The Canadian Housing Boom Fueled by China’s Billionaires(bloomberg.com)
bloomberg.com
The Canadian Housing Boom Fueled by China’s Billionaires
http://www.bloomberg.com/features/2016-vancouver-real-estate-market/
246 comments
>> In fact, many young, smart and talented people just head south to Seattle or the valley because the wages are so much higher, and the economics of staying in Vancouver just don't make sense.
Your claim is especially true if those people have families. 60% of Families said they planned on leaving the city in the next year due to the problems surrounding housing. Rental rates are also a problem with only a 0.6% vacancy rates and of those available only 16% are 2 bedroom and less than 1% are three bedroom.(1)
(1) http://www.theglobeandmail.com/news/british-columbia/familie...
Your claim is especially true if those people have families. 60% of Families said they planned on leaving the city in the next year due to the problems surrounding housing. Rental rates are also a problem with only a 0.6% vacancy rates and of those available only 16% are 2 bedroom and less than 1% are three bedroom.(1)
(1) http://www.theglobeandmail.com/news/british-columbia/familie...
Unfortunately in Canada we've gone for easy money (real estate in Vancouver, oil in Alberta) before trying to establish actual industries. We'd rather just grab US and Chinese cash then vacation in Mexico than actually work.
> We'd rather just grab US and Chinese cash then vacation in Mexico than actually work.
That's hardly unique to Canada. It's the default human state to prioritise short-term gains. See e.g. the phenomenon of obesity.
That's hardly unique to Canada. It's the default human state to prioritise short-term gains. See e.g. the phenomenon of obesity.
Former British colony with banking and enslaving land price shocker, page 4.
(I suppose I shouldn't be shocked that broad national generalizations should be followed up with fat shaming. But I am, none-the-less, disappointed.)
>We'd rather just grab US and Chinese cash then vacation in Mexico than actually work.
I would also like to grab cash and vacation. What's so honourable about working?
I would also like to grab cash and vacation. What's so honourable about working?
> what's so honourable about building a future for your country?
FTFY
FTFY
Introduction of a gradual increase in property taxes, as well as a gradual decease in income taxes, even lower than zero if appropriate, would be the naïve, straightforward economic policy recommendation if the problem has been accurately described. Some details yo resolve would be the numerous people who were using their primary residence as their main investment for retirement, and deciding how to handle people who were improving properties in order to make a living.
Is there any reason that property taxes couldn't be increased solely on homes without residents? It would at least encourage putting foreign owned homes on the rental market.
It's hard to define "no resident" and to effectively verify.
People would just hire someone or ask a relative to sign a lease and officially be "the resident" without actually having anyone live in the unit.
People would just hire someone or ask a relative to sign a lease and officially be "the resident" without actually having anyone live in the unit.
Residency tracking is hard. Actually, the city of Vancouver got permission from the provincial government to implement a vacant homes tax, but it's based on the home being unoccupied for a whole year. It probably won't work.
Why gradual? (not disagreeing, just asking)
Impact on retirees, impact on existing resident property owners, and lack of control over what income tax Ottawa sets are a few reasons.
As for the latter, can't BC just allow tax payed to Ottawa to be counted as a credit towards provincial/municipal income taxes?
As a Vancouverite (well, metro at least) who moved here from Toronto 15 years ago, one of the things that has bothered me most about BC and Vancouver specifically is how reliant the economy is on a few distinct sectors.
In BC, it's resources and literally nothing else. In Vancouver, since resources overall are declining, we run the economy via real estate investment. That's moronic.
As you say, we could become a tech hub easily if we leveraged our easy connection to Seattle and the gateway to Asia that we are. We could become a medical tech hub as well. We could be a centre for finance as well if we invested properly, particularly since oil is now on a downslide.
Our local governments simply have no vision. Our residents are too afraid of change to actually do, well anything really, and all our innovators simply move elsewhere.
In BC, it's resources and literally nothing else. In Vancouver, since resources overall are declining, we run the economy via real estate investment. That's moronic.
As you say, we could become a tech hub easily if we leveraged our easy connection to Seattle and the gateway to Asia that we are. We could become a medical tech hub as well. We could be a centre for finance as well if we invested properly, particularly since oil is now on a downslide.
Our local governments simply have no vision. Our residents are too afraid of change to actually do, well anything really, and all our innovators simply move elsewhere.
Perhaps Montreal can do the same, if the city finds some way to sidestep the provincial language laws.
Unfortunately the software industry in Montreal has decided that developers are not valuable. Salaries are hilariously low compared to american counterparts.
Living costs are very low. And hours are good. Can you buy time? Do you want to live in a country with shameful inequality? Not me.
you guys are important, really, no need to constantly whine about your neighbor to the south.
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They also seem prejudiced to foreign labour that is not French or American
Funny story: I have friends from Québec City (unilingual city) who work in Montréal who complain of always having to work in English, and I have former anglo-Montréaler friends living in Toronto because "it was impossible to find a job in Montréal as a non-native French speaker".
Learning a second language is a great thing - your mind becomes more flexible and you get access to movies, books and songs which you wouldn't be able to enjoy otherwise - having to cope with language laws, though, sucks big time.
Yes, I know mandarin and English. Wait, I have to learn French also? Pass.
I had the same problem in Lausanne, though French wasn't required for my job. I just couldn't completely devote myself to my research AND learn another language concurrently.
I had the same problem in Lausanne, though French wasn't required for my job. I just couldn't completely devote myself to my research AND learn another language concurrently.
> Yes, I know mandarin and English. Wait, I have to learn French also? Pass.
Is there a government that makes it mandatory? Because otherwise we're not talking about the same thing. I speak 4 languages and I learned each of them for different reasons... None of which was "because otherwise I would be breaking the law".
Is there a government that makes it mandatory? Because otherwise we're not talking about the same thing. I speak 4 languages and I learned each of them for different reasons... None of which was "because otherwise I would be breaking the law".
All services that serve Quebec have to be available in french. So if you're making an application front end, you have to provide a french version even if your userbase doesn't care. It's just extra overhead.
Well, localization is good practice and something that should be supported already. But I think it's more like the Quebecois language laws mandate bilingualism in the workplace, which is a greater hassle.
It's really that speaking french in a predominantly french region shouldn't stop you from getting a job you have every competencies to achieve. That's why the law can go into absurd territory(e.g. having only english equipment cannot be a valid reason to refuse employment to a francophone).
But then again, most of the law only applies once your business reach a certain number of employees(30 I think)
But then again, most of the law only applies once your business reach a certain number of employees(30 I think)
Nothing wrong with language laws, people just need to stop being lazy. Learning a second language isn't that hard.
Try having a startup in Montreal. Our has been targeted by the language police, and is being forced to translate not just our front end, but our blog and social media presences. It doesn't matter that 0.01% of customers are in Quebec, and that we have determined that there is no market for our product in french.
Anyone can send an anonymous message to this government agency and it will audit your business to make sure you are compliant. Have more than 50 employees? Make sure the copy button on your photocopier says "copiez" or you'll have to put stickers over it (true story, happened at my brother's pharma startup).
The sad thing is that most Montrealers have the attitude that "you're in Montreal, you should learn french." The problem is, this law goes far beyond that, and is a serious impediment for Montreal startups.
Anyone can send an anonymous message to this government agency and it will audit your business to make sure you are compliant. Have more than 50 employees? Make sure the copy button on your photocopier says "copiez" or you'll have to put stickers over it (true story, happened at my brother's pharma startup).
The sad thing is that most Montrealers have the attitude that "you're in Montreal, you should learn french." The problem is, this law goes far beyond that, and is a serious impediment for Montreal startups.
My understanding is that you do have the right to know who complained about your compliance under Bill 101.
Anyways, I don't think it's asking much to have your website/blog/frontend in the language of the province where you operate, but the photocopier business, keyboards in french etc is ridiculous. Also it seems the language police always get more confident whenever a PQ government gets power.
Anyways, I don't think it's asking much to have your website/blog/frontend in the language of the province where you operate, but the photocopier business, keyboards in french etc is ridiculous. Also it seems the language police always get more confident whenever a PQ government gets power.
Actually, it is "asking a lot". Quebec's language laws have been found to be in violation of the Canadian Charter of Rights and Freedoms. Unfortunately, the Charter (which Quebec did not support) has a "notwithstanding" clause, which Quebec invokes more often than all other provinces combined.
Quebec is a joke, both economically and with respect to liberal democracy.
Quebec is a joke, both economically and with respect to liberal democracy.
This is accurate.
The company I work for had to put French stickers on every key of every keyboard. They had to put stickers on the microwave oven as well...
The company I work for had to put French stickers on every key of every keyboard. They had to put stickers on the microwave oven as well...
I hate Canadian bilingual keyboards so much.
Wait, you actually look at the keys? You can use whatever keyboard but keep it mapped out to your favourite layout. I personally use a Canadian bilingual layout but haven't owned such a keyboard in quite a while, since work doesn't look fondly in buying a MacBook Pro with a layout that a future inheritor would bristle at...
Now if you mean that you really hate the layout, it's really anti-programming, and sometimes I wonder why I stick to it. :) It's so easy to use a layout switching keyboard shortcut...
Now if you mean that you really hate the layout, it's really anti-programming, and sometimes I wonder why I stick to it. :) It's so easy to use a layout switching keyboard shortcut...
This is for real. US alt international layout on Linux is great, best ever. And Azerty > Canadian bilingual keyboards too. Canadian bilingual keyboards suck for writing in both French and English.
I hate how the left shift key is split, and how the backslash moves to the enter position.
Despite being in Canada, I only buy laptops with US keyboards.
Despite being in Canada, I only buy laptops with US keyboards.
Apart from the photocopier sticker, that seems pretty reasonable.
If you speak both languages (or have employees who do), how difficult is it anyway?
If you speak both languages (or have employees who do), how difficult is it anyway?
Very. We post multiple times a day on social media, create videos, do webinars, and long-form eBooks. Most of our staff are in the US, and don't speak french. Of our ~25,000 customers, 10 are in Quebec.
As you can imagine, hiring a full time french speaker just doesn't make sense. So, we have to "fire" our Quebec customers and block the province via IP. This is what dozens of startups (and big web companies) are doing now to circumvent the crazy laws.
As you can imagine, hiring a full time french speaker just doesn't make sense. So, we have to "fire" our Quebec customers and block the province via IP. This is what dozens of startups (and big web companies) are doing now to circumvent the crazy laws.
> Most of our staff are in the US, and don't speak french.
> As you can imagine, hiring a full time french speaker just doesn't make sense.
So how are you based in Montreal, and why? Why not relocate to the US, or English-speaking Canada?
> As you can imagine, hiring a full time french speaker just doesn't make sense.
So how are you based in Montreal, and why? Why not relocate to the US, or English-speaking Canada?
I live here, and started the company here. It is massively difficult to move the company without incurring the ire of the tax authorities. Moving was my first response to this situation, but lawyers and accountants have advised against it.
Learning to order lunch or talk about the weather in a second language is not that hard. Communicating at a professional level takes years of practice. For most people - especially mid-career adults with limited time - that's not going to happen.
I work in tech in Montreal.
People speak in english. You can speak english all day if you want. My clients speak in english. We speak in english. We create websites that are 100% english for clients who are based in the USA.
What isn't allowed it having a workplace where the local (who can't speak english) have no chance of being hired because of the language. That is also why the employer must provide all workplace tools with french label. All else is lies, stereotypes and people not understanding the law.
