These weird market distortions in real estate have underlying causes. A lot of them are based off patchwork rules and regulations around real estate. Stuff like who you're allowed to sell to, how much you're taxed, the paperwork required etc. Putting more patch work on top of a system that's obviously broken will probably make things worse in the long run.

All of this though (ending blind bidding, making buy and sell data publicly available, etc.) is just using a bucket to bail out the Titanic since the system is designed to have prices continuously rise since Canadians are in house debt up to their eyeballs and have no idea how else to actually save for the long term and any party that actually changed this would likely never get voted into power again, if they even continued to exist.

So the federal government refuses to address the demand side of the equation (very high immigration rate) while the the provinces and municipalities block increases in supply. The natural result? Runaway price increases, and the rest of Canada's economy becoming uncompetitive because employees can't find a house within a 2 hour commute for under $1MM in the GTA.

In my case it killed my agribusiness project because the amount of work, the delays and the risks where too much to bear.

We can no longer build what we used to build in the 60’s and 70’s because of the regulations in spite of the technology being much better.

One problem in Canadian provinces is your taxes remain the same regardless of where you live, but if you need access to healthcare or education, then you have to live near a major city. Particularly if you want quality healthcare.

In fact the cost of living goes up if you're a rural inhabitant in most of Ontario. Electricity is more expensive, heating is expensive, etc.

With that being said, naturally homes near economic activity should be more expensive. It's more expensive and always will be to live near Google's HQ in Mountain View than it will be to live in Grand Rapids, Michigan or Toledo, Ohio. That's just economic physics. It's ok, normal, natural, acceptable, and economically good. And these homes are only going to get more expensive over time as energy costs increase (EVs won't save us), road maintenance costs increase (already far out of control), and people move to live in more walkable areas. But as these costs increase, people who were expecting that it would be cheap to live in the suburbs are surprised because energy costs and moving far away just won't save them anymore like it did in the past (oh I'll live here and just have a 40 mile commute) - hence it appears that we have a housing shortage when in reality the costs are more reflective of economic reality and were artificially cheap. New housing won't help here because even if we could build more faster we'd still be building it in an economically handicapped way and rely on traveling far distances in cars and on highways, which just will not work when we can't pump cheap oil out of the ground.

You have two options. The first option is dense skyscrapers. But those aren't going to be efficient enough in places unconstrained by geography. They also have maintenance issues and it'll be too expensive to keep them going in the future with much higher energy costs. The second option is medium-density mixed-use development. Think the beautiful streets with brick single family homes next to townhouses and 2 story apartments with a cafe or an office at the bottom, bikes, walking, and street cars or other similar efficient transit. These you can repair yourself and the maintenance is much lower on the long-run and they don't rely on cheap oil to be livable.

But we'll keep building skyscrapers and suburbs (I didn't mention these as an option because they aren't) and the prices will just keep going up.

I don't really disagree with your larger point, but I can't help but explore this nit because it seems interesting. I don't think anyone is arguing that EVs will markedly reduce energy prices; however, there is an argument that renewables will decrease energy prices by virtue of being cheaper per unit power. Of course, it will take at least a decade before renewable energy isn't supply-constrained, so I don't think anyone is expecting this to happen soon, and moreover I've heard counter-arguments that the figures associated with renewable energy aren't including the storage costs which would be required to make renewable energy suitable for base load generation or the costs to decommission/recycle hazardous solar panels and fiberglass wind turbine blades--maybe there will be a ~10 year window during which the supply of renewable energy meets/exceeds demand but before the recycling/decommissioning costs kick in en force? :)

If I had to completely armchair it here, if you looked at total impact to society, the environment, car accidents, you name it something like a gallon of gas in the US should really be about $20-$30/gallon but it feels like it's expensive at $5 b/c we're so used to the low prices. We are probably experiencing these costs through inflation and things like housing prices.

Renewables (should) drop overall energy costs by virtue of capturing natural movements (I'd throw nuclear in renewable as well IMO but I understand why you wouldn't) but people are going to focus on kWh being expensive because they're used to extremely cheap gasoline. I guess in other words renewables on paper will be more expensive "at the pump" but externality cost to society will be lower. I wouldn't be surprised if in the future as more EVs come online that energy costs to charge even at home are approximate to gasoline.

Price per gallon is probably the wrong unit. You probably want $/mile. Car accidents get priced in via insurance. Environment isn't priced in at all in the US, though a carbon tax could change that if there was any political appetite for it. EVs already significantly reduce fuel and maintenance costs even though ICE cars enjoy a "carbon subsidy" (i.e., pollution isn't priced into the cost of gas).

> people are going to focus on kWh being expensive because they're used to extremely cheap gasoline

Electricity is already much less expensive than gasoline. The current US-average gas price is $4.10/gallon and a 30mpg car will cost over $0.13/mile. The current US-average electricity price is $0.14/kwh--with ballpark 85% charge efficiency (not all energy drawn from the grid makes it into the battery) and 300wh/mile, an EV will cost less than $0.05/mile. EV fuel costs are just over a third of those of ICE vehicles.

How I'd phrase that is: "Electricity is currently much less expensive than gasoline "at the pump". What I think is likely to occur is that as we switch over to EVs (I own one btw if that helps here) there will be continued pure electricity demand which is going to cause prices to go up and up. Everything runs on electricity, and soon cars will too. So I think the kWh price is going to go up, and be measured and scrutinized much more (you can make an app to calculate this, not so much with gasoline easily) and it'll be more measurable. But gasoline costs just aren't "counted" in the same way. So eventually it'll cost, idk, $20 to go 300 miles and people will think that it's expensive because you could do it with gas much cheaper in the past, but the problem with that comparison is you wouldn't have accounted for the externalities so you're not really getting true costs. I hope that makes sense where I was going with that.

