I mean the real estae market would crash thus trillions in equity would be wiped out.
but then again wouldn't normal working class people be able to afford a house again in Vancouver and Toronto just like they should be able to?
Simple progression - real estate market crashes - builders stop building and lay off construction workers while suppliers see sales drop and they lay off their workers. Now, even at lower prices, these workers can't buy houses or if they own a house, can't make mortgage payments (foreclosure). Since all these laid off workers have to cut back spending, away goes all the secondary spending generated by these jobs (auto manufacturers, waiters/waitresses, etc.) - in the U.S. (there is no reason to believe that Canada would be different) the multiplier is about 2.5 - that means for every construction job lost, an additional 2.5 jobs are lost throughout the rest of the economy.
Then there is the question of taxes - as prices drop, properties get re-assessed at lower rates meaning localities get less in tax revenues. Town, counties, and states have two options - raise taxes (which price people out of the market) or cut services (fewer police, fewer teachers, less road maintenance, etc.)
And then there is the unanswered question - what is the psychological impact of those who create foreign direct investment - if Canada banned FDI in one sector, what would stop the government from protecting other sectors the same way - leading the investors to stop investment or even pull current investment out of Canada. This reduction slows (and can even stop) Canadian economic growth (note Canada is already being affected by reduced foreign investment which is hurting its economy) and piled on top of a real estate crash with its resulting recession can quickly escalate to a major Canadian depression. Have fun with that.
Housing price just stops at present high value even banning all foreigners from buying and selling property. The price shall be maintain high because governments from city, province and federal would not putting law to lower down the inflated housing price. They need taxation money on high price housing, the higher the housing price the more taxation money they can collect.
It's those very same "normal working class people" who are driving the market. If they stopped shopping for houses they can't afford, the speculators would stop investing, wouldn't they? That would push prices down.
So, the argument from catastrophe. Isn't there a logical fallacy by that name, or something similar? Help me out, guys.
It might and it might not. Global finance is a set of dominoes waiting to topple.
The housing crash could pull down the Canadian banks that loaned the money out in equity debt, or first mortgages. If this happens the banks would not have money to loan to other Canadinian businesses. This would then mean that the employers would either need to layoff people or go completely out of business as they do not have access to liquidity. Therfore, making housing at any price unaffordable as people have no income.
Even if the banks are solvent stopping foreign investment in housing will make Canada a less attractive place to invest any type of capital. This could lead to a widespread pullout by foreign corporations, which could have a similar affect as the banking crisis.
Or yes prices will drop and locals will be able to take advantage of the buyer controlled, therefore price controlled, market and live near major cities.
You don't crash an economy, so you can pick up the pieces for cheap. Especially when it's your own economy. That's a George Soros move.
it would remain a backwater of inbred snow hilbillies
If the economy crashes, no one can afford a house even if the prices plummet to 3 digits.