People speak in english. You can speak english all day if you want. My clients speak in english. We speak in english. We create websites that are 100% english for clients who are based in the USA.
What isn't allowed it having a workplace where the local (who can't speak english) have no chance of being hired because of the language. That is also why the employer must provide all workplace tools with french label. All else is lies, stereotypes and people not understanding the law.
No that's not all it is, and the person who does not understand the law is you. Quebec language laws require for instance that commercial signs not only have French, but that French be predominant. Why does a sign having big print in English and small print in French, prevent a native French speaker from working there?
Also, realistically if you hire many programmers who only speak English, it's simply not realistic to hire a programmer who speaks French exclusively because he can't communicate with the team. Putting "copiez" on your photocopier does not alleviate that.
These laws are discrimination, pure and simple, and have been found as such by the Canadian Supreme Court on many occasions. Most Quebecois just don't care about paltry things like individual rights, where their language is involved.
Also, realistically if you hire many programmers who only speak English, it's simply not realistic to hire a programmer who speaks French exclusively because he can't communicate with the team. Putting "copiez" on your photocopier does not alleviate that.
These laws are discrimination, pure and simple, and have been found as such by the Canadian Supreme Court on many occasions. Most Quebecois just don't care about paltry things like individual rights, where their language is involved.
> Quebec language laws require for instance that commercial signs not only have French, but that French be predominant.
No. If that was true, Best Buy would have big billboards that say "Meilleur Achat". "Canadian Tire" would be "Pneus Canadiens". They don't. The law don't ask for it.
> Also, realistically if you hire many programmers who only speak English, it's simply not realistic to hire a programmer who speaks French exclusively because he can't communicate with the team.
That's the entire point of the law. It's the very reason it's there. To prevent business from hiring an all english staff which would prevent local people from working there.
Edit: Some of it may not make sense to you because we are working in the tech industry. The abuses those laws are there to protect against happen mostly to minimum wage workers in the industrial sector. Some people could get hurt if the machines are not labelled correctly. I admit that stickers on the photocopying machine is a joke but it could be life and death when we are talking about a big industrial machines filled with saws.
No. If that was true, Best Buy would have big billboards that say "Meilleur Achat". "Canadian Tire" would be "Pneus Canadiens". They don't. The law don't ask for it.
> Also, realistically if you hire many programmers who only speak English, it's simply not realistic to hire a programmer who speaks French exclusively because he can't communicate with the team.
That's the entire point of the law. It's the very reason it's there. To prevent business from hiring an all english staff which would prevent local people from working there.
Edit: Some of it may not make sense to you because we are working in the tech industry. The abuses those laws are there to protect against happen mostly to minimum wage workers in the industrial sector. Some people could get hurt if the machines are not labelled correctly. I admit that stickers on the photocopying machine is a joke but it could be life and death when we are talking about a big industrial machines filled with saws.
It's still a big effort, learning a language properly is not something you do for 2 hours on the weekend and get proficient at it.
Even more so if you don't plan to use that language for anything else afterwards.
It isn't that hard but isn't that easy either.
Even more so if you don't plan to use that language for anything else afterwards.
It isn't that hard but isn't that easy either.
> It's still a big effort, learning a language properly is not something you do for 2 hours on the weekend and get proficient at it.
There's a big difference between being really proficient and knowing enough to be productive. In any case, like other skills, everyone gets better by actually doing it, but they need to start first.
There's a big difference between being really proficient and knowing enough to be productive. In any case, like other skills, everyone gets better by actually doing it, but they need to start first.
Many, many of the people injecting money into Vancouver already speak a second language just fine. French would be a third at least.
Apprendre une deuxième langue n'est pas le problème, mais la Loi 101 derange beaucoup de gens
Exactly, how many people coming to Montreal would be happy that their kids could only go to school in French?
Probably about as many parents who are fighting to get their kids in French Immersion in the rest of Canada. I can't speak about anywhere other than Toronto but here it's quite sought after, second language for children.
Especially amongst first generation immigrants like myself.
Especially amongst first generation immigrants like myself.
The difference is that in the rest of Canada, your child (and their children) does not lose their right to go to English school if they go to a French school first.
That's not because of French language, they would try even if it had Zulu immersion. It's just that it's cheaper than private schools, but you still get good students and quality environment
Correct. The parents that care put their children into French immersion because other like-minded parents do so and their children are high-achieving.
Any teacher will tell you that parenting is the biggest determining factor in academic achievement, and as a result French immersion is effectively the "academic stream" in the Canadian school system. It also receives additional federal funding which is not available to English programs.
Any teacher will tell you that parenting is the biggest determining factor in academic achievement, and as a result French immersion is effectively the "academic stream" in the Canadian school system. It also receives additional federal funding which is not available to English programs.
A Zulu-immersion charter school is my new Toronto-based startup idea.
Exactly. The school rankings are the driver here, not french language.
How many people come to the rest of Canada and are happy that their kids are forced to learn English?
I don't speak French but would love to put my kids in a French-only school.
They pretty much learn a second language for free. Why not?
They pretty much learn a second language for free. Why not?
If by "free" you mean "at the cost of learning anything else".
I went to French immersion in Canada. We didn't 'miss out' on anything that kids did in English school. They still had to take a second language class (we didn't since we already had English + French). We just had classes like science, math and social studies in French as well. We still learned English, and of course live in an English-speaking region, so we missed out on nothing.
You miss out on special education support. Have reading troubles? Behind the curve in math ability? Have motor skills issues that make writing difficult? You're told to drop out of French immersion and return to the main English stream. It's a de-facto removal of anyone with any academic problems at all.
And by extension, English schools that overlap with French immersion schools become biased towards kids with learning difficulties which makes them that much less attractive to high-achieving parents. The TDSB elementary system isn't supposed to be streamed but effectively it is.
(I had two kids in TBSB French immersion until grade 4 when we moved away)
And by extension, English schools that overlap with French immersion schools become biased towards kids with learning difficulties which makes them that much less attractive to high-achieving parents. The TDSB elementary system isn't supposed to be streamed but effectively it is.
(I had two kids in TBSB French immersion until grade 4 when we moved away)
Anyone wants to work for the federal government or in politics needs French, beyond a certain level. So making sure your kids learn it opens some really valuable opportunities for them.
This lacks recognition. So many factors could come into play. E.g.
The downstream effects of house prices has to hit entrepreneurship. Previously a bunch of people would be in a good place to take a couple years off to start a business mid-career. Now people have these huge mortgages where your ability to start a business is hampered by your ability to get a financial buffer to take this year or 2 off. And lets not forget most businesses are created form people mid-career, not the TV typical university dropout.
And small community business, how will they exist in the future. If someone wants to set up a local 'physical presence' vet/daycare type business that are typically mixed into residential areas the threshold is now too high to exist let-alone set up a new business. How can a daycare buy a million+ dollar house and expect to make money paying that back on having 30 local kids being looked after.
Also what is going to happen with social services like retirement and periods of higher unemployment. I suspect society will be less stable as either the government has to foot much higher rent costs (unlikely) or we will see increased population movements during retirement, and now the government has to look after older people that before a family who lived nearby could help out with. And during low employment cycles society can no-longer absorb this downturn if people have large income-to-debt loans. Historically people could 'tighten belts' for a year while things improve, harder when you're neck deep in debt. So we will again see more movement of people, debt default etc. It will serve to exacerbate recessions etc.
Also these higher prices skew the economy. When people are tied up in these ever increasing loan/income ratios there will be less spending on dining, holidays, hobbies etc. It will weaken the economy by concentrating the spend in limited areas.
From this I really believe we should be talking seriously about ensuring affordable housing for owner occupiers. Residential investment need to be discouraged (note I'm not saying stopped) as a speculative asset class. I've seen a few suggested methods to achieve this but I feel the simplest is to place a yearly 'asset tax' on non-owner occupied residential property (I would also include farms). Having a % tax would make it easy to adjust to find the right balance given economic cycles change. Also this would encourage property hoarders not in heavy debt to sell for lower taxed asset classes. This I feel is important as most solutions focus on controlling the investment lending side which is limiting in reach. And the 'add supply' will always be a limited case solution.
Good luck. It seems most western governments have stopped caring about looking past the most immediate budgets.
The downstream effects of house prices has to hit entrepreneurship. Previously a bunch of people would be in a good place to take a couple years off to start a business mid-career. Now people have these huge mortgages where your ability to start a business is hampered by your ability to get a financial buffer to take this year or 2 off. And lets not forget most businesses are created form people mid-career, not the TV typical university dropout.
And small community business, how will they exist in the future. If someone wants to set up a local 'physical presence' vet/daycare type business that are typically mixed into residential areas the threshold is now too high to exist let-alone set up a new business. How can a daycare buy a million+ dollar house and expect to make money paying that back on having 30 local kids being looked after.
Also what is going to happen with social services like retirement and periods of higher unemployment. I suspect society will be less stable as either the government has to foot much higher rent costs (unlikely) or we will see increased population movements during retirement, and now the government has to look after older people that before a family who lived nearby could help out with. And during low employment cycles society can no-longer absorb this downturn if people have large income-to-debt loans. Historically people could 'tighten belts' for a year while things improve, harder when you're neck deep in debt. So we will again see more movement of people, debt default etc. It will serve to exacerbate recessions etc.
Also these higher prices skew the economy. When people are tied up in these ever increasing loan/income ratios there will be less spending on dining, holidays, hobbies etc. It will weaken the economy by concentrating the spend in limited areas.
From this I really believe we should be talking seriously about ensuring affordable housing for owner occupiers. Residential investment need to be discouraged (note I'm not saying stopped) as a speculative asset class. I've seen a few suggested methods to achieve this but I feel the simplest is to place a yearly 'asset tax' on non-owner occupied residential property (I would also include farms). Having a % tax would make it easy to adjust to find the right balance given economic cycles change. Also this would encourage property hoarders not in heavy debt to sell for lower taxed asset classes. This I feel is important as most solutions focus on controlling the investment lending side which is limiting in reach. And the 'add supply' will always be a limited case solution.
Good luck. It seems most western governments have stopped caring about looking past the most immediate budgets.
Some great points here for sure.
I forgot to mention in my post that not only is the government in bed with the real estate industry (new rumors that the biggest real estate marketer in the city was notified weeks in advance about the new foreign buyer tax), but that they also "unexpectedly" took in 50% more than forecast, to the toon of $500+ million, in extra property transfer tax last year. Good luck getting them to slow down that gravy train.
I forgot to mention in my post that not only is the government in bed with the real estate industry (new rumors that the biggest real estate marketer in the city was notified weeks in advance about the new foreign buyer tax), but that they also "unexpectedly" took in 50% more than forecast, to the toon of $500+ million, in extra property transfer tax last year. Good luck getting them to slow down that gravy train.
The gravy train doesn't have to stop. With a non-owner tax they ride a new gravy train. And the biggest complainers will be non-voting foreigners that dont matter and the foreign governments like China will hardly care exiting money is being punished, so bonus. It will be tough for those that bough at the peak, but it seems those will be the minority to the almost 50% of the population in my town that cant afford a home in their own city.
That said the 'loudest' voices will be the uber wealthy with large property holdings so again...good luck...
That said the 'loudest' voices will be the uber wealthy with large property holdings so again...good luck...
I was very tempted to just play devil's advocate here, but then I come to think there might be more than that. So...
"Now people have these huge mortgages where your ability to start a business is hampered by your ability to get a financial buffer to take this year or 2 off."