I agree $/mile is the right unit, I was just thinking about how to isolate true gas cost versus true kWh rate in some way. I personally pay closer to the $.05 kWh rate at home, but I see peak rates in California hitting $.4/kWh and all I see is the writing on the wall for the rest of the country.

If I had to summarize:

We live in an era of extremely cheap energy. It may go on for another 50-100 years, who knows. Maybe it goes on forever. But it won't be from fossil fuels. And if energy becomes much more expensive and we haven't designed cities and transit for optimizing cheap/efficient energy costs we're beyond screwed. Relating it back to housing, I think it makes sense the housing is getting much more expensive and that this phenomenon is more than just "living somewhere cool" and part of the reason that people want to live in these "cool" places is exactly because the implicit energy costs are less. You don't have to drive to a coffee shop. You walk.

I guess one good thing about America is we have all of these navigable waterways so we won't have big food shortages as distribution costs can remain reasonable, at least in the mid west and the east.

-edit-

One startup idea I have is a way to truly measure your total energy expenditure. Right now I just get a bill in the mail and figure that it makes sense because it's sooooo cheap to run all of this stuff. What happens once energy becomes 5x more expensive? Well, I want to know how much it really costs me to run dual monitors. Maybe it's an extra $50/year I don't want to spend (just a contrived example).

It’s still not quite so cheap that recycling it makes no economic sense, so if it is possible a way will be figured out sooner or later. (Metal is recyclable because recycling it requires so much less energy than producing it; plastic is super cheap and so is basically never recycled.)

We're friends with the people that bought it from us and on the same street in that same small town in Ontario, houses are going for $1M+ now. This is not entitled millenials wanting to live in Vancouver. This is the place where things are supposed to be affordable. This is exactly the sort of place where Boomers love to tell us to go live if we can't afford the city.

Housing is cheaper if you are willing to relocate to e.g. Swift Current, Saskatchewan where a 2-bedroom home with 900 square feet will cost you $175000, but of course there are very few jobs in a small town of 15000 people that's 3 hours away from the nearest big city and the unemployment rate is among the highest in the province.

Not as bad as other parts of Canada to be sure, but most people living here have manufacturing jobs or are in the military. I don't see how this is sustainable, since there's nothing for rich people to do here.

People want to live where the amenities are, and all other things being equal more population can support more diverse sets of amenities. E.g. you need enough gay people in a town to support a regularly open gay bar, and generally speaking people want to have a choice of bars for going out.

The worst part of this is that the town has the money in the bank to build the water and sewage system. There's upwards of $8 million earmarked for the project. However, each homeowner is going to be responsible for $30k in hookup costs, and the town will have to shell out $500,000 per year to operate the new water system. Since it's a low income area, the >50% property tax increase needed to run the system won't fly, and neither will the hook-up costs. Instead, all the new builds are focused in rural areas where there is no infrastructure needed or in the larger towns / cities where costs are significantly higher but deemed to be an acceptable risk by developers.

Since agriculture industrialized, rural Canada has no work.

But yeah, "cool spots". /s

I am originally from a rural area in the Midwest USA. I know a statistically significant number of people from high school and college who purposely moved to bigger cities because of “the culture” or “there’s so much more to do.” They are right. I live in a much bigger city now for those exact reasons, but the demand justifiably has resulted in wildly more expensive houses. I could buy a modest house in my hometown for $85k right now. That same house where I currently live would easily be selling for $300-350k. You make more money here, but not by much.

We need to work on improving our housing density issues, but there’s an undeniable element of “I don’t want to live there” going on.

Between them and the banks that own all of those 30 year mortgages, that's all the political pressure you need.

I don't think this is strictly true. I don't like the model, but big box stores seem pretty sustainable (everyone drives to a distribution center for their goods). An actual last mile distribution system (a la Amazon) also appears to work pretty well. Neither of these are exclusively available to the economic elite.

> The road network alone is a funding quagmire, to say nothing of hiding the infrastructure burdens of servicing sprawl into the eldritch horror that is the municipal bond market.

I don't doubt that infrastructure costs decrease with density, but density doesn't keep urban municipalities from building infrastructure that they can't afford to maintain any more than other places. Quality of governance and density are almost certainly independent variables.

No, the lowest traffic solution is having the smallest number of trucks that are needed to serve local markets that a relatively high volume of people can access via walking, biking or mass transit. All that walking, very healthy.

Further, why should city dwellers subsidize this expansion? Surely these far flung communities won't have sufficient revenue to support the infrastructure needed to make all that work.

Suburbs are also the source of majority of tax revenue.

Suburbs may be the majority (I have no idea if thats true), but that doesn’t make them self-sustaining. They only exist because cities paid for highways, water, and power infrastructure to make it all possible (and continue to fund their maintenance) - exponentially moreso the further west you go.

City dwellers already subsidize rural living through taxes. On the federal level, more rural states are subsidized by more urban ones, paying more per capita and receiving less per capita. Similar things happen at the state level, but the numbers are a bit harder to track down.

This is how it works in the trades, for contractors, and some small company employees. I've Never Been Told what past applicants for a job position asked for salary and were denied

You've got that relationship backwards. The person doing the job is the seller. They are the ones taking bids.

