“We have a very good system of foreign investment creating a lot of new housing in Canada”

Now that our government has said it’s a “good system” to sell off our new housing supply to foreign investors (vs domestic homebuyers), why is this a problem? 1/

First of all, it doesn’t really matter if foreign investors are buying a new home or a resale home – the problem this creates in our housing market is the exact same, it artificially inflates home prices.

Why does this happen? 2/

When a Canadian tries to buy a new house or condominium, their home buying budget is based on their domestic income and their down payment is based on the after tax dollars they have saved.

Can a young household compete against a wealthy foreign investor – of course not! 3/

Foreign investors firstly have made their money in countries/cities where incomes are higher and tax rates are substantially lower giving them a significant advantage over a young family earning a household income of $100K CAD and paying taxes in Canada 4/

Now this assumes the foreign investor even earned their money legally.

A lot of the money flowing into Canada’s housing market is coming from criminals who want to use our housing market to launder their money 5/ https://financialpost.com/pmn/business-pmn/why-criminals-look-to-canada-to-launder-their-money-through-real-estate

So not only is a young family that earns $100K per year competing with wealthy foreign investors, they’re competing with wealthy international criminals who don’t care about house prices or affordability because their only goal is to launder their money.

Welcome to Canada! 6/

Now builders and politicians often argue that the fact that the vast majority of new condominiums are bought by investors is “proof” that we need to court these investors because without them it will kill off our housing supply.

This is truly an idiotic statement 7/

The reason few end users buy new construction condos is not because we don’t have demand in Toronto, it’s not because young first time buyers don’t want to buy a new condo

It’s because they can’t compete with foreign investors and criminals who will pay much more than them 8/

Pre-construction condos in the Toronto area cost 30+% more than resale condos because they are dominated – as Adam gleefully pointed out – by foreign investors.

Foreign investors can outbid domestic home buyers earning a salary in Canada.

It’s that simple. 9/

Vancouver, Sydney, Auckland and Toronto are in the top 5 most unaffordable housing markets in the world, only behind Hong Kong.

I don’t think it’s a coincidence that all three countries saw a significant amount of foreign capital flow into their housing markets 10/

Adam is now feigning concern about the “very good system” they created...

Selling off our new housing supply to the highest international bidder.

But their "very good system" has screwed an entire generation of home buyers. / https://twitter.com/TOAdamVaughan/status/1381306241314648074