How will they manage? By learning to adapt, which will be a critical ability in their careers as entrepreneurs. Say, they can start modest, with modest allocation of time instead of lavishing with both time and money to only hit the ground if they fail. Also, they may identify the opportunity of having around them this market of deep pocket potential clients! ...or may not, we'll see. The idea is, wealth is coming in, and people complain instead of finding ways to take advantage of it. I know that this isn't as easy to do in other domains as it is in real estate, but still.
"How can a daycare buy a million+ dollar house and expect to make money paying that back on having 30 local kids being looked after."
By raising the price of the provided services accordingly! The city is getting stuffed by each passing day with rich kids. What are you waiting for?
"When people are tied up in these ever increasing loan/income ratios there will be less spending on dining, holidays, hobbies etc."
I think those people can ask more for their services in order to get in an enjoyable zone or leave the city entirely if they can not. A life of struggle is not one worth living when you have a choice.
"Now people have these huge mortgages where your ability to start a business is hampered by your ability to get a financial buffer to take this year or 2 off."
How will they manage? By learning to adapt, which will be a critical ability in their careers as entrepreneurs. Say, they can start modest, with modest allocation of time instead of lavishing with both time and money to only hit the ground if they fail. Also, they may identify the opportunity of having around them this market of deep pocket potential clients! ...or may not, we'll see. The idea is, wealth is coming in, and people complain instead of finding ways to take advantage of it. I know that this isn't as easy to do in other domains as it is in real estate, but still.
"How can a daycare buy a million+ dollar house and expect to make money paying that back on having 30 local kids being looked after."
By raising the price of the provided services accordingly! The city is getting stuffed by each passing day with rich kids. What are you waiting for?
"When people are tied up in these ever increasing loan/income ratios there will be less spending on dining, holidays, hobbies etc."
I think those people can ask more for their services in order to get in an enjoyable zone or leave the city entirely if they can not. A life of struggle is not one worth living when you have a choice.
> The city is getting stuffed by each passing day with rich kids. What are you waiting for?
My impression is that many of those buyers don't even set foot in Vancouver. It's just an investment for them.
My impression is that many of those buyers don't even set foot in Vancouver. It's just an investment for them.
I think this is true, but it's also the case that businesses that cater to the very rich are doing very well. My wife works for a luxury retailer who's Vancouver location is seemingly supporting the entire company with it's sales. Revenue has basically tripled over the past 4-5 years.
So this is why they tore down all those grocery stores in Park Royal and built high end clothing stores instead.
Exactly. Just last night talking to a guy in Montreal about to open a new eco cafe. He can take the risk because rents are lower here. Fuck the banks. Long live Henry George.
They don't even care about the immediate budgets; otherwise the taxes on foreign-owned residential properties would be sky-high.
I don't understand how Seattle hasn't had a big housing problem compared to the valley or Vancouver. They have a decent tech sector and they're in close proximity to Vancouver.
Simply: It's more difficult to emigrate to the US as a foreigner in many key ways, coupled with the fact that it's a slightly larger city with a much stronger and more diversified economy.
(I am Chinese, is living in Vancouver, and know many mainland Chinese.)
In the eye of a mainland Chinese, an US citizenship is worth significantly less than Canadian citizenship. Take it for what you will, the bottom line is, no one wants to be an US citizen.
The difference in application fee is dramatic, as a Canadian citizenship application fee (to the middleman) costs 3x more than the US counterpart (Green Card).
In the eye of a mainland Chinese, an US citizenship is worth significantly less than Canadian citizenship. Take it for what you will, the bottom line is, no one wants to be an US citizen.
The difference in application fee is dramatic, as a Canadian citizenship application fee (to the middleman) costs 3x more than the US counterpart (Green Card).
I think it's coming. Rents have been climbing at a fast rate. My wife and I are paying close to $3K for a two bedroom + den in Bellevue, and this was the cheapest we could find. When we first moved in 3 years ago, our rent was just a little over $2K.
It's much less geographically constrained than Vancouver and it has fewer tech millionaires than the Valley. It has also had fairly significant price gains over the last few years though.
Billionaires buying houses does not increase housing costs. You do not need to purchase a Single Family House in Vancouver to have housing. You can buy a condo, the prices of which are totally uncoupled from SFHs, or rent. If foreign investors were leaving the houses they buy empty, and thus removing units from the housing stock, you might be able to make a case for foreign investment negatively impacting Vancouver housing costs, but that's not what's happening. The percentage of homes in the Vancouver West Side, where foreign investors are exceptionally active, (edit to add: 'that are unoccupied') is only 3 percent, which is below the typical rate for major cities.
What this means is that foreigners are not leaving houses that they buy in Vancouver empty. They are being rented out. The rental cost in Vancouver are below Seattle's when you compare it to the median wage so then couver housing as far as rentals is actually more affordable than neighbouring Seattle.
What this means is that foreigners are not leaving houses that they buy in Vancouver empty. They are being rented out. The rental cost in Vancouver are below Seattle's when you compare it to the median wage so then couver housing as far as rentals is actually more affordable than neighbouring Seattle.
> You can buy a condo, the prices of which are totally uncoupled from SFHs
If domestic buyers can't afford SFH's and shift their attention to condos, this increases demand for condos, thus raising the price. It is practically impossible for the two to be "totally uncoupled".
If domestic buyers can't afford SFH's and shift their attention to condos, this increases demand for condos, thus raising the price. It is practically impossible for the two to be "totally uncoupled".
> this increases demand for condos, thus raising the price
Condos are not supply-constrained. You can tear down like 6 detached houses and build 240 condos in that space.
In Toronto they're making over 100,000 new units a year: http://business.financialpost.com/personal-finance/mortgages...
Condos are not supply-constrained. You can tear down like 6 detached houses and build 240 condos in that space.
In Toronto they're making over 100,000 new units a year: http://business.financialpost.com/personal-finance/mortgages...
Toronto and Vancouver is an apples and oranges comparison when it comes to having space/land to build new structures.
Why's that? They're still building them in the downtown core, which is already way more developed than Vancouver's. There's probably some stupid NIMBY 'I need to keep my mountain views' stuff going on if they can't do the same in Vancouver.
Are they renting them out? I've heard speculators buying housing and then just sitting on them are turning some Vancouver neighborhoods into host towns. Is there anywhere we can get occupancy numbers? Also, aren't Vancouver rents higher than Seattle?
The city of Vancouver did a very rigorous study, and found unoccupancy in the West Side, where much of the foreign investment has been going, at only 3 percent:
http://vancouver.ca/news-calendar/city-releases-comprehensiv...
Which is below the average for other major cities.
http://vancouver.ca/news-calendar/city-releases-comprehensiv...
Which is below the average for other major cities.
Eh. But aren't they biased? They were going through a lot of effort to show that there wasn't a bubble, or that the market wasn't being targeted by the Chinese.
I put the possibility of them massaging the data in some way at very remote. This study had a lot of eyeballs on it so risk of getting caught would be too high for them to entertain. Moreoever, the CoV grunts who do the actual work, like doing studies, seem both competent and of high integrity, and I don't think they'd be willing to betray their duty to the public and try to create a false impression of the unoccupancy rate.
I'm also puzzled by some of the numbers they post.
They point out that non-occupancy in many other housing types is incredibly low (0% - 1%).
They then estimate condo non-occupancy as ~ 12.5% (I'd say that's a big deal, since most new housing stock is in condo form).
And finally point out that short-term-non-occupancy (aka. two months of the 4 they're counting) sits at ~ 10% across all housing types - without breaking out the numbers for condos alone, or clarifying whether this short-term-non-occupancy is on top of the non-occupancy numbers above.
Clarification welcome.
They point out that non-occupancy in many other housing types is incredibly low (0% - 1%).
They then estimate condo non-occupancy as ~ 12.5% (I'd say that's a big deal, since most new housing stock is in condo form).
And finally point out that short-term-non-occupancy (aka. two months of the 4 they're counting) sits at ~ 10% across all housing types - without breaking out the numbers for condos alone, or clarifying whether this short-term-non-occupancy is on top of the non-occupancy numbers above.
Clarification welcome.
They've been willfully ignorant to the numbers for some time. What is to say they aren't misinterpreting the data, fudging it, or ingoring factors like "more houses" or "more energy usage" while the number of people are dropping? This kind of thing goes on all the time here in Beijing, the only reliable way to determine vacancy is to count the lights that come on at night. All the other metrics, including energy consumption, are so gamed that they are useless.
They explain their methodology:
http://council.vancouver.ca/20160308/documents/rr1presentati...
Does not look easily gameable, and the authors don't strike me as being disingenuous.
http://council.vancouver.ca/20160308/documents/rr1presentati...
Does not look easily gameable, and the authors don't strike me as being disingenuous.
This piece is good also, to explain some of the limitations of the study:
http://www.theglobeandmail.com/real-estate/vancouver/poking-...
http://www.theglobeandmail.com/real-estate/vancouver/poking-...
So...I looked at their methodology, and I noticed one thing right off the bat:
They define a home as "unoccupied for the year" if its electricity usage is low during the non-heating months - aka. summer. This strikes me as flawed: summer is when you're most likely to be in Vancouver!
They define a home as "unoccupied for the year" if its electricity usage is low during the non-heating months - aka. summer. This strikes me as flawed: summer is when you're most likely to be in Vancouver!
I think you are naïve if you believe that a government wouldn't fudge a study to support their best interests (best interests in this case being that most of their top campaign contributors are in the real estate business (1)). Let me give you an example of this happening recently in regards to the Vancouver real estate market.
The provincial government released a study on July 7th, stating that only 3% of real estate transactions across BC were from foreign buyers (2). Nobody believed this number, and plenty of people called foul (3). Every single person I talked to involved in the market laughed at those numbers (it is hard not to know someone involved in the market here). The government used these numbers as proof that foreign buyers were not an issue in BC.
Only 3 weeks later on July 26th, the exact same ministry in the government released new data that said that foreign buyers accounted for more than 10% of the value of real estate transactions in Metro Vancouver, which is by far the largest real estate market in BC (4). They used this as proof that foreign buyers were indeed a problem.
This is a prime example of the ridiculous politics that are at play here.
Also of note, if you look at (4), you will see that foreign buyers aren't just buying houses in the exclusive and expensive West Side Vancouver neighbourhoods. According to the data, Burnaby and Richmond, both had 18% foreign buyers.
(1) - http://www.cbc.ca/news/canada/british-columbia/campaign-dono...
(2) - http://www.theglobeandmail.com/news/bc-government-releases-p...
(3) - https://www.biv.com/article/2016/7/asian-real-estate-confere...
(4) - http://www.cbc.ca/news/canada/british-columbia/vancouver-rea...
*Edit - formatting
The provincial government released a study on July 7th, stating that only 3% of real estate transactions across BC were from foreign buyers (2). Nobody believed this number, and plenty of people called foul (3). Every single person I talked to involved in the market laughed at those numbers (it is hard not to know someone involved in the market here). The government used these numbers as proof that foreign buyers were not an issue in BC.
Only 3 weeks later on July 26th, the exact same ministry in the government released new data that said that foreign buyers accounted for more than 10% of the value of real estate transactions in Metro Vancouver, which is by far the largest real estate market in BC (4). They used this as proof that foreign buyers were indeed a problem.
This is a prime example of the ridiculous politics that are at play here.
Also of note, if you look at (4), you will see that foreign buyers aren't just buying houses in the exclusive and expensive West Side Vancouver neighbourhoods. According to the data, Burnaby and Richmond, both had 18% foreign buyers.
