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It wasn't really hard to predict, you are giving houses to people who couldn't afford them but nobody cared because the economy was doing so well and everyone was making money hand over fist.
Canada is heading in the same direction, interest rates are dropping and it's cheaper to borrow making it more appealing to own real estate and misc. goods at a time when the average house hold is already 150% overleveraged.
What do you think will happen if we go through tough times or if interest rates go up so you have less money because you have to make more interest payments.
This is the same hypothetical put forward by the bears for years. The fearmongers have assembled all kinds of negatives that would impact the real estate market, yet the market has kept going up. These are probably the same idiots who shorted the S&P500 all the way up from the 2009 bottom and lost it all.
Garth at greaterfool.ca recently wrote, "we’re entering that space, it seems. On Thursday there was more to fret over. Loblaws shuttering dozens of stores just months after announcing a big expansion. More losses for the Canadian stock market. Oil now down to just $48 or 25% less than it was three months ago. The dollar at 76 and a half cents, promising a boatload of higher consumer prices. And who can forget the last holy-shit moment from the Canadian Payroll Association? These guys have polled people for six years, and things are nasty. A hefty 51% of all working stiffs said in the last survey “I would find it difficult to meet my financial obligations if my paycheque was delayed by a single week.” Half of everybody. Only one week. Ouch. What does this tell us when 70% have houses and epic mortgages?"
This guy Garth has so many followers despite the fact none of his doom predictions on Canada RE came true because he supposed to be an "expert", even though he is just a failed politician who doesn't know more than you and me. All this data or really just noise gives you the illusion of understanding and illusion of validity about where the market is headed. In truth, the world is a lot less knowable than you think.
This is the same hypothetical put forward by the bears for years. The fearmongers have assembled all kinds of negatives that would impact the real estate market, yet the market has kept going up. These are probably the same idiots who shorted the S&P500 all the way up from the 2009 bottom and lost it all.
Garth at greaterfool.ca recently wrote, "we’re entering that space, it seems. On Thursday there was more to fret over. Loblaws shuttering dozens of stores just months after announcing a big expansion. More losses for the Canadian stock market. Oil now down to just $48 or 25% less than it was three months ago. The dollar at 76 and a half cents, promising a boatload of higher consumer prices. And who can forget the last holy-shit moment from the Canadian Payroll Association? These guys have polled people for six years, and things are nasty. A hefty 51% of all working stiffs said in the last survey “I would find it difficult to meet my financial obligations if my paycheque was delayed by a single week.” Half of everybody. Only one week. Ouch. What does this tell us when 70% have houses and epic mortgages?"
This guy Garth has so many followers despite the fact none of his doom predictions on Canada RE came true because he supposed to be an "expert", even though he is just a failed politician who doesn't know more than you and me. All this data or really just noise gives you the illusion of understanding and illusion of validity about where the market is headed. In truth, the world is a lot less knowable than you think.
If ur gonna throw shit at ppl, at least back it with some facts or a defendable positon
C'mon guys YOLO. Who cares if you miss a couple paychecks and wind up on the street. Life on the edge is such a rush!
multicartual, is that you?
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Quote:
Originally Posted by StylinRed
This may interest some, the Director of the NCA in London (UK FBI) has stated housing prices are on the rise and being skewed from their actual value due to foreign criminals laundering money and driving up the prices
So it sounds like David Cameron is going to attempt to curb laundered money from entering the UK, and specifically from affecting the housing market. He's asking other nations to join in
Fucking hell, it's articles like this that prove that the MSM is full of idiots:
to put things into perspective, technically, this is correct. it's also the most simple form of economics. Weak economy = weaken your currency make your exports more attractive.
unfortunately, Canada's manufacturing base has eroded significantly since 2008, so any rebound will be muted compared to what could have been.
also, seriously, "people selling property to overseas buyers" - ARE YOU FUCKING KIDDING ME, selling real estate is a one time transaction, it is not a wealth generator, it is not a way to grow an economy... but to vancouverites and the MSM, it's the only industry there is!
i feel sorry for the average idiot on the street that reads this and thinks all is well. you shouldn't put a positive spin on everything, the loonie is weak b/c rates have been cut to try to stimulate a shrinking economy. a recession is just around the corner... there is little positive here.
also, note a HUGE downside here - input costs are going up, all goods will be more expensive, gasoline (as oil is priced in USD) will be way higher in Canada vs. US now... no, there is little good news right now in canada.
