8 ms·

> The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home. In the US, a lot ha

> The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home. In the US, a lot has been made about large investment companies buying up houses, but this is something different entirely: > This category represents homebuyers with multiple mortgaged properties. This means investors are homebuyers who either: > * purchase an investment property while maintaining their primary residence, or > * purchase a new residence to live in while converting their existing residence into an investment property Specifically, "investors" excludes anyone who didn't use a mortgage to purchase (e.g., all-cash buyers, any buyer with alternative financing). AFAICT, it would even exclude someone with a paid-off house who bought a new investment property with a mortgage. [1]: https://www.bankofcanada.ca/2022/01/staff-analytical-note-2022-1/#Classifying-homebuyers https://www.bankofcanada.ca/2022/01/staff-analytical-note-20...

bitxbitxbitcoin 3y ago
Almost as if the large companies would like those unable to buy homes to misdirect their ire.
- Schiendelman 3y ago
  The large companies just don’t account for very many homes. Once you control out for homes under construction, that just isn’t the issue. The issue is that we dramatically restrict how much housing anyone can build, specifically, upward.
  - ozmodiar 3y ago
    The city I live in isn't restricting it. Condos are going up as fast as they can be built and the parks are still filling up with tent cities and rents are still doubling. Something just doesn't add up. I'm in Canada (don't want to give exact city, sorry).
    - kiba 3y ago
      Well, without specific numbers and statistics, it's hard to know if demand for housing are being met.
    - Schiendelman 3y ago
      I don't know if you've looked at Canadian housing news in the last few days, but do you really, really think that "condos are going up as fast as they can be built"? Because if you do, I think you're very misinformed.
    - Schiendelman 3y ago
      I’m on King on a 504a right now. It’s massively restricted. You just can’t tell by looking. “Lots” isn’t a measurement.
  - bitxbitxbitcoin 3y ago
    Yes that is an issue. There isn’t only one issue. As an extreme illustration, think about trailer homes and trailer parks as an example.[0] [0] https://www.nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html#:~:text=Real%20Capital%20Analytics%2C%20a%20market,among%20the%20country's%20largest%20landlords https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner....
  - ethanbond 3y ago
    Zoning hurts, labor shortage hurts, speculation hurts, sprawl hurts, etc. We don’t really need to look for a single cause. All of these things are happening and interacting with each other.
    - Schiendelman 3y ago
      In general - zoning causes the sprawl and the speculation, and worsens the labor shortage. It is the only root cause.
bugglebeetle 3y ago
If there’s an affordability housing crisis at the level of Canada, where home prices are so wildly out of whack relative to median incomes, it’s IMO entirely reasonable to ban the purchase of investment properties in the single family homes market for anyone. This will never happen because of the political backlash, but housing as a speculative asset is fundamentally insane and corrosive to societies. Housing affordability is directly tied to all kinds of broader social outcomes, from crime to public health to educational achievement and it makes zero sense to sacrifice these on the altar of “fuck you, I got my house(s).”
- collaborative 3y ago
  A person I know of outstanding moral character (has adopted 3 kids) boasts about voting against any development in his area. I don't know what it'll take for people to see what you are saying
  - SamoyedFurFluff 3y ago
    I don’t think people with moral character can be reasonably expected to always have moral views on every subject matter. Not to be political but this is what people mean when they talk about intersectionality. For example a women’s rights advocate might unintentionally exclude disabled women, or be harder on black women they work with than white women for being ghetto or ratchet.
    - collaborative 3y ago
      You are being downvoted but you are right. It just depresses me to see that people I look up think this way. I have met others who also can't see that building is the solution because of more exotic reasons: those who want to impose price controls because they think this will somehow finally allow them to own that coveted flat in the center, those unwilling to allow the mass building of lower quality stock because who cares about poor people's houses, etc A multitude of entitled opinions that in a democracy hinder the construction of houses for the future generation
  - 3y ago
carlosjobim 3y ago
> it would even exclude someone with a paid-off house who bought a new investment property with a mortgage. That is called an investor, since they purchased an investment.
- belltaco 3y ago
  Right, they're saying those wouldn't be counted under the article's methodology.
- deleted 3y ago
  [deleted]
- __derek__ 3y ago
  I wrote "AFAICT" because that's my inference of a counterintuitive result of this methodology.
sokoloff 3y ago
It seems like it would also include people who are buying a new property to occupy as owners that will be mortgaged, while planning to later sell their existing, also-mortgaged, owner-occupied property. Those people are not investors by any useful English-language definition, but would be counted as such by this method. This is exactly the situation we were in when we bought our current home, and anecdotally, is not uncommon when people are moving in together from previously separate, owned properties. Sellers prefer zero sales contingencies over one sale contingency and prefer one over two.
- __derek__ 3y ago
  I believe those would be called repeat buyers under the Bank of Canada methodology because the Transunion data should connect their new mortgage with the discharge of their previous mortgage.
  - sokoloff 3y ago
    If someone had a house with a mortgage, bought another house with a mortgage in May, and discharged the original mortgage in October (or the following February), were they a repeat buyer or an investor? Plain English would say "repeat buyer", but I can't tell definitively how they'd be treated in the data. The one clear reference in the article strongly suggests they'd be categorized as an investor: "The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home."
    - __derek__ 3y ago
      I don't know. There's no link to the Transunion data set, so it's not possible to dig in. Even the sentence you quote is ambiguous because "maintaining" indicates an ongoing active state. Assuming that the dataset is a point-in-time snapshot, there are probably some repeat buyers classified as investors because of timing.
theptip 3y ago
So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”? While I can see how the delta in this metric is suggestive, it is not clear how it affects the available housing stock (rent+buy). What I think people actually care about is unoccupied investment properties, where someone buys and leaves it vacant. Apparently a lot of Chinese capital is parked in this way due to their capital controls preventing cash from being freely moved out of the country, though to be clear it’s not unique to China. Or if these properties are being flipped, perhaps that has a short-term negative impact on available housing stock as properties are taken off the market while being renovated. (If the marginal second bidder would have moved in to the house as-is, then the winning bid renovating and selling is reducing supply / increasing demand for housing.) As you note, a whole other kettle of fish around REITs that won’t use mortgages. In the US, REITs are a major contributor to new construction for example.
- pavlov 3y ago
  > ‘So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?’ Of course. The second house is purely an investment to you. I don’t imagine anybody particularly loves being a landlord. It’s sometimes messy compared to owning a stock. If you could get a better return with less risk from some other investment, you’d put your money in that instead. But residential real estate in cities happens to have an appealing risk/return profile that’s not directly correlated with stocks, so there are good reasons why both small and large investors buy housing.
- Ghostt8117 3y ago
  Yes, you are an investor. You do not live in the home you purchased. You rent it to earn money, i.e., an investment. This creates a huge problem. Rental properties have different regulations in different places. My brother-in-law was not given a lease renewal amnd was forced to move (within 30 days) while, where I live, that is illegal unless there is cause for eviction. It creates instability. Also, my rent increased $550/month in just two years. Who can afford that? This creates a tenuous housing issue. Thankfully, I was able to move and buy a very small condo so I have a set monthly payment and no longer need to worry about losing my home every year when my lease ends. There is a huge difference in how I can plan for the future knowing I am not going to be, potentially, homeless every year.
epistasis 3y ago
Honestly I think that owner occupied homes should count as investment homes too. There is scant difference between the economic interests of a landlord and a homeowner. Which is what lets homeowners buy a second home so much more easily than younger people. The asset price inflation of homes in Canada has been remarkable at concentrating the productive labor of working Canadians into the idle hands of homeowners.
roncesvalles 3y ago
A much better term is "speculators" since a second mortgage is purely a leveraged investment.