(1) - http://www.cbc.ca/news/canada/british-columbia/campaign-dono...
(2) - http://www.theglobeandmail.com/news/bc-government-releases-p...
(3) - https://www.biv.com/article/2016/7/asian-real-estate-confere...
(4) - http://www.cbc.ca/news/canada/british-columbia/vancouver-rea...
*Edit - formatting
The data fluctuates month to month. The data for both months was accurate. They may get political in how they present the data, but the way the collect and generate the data appears sound.
The whole Pacific coast of North America is becoming a gated region, closed off from those without at least quarter of a million dollars saved up. Unfortunately I think the mild weather and beauty of that area mean prices will never go down. Middle class people are seemingly bound to live in places that are too hot, too cold, or too flat.
Quarter of a million?! Maybe in 2009. Now, 1/2 a million.
I'm figuring for the down payment.
In Vancouver, $500k is more plausible. The minimum downpayment for >$1M properties is 20%, and the average selling price for a detached house in Metro Vancouver last month was $1.8M; in the City of Vancouver proper, it was well over $2M.
Hang on, I thought we were discussing whether the area is "closed off from those without at least quarter of a million dollars saved up". Isn't that the topic of this thread?
First of all, someone buys the below-average homes, right? So it's hardly "closed off" just because someone can't afford the mean (or median?) detached home value. What's the twentieth-percentile home value?
Second of all, what do detached home prices have to do with this? Live in a condo, like reasonable people do.
The minimum down payment for a 2 bedroom 2 bath condo in my East Van building would be around $40k.
First of all, someone buys the below-average homes, right? So it's hardly "closed off" just because someone can't afford the mean (or median?) detached home value. What's the twentieth-percentile home value?
Second of all, what do detached home prices have to do with this? Live in a condo, like reasonable people do.
The minimum down payment for a 2 bedroom 2 bath condo in my East Van building would be around $40k.
It is interesting to look at the map of California and wonder at that huge gap between Carmel and Santa Barbara. No development, no population, its even hard for tourists to find a place to stay, or even a campsite.
The tech industry pays all the state's bills, mostly captured by tenured public sector workers, in true socialist fashion. If there's a tech crash, and a few years pass without IPOs, the state will collapse into bankruptcy, and the impoverished residents will start to eye that empty coastline as their most valuable asset. When the tree-hugging hippies die off, 350km of the world's most valuable real estate will come onto the market.
The tech industry pays all the state's bills, mostly captured by tenured public sector workers, in true socialist fashion. If there's a tech crash, and a few years pass without IPOs, the state will collapse into bankruptcy, and the impoverished residents will start to eye that empty coastline as their most valuable asset. When the tree-hugging hippies die off, 350km of the world's most valuable real estate will come onto the market.
> that huge gap between Carmel and Santa Barbara
There's a reason that part of the state is sparsely developed. There's nothing but the mountains and the sea, and constant rockslides make building any transportation infrastructure hellishly expensive. Unlike Norway, there are no fjords to provide easy sea access, and there is no oil. It's a beautiful place to visit, but good luck building anything denser than small towns there.
There's a reason that part of the state is sparsely developed. There's nothing but the mountains and the sea, and constant rockslides make building any transportation infrastructure hellishly expensive. Unlike Norway, there are no fjords to provide easy sea access, and there is no oil. It's a beautiful place to visit, but good luck building anything denser than small towns there.
What exactly do you think climate change is going to do to Highway 1? Caltrans is already mulling writing it off after a certain amount of sea level rise...
There's no water.
Very surprised Bloomberg would put out such a fluff piece about the Vancouver Real Estate market.
There are very serious issues in Vancouver, and some suspect Canada is in for a ruder awakening than the US. http://www.vice.com/en_ca/read/meet-the-wall-street-short-se...
1) Canadian Real Estate is being used as a money laundering facility http://www.huffingtonpost.ca/ike-awgu/canadian-real-estate-f... .
2) Canada also has a healthy (well, actually unhealthy) sub-prime lending market http://www.huffingtonpost.ca/2016/05/18/subprime-lending-can...
3) Then there is the issue of occupancy. The reason the 15% tax was brought in is because money was coming in to purchase houses which then sat empty. Many have become derelict. When I lived in Vancouver, Yaletown was full of apartment towers, but where were all the people (I believe occupancy in that area has improved). http://www.theglobeandmail.com/real-estate/vancouver/poking-...
4) Lastly, the shadow flipping, again, mentioned in the article, but didn't get the attention it deserved http://bc.ctvnews.ca/house-flipping-concerns-as-368-vancouve...
Don't worry if you don't want to read the articles, it will be a movie in a few years along the lines of The Big Short.
There are very serious issues in Vancouver, and some suspect Canada is in for a ruder awakening than the US. http://www.vice.com/en_ca/read/meet-the-wall-street-short-se...
1) Canadian Real Estate is being used as a money laundering facility http://www.huffingtonpost.ca/ike-awgu/canadian-real-estate-f... .
2) Canada also has a healthy (well, actually unhealthy) sub-prime lending market http://www.huffingtonpost.ca/2016/05/18/subprime-lending-can...
3) Then there is the issue of occupancy. The reason the 15% tax was brought in is because money was coming in to purchase houses which then sat empty. Many have become derelict. When I lived in Vancouver, Yaletown was full of apartment towers, but where were all the people (I believe occupancy in that area has improved). http://www.theglobeandmail.com/real-estate/vancouver/poking-...
4) Lastly, the shadow flipping, again, mentioned in the article, but didn't get the attention it deserved http://bc.ctvnews.ca/house-flipping-concerns-as-368-vancouve...
Don't worry if you don't want to read the articles, it will be a movie in a few years along the lines of The Big Short.
Fluff piece? Did we read the same article? It covered at length the issue of the young couple essentially trapped in Surrey, unable to get enough space to have a child.
The author really went out of the way to emphasize the wealth of the investors, describing the buyer wanting a nonexistent car. The only remotely fluffy portion was describing the ecosystem of luxury services associated with the lavish spending. I think the article did a good job of conveying the huge negative effect to the Vancouver economy and way of life.
The author really went out of the way to emphasize the wealth of the investors, describing the buyer wanting a nonexistent car. The only remotely fluffy portion was describing the ecosystem of luxury services associated with the lavish spending. I think the article did a good job of conveying the huge negative effect to the Vancouver economy and way of life.
The requirements this young couple have is mind boggling. The have 111 sq meters and think they cannot have a kid in this space? A lot of my friends live in ~40 sq meters and are happy to have their own place at all. With a kid, even two. Surely they would like to move to a bigger places, but this isn't a showstopper. They would love to have 111 sq meters place.
Rising prices of properties is a real issue, but this particular couple is way above the standards I am used to.
What is the socially accepted minimal living standard for a couple with kids in the US / Canada?
Rising prices of properties is a real issue, but this particular couple is way above the standards I am used to.
What is the socially accepted minimal living standard for a couple with kids in the US / Canada?
> What is the socially accepted minimal living standard for a couple with kids in the US / Canada?
A lot of this comes from the expectation of what you had growing up versus what is available in your current situation, and how much you actually want kids. Do you want to bring up kids from 0 to 18+ in that same 111 sq meter space? The answer can be no for a few people, and people aren't seeing that they can move to something bigger even if it becomes necessary.
It's also not a good idea to compare floor space 1:1 across regions, floor layouts and building structure can have big impacts. 40 sq m used well can have the same level of comfort as 111 sq m used poorly, but because of various property restrictions (since it's not detached) they might not be able to modify the 111 sq m space in a meaningful way.
The main thing here in this case is that the couple represented have the choice of whether or not to have kids and they see the environment as not good for it. This is the sort of thing that happens when educated people sit down and consider whether or not having kids is the right plan for the moment.
A lot of this comes from the expectation of what you had growing up versus what is available in your current situation, and how much you actually want kids. Do you want to bring up kids from 0 to 18+ in that same 111 sq meter space? The answer can be no for a few people, and people aren't seeing that they can move to something bigger even if it becomes necessary.
It's also not a good idea to compare floor space 1:1 across regions, floor layouts and building structure can have big impacts. 40 sq m used well can have the same level of comfort as 111 sq m used poorly, but because of various property restrictions (since it's not detached) they might not be able to modify the 111 sq m space in a meaningful way.
The main thing here in this case is that the couple represented have the choice of whether or not to have kids and they see the environment as not good for it. This is the sort of thing that happens when educated people sit down and consider whether or not having kids is the right plan for the moment.
Fair enough, it's more space than I have for two children. It's a bad example that trivializes the actual extreme difficulty Vancouver families face getting affordable housing.
Where I'm from 111 sq meters condo is a "you have a really high income and three kids but will never be able to buy it" kind of thing.
Carney's ability to stoke a housing bubble was what got him the job in the Bank of England.
Absolutely this. Please, please take him back. Seriously, we'll pay you, just take him back.
Please do not give Carnage back. We need him to implode The City.
How and why would he do that? By throwing vast sums of money at them at the drop of a hat?
(I live in Vancouver.)
You really should include a link to this as well- Real Estate Board of Greater Vancouver MLS Home Price Index http://www.rebgv.org/home-price-index?region=all&type=all&da...
This shows the the price trend of Detached, Townhouse, and Apartment up to the last 11 years, broken by individual cities in Greater Vancouver.
But it is misleading. If you look at Metro Vancouver's trend, all 3 types of housing have gone up in prices. But if you look at the surrounding cities, only the Detached and Townhouse prices have gone up. Apartment pricing have remain relatively flat until 15 months ago. Since then Apartment price have gone up as well.
This is probably because 15 months ago, the Detached/Apartment pricing have increased to the point where buyers started to consider Apartment as a viable resident.
PS. If you look at the graph, you will notice that the prices have gone up so much it broke the graphing software.
You really should include a link to this as well- Real Estate Board of Greater Vancouver MLS Home Price Index http://www.rebgv.org/home-price-index?region=all&type=all&da...
This shows the the price trend of Detached, Townhouse, and Apartment up to the last 11 years, broken by individual cities in Greater Vancouver.
But it is misleading. If you look at Metro Vancouver's trend, all 3 types of housing have gone up in prices. But if you look at the surrounding cities, only the Detached and Townhouse prices have gone up. Apartment pricing have remain relatively flat until 15 months ago. Since then Apartment price have gone up as well.
This is probably because 15 months ago, the Detached/Apartment pricing have increased to the point where buyers started to consider Apartment as a viable resident.
PS. If you look at the graph, you will notice that the prices have gone up so much it broke the graphing software.
It's happening to countries all around the pacific rim (well, without being too rude, all the stable countries).
Chinese money is land-banking in Vancouver, US north west, Australia, and Auckland in nz.
and countries don't dear stop it because it will tank the real-estate bubble too quickly (it'll go before the tech bubble anyway). But if it does it will actually be good for the economies because capital tied up in unused land is worthless to the economy.
Chinese money is land-banking in Vancouver, US north west, Australia, and Auckland in nz.
and countries don't dear stop it because it will tank the real-estate bubble too quickly (it'll go before the tech bubble anyway). But if it does it will actually be good for the economies because capital tied up in unused land is worthless to the economy.
Yes, insane property prices in Oz & NZ:
http://www.acting-man.com/?p=46075
Canada and Australia have been hit hard by the commodity collapse, and their currencies have crashed, so their property has inflated in local nominal prices, as foreigners have bought anything with a roof (or even without). But their internal economies have not reacted to the loss of export business and imported inflation for consumer goods. They keep high-taxes and high-welfare socialist economies which are sleep-walking off a cliff - this will not end well.
