Quote:
Originally Posted by Traum
The problem is, supposedly, the government's duty is to serve the citizens and look after our needs, not cater to foreign investors at the expense of the citizens' well being. With foreign investors driving up home prices and making home ownership next to impossible, the government (all 3 levels of them) is not doing its jobs right.
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There's pros and cons to foreign capital investment into local real estate.
Pros:
- obviously it's similar to tourism as many businesses will now be exposed to new customers that have lots of $ and are willing to spend it.
- The owners that bought their property for 400K 10 years ago can now sell it for over $1 million. or more depending on where you live etc.
- those that own a home in a desirable area (west side etc) can now sell out for $2-8 million and use that cash to buy a dream home in East Van etc. trickle down effect.
- speculators make money
- banks, realtors, mortage brokers, real estate lawyers, property managers, housing, construction, condo development. . .they all benefit.
- municipal coffers are up big time, which is probably why we all think - Gregor is catering to the developers because he gets all this new property tax revenue. BC government gets property transfer tax revenue. Some of the biggest political donaters are developers.
- newspapers love developers, look at your newspaper, half the ads are real-estate related.
Cons:
- High cost of real estate and rents force companies to move elsewhere.
- many move elsewhere because they cant afford to live here due to high cost of living, companies suffer because they cant find good talent
- some are forced out due to limited supply of rentals, $1600-$2000 a month for a 1 BR condo downtown? $2000 a month for a 3BR townhome in east van? some of these homes are left vacant and there just need to be more supply in order to decrease the rent prices.
- extremely unsafe debt load from many taking on too much debt, all it takes is one earthquake and bam - those that are over leveraged are screwed.
I think it gets to a point where real estate levels are unsafe and that's when the government (all 3 levels) are not doing their job and not doing research, or keeping stats, or turning a blind eye to things and if the high real estate prices are left uncheck, this could cause a huge recession if say something like an earthquake happens or something and there's a major real estate correction.
And most likely the taxpayers will have to bail these people that are over-leveraged out. Not to mention that a recession also hurts everyone, even those that did the prudent thing and not over-leverage themselves.