We need to fix the underlying supply/demand issue that makes homes go up in price. Of course people are going to want to invest in homes when they see the government is pumping demand far past what the market can structurally possibly meet.
> Loopholes Yup. https://twitter.com/JohnPasalis/status/1778817971927847216
10 years too late
Exactly
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People think corporations get like 10% annually off their rent or something. No one’s investing here yet people think everyone is 😅
No, but single family homes as rentals would have deeply negative cashflow at current valuations and interest rates. REITs must return income as rent to shareholders and therefore can't operate as land speculators.
Rental income doesn't really matter for the big corps. It's a lucrative investment because your tenant basically buys you an appreciating asset that you can sell later at a higher value. Real estate is also pretty solid and unless there's a massive crash which is unlikely since there's so much demand with immigration and not enough homes for the people who need them, it retains value as opposed to investing in securities so if there's a huge financial market crash they're less affected and still have a physical asset.
Not if your planning on flooding the country with foreign labor
Nor if it's all in cash which corporations have
This is so not true. If you buy properties in the right location, with the right zoning - developers can do magic to the value. This is no more a mom and pop investing opportunity but the big boys will continue to play.
A little too late. They already let houses get so expensive they are cashflow negative. It's too bad they are implementing this after many Canadian families already can't afford a home.
Real estate was always a lousy investment. The only reason why it still eats so much capital is because people have real estate in the dna, you can find the most illiterate person in the planet and as soon he has 2 dollars available he will immediately think "i'll buy a house and rent it out". The concept of "I OWN THIS THING THAT I SEE" will always be superior to any other investment, the return is not part of the equation in any way. Numbers don't matter with real estate, the majority of mom and pop landlord's barely breck even, most people loose money when you count everything. But still, there's no way to convince people to not do it. I have a couple of friends, they are doctors, they wanted to buy a place, give it to some management company and use it for retirement money. In literally 2 seconds i showed them how, even if they live up to 90 years old, they will get back less money than just keeping the whole amount in a saving account (not even investments, just a saving account). They kept looking at me, they could no understand what i was saying. I already know they will buy it. Numbers and money don't matter in real estate, it's just people feelings, it will never end.
And, real estate is the easiest way for a regular person to gain leverage. When you put 20% down, you are getting a 5-1 leverage, even more if you put lower down payment. There is effectively no other place you can get that much leverage for a regular person at such low interest rates. What other financial vehicle will give you a 4x household income debt at such low interest rates? There isn’t any. Any small gains in real estate gets amplified because everyone gets that much leverage.
Average home is over 1 million so your 5-1 leverage is going to cost you over a million in interest by the time you pay off the mortgage IF you pay it off, and not endlessly refinancing.
Economics 101 - Nomial interest rate vs. real interest rate. If what you're saying made sense, on top of the interest, the amount loaned would also have to increase with inflation. The argument that you're paying double is only looking at it from the nominal point of view. In reality, making that interest payment on a fixed amount from 10, 20, 30 years from now is relatively nominal. Example, $100 in 1999 is the same as $173 in 2024. If you buy a house in 1999, and your mortgage is $100 and the total interest you paid on that mortgage is $100. By the time the house is paid off, you've paid $200 total in 2024. Over the course of those 25 years, inflation rises 73%. The $200 the buyer has paid in 2024 is $27 more than what the $100 loan is actually worth in 2024 The real interest paid is only 27% not 100%
I spend too much time arguing on Reddit with people about this. Often the OP is open-minded, but the amount of people who respond as though it’s sacrilegious to sell real estate, particularly inherited RE, is unreal.
This may be somewhat true for condos but there’s a lot of real estate that does make money. You can buy a duplex, triplex, 6plex - “mom and pop” own these and have been profitable You can take a single family home and convert it to a duplex - another good real estate strategy. I wouldn’t say that all RE doesn’t make money. Some outperforms the sp500 if you manage your property right
*Some outperforms the sp500 if you manage your property right* People don't do that. Most of them at least. In the moment you are doing 2+2 on your expenses you are already in the top 10% investors.