The employer – the buyer – is indeed blind. They don't know who else you are talking to and how much they are offering. If you can convince the employer that the other employer down the street has given you a better offer, they just might up their offer, and you stand to gain a higher income out of it.

So, yes, employment is a great example of where blind bidding is common.

I'd be very surprised if the average employer doesn't have far more information available to them than the average candidate. Especially given that's at least part of HR's role, knowing market salaries and deciding hiring budgets. They might not know about the hiring candidate directly, but more often than not, there are entire B2Bs dedicated to distributing this information. That's on top of skilled hiring managers and employers having vastly more experience with the whole procedure than the average candidate would.

That's what we're talking about. It's not hard to understand overall housing market trends as a housing buyer, but you don't know what a specific seller is going to do with the offers they have on the table. That's where you're blind, just as an employer is blind to what else a candidate has on the table.

If there's a difference, it's that the housing market is hotter (in Canada, at least) than the labour market, so you feel more pressure to buy a particular house when it comes up for sale. If you miss it, you might not find another one for a long time. If, on the other hand, you don't get one employee because you didn't offer enough, you can just wait for the next one that comes along the next day and try again. No big deal.

No matter how you transact, of the good is too scarce compared to demand, the price is going to be high. We've seen skyrocketing prices in the US too and we don't use a sealed bid first price auction for the transfer of houses.

The point I was making is that it’s too easy for us not to consider the implications to average or poor people of the proposals we make. It’s not that it’s the main point, but we also must not trivialize errors.

In addition, the process being described is NOT a "sealed bid first price auction" as the seller opens the bids and requests rebids without disclosing the current winner or top bid. The only reason to do this over a normal auction of that type is to trick people into thinking they didn't win, so they bid higher.

But that's unlikely. A tiny blog post about this: https://blogs.cornell.edu/info2040/2019/10/22/why-arent-home...

Australian living in Canada here - unsure what the tragic results were? It’s helped a number of my friends buy their first home - with a small (~$10k) credit /reduced stamp duties and taxes on the first home owned and lived in (ie not an investment). Negative gearing has been far more impactful in increasing the cost of housing, with people buying multiple homes for investment purposes.

I agree that negative gearing is far more impactful, but I certainly don’t believe my FHB grant helped me enter the market. It just meant I paid that much more to a seller for the same thing.

That's the wonderful part about lending - it's an arms race, where the lender always wins.

And you can't even be mad at them for it because there's no collusion, no intent to manufacture the disaster, no single person responsible for it all, this is just the consequence of economic torture by a hundred thousand cuts. Their hands are clean even though the damage is still done.

It's analogous to a bazar except you must go to this specific bazar and there is a limited number of stalls. You only need a stall for 5 minutes to do your transaction, you don't need the stall itself. We have collectively decided that people have the right to own these stalls. Here is the problem. If you are young and you have to work, you need to go to a stall and do transactions that let you sell your time. However, all the stalls are already taken by older people. They won't let go of their stalls, they want to take them into the grave, because they are scared of not having a stall when they really need it. So instead, they rent out the stall and let you use it for a short amount of time.

Now let's say the interest rate demanded is way too high and you refuse to borrow and fall for the debt trap. What are you going to do? Stay unemployed? Ok, but now you have lots of time to think and organize and a clear group of people that you dislike. This is the perfect growth medium for extremism.

So, we did away with a fixed number of stalls. Instead, we have decided to give everyone a stall. The problem is that those old people are now buying a second, third, hundredth stall. The amount of free stalls remains laughably small, forcing the government to keep increasing the number of stalls exponentially.

When you think about it, those stalls are public property and people who have no business blocking them are wasting everyone else's time. It's like someone is parking in the middle of the road and blocking traffic. Normally you would call the police and they will confirm the traffic violation and then tow the car away and fine the owner.

We don't do this with the stalls. There is no incentive for anyone to get on with their business as quickly as possible, so people grab as many stalls as possible. There is no opportunity cost to them but there is a huge opportunity cost to those who need stalls but can't get them. This is where the exploitation of the have nots by the haves originates. There are enough stalls for everyone but nobody is giving up the extra stalls that they don't need immediately. The wrong/incorrect allocation of stalls toward those who don't need them and away from those who need them is at the root of the problem. In theory, a market would automatically solve this problem. Why doesn't it?

My argument is that we need to introduce a fee on the stalls to punish slowpokes and make sure people keep those stalls free if they don't need them. This means that if people are refusing to rent a stall, the owner of the stall would be left with an asset that is losing them value instead of a tool that can be abused for power.

In short, the problem is that the interest rate must become negative to discourage people from indebting other people against their will when an economy that is no longer growing (for short bursts or maybe even forever) has no need for further debt, debt that can only be paid through inflation.

Further, if a non-human, non-bank entity was listed as the owner of the home there would be an automatic additional federal 2x state property tax fee on the property as well. These tax payments would further not qualify to reduce the taxes owed on your other incomes.

Banks and other such lending agencies would only be subject to the property tax penalty if they did not list the home for sale at fair market value within 60 days of acquiring the deed and they would be required to accept an offer that met the fair market value requirement. (i.e., if they only got bids for $50k under fair market value, then they wouldn't be required to accept those bids).

The monies generated would be used to fund anti-homelessness measures across the country. This would make it unbearably onerous to own more than 2 homes for all but the richest Americans, and it would make it so that people who are using real estate ownership as an income producing machine would lose out on that income.