NZ is in a slightly better position, because it produces more agricultural commodities than industrial minerals, and it restructured its taxes and regulations to become more friendly to businesses and individuals (no capital gains tax, no inheritance tax). But its real estate market is also in a crazy bubble, which will collapse if the foreign buyers disappear.
http://www.acting-man.com/?p=46075
Canada and Australia have been hit hard by the commodity collapse, and their currencies have crashed, so their property has inflated in local nominal prices, as foreigners have bought anything with a roof (or even without). But their internal economies have not reacted to the loss of export business and imported inflation for consumer goods. They keep high-taxes and high-welfare socialist economies which are sleep-walking off a cliff - this will not end well.
NZ is in a slightly better position, because it produces more agricultural commodities than industrial minerals, and it restructured its taxes and regulations to become more friendly to businesses and individuals (no capital gains tax, no inheritance tax). But its real estate market is also in a crazy bubble, which will collapse if the foreign buyers disappear.
The same is true in London, mainly with investors from Russia, China and the Middle East. Compared to their countries, they see these as a 'safe haven' for their money.
https://www.theguardian.com/society/2014/dec/26/londoners-mi...
https://www.theguardian.com/society/2014/dec/26/londoners-mi...
ex-IT workers who left these places say "My job went to India and my home went to China."
True globalization!
I'm disgusted/saddened by the biased reporting that's taken place over this issue. This article points out how Bloomberg and other media are attracted to the "foreign buyers" narrative:
http://www.straight.com/news/735161/revisiting-real-estate-r...
Study finds foreign buyers impact Vancouver real estate but likely can't account for sky-high prices:
http://www.straight.com/news/720471/study-finds-foreign-buye...
http://www.straight.com/news/735161/revisiting-real-estate-r...
Study finds foreign buyers impact Vancouver real estate but likely can't account for sky-high prices:
http://www.straight.com/news/720471/study-finds-foreign-buye...
Same in London. In everything except extremely high end property. But it is a common narrative for political purposes because people "feel" it to be right.
Not to mention perfectly valid non-speculative buyers.
Scenario for you: international student completed UBC and started working full-time on local tech company. After struggle to save, put a deposit on a place after saving from working part-time during later years of degree and about to close deal in a couple weeks (when new place is ready). Now, BAM! Gotta have to pony up 15% on home price agreed upon nearly a year earlier. More than original deposit! Tell me how that encourages qualified tech workers to stick around...
They aimed at a particular kind of "foreign buyers" in a crowd, but used a shotgun...
Scenario for you: international student completed UBC and started working full-time on local tech company. After struggle to save, put a deposit on a place after saving from working part-time during later years of degree and about to close deal in a couple weeks (when new place is ready). Now, BAM! Gotta have to pony up 15% on home price agreed upon nearly a year earlier. More than original deposit! Tell me how that encourages qualified tech workers to stick around...
They aimed at a particular kind of "foreign buyers" in a crowd, but used a shotgun...
As a vancouverite, and a person that's lived in Toronto for over a decade, I can say that while vancouver has about half the population (of T.O.) it has maybe 1/4 or 1/8 of the tech jobs. Also Canada is not like, say, the US, where there are many different industrial centers (ie Entertainment in LA or Finance in NY). In Canada, most corp headquarters are in Toronto and a small fraction are in Calgary and that's it. Vancouver has little significant industry that isn't tied to real estate.
Even if a crash does happen, the largest crashes to date have only been maybe 30% in '82 (prices recovered in 7 years) and 15% in '08 (prices recovered in 1 year).
What could change the course of the current deluge of chinese capital?
1 Canadian Regulatory change - the federal liberals and the provincial liberals have significant political contributions from real estate agents (look it up). They won't impl any meaningful changes. This new 15% tax will affect few and change little; it is just election season and our Premier, Christi has to look active. 2 Interest rates - The US basically sets our rates and the US is likely going to reduce the rates driving more capital to look for better returns. 3 Chinese cash - are you going to stop buying chinese shit? No, in fact most can only afford chinese made products these days. 4 Chinese Regulatory change - This could happen but most of the cash used to buy homes in BC is likely illegally moved out of china anyhow so...
TL;DR- In the 1-2 year timeframe tho, my advice - mortgage your house and buy as much BC real estate as you can afford. Good luck on finding 25%+ yoy low risk returns anywhere else.
Even if a crash does happen, the largest crashes to date have only been maybe 30% in '82 (prices recovered in 7 years) and 15% in '08 (prices recovered in 1 year).
What could change the course of the current deluge of chinese capital?
1 Canadian Regulatory change - the federal liberals and the provincial liberals have significant political contributions from real estate agents (look it up). They won't impl any meaningful changes. This new 15% tax will affect few and change little; it is just election season and our Premier, Christi has to look active. 2 Interest rates - The US basically sets our rates and the US is likely going to reduce the rates driving more capital to look for better returns. 3 Chinese cash - are you going to stop buying chinese shit? No, in fact most can only afford chinese made products these days. 4 Chinese Regulatory change - This could happen but most of the cash used to buy homes in BC is likely illegally moved out of china anyhow so...
TL;DR- In the 1-2 year timeframe tho, my advice - mortgage your house and buy as much BC real estate as you can afford. Good luck on finding 25%+ yoy low risk returns anywhere else.
Your mind frame displayed in your tl;dr is precisely what is responsible for the rate of housing price increases in your region.
My guess would be that the van housing prices mostly correlated to the outflow of cash from china. These investors likely don't care about the return - just that they don't lose the capital. So, I respectfully disagree.
A couple of issues here. Firstly US does not dictate Canadian rates, sadly. The fed raised interest rates recently and likely will raise then further if the conditions are right. In Canada many people, especially young people, have dangerously high mortgages for their income. They bought into property because of fear of missing out, often aided and encouraged by their parents who made out like bandits and assume the market can only go up.
Secondly Chinese cash coming to Vancouver is almost by definition illegal because of the $50k cash limit Chinese can take out of the country.
Secondly Chinese cash coming to Vancouver is almost by definition illegal because of the $50k cash limit Chinese can take out of the country.
> Firstly US does not dictate Canadian rates, sadly.
Of course not, but 5 year-fixed rate mortgages are set according to the bond market, not BoC overnight rates.
If interest rates set by the US Fed are high, then lenders are going to securitize Canadian mortgages with US bonds, due to the higher yields found there.
Of course not, but 5 year-fixed rate mortgages are set according to the bond market, not BoC overnight rates.
If interest rates set by the US Fed are high, then lenders are going to securitize Canadian mortgages with US bonds, due to the higher yields found there.
Agreed. While the US and CA rates sometimes differ, it's not by much and they usually loosely track each other.
This is the effect when you have 2 economies that are so closely tied.
This is the effect when you have 2 economies that are so closely tied.
If you look at the US and CA rates you;ll see they track each other quite closely and it's not like canada is driving the US rates.
I agree most BC residents have dngerously high mortgage payment to income ratios. That's something that the gov should have stopped by slowing foreign ownership but they didn't and now can't.
Now that the gov can't change things for fear of triggering a huge crash, one is inevitable. So now we're in a situation where the bubble will get massive and then explode.
My point is, just try and enjoy it!
Re chinese cash: If I've learnt anything from the big banks or uber it's that if you do something illegal on large scale it's not illegal. ;>
I agree most BC residents have dngerously high mortgage payment to income ratios. That's something that the gov should have stopped by slowing foreign ownership but they didn't and now can't.
Now that the gov can't change things for fear of triggering a huge crash, one is inevitable. So now we're in a situation where the bubble will get massive and then explode.
My point is, just try and enjoy it!
Re chinese cash: If I've learnt anything from the big banks or uber it's that if you do something illegal on large scale it's not illegal. ;>
The city of Vancouver's population is 600K, while Toronto's is 2.6M - over 4x as large. Are you talking about their CMA populations? (That seems more likely: ~2.6M vs. 5.6M)
Thanks. Yes, for brevity's sake. I hope most will infer this.
> TL;DR- In the 1-2 year timeframe tho, my advice - mortgage your house and buy as much BC real estate as you can afford. Good luck on finding 25%+ yoy low risk returns anywhere else.
Return is a function of risk. Doesn't a 25% yield imply far more risk than you are implying? Why is anyone selling right now if prices are going to skyrocket like that? What if China institutes tight capital controls? What if oil goes to $20 a barrel?
Return is a function of risk. Doesn't a 25% yield imply far more risk than you are implying? Why is anyone selling right now if prices are going to skyrocket like that? What if China institutes tight capital controls? What if oil goes to $20 a barrel?
What i as trying to do was break down that risk into the major constituents (as i see them), Chinese regulatory change being one of them. As I pointed out, likely a large fraction of the chinese cash is already illegal. I don't know chinese politics well enough to know the likelihood or impact of a change. However just from general corrupt country historical knowledge I would guess there are a lot of payoffs to get the money out and who wants to stop that?
Oil price is an interesting point. Of course the question becomes what would the price of oil do to foreign investment? Not much i'd guess.
If oil goes down the CAD will become cheaper increasing investment. Up and investment may slow but, again, if you're a chinese millionaire looking to get your cash to a safe haven do you actually care how big the house is you are buying? You are just moving the say 2mil out of china. You just care that it keeps the original value.
Oil price is an interesting point. Of course the question becomes what would the price of oil do to foreign investment? Not much i'd guess.
If oil goes down the CAD will become cheaper increasing investment. Up and investment may slow but, again, if you're a chinese millionaire looking to get your cash to a safe haven do you actually care how big the house is you are buying? You are just moving the say 2mil out of china. You just care that it keeps the original value.
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A disaster for people who believe Canadian citizens and permanent residents should be able to afford to buy a home in their own city.
Great for those who own real estate and sell it.
Great for those who own real estate and sell it.
It seems like the Canadian government is responding:
> Foreign investors will have to pay an additional 15 percent in property-transfer tax as of Aug. 2 and city of Vancouver was given the authority to impose a new tax on empty homes.
The additional tax on foreign investors is a good idea, but I wonder how it will be enforced, especially when ownership is often hidden behind trusts.
> Foreign investors will have to pay an additional 15 percent in property-transfer tax as of Aug. 2 and city of Vancouver was given the authority to impose a new tax on empty homes.
The additional tax on foreign investors is a good idea, but I wonder how it will be enforced, especially when ownership is often hidden behind trusts.
That tax is just a smokescreen. There are numerous loopholes and problems with it, so many that it's surely deliberately engineered for maximum buzz but minimum effect. BC and Vancouver have been playing hot potato with this issue for a while with no one doing anything to address the problem.
For example, it very narrowly targets foreign citizens who are not permanent residents or citizens of Canada, completely missing "investors" who have just bought Canadian permanent residence for cheap, do not earn income in Canada, and are now buying property in their safe haven. This scenario is unfortunately all too common.
About $100K in interest payments via Quebec's investor immigration program, no other requirements.
For example, it very narrowly targets foreign citizens who are not permanent residents or citizens of Canada, completely missing "investors" who have just bought Canadian permanent residence for cheap, do not earn income in Canada, and are now buying property in their safe haven. This scenario is unfortunately all too common.
About $100K in interest payments via Quebec's investor immigration program, no other requirements.
My instinct is that it will likely be a small source of income for the government. Will it help with affordability issues for locals? Unlikely.
>>and city of Vancouver was given the authority to impose a new tax on empty homes.