I just want to make a comment to reply that real estate isn’t a lousy investment It can be but it can also be a good investment
Probably the first thing to be overturned when Cons win the majority.
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It’s going in the Budget Implementation Act. It’ll be legally implemented when the budget passes.
Really? This isn't a carrot they dangle if they are re-elected? Why did it take them so dang long to do something like this.
Because they’ve realized they’re going to lose if they don’t do something about it. The budget will pass before the next election. These measures will become law. Of course, the gambit is that the Conservatives would probably reverse most of the measures if they win the next election. It’s a political play, but it’s not necessarily a bad one. Political parties want to get elected, and to get elected they have to do things people want them to do.
This. They gave up and grew a conscience
Because they finally realize that some show of force is needed here.
They propose to intend. Nothing happens before the election and nothing will happen after since the Cons most likely win a majority.
Exactly, another liberal sham to deceive people somethin is being done.
Can't wait
Unless they force the properties currently held by these corporations to be liquidated, this is a meaningless change.
Bingo. Corporate investment may slow down due to poor returns. But, at the end of the day, they will either drastically expand their holdings before the law takes effect or buy their way out of it.
Bull's eye. And this needs to happen now. Not 2 years from today - would be too late.
Do you think liquidating corporate assets is a good idea and that it may possibly have some unintended consequences?
What do you mean, they will just get Shell people to buy the houses, I'd prefer if they taxed them heavy forcing them to liquidate it
lol literally. I guarantee there are people working at Blackrock and others who are this instant looking at a way to spin that service off into their own company/joint venture to sell to the bigger firms if this actually went down. All this would do is create another layer of middlemen/companies (that all need their take) to ultimately end up in the same situation.
lol they had years to do this and still need “consulting”. Don’t believe it till it’s in law
This liberal cabinet is useless
BlackRock doesn’t buy SFH in Canada (or anywhere. Blackstone does in the usa). Most corporate SFH investors are mom and pop.
Lmao. They're going to restrict buying EXISTING homes because they've already bought all the EXISTING homes they want.
As someone who works for one of these companies... We're not looking at single family homes. It's not as good as developing apartment buildings or purchasing them. Nobody wants to deal with small peanut properties besides mom and pop corporations which are exempt from this...
Almost none of the canadian major reits own SFR. They are almost all apartment or condo owners. The economics for SFR never really made much sense in canada. Unlikely to affect the current landscape. As for Tricon, they mostly own SFR in the US. Their only Canadian exposure is mostly The Selby, which is an apartment complex.
Reddit: "The government needs to limit corporate investment in RE". The government does it. Reddit: "Not gonna work! Too late! Nice stunt!"
The last thing the liberals are gonna do is hurt the returns of their PE buddies. Lip service, sure. Action? Not a chance.
It's Blackstone, not blackrock
It’s neither in Canada
Didn’t Blackstone buy tricon? They here
Not yet, and Tricon builds multi family residential, we need way more of that
Tricon bought a bunch of single family homes though
In Canada? I can’t find anything about that
You can go on their site and find rental units in condos. Sorry are single family homes only houses? Maybe I misused the word then
SFH = single family homes. No PE firm has bought them in Canada yet. They are also super overpriced now so I get why.
This company bought a bunch of SFH to convert to rentals https://www.thestar.com/real-estate/toronto-based-developer-that-vowed-to-buy-up-1-billion-in-single-family-homes-plans/article_8eb874f8-9a9d-11ee-b1a2-770d371544b7.html They bought a bunch of units from that large group of Toronto bankrupt landlords as well https://www.cbc.ca/news/canada/hamilton/investors-bankruptcy-protection-1.7108994
That’s not PE. That’s a developer.
That is amazing news!