This decree would be set to roll out over a 4 year period to give the mom and pop airbnbers and other non-financially entrenched in the real estate market companies time to liquidate their equity in the housing market. Those companies that are fully dependent on rental income from single-family homes would have no motivation to purchase the newer homes on the market as each additional home would add a federal 1X multiplier to their tax burden, housing would decrease in value, more people would be able to buy in, apartments and multi-family homes would become more readily available and the prices would decrease, more people would be able to afford to rent an apartment, and fewer people would be homeless.

That's a win all around except for any company that fills its pockets by sleeping on its horde of unused homes like ancient dragons and ill-gotten gold.

For example, requiring that home sellers sell their homes with total consideration (incl. any required "side payments" to third parties) matching the mean market value of equivalent homes in other non-manipulated markets.

Or requiring that homeowners get their home appraised, and then legally mandate that consumers be charged a total compensation of at most the appraised value minus 10% to buy said home; with it being left up to the homeowner how to make that happen. (Where they can apply for their own government grants or whatever else, but they can't do anything that increases the total compensation demanded from the buyer—which would include taking any grants given to the buyer for buying a home.)

Find it hard to believe anyone could say such a thing with a straight face. Every time these subsidies are announced the median price rises.

Negative gearing is a distraction that completely skirts the real issues regarding supply, density and infrastructure.

Here’s why, as someone who has been on the ground and lost a few offers because we didn’t want to overbid. After the sold price was released, on multiple occasions we thought “damn! we’d have our that and $25K on top to get it had we known”.

In a blind bidding system, you bid what you think the house is worth. In an open bidding system you start to bud as much as you are able to afford.

Except you're rarely sure how much it's worth. The market is fluid, the psychology is working on you, and the feedback takes too long that by the time you know how much you missed it's too late to learn much from it.

Here in DC metro, people are massively over-bidding (relative to list price) because they've already bid/lost 5-10 homes in the last few months. So, they go in strong, $100-$150k over on a $600k list price isn't uncommon right now.

That doesn’t follow at all. You are going to bid the minimum amount you think can win the auction, not your max price you are willing to pay.

If you want people to bid the max amount they are willing to pay, you would want a Vickrey auction, where everyone presents a sealed bid, and winner is the top bid… but they pay the price of the second highest bid. That way you can bid your actual max price without worrying about bidding against yourself.

https://en.wikipedia.org/wiki/Vickrey_auction

In a hot market with little supply, a list price is a marketing tool to get people into the door, and for a selling realtor to be able to brag about how good they are.

That’s it. It has been like that for years. It doesn’t make sense to post a list price that is too high or accurate (unless you don’t want the hassle to deal with multiple bidders.)

1500 sqft houses in my formerly middle class SV neighborhood are listed at $2.5M and sell for $3.5M within a week. Everybody knows that this $2.5M is imaginary. If you want to know what a house will really sell for, just look at the sales of the past 2 months. It’s a much better indicator.

More typically, a "$500k" house would list for $480 and close at $520 or maybe $550. Today, that same house is listing for $599 and closing at $700+. Not only have the prices gone up, but they've gone up fast enough that nobody really knows what a home is worth until it closes.

Now, in an open bidding system, you are literally in competition for who can/is willing to pay the most for the home. The ceiling is what you can/willing to afford - back and forth with other bidders until literally the highest price is extracted.

> generally they will give you one chance to "improve" your offer

Of course, you have no idea what you're competing against, or if there even is a higher offer.

> in an open bidding system, you are literally in competition for who can/is willing to pay the most for the home.

This is true for blind auctions too.

> The ceiling is basically what you think is "fair". > in an open bidding system ... The ceiling is what you can/willing to afford

I don't see any reason why you couldn't set the ceiling to what you think is "fair" at an open auction.

Once you lose 5-10 bids, you'll either give up on owning a home, move to the country or start upping your bid to suit.

"Hey, we banned those darned foreigners just for you, can we get some love now at the ballot box?

xoxo"

“If you like laws and sausages, you should never watch either one being made.”

Why? There’s no special virtue ascribed to the purchaser v.s. the seller.

Nothing stops the purchasers from standing in front of the property and publicly announcing their bids (outside of game theory). If they’re bidding less than they are willing to pay, then de facto they’re low balling the seller. There’s no gun to their head to purchase a particular house.

When I sold my house, I had three bids, and the highest bidder payed over $30k higher than the second place. It was still over $100k over asking, with no conditions. That's just the reality of things right now, and it's not the sign of a healthy market for something as critical as housing. People are desperate, and it's getting worse.

1) as someone who has been on the ground as well, I’ve lost a few offers because I was worried about over paying. On multiple occasions, after seeing what it sold for we thought “damn, we woulda paid another $25K on top to get it had we known.”

2) Canadian banks has a very conservative “stress test” for securing mortgages. This includes qualifying at much higher rates then is being offered. Therefore it isn’t possible to “stretch yourself beyond any reasonable limits”

In a normal Dutch auction style situation you’ll pay $1 more than the second highest bidder, which is a bit more fair.

In a Dutch auction (regular dutch auction. Not reverse.) there is no second bidder. The price starts too high and drops until the first bidder to decide the price is low enough (as it drops) buys.

  Canadian banks has a very conservative “stress test” for securing mortgages.

Please stop gambling on housing as an asset class.

The middle class doesn't do it in France, Germany, or Japan. In those places, housing prices are kept _fair_ through clear, transparent planning and a blend of free market and regulation. What the hell is wrong with US/UK/AUS/NZ that allows insane leverage to middle class house buyers that drives up the price of houses? It's all silly to me. (I'm less familiar with how much CAN allows middle class people to gamble on housing.)