See the below at how Canada turned from a net exporter to importer... no silver lining (couldn't quickly find more up to date figures, but shows the post 2008 story)
Lower loonie could turn into good news, say experts
Economists point to exporters, tourist industry, people selling property to overseas buyers
The Canadian dollar dropped to its lowest point in more than a decade Wednesday, hitting 76.7 cents US. But some experts say a weak loonie can make for strong investment opportunities.
The loonie has been on a downward slide since last summer, with the weakening price of oil, and analysts say the pace of decline has been accelerated by the Bank of Canada’s decision last week to lower its benchmark interest rate.
Paul Beaudry, a professor of economics at UBC’s Vancouver School of Economics, said some Canadian businesses traditionally thrive when the loonie is in a weak position against the U.S. dollar, such as those in exporting and tourism. The U.S. is both the largest trade partner and top source of tourists for Canada.
“Exporters that can actually take advantage of this low loonie, that’s an aspect where small investors can take advantage by investing in those companies,” Beaudry said.
Prices are down for commodities such as oil and gold, but Beaudry said there could be investment opportunities in Canadian manufacturing and high-tech firms, especially ones that sell to the U.S. For such a play to really pay off, he said, the investor would be betting on an extended period of a low Canadian dollar, which he predicts is likely the case “for a quite a long haul.”
Beaudry’s colleague, Geoffrey Newman, also a professor of economics, agreed that the dollar could remain low for a period of time, and that it could yield opportunities.
Newman expects the loonie could remain low for “a year or more,” and said it could decline further.
“The dollar may jump occasionally,” Newman said, “but any increase strikes me as temporary, and I’d say the trend is downward.”
One thing that could cause the dollar to rise, Newman said, would be a surge in the price of oil.
“Oil is so dominant in this economy, that’s the problem,” he said.
If the weak loonie provides an opportunity for a shift away from Canada’s reliance on commodities and toward developing other sectors, such as high-tech, manufacturing, or food, Newman said, that could be good for “the broader export potential of Canada in the longer run.”
However, Werner Antweiler, professor of economics from UBC’s Sauder School of Business, declined to provide a forecast for the loonie.
“I’m like the weatherman. If I say it’s going to rain tomorrow, the sun is going to shine, and vice versa,” Antweiler said. “And I consider myself an expert on exchange rates, but I would not even tell you what my prediction is.”
Because exchange rates are influenced by a range of factors and are difficult to predict accurately, Antweiler said he advises “extreme caution” for smaller investors who might try to profit from the fluctuating value of the dollar.
“For small-time investors to take advantage of a falling or rising exchange rate is virtually impossible. Even sophisticated investors would not want to go there. It’s a very volatile environment,” he said. “People burn their fingers with this very quickly ... It’s very close to gambling.”
One group that could benefit from the declining loonie includes property owners who might be looking to sell, said Thomas Davidoff, associate professor of economics at the Sauder School.
“I would say those who have invested in real estate for which there is significant foreign demand should see benefits from the weak loonie,” Davidoff said, explaining that a low Canadian dollar can make property appear more appealing to a prospective overseas buyer,
Call me your average street idiot, but I'm not reading what is so wrong in the article you cut and pasted. Nobody is claiming that exporters, tourism, and foreign RE will save the sliding economy and Cdn dollar, not that I'm reading anyways. The current conditions do present opportunities in those areas, and those will continue to streghthen if the dollar continues to move lower if I'm not mistaken. For companies that have left as exporters, at some point it will be more attractive again to return and set up shop again, maybe there will even be some tax incentives kicked in to jump start this. Who knows.
Call me your average street idiot, but I'm not reading what is so wrong in the article you cut and pasted. Nobody is claiming that exporters, tourism, and foreign RE will save the sliding economy and Cdn dollar, not that I'm reading anyways. The current conditions do present opportunities in those areas, and those will continue to streghthen if the dollar continues to move lower if I'm not mistaken. For companies that have left as exporters, at some point it will be more attractive again to return and set up shop again, maybe there will even be some tax incentives kicked in to jump start this. Who knows.
it's just an uber positive spin at a very negative time.
fundamentally, you're right, at a certain point, they should return, unfortunately, it will take a long time to get there as capital decisions / spend has already occurred elsewhere, it's not like the factory in Ontario is there fore them to flip on the lights and start producing, you could be waiting a year or so to outfit a factory for production... and millions of dollars... those decisions are usually made based on long term demographics / conditions... not a good sign overall
Garth Turner isn't wrong all the time, he 100% called the US housing collapse before it happened and his timing was bang on, he also urged people to load up on equities when the prices tanked... taking that advice I made a nearly 250% return on JPM and SU in just over 24 months. Here also told people to rush over the border and buy US property while the dollar had parity and homes were selling at massively discounted prices. If you were to sell an AZ home today that you bought in 2010, your return would be an easy 50% from the bottom + you would also be able see an additional 25-30% return via the exchange rate. (Not taking taxes into consideration obviously, buying and selling RE in the USA as a foreign investor isn't exactly 100% roses)
Silly Garth though, he made predictions that actually took logic into consideration, he didn't realize Canadians would be happy to live with so much debt.