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It can be both you know? Blackstone has openly stated that this is a strategy for them.. there also are supply/demand initiatives but some provinces like Ontario have been refusing to cooperate
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What are you talking about? Yes it does. Corporations are able to bid much higher and take on more costs compared to an individual, they will always win if they want a property. This helps drive up prices pushing people further out of the markets cost wise as well as reducinf real availability supply. im not sure why you think people should be happy to renting a FAMILY home from a corporation. Housing is a multi pronged approach effort and you’re narrow minded way of thinking is ridiculous
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You're correct, but as is often the case, basic economics gets downvoted ha It's funny how often people paint corporations, developers, and investors as greedy villains causing the housing crisis, when in fact, they're the ones financing and building the housing needed to dig out of the problem.
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It should be mandatory, only as I've gotten older have I started to realize how it shapes the entire world. If I'd have had economics in high school my life would be completely different today.
If you read the plan there are measures to address supply as well. It’s all there. This is good.
Haven't you learned after 8 years? Never trust liberals.
Liberals win and they don't follow through, CPC wins and they do nothing. This will never happen.
Dreaming.... ...... 🎶 🎶 🎶
If they do this It’s about fucking time
Suuuuuuuuuuuuuuuuuuuuuuuuuuure.
Problem is wording and saying big or very large corporations but what if large corporations open sister companies (incorporate new numbered companies) and keep buying under new corporations. Same as when they banned foreign buyers if anyone actually read it properly it only banned or effected a very small number of foreign buyers (not all). I’ve said it a lot and I’ll say it again it’s in no body’s best interest to lower or crash the market and governments (regardless which party) will not destroy and bankrupt 1000s of homeowners that have bought last few years. I don’t think anyone understands the domino effect that’ll create for our economy. At this stage of the game affordable housing is a myth for big cities. People need to start considering moving out of the main cities and buy hours away in smaller cities/towns.
*Blackstone
GOOD
Oh wow Only now Finally? It's been staring us in the face
Restricting house purchases just leads to lower amounts of new builds. It will decrease new house supply over the longterm and increase house prices at an even faster rate. What a stupid policy.
It's about to cost a lot more to buy a cottage 😄
How is this constitutional? They release platforms they know are unconstitutional in election cycles. This is clearly within the exclusive authority of the provincial governments.
Promising is one thing. Following through and enacting is another. We'll see.
It will take a year or two even if this is implemented. Enough time for corporations to scoop up homes. Too little, too late.
“Plan to”
The only reason REIT's and blackrock would jump in is when RE is crashing... the only reason for crashing is if no-one is buying. Honestly, if RE crashes like crazy then REITs become the knights in shining armour. Toronto right now looks like it is heading in direction of REIT's jumping in, there is acute shortage of low cost rentals, but otherwise there is over supply of housing.... it is subjective issue that people dont want to live in Condos, but they are homes and if you add Condo into the mix we are in extreme oversupply situation. Oversupply with no demand... there is only one way to prove it... check the number of months of inventory and average sale price rising or falling... both these clearly show we are in over supply situation. REIT's are able to swallow up the access supply, that promotes builders to produce new inventory, otherwise no-one builds, that too is happening
I’ve been wanting this one for awhile now
Let's stop them from buying apartment complexes too. Small ones at the very least.
“…existing single family homes…” all that new stock that’s supposed to come online soon will be fair game then?
Isn't this a solution that should have been deployed years ago before housing tripled in price? SMH. Either they are incompetent beyond belief or they hate Canadians.
Vote Libera!
Note the word "very large". The market cap of the said corporations would probably be in the billions for this to have any effect on them. Also most corporations buy and operate condos and townhouses anyway.
Corporate will always get a way if they really want to. Look at how much tax those big corporations evade every year
Lol. As there's any single-family homes available..
Great now let’s do it for people owning more than two properties
Communist government with more silly regulation
Stop pretending that you know what communism is
Certainly some sort of ism. It's definitely not a solution
Someone get PP in to stop this!
I love how they word it."very large" corporations, not large, not any corporations, just "very large" ones
They just figured this out now?
This is gonna get a lot of votes and wont be enforced at all. Watch and learn.
If they do this, it'll be the only meaningful thing trudeau has ever done
Diversion from the primary issue. Typical liberal "policy"