“stretch yourself beyond any reasonable limits” means that you may not be able to pay your mortgage, it doesn't mean the bank won't offer it to you.

The bank will look at how much you earn and how much you owe and say "We can pre-approve you for $X at Y%". They consider that you can pay that rate and they are most likely right.

Now if you do take $X, you have effectively leveraged your entire earnings, which for most people is a pretty bad idea because stuff happens and you can end up with a mortgage you can't pay because turns out you also want a car.

That being said (at least in Canada), your broker won't really let you take the full bank offers, or at least they don't expect you to do it.

For a $5,000 mortgage, that's a $5,000 a month buffer

Federal actual rate 16.5% (24% marginal)

CA State actual rate 6.4% (9.3% marginal)

Medicare rate 1.45%

OSDI rate 6.2 %

CA SDI rate 1.0%

Total:31.55% total before tax deductions and tax shelters

If your mortgage is ~40%, you have ~30% left over.

Per month, this is 4,000 for a mortgage, 3,000 taxes, and 3,000 remainder.

A 4,000/month mortgage covers a 800k loan on $1 million dollar home.

You don't get a lot of house in the bay area for 1 million, So if you are single earning this much, you are looking at condos.

If have two similar earners, you just double everything. E.g. 2 million dollar house with $6,000 per month remaining income.

You haven't factored in property taxes, home insurance, or anything. Putting these numbers into a calculator, your monthly loan payment is going to be closer to $5,400 a month.

You're taking home $6,800 a month.

You're not living on $1,400 a month in the Bay Area.

No bank is giving you this loan.

If you are putting less than 20% then the stress test is even higher.

I doubt we will see 5-6% interest rates in the next 5 years.

Above asking is a meaningless number because asking isn’t a reflection of what anyone expects a house to go for. It’s a game price designed to attract as many of the right people as possible to the property.

https://en.wikipedia.org/wiki/Vickrey_auction

And I don't see that ghost bids propping it up would be much of a problem, they'd risk winning? You could require registering names, putting a deposit down perhaps, no real need for it to be anonymous even?

When you are making a blind bid, the only information you have is the home itself. The ceiling for your bid is on what you think the house is "worth". You are very conscious about "overpaying" because you have no perspective on what other people are offering.

In open bidding, you are competing against other offers and the ceiling is basically what you can afford to pay.

Can't tell you how many times we lost offers because we didn't want to overpay - when the sold price was revealed we realized we would've paid another $25K on that had we known.

> In open bidding, you are competing against other offers and the ceiling is basically what you can afford to pay.

Well, what someone else can afford (and is willing) to pay. i.e. you never overpay, pretty much by definition.

(I think there probably exist 'open' auction system where the highest bid (not second) is paid, but the main ones don't work like that, and nobody's suggesting that as far as I've seen.)

We take people who know nothing about pricing homes, put them in a high stress time sensitive situation, advised by realtors who are incentivized to close deals quickly and at higher prices, and then expect them to make reasonable bids.

In my opinion real estate assets are likely overpriced and inflexible from what they should be due to the current regulatory situation.

The “money on the table” argument is weak, because the first bid is when people are most rational, it’s only after human psychology takes over that they start bidding higher.

The auctioneer is typically a licensed real estate agent. The whole farm will be sold that day, sometimes field by field, sometimes as a whole (sometimes both ways - this is complex to understand: they get bids an all fields separately, then for the whole and the larger total wins). Then they sell the equipment and junk. Bankers are on hand to verify financing... For houses most people wouldn't work this way, but for farms it makes sense.

I have no idea why there are regional differences, but I'm not really surprised they exist.

I'm sure it is multi-faceted, but supply management is a big difference. Notably, diary farmers in some provinces voted to impose a quota price limit in an attempt to make it affordable for new farmers back in the mid-2000s. This means that the amount that quota sells for is the same now as back then, even though the fair market value has at least doubled in the meantime.

This has created a market aberration where the quota is undervalued and to resolve it farmers have started tacking the difference onto the purchase of land. In other words, on paper I pay you $x for quota and $y for land in order to stay compliant, even though in reality I'm actually paying you $2x for quota and $y-x for the land.

This, of course, has driven up the price of farmland to unreasonable heights as people notice what farmland is selling for on record. $40,000 per acre isn't unheard of these days. I bet you in Iowa, despite having a climate that can easily outgrow us in Canada, won't see anything close to that.

As farmland prices have risen (up ~700% since 2007), residential sprawl out into that farmland has become much more expensive. This has increased the pressure on housing in existing urban areas, pushing prices up there. And, thus, the Canadian housing problem that's being discussed in the larger scope here.

For those who don't know, the best farmland in Iowa can go for just over $20k, and as you say can grow more value than anything in Canada. Iowa should be the most valuable cropland in the world - great soil, good climate, great national economy, and relatively flat land. (there are places better in some of the above, but they are lacking in at least one significant way and so the value of their land should be less today.)

The study determined that when a house was the property of the estate agent sold in a little more time at a noticeably higher price.

The idea if that your house sells (today) for (say) 100,000 units of value (pounds/dollars/whatever) the estate agent will get (still say) 5% of it, i.e. 5,000 "units" (also today).

If in a few more months time you can sell it for 120,000, the agent will get (a few months later) 1,000 "units" more, but he/she will have spent a lot more time visiting the property with prospective buyers, runnning ads on newspapers, whatever, so the incentive for the agent is to conclude the sale as soon as possible, even if at a (reasonably) lower price.