Quote:
Canada's household debt-to-disposable income ratio rose to new high of 163.3 per cent in fourth quarter of 2014. Put another way, households held roughly $1.63 of credit market debt for every dollar of disposable income as of the end of last year, StatsCan said
Obviously as a country people are very divided on the future of Canadian RE, (It's not just Vancouver and TO that have jumped in prices over the years) why anyone would celebrate having to carry a massive mortgage is beyond me. This is your HOME, it should not be viewed as an investment vehicle, unless of course it's part of a balanced portfolio - for the average Canadian with a roughly 80K median household income this is certainly not the case.
Me personally, I've been dumb enough to side with economic fundamentals, while I haven't seen my house jump in value by 200K, I also don't have to be on the other side of the fence when/if the chips fall.
I know in Vancouver everyone is convinced that it's foreign buyers that drive the market, there is simply no data to support this. While I'm sure for the 1 million + homes they are a bit of a factor (I doubt >10%), the real driver of home prices is simply interest rates and the generosity of financial institutions.
As interest rates climb, the average buyer simply cannot afford the same home they could when rates were lower, if you can't see how this will affect the market... well, good luck.
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Quote:
Originally Posted by jasonturbo
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If ur gonna throw shit at ppl, at least back it with some facts or a defendable positon
isn't it ironic you have been the biggest bear on vancouver real estate on this forum, yet prices and sales kept going up, and you you want me to provide facts to disapprove a vancouver real estate collapse?
the onus is on you and the bears not me. you have not pointed to anything substantial that will derail the housing market. you can just like Garth Turner, however, keep on spreading your nonsensical doomsday fear to all the renters about a major downturn.
The best part is 4444 doesn't even live here. Has the highest post count by far in this thread, most of which he is trying to justify his position or reason for not being invested.
Stop trying to convince yourself and others that you made the right decision, because so far, you have not.
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Quote:
Originally Posted by MG1
punkwax, I don't care what your friends say about you, you are gold!
^ If we take his word for it, I recall his real estate investments are south of the border. If you think that's a lesser position compared to holding Canadian real estate, you need to get your head checked.
i was recently in shanghai... the nice bits, too (there on business, dinners on the waterfront, etc.) - COULD NOT WAIT TO GET OUT OF THERE!
you didn't do enough drugs and fuck enough girls there bro. why else would anyone else go to china? to smell the fresh air? lol.
china's awesome cuz that's where men get to be cowboys, and ladies get to be cowgirls... in a relatively lawless society where you can pay off anything except murder.
sex, power, money. ultimate freedom.
Quote:
Originally Posted by Carl Johnson
These are probably the same idiots who shorted the S&P500 all the way up from the 2009 bottom and lost it all.
i can agree with that, but what about the guys that short it fro 1575 all the way down to 666?
or the guys that bought from 1575, and held down to 666? lol...
market is very random. but the trend is always your friend. all the people theorizing whether it will do what... sure
all of us can give our opinion and we will all be right... (eventually).
some bear can keep calling the top, and if the market crashes tomorrow, he's god. if the market crashes 5 years from now he'll be like "I TOLD U GUYS 5 YEARS AGO!!!"
same for vice versa, the bulls.
now i don't post much in this thread, but from the looks of it, most of you aren't traders, or in the business of speculation. there's no point trying to guess a top or bottom unless you are speculating and flipping houses is like... your life, and generally that's next to impossible to do too.
just buy what you need to buy, when you need it. if it's too expensive, then don't buy.
Last edited by Ulic Qel-Droma; 08-05-2015 at 04:39 PM.
^ If we take his word for it, I recall his real estate investments are south of the border. If you think that's a lesser position compared to holding Canadian real estate, you need to get your head checked.
bingo,
look at what US real estate in CAD equivalent has done since 2011.
