Ottawa announces new minimum down payments for homes over $500K

[Mr. Analog]

Gong from 5% to 10% down payment on houses $500,000 and up

http://www.ctvnews.ca/business/ottawa-announces-new-minimum-down-payments-for-homes-over-500k-1.2696421

The goal with this change is to try and cool off the housing markets in places like Vancouver/Toronto where real estate prices have skyrocketed (through foreign property speculation and job growth).

Personally, I don't understand why the government doesn't limit foreign property investment to make room for Canadians actually moving to these cities for work.

http://www.theglobeandmail.com/report-on-business/top-business-stories/why-analysts-see-no-quick-end-to-the-toronto-vancouver-housing-booms/article27661566/

What does it mean for potential home buyers in places like Calgary where housing is still expensive even though there are a lot of people moving away?

http://calgaryherald.com/business/real-estate/calgary-house-prices-expected-to-fall-4-in-2016-remax

The average house price in Calgary according to this article is $443,232 (to contrast, the average residential home in Edmonton is $432,862¹, in Vancouver it's $947,350²).

I guess if you're planning on buying a house save up at least $50k first

[Lazybones]

Ya, since I live in / around one of those markets the initial comments have been about ensuring no Canadians purchase those homes as the foreign purchaser just pay cash.

The data from one of the first foreign ownership studies has been released but if your read to the end, the numbers can be bent in different directions.
http://business.financialpost.com/personal-finance/mortgages-real-estate/cmhc-finally-releases-foreign-ownership-data-on-housing-too-bad-few-believe-it

[Tom]

I thought the big problem was that data wasn't properly tracked. So noone really knows how "bad" foreign ownership has actually gotten.

[Lazybones]

I thought the big problem was that data wasn't properly tracked. So noone really knows how "bad" foreign ownership has actually gotten.

If you read the link it is the first study to try and GET the data.

Also if you want to know what it costs to live in Canada this just came out
http://www.huffingtonpost.ca/2015/12/11/canada-most-expensive-homes-income_n_8777022.html

[Tom]

I mean there is no real /raw/ data. So these studies can really only approximate it. Someone actually has to actually ask "hey, where is the money coming from", and i don't know if anyone does?

[Mr. Analog]

Also if you want to know what it costs to live in Canada this just came out
http://www.huffingtonpost.ca/2015/12/11/canada-most-expensive-homes-income_n_8777022.html

I'd like to know what they based these numbers on too. All this information flying around but no raw data, I agree, s'crazy. At best the information I could find were summary reports published by private companies / organizations, my guess is the detailed data is private.

At the end of the day though it does feel like the plan is to put the squeeze on lower/middle income home buyers, those people that wouldn't be able to put 10% down on an average home without getting a line of credit. Wealthier individuals can front the cash, if you are a family just starting out though, it seems harder. Good time if you are a property owner looking to rent I guess.

There was one suggestion in a comment buried somewhere that had an interesting idea of increasing the % of minimum down payment based on the value of the home, not sure if that would work by incentivizing a lower average?

[Thorin]

If the goal is to stop foreign investors from buying local property and causing house price increases, then the only solution is to disallow foreign ownership.

Any other scheme, the rich investors will find a way around and the while the locals will pay too much.

And even if you disallow foreign ownership, what's to say the rich investors don't just buy using a local as figurehead? Although the local could sell the house and pocket the money, I'm sure the foreign investors would find some shady guys to go get their money back.

Requiring a certain amount of downpayment will not drive out rich investors, though, as they typically have larger amounts of cash available than a first-time homeowner.

The only real solution I see is to disallow foreign ownership and then actively investigate every housing transaction for possible fraud (and seize the house if fraud is found). Then the foreign investors would be unable to make money through ownership and would go away. Our housing markets might come tumbling down to earth as well, though.

[Lazybones]

The down payment increase isn't for foreign owners it is to prevent locals from over extending into the overpriced market and then default.