The proposal to correct the incentves was to have a flat percentage (like the mentioned 5%) until a certain amount and a much higher percentage (like - if I recall correctly 15% or maybe 20%) on the excess.

Of course it depends on the local current market, but estate agents have interest to push house price higher only until the property is an "easy sale", the sheer moment the house stays on the market for some time (this highly depends on the local market, it could be weeks or months) they will start saying something "Hmmm, maybe we valued a little too much, we (that means you) should discount it by 10%", this in the same 100,000 unit house means that you will get 10,000 unit less, while the agent would get 4,500 units instead of 5,000.

It's certainly the case that the agent who knows that a particular bidder is the highest/most attractive offer is working for the seller.

You can have an agent working on behalf of the buyer, but my experience is that’s a minority rather than majority arrangement.

Dual representation can work out ok in some scenarios, but the hyper-inflated and super competitive market we're in right now isn't one of them.

If you tell "your" agent that you'd like to bid $1M but are able to and would pay up to $1.2M because you really love the house, you're giving away a lot of information that I decided I wasn't willing to give up and so kept all Realtors at arms-length.

Inability to coordinate due to lack of information allows the seller to maintain full control of the process.

1) 'Foreign Buyers' are price insensitive. In a market without much rational pricing, it's the 'confident signals' that set the price.

i.e. 'Foreign Buyer' comes in and buys for 5% 'above asking' on Street A. What happens then, is all the other houses on that Street set their prices a big higher, and hold. Other buyers see that sale, and it 'validates' the price for everyone else. More sales on that street, set the pace for sales in the area. etc..

Everyone is 'following' the confident bidders.

2) 'Blind Bidding' just favours the seller.

Buyers will only ever bid what they are willing to pay - not more.

It's just a form of auction, that's it. It's not unethical.

3) Low interest rates

4) Way too much migration

There is actually already enough construction. The notion that a city should expand it's services and population at break neck pace to accommodate the world's population is crazy. It's a 20th century 'body count' growth delusion strategy.

Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call.

Just before declaring it sold, the agent normally stops, goes inside to consult with the vendor, and if the price is above their reserve price, goes back outside and says "the house is now on the market".

Now the auction gets serious...

Usually another couple of bidders reveal themselves at this stage. The increments can drop to $1k. If there is a battle between the last two or three bidders, the final price can go up another $50-100k or so. Eventually the final bid is locked in with a final call of "going once, going twice, going three times, to the man in the blue shirt."

The winning bidder goes inside with the estate agent, hands over a cheque for 10% of the purchase price, signs the contract part of the Section 32 statement, and is then committed to pay the balance in 60 or 90 days. Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out.

I bought my house like this, and sold it again 20 years later the same way.

It's a totally predictable, well regulated, very transparent process. The weekend auction results are all published on Monday morning, both for every house, and the aggregate "clearance rates" for sold versus "passed in".

This is so unlike UK, where each sale has a chain of buyers, all "subject to finance", and no certainty or speed!

In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.

Right now, in DC metro, all contingencies are being waived, bids are $100k+ over list on moderately priced homes, and the seller is demanding a 2-month free "rent" back from the buyer.

Both my home purchases have waived inspection. The second waived financing contingencies as well. This isn't uncommon, based on what friends and family have done.

But that’s a very well known risk. An agent will have a whole checklist of things to look at before putting a house on the market to minimize that risk. Also, buyers lose at least some money if they back out, there’s a nominal sum put up that you don’t get back if you decide to not buy once the process is started.

Imagine the same level of stress, but you have to guess what the other buyers are bidding. Do you bid low and hope everybody else does? Bid high, but risk overpaying?

Say an auction closes at 5pm Friday... I bod $500k on Wednesday. Somebody bids $501 Friday 4:50. I bid 502... they 503, right up to the last moment.

And if the site is like some online car auctions, any activity in the last 5 minutes extends the auction by another 5 minutes. So, 504... 505... and on up until somebody walks away.

A home purchase is the largest single thing most people will ever buy. It's going to be emotional, even if the buyer manages to stay calm.

No it's not.

- Ghost bidders and staff posing as buyers on auction day aren't uncommon with smaller outfits.

- They can list the property at a range of say 1-1.2M but the reserve on the property might be 1.5M. They waste everyone's time doing this, and you don't know until auction day - and that's only IF the property meets it.

- They will negotiate with buyers after hammer down, technically the "right to negotiate" goes to the highest bidder - however there's no laws, and I've seen every single agency in Melbourne do this - will go around and gauge what people are willing to go up to. They'll then instruct the vendor to accept/not accept an amount. This is why they have multiple staff on auction day.

So, I decided to look at the City Plan -- to see what the actual plan is for addressing the housing cost crisis in Toronto.

Not surprisingly, the real problem became very clear to me, almost immediately.

The problem is not blind bidding.

The problem is not foreign buyers.

The problem is not low interest rates.

The problem is the official city plan is 100% a NIMBY plan.

From the plan itself:

> While communities experience constant social and demographic change, the general physical character of Toronto’s residential Neighbourhoods endures.

In other words, let's not change our back yards.

> Physical changes to our established Neighbourhoods must be sensitive, gradual and “fit” the existing physical character.

Again -- this means that the large inner-city neighborhoods full of mansions (such as Rosedale and Forest Hill), have to stay full of mansions.

