Home prices and rents have increased by 5% to 10% due to purchases of home from those outside the region, according to Out-of-Town Home Buyers and City Welfare, a joint UBC Sauder School of Business-New York University study.
In contrast, out-of-town homebuyers in New York have only contributed to 1.1% increase in home price and 1.6% in rent.
The increase in home prices was thought to be beneficial to local homeowners since an up home prices equates to greater asset value for homeowners. However, this isn’t the case.
Jack Favilukis, Sauder School professor, says that “Wwile indeed, older households who own their home do benefit handsomely after out-of-towners show up, this benefit is not enough to offset the cost to others. Poorer households, younger households and renters, despite being a minority, are more negatively affected because it is much more expensive for them to pay for housing going forward.”
Policy such as the 15% foreign-buyer tax is designed to prevent foreign homebuyers from inflating the housing marketing and making home purchasing or renting unaffordable.
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