Look at what an international basket of equities in CAD equivalent has done since 2011 (though i've bought them month on month, so it's not quite fair to do from a specific point).
for those that think investing in canadian real estate is "winning" as charlie sheen would say, you need to realize, risk adjusted there are way better investments.
the risk adjusted part means little right now, but give it time, eventually this bomb will blow.
but, again, people are welcome to say i'm wrong or whatever
isn't it ironic you have been the biggest bear on vancouver real estate on this forum, yet prices and sales kept going up, and you you want me to provide facts to disapprove a vancouver real estate collapse?
the onus is on you and the bears not me. you have not pointed to anything substantial that will derail the housing market. you can just like Garth Turner, however, keep on spreading your nonsensical doomsday fear to all the renters about a major downturn.
you were slinging shit without any kind of half decent argument to support it, kinda like what CiC does.
i can't prove something that hasn't happened you, but i think we can all agree that prices are entirely decoupled from reality - you think this can last forever? Where has it lasted forever?
yes, prices have gone up and up (you think lower and lower rates, and now new government intervention hasn't been a big driver of this), but again, i'm not saying it'll blow today, i'm saying invest elsewhere, sell and rent, be diversified, work damn hard, save and invest your money in smart assets, and when it makes sense buy. now it doesn't make sense - that will change
This is one of the more complete articles I've seen on the state of Vancouver Real estate. It basically sums up a lot of this thread.
Quote:
Vancouver is mortgaging its future for a market that’s anything but free
SAEID FARD
Contributed to The Globe and Mail
Published Saturday, Jul. 18, 2015 3:00AM EDT
Last updated Saturday, Jul. 18, 2015 2:37PM EDT
206 comments
AA
Saeid Fard is a digital designer and president of Sokanu, a Vancouver-based discovery platform
Almost overnight after the fall of the Soviet Union in 1991, its planned economy was transformed into a market economy. Businesses, factories and property spontaneously fell into the hands of a minority of the population.
ALSO ON THE GLOBE AND MAIL
MULTIMEDIAFamily pays over asking price for ‘unusual property’ in North Vancouver
This near-instantaneous liberalization, encouraged by Western powers under naive interpretations of how free-market capitalism ought to apply to the new Russian economy, led by some measures to the greatest income inequality in the world, and with it, the resentments and political corruption that massive wealth disparities tend to necessitate.
In modern-day Vancouver, policies at all three levels of government are leading to another great generational wealth transfer – not on Russia’s scale, perhaps, but certainly the largest in the city’s history. Homeowners and developers have become millionaires overnight through no particular skill or agency of their own, at tremendous long-term cost to the community. And like Russia, one pernicious lie has snaked its way into popular discourse: That this is simply free-market capitalism at play.
Housing in Canada has never really been a free market. Municipalities dictate what and where real estate can be built through zoning laws. Provinces regularly step in with social housing programs. And, most interventionist of all, the Bank of Canada chooses interest rates. And as we saw this week, despite the uproar of many, the bank is setting rates artificially low to cheapen the Canadian dollar and encourage exports. This has fanned the flames of real estate by lowering domestic mortgage payments and making Canadian property cheaper in foreign currency terms.
Furthermore, mortgages themselves are insured by the Canadian Mortgage and Housing Corp., a Crown corporation. The CMHC’s mortgage insurance program has made debt available to Canadians who otherwise would not be eligible for mortgages. Ironically, in a bid to make home ownership more accessible, the CMHC has contributed to the country’s affordability problem by adding to demand and pricing out some of the people it was mandated to help.
In foreign capital’s involvement, the application of the term “free market” makes even less sense. Free markets in a global sense simply don’t exist. Countries have different laws, regulations and standards. This is why trade agreements are created – to level the playing field.
Due to government refusal to collect data on foreign ownership, it’s impossible to know how much of our real estate stock is owned by foreigners. The B.C. Real Estate Association, a biased stakeholder by all rights, estimates foreign ownership of housing stock to be at most 5 per cent, thus dismissing the impact of foreign ownership as inconsequential.
Two amateurish flaws with that analysis stand out among others.
First, when assessing the impact of foreign ownership, it is not the share of units that matters, but the share of capital. Foreigners disproportionately buy detached and luxury properties. The price of a detached home is more than four times higher than an apartment, so the share of foreign ownership could be several times higher than the BCREA estimate.
Second, foreign buyers tend to be less price-sensitive, and their subject-free cash offers drive up prices excessively. Put in economic terms, foreign demand is more inelastic than domestic demand and can have a dramatically disproportionate effect on housing prices.