I wonder how they will actually enforce this. I mean, one can furnish a home, have utilities remain active and leave a few lights on and make it look like someone is actually living there. Add some random noise generation (pretty easy to set up with home automation or other, similar methods) and you can fool basically anyone who isn't actively watching your door 24/7.
I wonder how they will actually enforce this. I mean, one can furnish a home, have utilities remain active and leave a few lights on and make it look like someone is actually living there. Add some random noise generation (pretty easy to set up with home automation or other, similar methods) and you can fool basically anyone who isn't actively watching your door 24/7.
IIRC they're planning to use a number of sources. Things like utilities - so at a minimum you'd have to pay for and use a reasonable amount of electricity, water, etc. in the home. Even garbage/recycling collection would be a give-away. Insurance companies will also be a source of info, as insurance rates differ based on occupancy, so the companies have an incentive to determine the same. Finally anonymous reporting (ie from neighbours). Sounds like it should be pretty effective to me. The last bit least so, but utilities + insurance should go a long way. It's going to be a lot easier to just find a decent tenant (easy to do when housing is in such short supply; charge slightly below market rent if you want your pick from many applicants) than to do all the work to fake occupancy.
> you can fool basically anyone who isn't actively watching your door 24/7
How easy is it to fool a surveillance camera pointed at your door 24/7 with an automated system trained to detect human movement watching it?
How easy is it to fool a surveillance camera pointed at your door 24/7 with an automated system trained to detect human movement watching it?
A huge portion of BC (and Canada's) economy since the oil price crash has been FIRE, so I would imagine there is no interest in bursting the real estate bubble.
The foreign investor tax is a low-effort attempt to skate through another election and maybe pick up a few bucks on the other side.
An actual solution to this problem will involve cooperation between the province and the feds at the very least to handle Canada's lax money laundering laws and the Quebec immigrant investor program, as other posters have said. And you are correct in that there have already been realtors caught and censured in BC for offering to help their clients sidestep this new tax using a white proxy buyer or a cut-out trust.
However, an actual solution is likely to also tank real estate values, which is reasonable when you think about how the average single detached home in Van is selling for a huge multiple of average wage.
The foreign investor tax is a low-effort attempt to skate through another election and maybe pick up a few bucks on the other side.
An actual solution to this problem will involve cooperation between the province and the feds at the very least to handle Canada's lax money laundering laws and the Quebec immigrant investor program, as other posters have said. And you are correct in that there have already been realtors caught and censured in BC for offering to help their clients sidestep this new tax using a white proxy buyer or a cut-out trust.
However, an actual solution is likely to also tank real estate values, which is reasonable when you think about how the average single detached home in Van is selling for a huge multiple of average wage.
[edited for accuracy]
Technically, it is a British Columbia provincial tax which applies only in the metro Vancouver area. I am curious to see what, if any, affect it has.
Technically, it is a British Columbia provincial tax which applies only in the metro Vancouver area. I am curious to see what, if any, affect it has.
I think that the real problem is that so many people are trying to concentrate into the densest areas. That creates huge pressures, which are reflected in the price of space.
Take a look at the cities with populations below 100K. You will find lots of people who live great lives, despite not being rich. For those of us who grew up in these little island towns, living in a place like Vancouver is downright depressing, regardless of the price.
Take a look at the cities with populations below 100K. You will find lots of people who live great lives, despite not being rich. For those of us who grew up in these little island towns, living in a place like Vancouver is downright depressing, regardless of the price.
I used to think you had to live in an "it" city to make it. Then I realized that I could make my life whatever I wanted to be more easily in a less expensive place. The chains were in my head.
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Yes, until you have a family. Then suddenly you need a good school nearby (and good luck bringing children to school in car if they have serious case of motion sickness).
Canadian small towns of 100-300k have good schools. Most of Canada lacks much of any kind of ghetto area. The few ghetto areas that exist are pretty easy to avoid. The good school worries that exist in the USA are pretty much nonexistent in Canada.
> good luck bringing children to school in car if they have serious case of motion sickness
That's maybe the worst excuse I've ever heard.
At least it's the worst for the last... 3 years probably.
That's maybe the worst excuse I've ever heard.
At least it's the worst for the last... 3 years probably.
Especially if you have a family, too big cities are a cr*ppy selfish choice of parents. kids will have plenty of time to go super urban in their adulthood if that is what they want. As a kid I always felt sorry for kids from big/capital cities, out of touch from nature, far more exposed to stressful fast-paced life. The gap when meeting some was stunning (but this is obviously my super-anecdotal experience).
I walked to school back when I was in elementary school. In grade 2, my mother confirmed that I remembered the stranger rules, and stopped walking with me. It was about a 2km walk.
Why is it ok for this to not be the norm? Why do people just accept that their kids are growing up in a city where they can't be allowed to explore their environment?
Why is it ok for this to not be the norm? Why do people just accept that their kids are growing up in a city where they can't be allowed to explore their environment?
I've lived on both sides of the fence. I cover much more ground living in the city then I ever did living in the country or suburbs. I drive 1-2 times a month now compared to 2-3 time a day living outside the city. In my experience the city inspires a lot more exploration. My daughter is all over Toronto on a daily basis.
"Stranger rules" are a net negative, in my opinion. The threat from strangers is overblown--if you want to minimize danger to your kids at the all costs, don't let them see relatives, ever.
And yet the other day there was an article on here about Canada's issue hiring high tech workers.
The thread was filled with a ton of programmers that left Toronto / Canada to go to Silicon Valley because the wages are so much higher.
Yeah I'm going to make probably less than half of what someone in Silicon Valley can make but living in a medium sized Canadian city means my cost of living is obviously much lower.
The thread was filled with a ton of programmers that left Toronto / Canada to go to Silicon Valley because the wages are so much higher.
Yeah I'm going to make probably less than half of what someone in Silicon Valley can make but living in a medium sized Canadian city means my cost of living is obviously much lower.
Those sorts of cities don't generally have large apartment blocks so you don't get the benefits of density.
So more space for less money? Lack of large apartment blocks or density isn't what I'd call a downside.
I like having everything I need inside a 10 minute walk. If it weren't for work I'd very rarely go outside of this 1Km radius. To do that you need large apartment blocks.
What you need, is a bicycle.
But aside from that, small towns often have a more thorough mixing of zone types; you can often live within walking distance of work or school and a small grocery store.
But aside from that, small towns often have a more thorough mixing of zone types; you can often live within walking distance of work or school and a small grocery store.
> bicycle
> Canada
That's great, except for the 7 or so months out of the year when it's not.
If flukus prefers dense areas that's his deal... arguing about preferences is dumb.
> Canada
That's great, except for the 7 or so months out of the year when it's not.
If flukus prefers dense areas that's his deal... arguing about preferences is dumb.
What's wrong with riding in the winter? You have to make sure you have the right clothing and equipment, but that's about it.
We tend to get quite a bit of snow in Canada, and it is pretty cold. I'm not sure if riding in the winter is common elsewhere but where I live in Canada I don't ever see cyclists in the winter.
I live in Boston, and while it isn't Canada, it can get quite cold in the winter. Plenty of people here, I included, bike in the winter. As long as you wear the right clothes have low-temperature lubricants and winter tires on your bike, winter biking isn't that big of an issue. If anything it's better than summer biking because I don't get as hot or sweat as much. Mud season is far worse for biking, but it last only a month or so if that.
Where I live it is unsafe for multiple reasons. Almost no one does it.
and for those of us used to living in cities, living in the middle of nowhere sounds horrendous.
Just wait until you see the Milky Way stretching across the night sky. Or get a call from friends to take the Jeeps up the mountain. Or jump into a cool river on a hot day, and float a few kilometres downstream without encountering anyone who cares about the cooler of beers floating along with you.
I can drive out of the city, you know...
Everyone has their tradeoffs and priorities. Decades ago, it was common for new finance grads to get a tiny, poorly lit, crappy apartment in Manhattan because they couldn't imagine living in Queens much less New Jersey--or even somewhere other than the New York area entirely.
Today that's probably still true but add the walkable core areas of a variety of other US mostly coastal cities. The Bay area is something of an exception but housing prices go down a lot as you get an hour away from most of those cities (which isn't exactly the middle of nowhere).
Today that's probably still true but add the walkable core areas of a variety of other US mostly coastal cities. The Bay area is something of an exception but housing prices go down a lot as you get an hour away from most of those cities (which isn't exactly the middle of nowhere).
I can't speak for Canada, but in the USA; all a foreigner needs to buy a home is cash, and a phone call.
I'll get hammered for saying this, but I feel it's wrong on so many levels.
I'll get hammered for saying this, but I feel it's wrong on so many levels.
I agree with you that there should be restrictions on foreign investors looking to housing as investment. . . at the same time, I am worried that they are being used as scapegoats to avoid addressing much larger structural economic and legislative problems behind the inflationary price increase.
In fact I think these foreign investors are more being attracted by the already inflating prices than actually the culprit in the inflation.
In fact I think these foreign investors are more being attracted by the already inflating prices than actually the culprit in the inflation.
>Being used as scapegoats
That's what it looks like for me with the Australian housing market where the Chinese are being blamed for increasing prices. China is the biggest foreign investor in the Australian housing market followed by the US with $12 billion out of $34 billion foreign investment in 2013-14 [1], but it can't be the only explanation.
As a non-permanent resident you can only buy from the plan, no 'used' houses at all: 'If the FIRB feels that the residential real estate in question is only being purchased by a foreign citizen or company just for the purpose of renting it out, or because the purchaser wants to speculate on the property’s future value, permission to purchase will be refused.' [2]
The reasons for the extreme prices are more complex and subsequent Australian governments refuse to change this: banks have been giving out record-low mortgages leading to massive debt and rising houseprices [3], and there's negative gearing, which allows people to overinvest because they can claim later and causes people to hold onto their property, thereby inflating prices [4]. Changing this broken system is detrimental to the parties parties as it would directly cut into income for the rich and the old, and so many blue-collar jobs in Australia depend on building houses. It will only change after the whole bubble implodes.
[1] http://www.globalpropertyguide.com/Pacific/Australia/Price-H...
[2] http://www.australia-migration.com/page/Foreign_Investors_Bu...
[3] http://www.abc.net.au/news/2016-02-29/verrender-housing-bubb...
[4] https://en.wikipedia.org/wiki/Negative_gearing#Australia
That's what it looks like for me with the Australian housing market where the Chinese are being blamed for increasing prices. China is the biggest foreign investor in the Australian housing market followed by the US with $12 billion out of $34 billion foreign investment in 2013-14 [1], but it can't be the only explanation.
As a non-permanent resident you can only buy from the plan, no 'used' houses at all: 'If the FIRB feels that the residential real estate in question is only being purchased by a foreign citizen or company just for the purpose of renting it out, or because the purchaser wants to speculate on the property’s future value, permission to purchase will be refused.' [2]
The reasons for the extreme prices are more complex and subsequent Australian governments refuse to change this: banks have been giving out record-low mortgages leading to massive debt and rising houseprices [3], and there's negative gearing, which allows people to overinvest because they can claim later and causes people to hold onto their property, thereby inflating prices [4]. Changing this broken system is detrimental to the parties parties as it would directly cut into income for the rich and the old, and so many blue-collar jobs in Australia depend on building houses. It will only change after the whole bubble implodes.
[1] http://www.globalpropertyguide.com/Pacific/Australia/Price-H...
[2] http://www.australia-migration.com/page/Foreign_Investors_Bu...
[3] http://www.abc.net.au/news/2016-02-29/verrender-housing-bubb...
