[jaredklewis]

It's strange that there is so much push back against foreign investment.

Rather than enact a bunch of projectionist policies, wouldn't it be better to just adapt to the investment in a way that benefits natives? After all, when foreign people want to buy something you have, that is called an export, and most people agree those are good for the economy.

If foreigners are investing in housing, local governments will receive a huge influx of tax income from property taxes. If there is no property tax, then now is the perfect time to add it (or the similar but more progressive land value tax) or increase it. The income from these taxes can be used to fund infrastructure, education, and reduce other taxes like consumption taxes.

The other thing to when demand for housing in your city is high, is to increase supply. Seattle is not full. The Seattle metropolitan area is 15,000 sq. km with a population of 3.7 million. To compare, the Tokyo metropolitan area is 13,500 sq km, with a population of 37 million. No idea about the accuracy, but this site showed that rents were more reasonable in Tokyo (which matches my own impressions): https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

If we are going to take legislative action anyway, instead of a bunch of protectionist policies that will create long lasting opportunities for arbitrage and market inefficiencies, why not just make taxes to help the people benefit from the foreign investment and let development happen to help reduce costs long term?

[goatsi]

It's funny that you think that they pay taxes.

>An unusually high number of Vancouver homeowners living in multi-million dollar neighbourhoods but reporting poverty-level incomes is a red flag that needs immediate government action, says NDP MLA David Eby.

>“The focus should be quite straightforward: are you paying your worldwide taxes inside British Columbia, or not?” Eby, who represents Vancouver-Point Grey, told reporters during a July 15 press conference.

>“If you’re not you should have to pay extra in order to pay for the public services that make this real estate so valuable: the environmental controls, the policing, the court system, the schools and the healthcare.”

http://www.metronews.ca/news/vancouver/2016/07/15/number-of-...

>Documents obtained by Eby also show 29 of those homeowners have also been able to take out a mortgage. “There’s a waitress that bought a $2.3 million property. And there was a casino dealer and a cashier who bought a $1.2 million property as well. Students, homemakers and waitresses, by definition, have very low or no incomes. Is this why MacKenzie Heights and other neighbourhoods throughout the Lower Mainland are reporting incredibly low incomes, despite real estate values being so high? Are the people purchasing these $1 million homes reporting poverty level incomes for tax purposes?”

http://www.news1130.com/2016/09/27/homemakers-students-own-1...

[dang]

> It's funny that you think

Please don't be snarky on HN. "It's funny that you think X" can be shortened to "Not X".

[matt_wulfeck]

It still seems like a property tax assessment on the house, which doesn't take into consideration the owners tax bracket, Would benefit the community the local governments?

[goatsi]

Property tax on residences isn't they only place municipalities get revenue, they also get taxes from commercial (shops & companies) property. If the foreign owners never move into the house and don't rent[0] it there is no additional revenue in the form of purchasing things or working at an employer in the city.

[0]https://www.pressreader.com/canada/the-province/20141127/281...

[jaredklewis]

I said that if we are making legislative changes anyway (i.e. adding in anti-foreign buyer laws), why not just fix the underlying problem, sans-xenophobia, by adding or increasing property taxes?

If people aren't paying a sufficient amount in taxes now, I suggest adding land value taxes.

[nugget]

I think the push back comes from the fact that in many of these places, Government policies are very favorable to owners and investors. In California, for example, property taxes are extremely low, while sales and income taxes are the highest in the entire country. As domestic home ownership decreases, the domestic political support for such favorable policies will decrease as well. As California's home ownership rate decreases (and fiscal pressures increase), there's no doubt in my mind that proposition 13 will eventually come under attack and eventually be repealed. If property taxes were 3%, like in Texas, I don't think as many people would complain about absentee ownership since so much of the value flows back to the community each year.

[greglindahl]

Wow! Given that many citizens in California would like to destroy Prop 13, that sure is an interesting way to approach killing it.

[Tiktaalik]

> The other thing to when demand for housing in your city is high, is to increase supply.