This brings us to the most distortionary government program of all – the immigrant investor program. Through this scheme, 45,000 millionaires migrated to Vancouver between 2005 and 2012 alone. It was thought that investor-class immigrants would create jobs and boost the economy, but the program has been such a massive failure that investor-class immigrants pay less in taxes than refugees. Through a series of loopholes and abject fraud, this class of immigrant continues to funnel untaxed money into Vancouver from abroad.
They come because Canada has some of the loosest property ownership and tax laws in the developed world, and Vancouver is its wild west. The city has among the country’s lowest property taxes, developers hold disproportionate political influence and a league of professionals, such as real estate agents and immigration lawyers, are ready to take their slice of the pie.
The idea that foreigners should have the same rights as nationals to purchase real estate has no economic basis. Global free markets can have terrible externalities when supply is fixed. You can’t produce more land in Vancouver in the way you can produce more iPads or cars. This is why Canadians are restricted from buying property in countries like Switzerland, Iran and China. Those spouting free market arguments have no understanding of its real world constraints and prove the adage that a little understanding of economics is more dangerous than none. The countries with cities in Demographia’s top 10 international housing least affordability list all have regulations to at least measure, and in most cases curtail, foreign ownership, except for Canada.
There was a time when governments cared about the principle of housing affordability – when housing was what you lived in, rather than an investment class. Those times are far gone. B.C. Premier Christy Clark won’t even agree to collect data on foreign ownership. “By moving foreign owners out of the market, housing prices will drop,” she cautioned in May.
You hear government officials literally laugh off ideas of locals living in neighbourhoods like Coal Harbour. That the idea someone who works in Vancouver should be able to live in the city is somehow funny speaks to the perverse acquiescence and cowardice of our leaders.
The aforementioned policies (or lack of policies) have made existing homeowners incredibly wealthy, while most everyone else is permanently priced out of the market. This wealth hasn’t been created – it’s been transferred from the future to the present. Robust wealth is created through business and innovation. As our stagnant job market shows, we are not becoming wealthier – and with leagues of young, educated people leaving the city, it is on a path of decline. We have mortgaged its future, and the future of younger generations, to pad the coffers of today’s property owners.
Vancouver’s housing crisis has been directly caused by government policy, and now that an entire generation has been priced out of the market, we’re being told to deal with it – it’s the free market. That term, “free market,” has become meaningless in the process – invoked when it benefits the wealthy and powerful, and completely circumvented when it doesn’t.
One of my SJW Facebook friends shared this article
Quote:
On a cloudy afternoon in May, a few hundred people gathered in front of the Vancouver Art Gallery to raise awareness about the city's notorious lack of affordable housing.
The movement began after Vancouver-raised Eveline Xia started the hashtag #DontHave1Million to rally local residents who believe rising rental rates and home prices are damaging the fabric of city life. Xia is 29, holds a master's degree in environmental studies and, like many young professionals in the city, doesn't have $1 million to afford an average Vancouver house.
"Housing is not like having a Ferrari. Housing is a necessity," Xia said. "Not to say a house is a necessity, but appropriate, adequate housing is."
At the edge of the crowd, Brad Saltzberg leaned against a fence. Saltzberg has some answers of his own to Vancouver's affordable housing crisis: blame it on the Chinese. Over the past decade, newspapers have occasionally published Saltzberg's comments on anti-immigration and what makes a Canadian (being of white, European descent, mainly). He was in the media more frequently this past year, campaigning against bus ads by a social services agency that posted its messages only in Chinese, not English. Saltzberg's campaign led to their removal.
"I'm proud to say I've never believed in multiculturalism for even one minute of my life," said Saltzberg in a July 2014 interview with the North Shore News.
Saltzberg's beliefs are extreme. They even led to his expulsion from a group he often spoke on behalf of called Putting Canada First, which cautions against mass immigration.
But views like Saltzberg's go unchecked in Vancouver's highly racialized housing debate -- one that blames real estate investors identified to have roots in mainland China for pushing the housing market out of reasonable reach. Stories of Chinese investors buying multiple luxury homes, and recent reports of fugitives "hiding" stolen money turn the heat up even higher.
Metro Vancouver's ethnically Chinese residents are feeling that heat, including Vancouver city councillor Kerry Jang.
Jang once received an email from a resident who claimed an empty house in his neighbourhood was probably owned by a foreign investor. When Jang investigated further, it turned out the house in question was his own, which he had moved out of at the time while it was being renovated.