bitxbitxbitcoin 3y ago

Almost as if the large companies would like those unable to buy homes to misdirect their ire.

Schiendelman 3y ago
The large companies just don’t account for very many homes. Once you control out for homes under construction, that just isn’t the issue. The issue is that we dramatically restrict how much housing anyone can build, specifically, upward.
- ozmodiar 3y ago
  The city I live in isn't restricting it. Condos are going up as fast as they can be built and the parks are still filling up with tent cities and rents are still doubling. Something just doesn't add up. I'm in Canada (don't want to give exact city, sorry).
  - kiba 3y ago
    Well, without specific numbers and statistics, it's hard to know if demand for housing are being met.
  - Schiendelman 3y ago
    I don't know if you've looked at Canadian housing news in the last few days, but do you really, really think that "condos are going up as fast as they can be built"? Because if you do, I think you're very misinformed.
  - Schiendelman 3y ago
    I’m on King on a 504a right now. It’s massively restricted. You just can’t tell by looking. “Lots” isn’t a measurement.
- bitxbitxbitcoin 3y ago
  Yes that is an issue. There isn’t only one issue. As an extreme illustration, think about trailer homes and trailer parks as an example.[0] [0] https://www.nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html#:~:text=Real%20Capital%20Analytics%2C%20a%20market,among%20the%20country's%20largest%20landlords https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner....
- ethanbond 3y ago
  Zoning hurts, labor shortage hurts, speculation hurts, sprawl hurts, etc. We don’t really need to look for a single cause. All of these things are happening and interacting with each other.
  - Schiendelman 3y ago
    In general - zoning causes the sprawl and the speculation, and worsens the labor shortage. It is the only root cause.

bugglebeetle 3y ago

If there’s an affordability housing crisis at the level of Canada, where home prices are so wildly out of whack relative to median incomes, it’s IMO entirely reasonable to ban the purchase of investment properties in the single family homes market for anyone. This will never happen because of the political backlash, but housing as a speculative asset is fundamentally insane and corrosive to societies. Housing affordability is directly tied to all kinds of broader social outcomes, from crime to public health to educational achievement and it makes zero sense to sacrifice these on the altar of “fuck you, I got my house(s).”