[4] https://en.wikipedia.org/wiki/Negative_gearing#Australia
Except, the FIRB does not collect adequate data to truely monitor the acquisition of housing by non-Residents, and these regulations are easily to get around and are often flaunted.
Do you have any proof for either statement?
All I could find is the 2014 report on the FIRB which said they would never initiate court proceedings; http://www.abc.net.au/news/2014-11-27/foreign-buyer-rule-enf...
I have no clue how much has changed there since then, and I don't assume anything will change. This still doesn't mean that any of my original points are wrong, the entire system is bad and IMHO Chinese foreign investment is just a scapegoat (if you look at the report, at that time Chinese investment was already the highest but back then very close ($5.9 billion) to US ($4.4 billion) and Canadian ($4.9 billion) investment: Why did no-one complain about either?)
All I could find is the 2014 report on the FIRB which said they would never initiate court proceedings; http://www.abc.net.au/news/2014-11-27/foreign-buyer-rule-enf...
I have no clue how much has changed there since then, and I don't assume anything will change. This still doesn't mean that any of my original points are wrong, the entire system is bad and IMHO Chinese foreign investment is just a scapegoat (if you look at the report, at that time Chinese investment was already the highest but back then very close ($5.9 billion) to US ($4.4 billion) and Canadian ($4.9 billion) investment: Why did no-one complain about either?)
Seriously?
The government held an inquiry into it, and this is the first key thing in the report:
"First, there is no accurate or timely data that tracks foreign investment in residential real estate. No-one really knows how much foreign investment there is in residential real estate, nor where that investment comes from."
See http://www.aph.gov.au/Parliamentary_Business/Committees/Hous... http://www.rba.gov.au/publications/submissions/housing-and-h... http://www.canberratimes.com.au/federal-politics/political-n... http://theconversation.com/little-hard-data-in-the-hard-area...
Secondly 4 Corners did an investigation into it http://www.abc.net.au/4corners/stories/2015/10/12/4327525.ht... and https://www.crikey.com.au/2015/10/14/why-are-chinese-buyers-...
The government held an inquiry into it, and this is the first key thing in the report:
"First, there is no accurate or timely data that tracks foreign investment in residential real estate. No-one really knows how much foreign investment there is in residential real estate, nor where that investment comes from."
See http://www.aph.gov.au/Parliamentary_Business/Committees/Hous... http://www.rba.gov.au/publications/submissions/housing-and-h... http://www.canberratimes.com.au/federal-politics/political-n... http://theconversation.com/little-hard-data-in-the-hard-area...
Secondly 4 Corners did an investigation into it http://www.abc.net.au/4corners/stories/2015/10/12/4327525.ht... and https://www.crikey.com.au/2015/10/14/why-are-chinese-buyers-...
One can look at the high rents in Sidney to verify the issue there is primarily supply.
Especially when that cash can come from dodgy loans in the home country.
All the trillions of dollars that got sent out the trade deficit since the 80s are finally making their way back to the developed economies. We can only export our inflation for so long.
Yeah. Nobody will talk about this. Trillions of dollars went to China in exchange for things purchased legally and voluntarily. Now, people throw around terms like "money laundering" as if the Chinese are a bad ass cartel that's been selling us cocaine all this time.
If would could only find a way to tax that in order to pay off the fiscal deficits we had to accrue in order to make perpetual trade deficits less painful...
The Chinese buyers are paying on average $900k for a house, which is what the average Canadian is buying.
The percentage of Chinese buyers is anywhere from 4% to 8% in the market.
What upsets me here more than anything else is that no one mentioned the CMHC. I suppose people would be more willing to believe that aliens are using mind control on people to drive a real estate frenzy rather than believe that there are institutions creating moral hazard within Canada.
What upsets me here more than anything else is that no one mentioned the CMHC. I suppose people would be more willing to believe that aliens are using mind control on people to drive a real estate frenzy rather than believe that there are institutions creating moral hazard within Canada.
What is the "CMHC"?
Canadian Mortgage and Housing Corporation.
They insure the banks against mortgage default. People pay a small premium on their monthly mortgage payments so that if they default, the bank is insured for the cash difference of the outstanding amount on the mortgage.
As a result, banks in Canada face no risks from mortgage default so there's no reason to deny a mortgage. Over 90% of mortgages made in the past decade are CMHC-insured.
They insure the banks against mortgage default. People pay a small premium on their monthly mortgage payments so that if they default, the bank is insured for the cash difference of the outstanding amount on the mortgage.
As a result, banks in Canada face no risks from mortgage default so there's no reason to deny a mortgage. Over 90% of mortgages made in the past decade are CMHC-insured.
I get what you are saying, but so far things are going very well.
By 2010 CMHC had an annual financial surplus of more than $2 billion.[6] CMHC is the largest Crown Corporation in terms of assets with some $26 billion in holdings as of 2008-2009.
If you think this insurance can cause Canadian banks to be more risky in their lending - I don't think that is currently the case.
By 2010 CMHC had an annual financial surplus of more than $2 billion.[6] CMHC is the largest Crown Corporation in terms of assets with some $26 billion in holdings as of 2008-2009.
If you think this insurance can cause Canadian banks to be more risky in their lending - I don't think that is currently the case.
So $26B in holdings to insure $1.372T in outstanding mortgages, that seem pretty low but since the taxpayers will cover the rest, I guess it's fine to continue handing out subprime mortgages.
They don't insure the value of the mortgage, they insure the shortfall between what the lender recoup in foreclosure vs. the outstanding loan balance.
I havent looked in detail lately - but I believe they issue bonds and the bond holders would be covering the impact of a market crash.
You would prefer if there was not such an insurance system required for home owners putting less than 20% down?
You would prefer if there was not such an insurance system required for home owners putting less than 20% down?
You would prefer if there was not such an insurance system required for home owners putting less than 20% down?
I know I would. It would be like the 90's again where banks had to only loan out to people who they thought wouldn't default.
I know I would. It would be like the 90's again where banks had to only loan out to people who they thought wouldn't default.
If you think this insurance can cause Canadian banks to be more risky in their lending - I don't think that is currently the case.
This is 100% exactly how the US crash happened through Fannie Mae and Freddie Mac.
This is 100% exactly how the US crash happened through Fannie Mae and Freddie Mac.
Holy - I live 5 blocks from the C$64M home mentioned in the article and pay a rent of 1200$ every month.
Rents are constrained by wages. Prices are constrained by money printing. Money printing is not constrained.
It's happening in Australia too, but the few people willing to talk about it are crucified by the PC brigade.
The SMH and West Australian publish articles about Chinese real estate purchases every week. This is an oft-discussed issue.
The interesting parts about foreign buyers is that the best story always seems to highlight the super rich, but its not like mansions are the only things going up in price.
I'm sure that a price increase in land results in a "rising tide" effect for all homes, but because someone is willing to spend 64M on a mansion, does it mean condo's should be worth more too?
The city is pretty, but there aren't exactly a massive pile of high paying jobs, nor do we have much of an economy beyond resource extraction, satellite offices, etc.
I'm sure that a price increase in land results in a "rising tide" effect for all homes, but because someone is willing to spend 64M on a mansion, does it mean condo's should be worth more too?
The city is pretty, but there aren't exactly a massive pile of high paying jobs, nor do we have much of an economy beyond resource extraction, satellite offices, etc.
I agree, this bothers me as well; the mansions seem to get way more press than they deserve.
What gets under-reported is:
-the non-foreigner/non-Chinese/locals that are hanging on to 2-3 properties -the person who can now afford that $1 million condo because they just sold their smaller condo for $500,000 and netted $250,000. -the fact that interest rates are at the lowest ever and some years ago amortization periods were pushed up to 40 years and down payments of 0-5% were allowed.
What gets under-reported is:
-the non-foreigner/non-Chinese/locals that are hanging on to 2-3 properties -the person who can now afford that $1 million condo because they just sold their smaller condo for $500,000 and netted $250,000. -the fact that interest rates are at the lowest ever and some years ago amortization periods were pushed up to 40 years and down payments of 0-5% were allowed.
Yep. These are also the people causing housing price rises by voting for local governments that'll protect their investments and disallow more rapid new construction or smaller lot sizes.
Investors who rent out their properties might change the price:rent ratio, but they don't contribute to the housing shortage.
They contribute to the issue of renters being unable to buy. Each of those standalone houses are not available for purchase that otherwise would have been, unless the investor bought the land, applied for residential zoning, and built the property.
>They contribute to the issue of renters being unable to buy.
But on the other hand, they give renters a good deal. Buying at a high price:rent ratio means a low cap rate, which makes for a bad investment. So the landlord is essentially giving ownership returns to the renter, while keeping price risk themselves.
To the extent that rents are also high, this shows that the problem is not, in fact, investors but instead a limited supply of housing.
But on the other hand, they give renters a good deal. Buying at a high price:rent ratio means a low cap rate, which makes for a bad investment. So the landlord is essentially giving ownership returns to the renter, while keeping price risk themselves.
To the extent that rents are also high, this shows that the problem is not, in fact, investors but instead a limited supply of housing.
I'm sure that a price increase in land results in a "rising tide" effect for all homes, but because someone is willing to spend 64M on a mansion, does it mean condo's should be worth more too?
It has a cascade effect - if a person who can afford a $2M house is forced into buying a smaller property because $2M doesn't go as far, that displaces the guy who could afford $1M, who displaces the guy who can afford $750K and so forth. Further down the line it hits people who can't afford to buy at all, people whose rent becomes unaffordable on their income, and so forth.
It has a cascade effect - if a person who can afford a $2M house is forced into buying a smaller property because $2M doesn't go as far, that displaces the guy who could afford $1M, who displaces the guy who can afford $750K and so forth. Further down the line it hits people who can't afford to buy at all, people whose rent becomes unaffordable on their income, and so forth.
A running joke in Canada is that BC stands for "Bring Cash". This is what happens in a completely unregulated market. Good in the short term, disastrous in the long.
Isn't BC vast and mostly empty though? Last I looked purchase prices in Vancouver island (aside from Victoria maybe) were about the same as or lower than rural areas in Germany.
95% of BC is Crown Land though - either reserved by the government, covered by fresh water or designated agricultural-use only (ALR). Only 5% is available as private land.
A useful overview map: http://40.media.tumblr.com/2410fe72393357ea0b00f50272065562/...
A useful overview map: http://40.media.tumblr.com/2410fe72393357ea0b00f50272065562/...
So people should just go live in the woods?
What do you think Vancouver was before we poured bitumen all over it?
Also the idea that people in Yaletown/Gastown should go live in old factories and warehouses seems to have just fine.
Also the idea that people in Yaletown/Gastown should go live in old factories and warehouses seems to have just fine.
Not what I meant, was just saying it seem to apply mostly to Vancouver (maybe Victoria, to a much lesser extent) and not BC as a whole.
But that's not how jokes work I guess!
But that's not how jokes work I guess!
It's racist, but after Hong Kong and Macau, Vancouver was readily referred to as Hongcouver.
The money spilling in from Asia has been going on for a long time. 16+ years.
The money spilling in from Asia has been going on for a long time. 16+ years.
The difference is that the first wave of foreign money that came into the city was from Hong Kong. Generally a lot of these immigrants started businesses in the city and contributed to the economy. This is not the case with the current influx of cash. Houses are sitting empty and there is evidence that it is really hurting the economy.
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8 percent of the total housing market is being bought by billionaires, that's my understanding of the article.