Jang is a third-generation Canadian, yet his neighbour's complaint points to a xenophobic undercurrent that paints Vancouverites of Chinese heritage with the same wealthy, foreign, money-laundering brush. As activists like Xia now call for more data on foreign housing investment, experts warn racism concerns must also be addressed.
"People have been asking me... as a Chinese-Canadian, how do I feel about this," said Xia. "I feel terrible for people who are being stereotyped. Not all Chinese are wealthy, and not all of them are foreigners. There is a strong Chinese history here in B.C."
Fenella Sung, spokesperson for a group called Friends of Hong Kong, put it more bluntly. She said it's racist to associate "dirty money" with Chinese culture.
The blame game
A UBC history class taught by Prof. Henry Yu documented the phenomenon of "blaming the mainlander" in a video filmed in Vancouver, Hong Kong and Shanghai.
"There is racialization going on right now, but that doesn't mean we shouldn't talk about it," Yu said. "By saying you can't talk about race, that's actually a real problem."
Yu, an expert on Asian-Canadian history, said conflating Vancouver's housing debate with race is nothing new. The surge of Hong Kong citizens migrating to Vancouver in the 1980s and '90s sparked a similar fear of foreign investors inflating real estate prices.
Those decades also saw Vancouver's "monster house" debate take off. When new residents from Hong Kong built large homes in establishment neighbourhoods -- Kerrisdale and Shaughnessy -- predominantly white residents complained the new homes were architecturally jarring and in bad taste. The Hong Kong expats took offence to the term, as it suggested they were monsters by association.
Michael Goldberg, professor emeritus of UBC's Sauder School of Business, did research on foreign investment at the time. In 1990, Vancouver's top foreign investors were not from Hong Kong. They were revealed to be mostly American, British, Dutch, and then German, according to the Canadian Yearbook.
And yet the public eye was still set on East Asians, framing them as the foreigners doing the most harm to Vancouver's real estate landscape.
"The 'Yellow Peril' comes out quite often," said Goldberg of the return of these fears. "Once again, the hysteria is way over blown."
Buying luxury homes isn't the only thing immigrants and Chinese people are blamed and shamed for. In the past year, student protest deemed a new college for international students at UBC "a slap in the face"; a Richmond overpass demonstration blamed immigrants for bad traffic; and businesses in West Vancouver and Richmond face ongoing backlash for posting Chinese-only signage.
The price of a 'typical' detached Vancouver home has risen from $725,000 to $1.8 million since 2005. Photo by Christopher Cheung.
Friends of Hong Kong's Sung noted many Metro Vancouver residents encounter "very visible and daily" tensions with individuals believed to be from mainland China. They include arguments about parking, budging in line, or shouting at the mall.
"It's very visible and immediate and people can feel it," Sung said, "not just the Hong Kong community [in Vancouver], but everyone else."
'We are at step zero'
Anyone who lives here knows Vancouver real estate prices are skyrocketing beyond the reach of average incomes. In June 2005, the Real Estate Board of Greater Vancouver suggested that a "typical" detached Vancouver home costs about $725,000. The same type of Vancouver home in June 2010, five years later, was $1.2 million.
Today, the typical house price sits at $1.8 million, more than double the 2005 number just a decade ago.
Members of the real estate industry in Greater Vancouver have noted an influx of buyers with connections to mainland China -- especially folks who purchase multimillion-dollar luxury homes.
Cameron Muir, chief economist for the B.C. Real Estate Association (BCREA), finds one oft-quoted stat regarding Chinese ownership "amusing."
Macdonald Realty, one of the province's largest real estate companies, said that about one-third of its single-family home sales in Vancouver went to Chinese buyers, both recent immigrants and Canadian citizens of Chinese heritage. Muir said this statistic shouldn't be surprising, considering Vancouver's large Chinese population. The 2011 National Household Survey counted that approximately 29 per cent of Vancouver is ethnically Chinese.
"You tend to have people trying to look for easy reasons why prices are high as they are," said Muir, who believes individuals considered to be foreign are an easy scapegoat.
Advocate Xia hopes concrete data on foreign ownership and vacancy will lend some clarity to what has become a murky, racialized affordable housing debate. "The public has a right to know," she said. "We are at step zero compared to the rest of the world."
So far leaders have resisted "give us data" demands. Rich Coleman, B.C.'s minister responsible for housing, said the province has no plans to collect information on foreign ownership and that the B.C. Property Law Act doesn't discriminate against foreign ownership.
"I don't believe we should be in the marketplace," Coleman said in legislature. "We have not had any requests to go and do this work."
