Sold my house in Woodbridge, North of Toronto. To a unmarried couple from China studying at University of Waterloo for 1.85M, no home inspection nothing... Paid over ask. It is all about the wealth fleeing from China and nothing else

Think about how desperate you have to be to buy in Woodbridge if you’re studying in Waterloo? I think they were more likely victims of the situation not perpetrators, c’mon.

Waterloo is a legit school, not unexpected for it to draw international students and of course they have money, international tuition ain’t cheap.

$1.85m student purchase. Sounds like a perpetrator rather than victim to me. They could have bought something or rented near the university. It was clearly a choice to buy in the GTA and tuck cash into “safe” Toronto real estate. Likely not the students themselves but their corrupt parents siphoning cash from China into Canada.

Canadian parents do this too, I’ve known several students whose parents bought homes to live in while they study. It’s not necessarily a naked investment ploy, it’s simply very difficult to maintain a certain quality of life for your children in rental accommodations. I’m not commenting on the ethics of it, just the suggestion it’s specifically a Chinese behavior.

Supply in KW is far more constrained that GTA. I bought here in 2019 after selling a Brooklyn condo and had to buy something under construction. There was nothing reasonable (ie didn’t need a ton of work) on the market.

Why are the parents assumed to be corrupt?

It's surprising how the Canadian government is letting the Chinese buy up properties like that.

Some regions are implementing various taxes on foreign buyers or penalizing those who don't occupy whay they buy.

The thing about Canada is that we seem to take everything slower and more moderately. To put simply, we're like American policy put through a low pass filter, smoothing down the extremes.

Should we be more protectionist? Probably. Will we do so? Probably. Will we rush to implement significant and severe new policy? Probably not.

Ontario isn’t building nearly enough housing for the rate of flux in the economy. We’re 10x behind. KW is a great example, we’re still building too many cul-de-sac subdivisions with 3000sqft houses on 3000sqft lots. We can’t build enough supply that way. It’s also supply geared towards the old university-and-insurance economy not the new tech-priced-out-of-Toronto economy (hello me). This seems sustainable to me, supply isn’t keeping up.

I have a house in Kitchener but also a farm in PEC. The situation in rural Ontario is an order of magnitude worse and certain to crash. I bought farmland (with pretty bad soil) in 2014 for under $2000/acre—basically it’s agricultural value. A one acre lot across the street from me on a similar old farmstead sold for 100x that price this winter. This is not sustainable, I mean our wells go dry all summer. I get high speed internet such as it is through a complex direct LTE setup. This demand won’t last.

Also, I was in KW recently and it seems like there was tons of development, but all either (a) high density core development, or (b) medium density suburban development (stacked townhomes as far as the eye can see in seemingly all directions. I understand the Places to Grow Legislation effectively killed 3,000sf single family subdivisions.

I concur. I recall my father buying farmland in southwestern Ontario about 20 years ago for $4,000/acre. At the time, farmers rented land at $100/acre. Not a very good return.

Today? $25,000-$30,000/acre and farmers pay… $150-$200/acre. Far worse return. Yet there is a frenzy anytime land comes available.

This is what doesn't make sense to me. High earners are struggling to buy a place.

It's not sustainable generally and political will for ever growing prices will have to shift as demographics age and non-owners grow relative to population.

And if interest rates start going north in any real way it's going to be severe with some of the debt load you hear about so many people taking on.

> High earners are struggling to buy a place.

because there are even higher earners buying, pricing them out. So are they really 'high' earners?

I think the lack of supply is the true source of the problem.

Zoning is largely local though, so the actual political control of the thing that would make this situation unsustainable is held by incumbent owners.

There are of course still limitations to the impacts of higher density as well, the desired living conditions of many buyers is yard+reasonable commute, so there is an absolute physical constraint here as well.

> Zoning is largely local though, so the actual political control of the thing that would make this situation unsustainable is held by incumbent owners.

Or a solution that speaks to that. E.g. A progressive tax like income is but in total residential property value.

Something like <$1m is 0%. $1-3m is 1%... Etc. Make the top rate untenable to own more than $Xm in residential like 10% + top rate for anything held under obscure ownership structure.... or whatever bands/percentages that seem right.

There is an increasing small group of people that own/inherit significant residential ownership. And while there is a physical constraint side of housing, fixing residential as investment vs place to live can take a heap of pressure off and is a much easier/faster point of solution I feel.

I cant remember where I heard but someone said residential property can either be good for investors or owner occupiers. Not both. Ultimately the government needs to prioritise occupiers in my view anyway as not just for happy people, but this brings stability and economic benefits to a society.

I would love to see a "land tax" instead of a "property tax" - so if you have a bungalow on land that would be very profitable as a tri-plex you get taxed on that potential vs. on what you happened to have on the land... but that's politically infeasible unfortunately.

Wondering what the total expected cost of buying a house in the 80s was, factoring in much higher expected interest over the mortgage, versus today, with much lower interest. Is it that we are effectively paying up front what previously would have been spread over the term?

Interest rates in the east 80s were in the teens. Today they are around 10x less at 1.5%. Over 25 year amortization that makes a big difference in total interest payments.

I think there's a significant difference, yes. But I don't think it comes anywhere close to accounting for all of it.

Also the house in question doubled in value in just the last number of years alone when rates were already basically zero.

Low rates are quite something. My mortgage is fixed at under 3%. As a result I'm actually discouraged from paying off my mortgage because all my index fund investments return way above that.

I did some math. Assuming 12x increase in prices as you suggest, starting with $50k and now $600k, 15% interest in the 80’s, and 1.5% today. Also assumes interest rates are steady in both scenarios. Obviously it is preferable to start high with greater odds of declining, vs start low and can only go up.

Total payments over 25 year amortization:

$50k —> $192,125 $600k —> $719,885

So yeah, interest rates don’t explain it. We are paying too damn much up front!