Just to spell it out:

> If, for example, an existing zoning by-law permits only single detached houses in a particular geographic neighbourhood and the prevailing building type in that neighbourhood is single detached dwellings, then the Plan’s policies are to be interpreted to allow only single detached dwellings in order to respect and reinforce the established physical character of the neighbourhood

You see this reflected in the development that does happen. Yonge & Eglinton just gets more dense -- because that's the "character" of the neighborhood. Meanwhile, in "fancy" neighborhoods, housing often gets less dense, because that conforms to the "prevailing" characteristic of the neighborhood.

With the current plan, the city is going to be a city with super high density combined with ultra low density and very little in-between. In other words, it will be full of wonderful enclaves for the wealthy, and sardine-can housing for everyone else.

This, of course, leads to issues such as the lack of schools available in the Yonge & Eglinton area, anod overcrowded transit, not to mention the lack of quality housing for families with two kids. (Try finding a decently sized 3 bedroom unit near playgrounds and schools. Yikes.)

The solution, would be to allow more medium and low rise development throughout neighborhoods. The "character" of the existing neighbourhoods should be allowed to change.

I don't blame Toronto though, this is a problem that is happening in most wealthy cities in North America. Doesn't mean we can't do better. We should.

https://www.toronto.ca/wp-content/uploads/2017/11/97dd-cp-of...

Totally agree with you.

I just returned home from a visit to Cape Canaveral, Florida. It has a true mixed residential pattern. Lots of singles, duplexes, and small apartment blocks mixed. Felt "natural", scaled well, etc. I'm sure there are problems, but from a short visit, it looked like a reasonable assortment of housing.

Hopefully this link works... https://www.google.com/maps/@28.3905172,-80.6008949,3a,75y,3...

That's a small single, with a small apartment block next door, with a slightly larger block two down.

https://www.google.com/maps/@28.3905172,-80.6008949,3a,75y,1...

Same spot, looking to other side of street, mostly duplexes, with a few singles.

For ease of searching, this phenomenon is often called the "missing middle" problem. And it sucks, because as the already-high-density areas get more and more dense over time, it just reinforces the fear of density that people in the low-density neighborhoods have, because it confirms their prior belief that density means 50 story condo towers, and only 50 story condo towers.

Chicago is a wonderful counterexample to this - lots of neighborhoods are a mix of SFH, SFH with ADUs, MFH with 2, 3 or 4 units, and small 4 or 5 story apartment buildings, with nary a condo tower in sight.

In NYC there's a very similar balance of power. On some rarefied streets, it's illegal to change the silhouette or facade of a building, because it's an "historic district".

But if you go 40 minutes outside of lower manhattan, relatively affordable housing abounds and there are essentially no rules. The "museum" core creeps outwards, but with sloth-like predictability.

You're right, these places are not "for you/us". They're for people whose means allow them to make mole hills out of the mountains you describe (access to education, public transit, quality housing), and for the rest of us, who are willing to compromise their ideals and cope with the egregious terms and conditions.

Your solutions make sense in a utilitarian sense, but this is not a sense that appeals homeowners who have already rationalized away the irrational aspects of the status quo. Generations of experience have shown that, absent some highly-destructive disaster, it's cheaper to move to place you perceive to align with your ideals, or to change your own ideals, than it is to change the ideals of zoning policy.

There is a selfish component to this vector of development, but it's reductionist to say it's the only component. At any given point in time, the selfish component is there; but at many points in time it is not the biggest contributor.

Building huge quantities of condos may help some with density and may drive prices down slightly but there is little that can be done to have new detached houses on the market.

You could potentially tear down some mansions in rich neighborhoods to build two or three houses and that might help slightly at the margins. There aren’t enough mansions in the city for this to really move the needle though.

The problem is a handful of cities are winners and everywhere else is losing. Toronto is the lifeblood of Canada and many people want to be here for opportunities that are unavailable elsewhere. A large population that grew up here doesn’t want to leave friends and family behind to start a more affordable life elsewhere. As long as we create a society where there are a handful of great places to live those places will be prohibitively expensive.

Being unable to create successful cities in Canada outside of Toronto and Vancouver has been the bigger political failing than NIMBY within those two cities. If Canada had five cities that were as successful as Toronto there would be more opportunity to go around and less pressure on Toronto. Disproportionate amount of both internal and external immigration is to the places with the best jobs and that drives up housing quickly.

That may be true, but the housing cost crisis extends beyond detached houses. We need more apartments, condos, townhouses, etc. Not just nice detached houses. Prices should get lower in all of those categories. Even condos in towers have grown much, much more expensive.

> You could potentially tear down some mansions in rich neighborhoods to build two or three houses and that might help slightly at the margins.

Most of the land in Toronto is tied up with single family detached housing. Why not replace some of these with small apartment buildings, brownstones, and townhouses especially when near transit, or villages? I live in a large house that is a 10 minute walk to transit and two major strips of retail. This neighborhood is mostly detached houses and duplexes. Why not allow for double, triple, or quadruple the density with townhouses or small apartment buildings? If done at scale, across the city, this could absolutely make a huge difference, in terms of the availability of housing.

In terms of mansions, why not spend a few hours walking around Forest Hill. You'll probably need more time, though, if you want to see them all. It's a beautiful neighborhood. And very large.

> The problem is a handful of cities are winners and everywhere else is losing.

There are other nice cities that are growing -- and the housing prices are growing exponentially there as well. (For example, Waterloo and Victoria.) Everywhere else is definitely not losing, though I agree that there should be more thriving cities in Canada, that is also a daunting task. Frankly, it's also a lot more daunting than changing the zoning to allow for medium density in single-family neighborhoods.