Coleman repeated his stance to The Tyee in a July story: the province has no need to collect foreign ownership data, nor would such data provide any answers to the housing crisis.
In a surprise response to The Globe and Mail, Vancouver's Chinese consul-general in Vancouver said Chinese buyers shouldn't be blamed; governments should regulate the housing market more strictly if they believe there's a problem.
There is also evidence that Chinese buyers aren't significantly impacting the market.
To confront the long-held belief of foreign property owners purchasing condos in downtown Vancouver and leaving them empty, Andy Yan led a 2009 study for Bing Thom Architects's R&D division and discovered that only about 5.5 to eight per cent of downtown Vancouver condos were empty in their sample of 2,400 condos. Yan used BC Hydro data to track energy use; those condos that only seemed to be running a refrigerator were considered empty.
On the widely held notion that foreign investment causes local housing unaffordability, UBC geography professor David Ley tracked an almost one-to-one correlation between real estate prices and international immigration to Metro Vancouver 1977 to 2002 (+0.94, if you really want to be exact). During those years, Ley said his data connecting immigration with house prices is "unusually decisive," even rising and dipping during key events like the Hong Kong handover in 1997, due to the number of Hong Kong investors in Vancouver.
While there is no definite number on foreign buyers in Metro Vancouver's housing market, BCREA estimates that foreign ownership in the region is about five per cent. This number is based on data including censuses and the Canadian Mortgage and Housing Corporation.
Economist Muir sees domestic investors having far more impact on the rising price of detached homes. Local investors make three to four times more purchases than foreign ones, according to the BCREA.
"If you eliminated foreign investment completely from Vancouver," Muir said, "the average homeowner wouldn't notice a change at all."
Muir also pointed to Vancouver's growing population and the geographical limits of the region. Mountains and ocean hem us in; there is limited space to build more detached houses.
"There is an exceptional consumer demand for housing in the province," Muir said, "but this is driven by people who live and work in these communities."
Who are foreigners, anyway?
While foreign money seems to be a popular hypothesis for Vancouver's real estate prices, there is a lack of concrete data that measures the connection.
There is also the tricky matter of defining what is considered "foreign" in potential data, as there are many recent Chinese migrants who are now permanent residents -- like the 37,000 mainland Chinese millionaires that arrived in B.C. between 2005 and 2012 under the now-terminated wealth-based Immigrant Investor Program (IIP).
The BCREA does not consider landed immigrants, permanent residents and Canadians citizens foreign. This means millionaire IIP migrants were excluded from BCREA's estimate of five per cent foreign investment.
There has also been a 150 year history of Chinese migration in British Columbia. Yu said there is a possibility some might consider Canadian citizens of Chinese heritage to be "foreign" -- despite their local roots. There is a perception that individuals, who are in their minds local, are allowed to make money and invest, whereas those considered to be foreign are not, Yu said.
As Vancouver continues to grow -- the Lower Mainland is welcoming 30,000* new residents each year -- the housing crunch will endure. Yu said residents' understanding of what is foreign and local is inherently based on assumptions about race -- and that urgently needs to be addressed.
"Denial doesn't engage the realities of many Vancouverites," agreed researcher Andy Yan. "It misses an honest dialogue about race and ethnicity in the city."
Chinese buyers making mark on Vancouver’s luxury housing
IAIN MARLOW - ASIA-PACIFIC CORRESPONDENT
VANCOUVER — The Globe and Mail
Published Tuesday, Aug. 11, 2015 6:00PM EDT
Last updated Tuesday, Aug. 11, 2015 6:12PM EDT
Buyers from China “dominate” the luxury segment of Vancouver’s red-hot housing market, according to new data from prominent B.C. real estate company Macdonald Realty Ltd., which says mainland Chinese buyers in 2014 accounted for 70 per cent of the firm’s transactions of high-end Vancouver homes over $3-million.
At the same time, however, Macdonald’s data show the influence of wealthy mainland Chinese buyers – a subject that stirs strong emotions here on the West Coast – declines in tandem with the price of the property. The firm said mainland Chinese buyers accounted for 21 per cent of the transactions last year in which homes sold for between $1-million and $3-million, and just 11 per cent of those in which the price tag dipped below $1-million.
The new data offer fresh granularity into Vancouver’s cosmopolitan housing market, where the average cost of a detached house has soared to $2.23-million, amid talk of a housing affordability crisis and rampant speculation about the possible role of buyers whose income is disconnected from the local labour market.
