Canada Welcomes the New Year by Banning Foreign Home Ownership

“It’s certainly true Canada has some of the most unaffordable housing prices in the developed world. Average home prices are ten times average incomes. Compare that to the U.S., where median home prices are 4.3 times median incomes, per National Association of Realtors’ data. OECD figures show that Canadian home prices have grown 43 percent faster than incomes since 2015.
And as homes have gotten more expensive, foreign homebuyers have become an increasingly popular scapegoat.”

“foreign buyers make up only 5 percent of homeowners in the country. Squeezing out such a marginal part of the market probably won’t have a huge effect on prices.

Foreign buyers made up around 4 percent of New Zealand’s housing market when the country implemented a ban on nonnative buyers in 2018. Home price growth continued unabated after the ban.

A heavy tax on foreign home purchases in British Columbia has managed to reduce “foreign-related” purchases from 10 percent of all sales to between 1 to 2 percent. One study of the policy showed it reduced home price growth by 1 percent, and that minimal benefit faded after a few months.

Such are the pitfalls of trying to marginally curb demand in a hot market without enough supply. Behind every eliminated foreign buyer are multiple domestic home purchasers competing over an insufficient stock of homes.

Canada’s national housing finance agency estimates the country will be short some 3.5 million homes by the end of the decade. That’s within spitting distance of the U.S.’s own estimated shortage of 4 million homes—a country with nearly ten times Canada’s population.

The country has all the limits on supply that the U.S. does, including density restrictions in the urban core and growth boundaries on the exurban fringe. Both prevent new housing from being built to meet demand. As a result, prices in the country stay stubbornly high.

Canada’s local and provincial governments are starting to address this problem with proposals to loosen zoning restrictions. Done right, that will unleash developers’ ability to add much-needed supply.

At the federal level, it appears more politically practical to run with unproductive bans and to scapegoat foreigners.”

New York Gov. Kathy Hochul’s Housing Plan Avoids Common Mistake of Other YIMBY Reforms

“New York has some of the most restrictive local zoning regimes in the country, resulting in rock-bottom rates of housing construction and sky-high prices.
Now, Democratic Gov. Kathy Hochul is proposing to fix this sad status quo by allowing developers to bypass city and town zoning codes altogether and get their housing projects approved directly by a fast-tracked state process.

“Through zoning, local communities hold enormous power to block growth,” said Hochul in her annual State of the State address yesterday. “People want to live here, but local decisions to limit growth mean they cannot. Local governments can and should make different choices.””

The most successful strategy for ending homelessness is under attack

“The housing-first model calls for providing individuals with permanent housing, but it doesn’t claim that housing alone is enough. Regular check-ins by trained case managers are required, as are making social and medical supports readily available.”

Environmental Lawsuits Tried To Block 50,000 Homes From Being Built in California in 1 Year

“California policy makers are seemingly getting serious about solving the state’s housing crisis by passing a bevy of laws that ease restrictions on new development. But the benefits of this deregulation are often undone by environmental lawsuits, and there’s evidence that the problem is getting worse.
In 2020, almost 48,000 new housing units were targeted with lawsuits, according to a new report from the law firm Holland & Knight. That’s roughly 50 percent of the 110,784 annual housing units the state has built on average over the past six years.

Two-thirds of these anti-housing lawsuits filed under the California Environmental Quality Act (CEQA) allege that new residential development violates state targets on reducing greenhouse gases and vehicle miles traveled.

“CEQA has indeed become a population control (aka reduction) statute,” writes the report’s author Jennifer Hernandez. “California is losing people, and the people being expelled are our families, our kids and grandkids, our favorite young teacher, our most compassionate nurse, our lifeline electricians and carpenters, our first responders, and our future caregivers.”

CEQA, passed in 1970, requires that governments study and mitigate the environmental impacts of new developments they have discretion over. The law also gives third parties the ability to sue governments for approving projects without allegedly studying them enough or requiring sufficient mitigation of their environmental effects.

That setup has made the law a go-to tool for anti-development Not in my Backyard (NIMBY) activists, who can hold up new projects for years with (often very flimsy) CEQA lawsuits. Despite its original purpose of protecting the environment, CEQA enables reams of litigations targeting everything from new apartments to new solar panels.”

“The report notes that the impact of CEQA lawsuits on new housing is probably greater than the mere 47,999 that have been explicitly challenged. These legal challenges also target upzoning measures that would allow developers to propose more housing.

That’s helped to keep California’s housing production numbers flat over the past few years, despite the passage of nearly 80 laws aimed at boosting housing production or bringing housing costs down.”

Selling a Home? The D.C. Down Payment Assistance Program Will Give You Up to $202,000.

“the mayor urged residents to take advantage of the city’s newly expanded Home Purchase Assistance Program (HPAP). Starting October 1, the program will provide residents with up to $202,000 in interest-free loans to help cover the costs of a first-time home purchase, plus an additional $4,000 to help cover closing costs.
The decades-old program previously provided home purchasers with $80,000 in interest-free loans. The increase is justified, officials argue, by today’s hot housing market.

“We knew we had to do something to make the program more viable for potential home buyers,” Deputy Mayor John Falcicchio told The Washington Post last week. “We wanted our residents to be the most prepared as they go into this hot housing market.”

D.C. is certainly an expensive place to buy a home.

The real estate listing company Zillow says the typical D.C. home is worth $707,747—roughly twice the typical home cost nationally. Prices have increased 9 percent so far this year, according to the Case-Shiller home price index. That’s slightly more than the national increase in prices but far less than the 20-plus percent increases in such cities as Atlanta and Tampa.

These interest-free loans will probably increase those prices further. Indeed, the value of that subsidy is more likely to be captured by home sellers than by homebuyers.

The whole purpose of down payment assistance is to get more people to buy homes. That’s another way of saying that it is increasing the demand for home purchases. Economics 101 tells you that increasing demand, all else being equal, will increase prices. Homebuyers with more money can be less price-sensitive, and home sellers can be choosier about purchasers. All that encourages those sellers to increase prices.”

“In a normal market, you’d expect price increases to induce a supply effect. More demand encourages suppliers to enter a market, which helps moderate price increases.

But don’t expect to see much of that in D.C.’s housing market. For starters, the city has only so many vacant or redevelopable plots of land where new housing could go. Redeveloping existing housing into more units is constrained by the city’s zoning laws and historic preservation rules. Meanwhile, rising inflation and persistent supply-chain issues have caused new home construction to plummet, as high material costs make builders less willing to take on new projects.”

California Takes on the High Cost of Mandated Parking

“Minneapolis is one test case. It eliminated parking minimums citywide as part of an update to its general plan in 2018. Crucially, the city also increased the maximum allowable size of apartments near transit and along commercial corridors at the same time. (The city also imposed some very unlibertarian parking maximums in some areas.)

The combination of those two reforms has kicked off a small boom in the construction of smaller apartment buildings, with most of those projects being built with less parking than had been typically required under the old rules.”

Why does the WeWork guy get to fail up?

“The housing shortage is certainly a big deal. The US was short nearly 4 million housing units as of late 2020, and the problem is spreading across the country. The inability to buy a home has huge repercussions on everything from Americans’ quality of life to their ability to create wealth. The problem is big enough that venture capital firm Andreessen Horowitz (a16z) is writing its biggest check to date — $350 million, valuing the company at $1 billion — to invest in Flow with the hope that the company can disrupt residential real estate through technology.”