This statement assumes that cities aren't already increasing supply. The fact is that Vancouver is building more supply than at any other time in recent memory.

There are real physical limits to creating supply. There are limits in tradespersons available. There are limits in being able to review and approve buildings and it all takes time. The city of Vancouver has already increased development fees in order to be able to hire more people to review development applications faster and build faster.

In contrast to the real and known limits of supply creation, the scope of foreign speculative demand is unknown.

What happens when you increase supply and you don't meet demand? What happens if foreign demand increases to meet the new supply?

[bootload]

"It's strange that there is so much push back against foreign investment."

I'll stop laughing at this when I see the ability for reciprocal investment in source countries. Will that happen?

[loeg]

I'd be fine with foreign buyers buying up all of the real estate if we taxed unoccupied residences heavily. As long as they're renting it to the local market, it's ok.

[TheSpiceIsLife]

Does it make sense to think of foreign real estate ownership as an export?

If so, at what point should we expect the Chinese militarily to park it's boats off the coast to protect its property?

Edit: fixed a word

[the_economist]

That would be after the Chinese defeats us in WW3 and a treaty prohibits us from fielding our own military for the next 100 years.

[nandemo]

The problem is that that comparison is misleading: while a Seattle 1BDR is 61% more expensive than a Tokyo one, it's also much bigger.

Note that the Buy comparison is by square meter, which is much more reasonable. Price per Square Meter to Buy Apartment in City Centre is -60% in Seattle i.e. Seattle_price = .4*Tokyo_price.

It's not like there's such a huge disparity in rent prices vs. buy prices in either city. The main reason that Rent for Apartment (1 bedroom) in City Centre comes out 61% more expensive in Seattle is that their average 1BDR is more than double the size of a Tokyo 1BDR.

[justabystander]

> It's strange that there is so much push back against foreign investment.

You say "foreign investment" as if they're looking to develop or improve the local economy and in the process make a profit. Many Chinese buyers have been targeting foreign real estate as a way to combat the fluctuations of their local currency, which is under suspicion of government manipulation. They're "investing" because there's nothing of long-term value in local areas, so they buy foreign properties in more stable markets. Without any consideration of the effect on the people living in that market.

> when foreign people want to buy something you have, that is called an export

Local goods that are shipped to foreign locations are called exports, and they're subject to significant extra taxation. Local resources such as land, water, food and energy that are bought and taken off the market to create shortages, thus increasing the cost of living for locals (thus increasing the value of your investment at the expense of others) aren't called exports. They're called market manipulation (or market speculation, if you're being generous).

> [Various comments about housing density]

Many of these properties lay vacant, which further drives up the cost of housing in already expensive locales. These buyers often aren't targeting areas for building commercial or high-density housing. They're buying multiple houses at the middle-class level, which contributes to an already vanishing middle class. The cost of houses and apartments in these areas has multiplied by 1.5x-3.5x the original value in a very short period of time. Unbalanced inflation like this perennial issue in the US given the lack of sufficient corporate oversight. Artificial inflation (beyond currency inflation) of the cost of living should be the prime issue for any major city.

Allowing them to buy and sit on valuable land that could be developed when they have no intention of development actually prevents us from increasing housing density in these high-demand areas. That's the whole reason they're introducing this tax. As long as there's some sort of time-limited exemption for actual construction and development that will cover people building new commercial and high-density housing structures, it's exactly the sort of thing we should be doing with our rate of population increase.

> rents were more reasonable in Tokyo

It's also perniciously difficult to rent in Tokyo as a foreigner. And when moving into a new apartment, locals will often pay a move-in gift of 3x the monthly rent as a tradition from post-war shortages. Japan also has a much more advanced public transit system, allowing for longer commute times and more stable pricing. China also doesn't allow foreigners to buy land or open businesses. In any case, Vancouver's and Seattle's current unreasonable rents are a factor from external manipulation, so once we curb the foreign investors who don't develop or use property, it should become much more competitive.