Although Vancouver has historically been shaped by immigration from Asia, particularly from Hong Kong in the years preceding the 1997 handover to China, there has been intense debate in Vancouver as house prices climbed in recent years. Many have said demand for high-end housing was boosted by tens of thousands of mainland Chinese millionaires arriving in Vancouver on provincial and federal immigrant-investor programs.
Dan Scarrow, a Macdonald vice-president who runs the firm’s Shanghai office, says buyers from China are having a clear impact on house prices – but only in the luxury market, and not on broader real estate prices, which have risen for other reasons. That creates a conundrum for those who are blaming foreign buyers alone for Vancouver’s affordability crisis, he says, but also contradicts those in the real estate industry who are trying to play down or entirely discount the role Chinese buyers play in the market.
“It’s absolutely had an impact on the top end, on the luxury market. But when you look at the rest of the market, [mainland Chinese buyers are] only participating at an 11-per-cent rate,” Mr. Scarrow says.
“What it’s resulted in is unaffordability in the luxury segment. Those are the people in society who need the least amount of help. The unaffordability issue at the entry level – it’s a function almost entirely of a lack of supply and low interest rates.”
The data emerged from an analysis of 1,500 real estate transactions from Macdonald’s three main Vancouver offices over the course of 2014, Mr. Scarrow said. Apartments and attached houses accounted for 962 – or 62 per cent – of the 1,500 properties, while the remainder were detached houses. Almost all of the properties above $2-million were detached houses, Mr. Scarrow said, and the firm isolated buyers with ties to mainland Chinese by their names – which differ in spelling from Cantonese names from Hong Kong and those from Taiwan. The firm said these buyers “likely are Canadian citizens or have status as immigrants,” and mentioned that a “critical mass of around 50,000 high-net-worth mainland families” will continue to bring in money from Hong Kong and China to “invest in local real estate” over the coming years. Mr. Scarrow – whose mother Lynn Hsu is the president of Macdonald and immigrated from Taiwan in 1979 – says he is confident in the accuracy and analysis of their data, and suggests that though it is imperfect, it is likely indicative of the broader real estate market as a whole.
Macdonald said that, last year, using a different methodology, 33.5 per cent of the 531 detached homes they sold in Vancouver in 2013 went to buyers from mainland China, who also happened to buy more expensive houses, on average, than other clients. That data generated a lot of debate in Vancouver partly because it is so rare in Canada to get such a detailed glimpse at the origin of real estate buyers in any one market: Vancouver, the province and the federal government do not collect objective data on foreign real estate purchases, unlike other jurisdictions globally – leaving Vancouver industry watchers arguing over the scope of the phenomenon and scrambling for whatever random data they can find.
Sotheby’s previously issued a report in 2013 that said roughly 40 per cent of its Vancouver luxury sales went to buyers from mainland China, and one local urban planner, Andrew Yan, even looked at electricity use in Vancouver, finding that nearly one-quarter of condo units in Vancouver’s downtown Coal Harbour neighbourhood appeared to be empty – owned by investors, but not occupied or rented out. The lack of official data, however, has left many reliant on the local real estate industry sources for statistics, and many real estate industry players and developers have played down the phenomenon of foreign buyers, or raised accusations of racism – which some critics say is to avoid the possibility of any sort of additional scrutiny, regulation or new taxes.
Mr. Scarrow says one reason for the current high prices is that the supply of single family houses in Vancouver – a city that is also hemmed in by the sea and mountains – has been unchanged for at least 20 years. He says Chinese buyers have simply helped push house prices in formerly middle- and upper-middle class areas – such as most of Vancouver’s west side – firmly into luxury territory on par with traditionally tony neighbourhoods such as Shaughnessy.
But Mr. Scarrow, who presented the data as part of a presentation to the CFA Society titled “Vancouver Real Estate: The China Effect,” says the impact of Chinese investment over the past decade in Vancouver proper has not had a significant impact on properties below $1-million – and is not responsible for a situation in which young families are forced to look further afield for more affordable properties in suburbs such as Burnaby.
Mr. Scarrow says a broader transition is happening in Vancouver, one similar to other big cities – such as London – where most families have had to adjust their notions of home ownership away from the likelihood of being able to afford a detached, traditional house.
“It translates to a transition Vancouver is making from a suburban city to an international city,” Mr. Scarrow says. “A generation ago, most people would say that being in that white picket fence environment was the dream. Now, being close to the cultural heart of the city is the dream. People are more willing to accept apartment living, even if they move on to different state[s] in their life.”
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