The bottom line, though, is that you're right about what officials can't change. They can't change the amount of land available, but they certainly can and should change the amount of development that is allowed on it. The current plan is simply not working. Something needs to change. My proposal is to allow medium density development; I don't see a better alternative.

According to their plan:

> Our goal is 72,000 new homes across Vancouver in the next 10 years.

Unfortunately, if the Vancouver population continues to grow at an annual 1% rate, that means 275,000 new people to house. 72,000 homes would mean an average of 3.82 people in each of those new houses, which is just not realistic.

In short: Vancouver isn't even planning on building enough to be able to house everyone.

I'm not very familiar with the city, but clearly, their attempts to solve the housing issue are not actually serious if they're not even planning on building enough housing for everyone.

You are exactly right, but this is by design. You're talking about the Canadian Federal Liberals. The Prime Minister is a trustafarian who got elected because his father was Prime Minister. Every major minister of their party owns several investment properties. The Minister of Housing and Diversity and Inclusion (what a combo!) owns investment properties.

These people have zero interesting in seeing property values go down. It's their own net worth we're talking about, not to mention the net worth of their friends and donors.

The plan is to virtue signal their way to taking the least effective action possible (E.g. "ban foreign buyers", but leave loopholes so they can still buy through corporations), bring in another 500,000 people that will need housing, and then do as little as possible, but as loudly as possible, to "increase to supply". They've been in power 6 years and this has been an issue since day 1. Why anyone would expect them to address this issue on the face of Canadians still voting for them, is a mystery to any rational thinker.

It's a group of people where you have to ignore what they say and focus on their actions. Did the Canadian Federal Budget look at all like a budget passed by someone trying to reduce inflation? Trying to cool down housing markets even a little bit? Of course not. Look at the hand signing the cheques, not the mouth speaking the lies.

The fact is the party political system in Canada is heavily biased towards the wealthy. Heck, in Ontario MPPs don't even get a pension so you you have to not only be wealthy to join the game but already self-supporting into retirement to be willing to consider it. You can only rely on politicians carrying through on their virtue signalling to do the right thing for the rest of us, so I'm not willing to criticize any of them for it.

Trust only that they are a politician.

And everyone knows in those cities, local officials and councillors are all in builders' pockets. Large tier builders like Richcraft are routinely raising their prices by 5-10K per every release within last 2-3weeks since last 2020 and still they have all slots closing in 5 min of opening. They are keeping the supply artificially low and I imagine the inflation and supply chain issues are not going to make things any easier.

Bottom line, house prices continue to rise. The only thing that can temporarily put a halt to this is if we end up with rates as high as 10+%. Even then I suspect there are enough people with equities and large cash pool (hell our point based immigration system makes sure this is the case for all incoming immigrants)..

Middle class dream in Canada is over for most people. When you can't afford a decent place in Toronto or Vancouver with a tech salary you know its over.

I can't imagine how bad it'd have been with the Liberals (provincial) still in power.

- Blind bids sound completely unethical. Why are real estate agents enabling this? Are they not bound to a code of ethics?

- Allowing buyers to offer cash on top of the value of a home should be illegal. You should be allowed to sell your home for what it appraises for, no more. Again, why are real estate agents enabling this behavior?

- Requiring buyers to submit letters, photos, and videos in order to buy a home is insane. They did away with this in California, but is it gone everywhere else? Another question of real estate agent ethics.

- Stop allowing companies to acquire residential real estate. This just, doesn't even make sense.

Patch these things up and you'll have major progress in freeing up a lot of real estate transactions and overvaluations.

So even if someone is told which bid is currently in the lead, the subjective elements may mean out-bidding that offer would not put them in a winning position.

Not to say eliminating blind bidding wouldn't be a good idea.

The primary scenario that comes to mind is where the neighborhood finds out Joe Outsider is the leading bidder, and they -really- don't like him for a reason they shouldn't. Blind/sealed bids help prevent Joe from getting specifically targeted for being outbid. (To an extent.)

I'd love for a better solution to exist though.

Can it hurt though? It's a massive conflict of interest to have foreigners buying your homes without any personal stake in your country. Shouldn't this be the default stance for all nations?

It's not like we haven't seen deleterious consequences already from California allowing the Chinese to buy up homes ad nauseum.

https://en.wikipedia.org/wiki/Vickrey_auction

If you bade your maximum already then obviously you’re out of contention.

On the other side if the sellers aren't happy with the highest bid they can just keep waiting for more people to turn up.

It's the opposite, worked like charm. Your main voting base, powerful people, developers, banks want price of properties to increase.

When you're applying to a new job, do you feel it's ok for the hiring company to ask you what exactly you currently make so that they can offer you $1.00 more than what you currently today? If not, how is that not "unethical"? (Also note, in the US at least - you can't ask someone what they currently earn).

I just don't understand why it's unethical.

Maybe the seller way under estimated the value of their home, why shouldn't they be allowed to sell it at the highest price?

EDIT: why the downvote? If you don't agree - why not reply so we can have a healthy dialogue.

Yes but I don't have to accept it and I can then tell them what I want and they're free to turn it down and it's a discussion. The hiring equivalent would be every applicant would write their expected salary down. Then the lowest wins with no negotiation.

But they sure do like to tell you.

Depends on what they hope to accomplish.

That is messed up…

On my current house they said there was another competing offer and it was a close choice, they asked if we wanted to increase our bid to be more competitive. We dropped it by $15k and it turned out the competing offer wasn’t even close to our initial offer. They just wanted to know if we’d throw in $5k or $10k more.