collaborative 3y ago
A person I know of outstanding moral character (has adopted 3 kids) boasts about voting against any development in his area. I don't know what it'll take for people to see what you are saying
- SamoyedFurFluff 3y ago
  I don’t think people with moral character can be reasonably expected to always have moral views on every subject matter. Not to be political but this is what people mean when they talk about intersectionality. For example a women’s rights advocate might unintentionally exclude disabled women, or be harder on black women they work with than white women for being ghetto or ratchet.
  - collaborative 3y ago
    You are being downvoted but you are right. It just depresses me to see that people I look up think this way. I have met others who also can't see that building is the solution because of more exotic reasons: those who want to impose price controls because they think this will somehow finally allow them to own that coveted flat in the center, those unwilling to allow the mass building of lower quality stock because who cares about poor people's houses, etc A multitude of entitled opinions that in a democracy hinder the construction of houses for the future generation
- 3y ago

carlosjobim 3y ago

> it would even exclude someone with a paid-off house who bought a new investment property with a mortgage. That is called an investor, since they purchased an investment.

belltaco 3y ago
Right, they're saying those wouldn't be counted under the article's methodology.
deleted 3y ago
[deleted]
__derek__ 3y ago
I wrote "AFAICT" because that's my inference of a counterintuitive result of this methodology.

sokoloff 3y ago

It seems like it would also include people who are buying a new property to occupy as owners that will be mortgaged, while planning to later sell their existing, also-mortgaged, owner-occupied property. Those people are not investors by any useful English-language definition, but would be counted as such by this method. This is exactly the situation we were in when we bought our current home, and anecdotally, is not uncommon when people are moving in together from previously separate, owned properties. Sellers prefer zero sales contingencies over one sale contingency and prefer one over two.

__derek__ 3y ago
I believe those would be called repeat buyers under the Bank of Canada methodology because the Transunion data should connect their new mortgage with the discharge of their previous mortgage.
- sokoloff 3y ago
  If someone had a house with a mortgage, bought another house with a mortgage in May, and discharged the original mortgage in October (or the following February), were they a repeat buyer or an investor? Plain English would say "repeat buyer", but I can't tell definitively how they'd be treated in the data. The one clear reference in the article strongly suggests they'd be categorized as an investor: "The central bank defines an investor as a buyer who took out a mortgage to buy the property while maintaining a mortgage on another home."
  - __derek__ 3y ago
    I don't know. There's no link to the Transunion data set, so it's not possible to dig in. Even the sentence you quote is ambiguous because "maintaining" indicates an ongoing active state. Assuming that the dataset is a point-in-time snapshot, there are probably some repeat buyers classified as investors because of timing.

theptip 3y ago

So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”? While I can see how the delta in this metric is suggestive, it is not clear how it affects the available housing stock (rent+buy). What I think people actually care about is unoccupied investment properties, where someone buys and leaves it vacant. Apparently a lot of Chinese capital is parked in this way due to their capital controls preventing cash from being freely moved out of the country, though to be clear it’s not unique to China. Or if these properties are being flipped, perhaps that has a short-term negative impact on available housing stock as properties are taken off the market while being renovated. (If the marginal second bidder would have moved in to the house as-is, then the winning bid renovating and selling is reducing supply / increasing demand for housing.) As you note, a whole other kettle of fish around REITs that won’t use mortgages. In the US, REITs are a major contributor to new construction for example.

pavlov 3y ago
> ‘So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?’ Of course. The second house is purely an investment to you. I don’t imagine anybody particularly loves being a landlord. It’s sometimes messy compared to owning a stock. If you could get a better return with less risk from some other investment, you’d put your money in that instead. But residential real estate in cities happens to have an appealing risk/return profile that’s not directly correlated with stocks, so there are good reasons why both small and large investors buy housing.
Ghostt8117 3y ago
Yes, you are an investor. You do not live in the home you purchased. You rent it to earn money, i.e., an investment. This creates a huge problem. Rental properties have different regulations in different places. My brother-in-law was not given a lease renewal amnd was forced to move (within 30 days) while, where I live, that is illegal unless there is cause for eviction. It creates instability. Also, my rent increased $550/month in just two years. Who can afford that? This creates a tenuous housing issue. Thankfully, I was able to move and buy a very small condo so I have a set monthly payment and no longer need to worry about losing my home every year when my lease ends. There is a huge difference in how I can plan for the future knowing I am not going to be, potentially, homeless every year.

epistasis 3y ago

Honestly I think that owner occupied homes should count as investment homes too. There is scant difference between the economic interests of a landlord and a homeowner. Which is what lets homeowners buy a second home so much more easily than younger people. The asset price inflation of homes in Canada has been remarkable at concentrating the productive labor of working Canadians into the idle hands of homeowners.

roncesvalles 3y ago

A much better term is "speculators" since a second mortgage is purely a leveraged investment.