Isn't the cause of rapidly rising real estate prices also caused by devaluations of currencies, so people with a lot of money are looking for relatively safe places to park it? In the USA real inflation is much higher than our government admits.
Do you have any supporting evidence to your claim that real inflation is much higher?
I'm not trying to prove you wrong, I'm genuinely curious. My impression has been that inflation has been relatively low, with the exception of housing. Though housing has gone up much faster in large metros than the rest of the country
I'm not trying to prove you wrong, I'm genuinely curious. My impression has been that inflation has been relatively low, with the exception of housing. Though housing has gone up much faster in large metros than the rest of the country
I have read that our government stresses consumer items like TVs in calculating the inflation index because tech product prices decrease rapidly. Food, housing and medical costs are increasing rapidly and get discounted in the CPI.
If the true rate of inflation were admitted, then cost of living increases for social security, etc. would be more expensive, right?
If the true rate of inflation were admitted, then cost of living increases for social security, etc. would be more expensive, right?
If that were true, wouldn't it make more sense to sink money into funds targeting the food, real estate, and medical sectors instead of directly in real estate? After all, there is no reason that (residential) real estate prices track food and medical prices, and owning real estate outright is a horribly lumpy, illiquid, and undiversified investment.
> In the USA real inflation is much higher than our government admits
Care to explain?
Care to explain?
> The 31-year-old paralegal and her husband, an apprentice plumber, live in a two-bedroom, 1,200-square-foot (111-square-meter) apartment
They can't afford kids? I have lived in 83-square-meter apartment with my wife and two kids and a I had a friggin' separate home office room to work from home. It wasn't ideal (we have moved when the youngest turned 5, so we wanted to give them separate bedrooms), but it worked pretty well. Granted, it was in Norway, not US, but one can't help thinking that people just don't know how to use the space they have.
They can't afford kids? I have lived in 83-square-meter apartment with my wife and two kids and a I had a friggin' separate home office room to work from home. It wasn't ideal (we have moved when the youngest turned 5, so we wanted to give them separate bedrooms), but it worked pretty well. Granted, it was in Norway, not US, but one can't help thinking that people just don't know how to use the space they have.
Isn't the market telling that couple that they should move? I'm not being sarcastic at all.
If you can't afford to live in a city because you're priced out, and you want a different lifestyle as well (signalled by the stated desire for children), why wouldn't you move?
If you can't afford to live in a city because you're priced out, and you want a different lifestyle as well (signalled by the stated desire for children), why wouldn't you move?
It's the bigger home with a bit of green space that they can't afford. You might be able to squeeze in a kid or two anywhere, but as you said, it wouldn't be ideal. I'm sure they're considering the trade-offs.
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Canada is the fifth most popular country with Chinese property investors who is interested in purchasing condos for their children near universities. As a result, single-detached homes move further into luxury budget territory leaving first-time buyers with funds enough for a condo. Source https://tranio.com/canada,new_zealand,australia,united-kingd...
This situation can be turned around into a positive. The higher real estate boom could be used for a massive building boom to reduce unemployment and boost wages in the construction industry. I doubt every last bit of land has been used up, I don't think their density is anywhere near that of Hong Kong.
On a broader scale, I don't understand why (other than politics and legal) this massive multi nationwide demand for housing hasn't created opportunities in the construction industry: building out with existing technologies as well as incentives to produce more efficient methods and tech. Whatever happened to big problems leading to big opportunities? I mean we're talking about a multi-trillion dollar industry begging to be disrupted. I can't name a single unicorn company that's involved in this right now.
On a broader scale, I don't understand why (other than politics and legal) this massive multi nationwide demand for housing hasn't created opportunities in the construction industry: building out with existing technologies as well as incentives to produce more efficient methods and tech. Whatever happened to big problems leading to big opportunities? I mean we're talking about a multi-trillion dollar industry begging to be disrupted. I can't name a single unicorn company that's involved in this right now.
They make it look like they live in the homes to pay no capital gains tax. These homes generally aren't used as homes but investments. It takes a lot of work and luck to even rent a small apartment.
Source: I was just reno-victed I had a front row seat. My new apartment had been available for 30 minutes when I put the deposit down. It was pure luck that I found somewhere to live . It's not sustainable.
Source: I was just reno-victed I had a front row seat. My new apartment had been available for 30 minutes when I put the deposit down. It was pure luck that I found somewhere to live . It's not sustainable.
As mentioned in this article, in most cases, father and the business do not move, only part of the family. Apart for spending in property and luxury items, looks like wealthy migration are passive participants in the economy - not starting businesses employing people, or paying much tax.
I wonder, what are wealthy people more likely to do: (1) but a hand made leather bag from a local hipster workshop (which I would do) or (2) buy a 10x more expensive Louis Vuitton bag which was probably made in a giant factory in China? And generalize to other goods/services.
(1) at least supports local economy while (2) supports limited number of middle men.
I'm not saying (2) is bad, but if it's only wealthy people spending their money only on imported goods then it is not good.
(1) at least supports local economy while (2) supports limited number of middle men.
I'm not saying (2) is bad, but if it's only wealthy people spending their money only on imported goods then it is not good.
Depends how recently the wealthy person came into money.
Nouveau: head to the nearest Louis Vuitton or Goyard boutique and choose the bag with the most logos.
Old money: handmade artisan bag with no labels.
Nouveau: head to the nearest Louis Vuitton or Goyard boutique and choose the bag with the most logos.
Old money: handmade artisan bag with no labels.
This is happening in Australia too.
There are new apartment buildings going up by Chinese property developers aimed squarely at the growing Chinese population.
As a matter of fact, construction management university students are told to study Chinese language and culture to help them get jobs after uni
There are new apartment buildings going up by Chinese property developers aimed squarely at the growing Chinese population.
As a matter of fact, construction management university students are told to study Chinese language and culture to help them get jobs after uni
I'm from Canada (Whistler, north of Vancouver) and now live in Sydney, Australia.
Australia is nowhere near as bad as Canada. I'm amazed this article glanced over the issues Vancouver is really struggling with.
I believe the housing market in Sydney will come into trouble, but Canada is in for a very rude awakening.
I'll post another comment re:these serious issues canada faces.
Australia is nowhere near as bad as Canada. I'm amazed this article glanced over the issues Vancouver is really struggling with.
I believe the housing market in Sydney will come into trouble, but Canada is in for a very rude awakening.
I'll post another comment re:these serious issues canada faces.
Isn't pretty much the same thing happening in San Francisco, too? Alongside all the other drivers of increased home prices there. I think SF has shot up the ranks to become one of the most expensive cities in the world now, right?
The hole bay area is like that. Ive heard of like whole housing projects getting bought out by foreign investors out in Santa Clara, stable place to keep money I suppose.
You can work in SV and sort-of maybe afford a house in/around SF eventually. There is no industry in Vancouver except selling houses and cars to rich foreigners. A software developer in Vancouver earns less than US$60k.
This type of money (rich and super rich) has always been invested in the nice, stable democratic world, places where they can safely park their money, friends, families and educate their children. Places they are go to in case of an uprising or regime change..
The difference now is that this class of person is not just coming from the oil-baron gravy train and political kleptocracy. But is also coming from the booming business-class that is China
So many of those new rich who make it big certainly want their families and especially their children to the chance to live and be educated in a free and democratic society.
The difference now is that this class of person is not just coming from the oil-baron gravy train and political kleptocracy. But is also coming from the booming business-class that is China
So many of those new rich who make it big certainly want their families and especially their children to the chance to live and be educated in a free and democratic society.
A lot of commenters concerned about Bloomberg's potential editorial bias in running this piece, but it is interesting that it comes just a few days after they published "End of an Era as China’s Love Affair With U.S. Real Estate Fades"
[1] https://www.bloomberg.com/news/articles/2016-07-26/end-of-an...
[1] https://www.bloomberg.com/news/articles/2016-07-26/end-of-an...
Are there examples of very lightly regulated housing markets in developed countries? Does that really lead to bad things like people say? I know it can cause slums in poor countries. But would California or Vancouver somehow fail if they allowed unlimited high density construction and development in what's currently undeveloped land? Are there examples of that happening before?
My understanding is the Vancouver has light regulation in some aspects, hence the term Vancouverism: https://en.wikipedia.org/wiki/Vancouverism
> Surrey, a neighborhood about an hour’s drive
Or a city of 500,000. It is part of the GVRD.
Or a city of 500,000. It is part of the GVRD.
Yeah, this is working so well for the real estate market in New Zealand...
> The affordability measure is based on average household income of C$64,000 and a 25-year mortgage with a 25 percent downpayment.
So if most houses are a million you only need 4 years salary for the downpayment.
Ouch.
So if most houses are a million you only need 4 years salary for the downpayment.
Ouch.
There are some simple fixes to people's issues.
1) Charge more for everything
2) If you cannot get a good deal, then leave.
3) Stop playing games where you sacrifice yourself trying to compete against people who sacrifice very little but have much. These billionaires are flippant about these things because it cost them nothing (personally) to get the wealth. When you make $64M a year, a $4M condo is nothing. But when a paralegal and a plumber scrimp and save to try and compete, it will cost them everything. Better to just move to another city and not play the game. Or charge the billionaire $400 an hour for plumbing.
Great, tell my relatives to say goodbye to their elderly parents they support. Also tell them to leave their clients behind. Oh! And hurt their school-age children socially by moving them to a different region.
Not all people have the same mobility that you do. This is a situation that many people need to stand and address, not vote with their feet.
Not all people have the same mobility that you do. This is a situation that many people need to stand and address, not vote with their feet.
The fact of the matter is that you/they cannot afford to keep things going, and the only way the market will correct is when people refuse to sacrifice more.
Your family loves you and based on that I can securely tell you that if you have to leave they will continue to love you. And if they truly are dependent on your support, they will follow.
Assuming you're not literally 100% broke (like $0 in the bank, $0 credit) you have the ability to travel somewhere close to make a less expensive life. Maybe Kamloops or more central like prince George?
Your family loves you and based on that I can securely tell you that if you have to leave they will continue to love you. And if they truly are dependent on your support, they will follow.
Assuming you're not literally 100% broke (like $0 in the bank, $0 credit) you have the ability to travel somewhere close to make a less expensive life. Maybe Kamloops or more central like prince George?
The governments of most western countries have betrayed their citizens with globalisation and loose regulation. Freedom to transfer money across borders, access to markets with little responsibility or accountability.
Some make a fortune during the turbulence, others suffer poverty or virtual slavery. The peaks become higher and the troughs lower.
I have trouble believing that this is the world foreseen by the original proponents of neoliberalism. Freedom is a wonderful thing, but not when it facilitates and entrenches unfairness.
My grandfather, who lived through a similar period of financial disparity in the 1930s refers to it as "wild capitalism". No need for a crystal ball to predict what may happen next.
Some make a fortune during the turbulence, others suffer poverty or virtual slavery. The peaks become higher and the troughs lower.
I have trouble believing that this is the world foreseen by the original proponents of neoliberalism. Freedom is a wonderful thing, but not when it facilitates and entrenches unfairness.
My grandfather, who lived through a similar period of financial disparity in the 1930s refers to it as "wild capitalism". No need for a crystal ball to predict what may happen next.
I believe that Vancouver has potential to be THE tech hub in Canada. Unfortunately, wages are very low compared to the cost of housing, and so the cost of living is super high. Combine that with extremely low vacancy rates, and it is very hard to attract talent from out of town. In fact, many young, smart and talented people just head south to Seattle or the valley because the wages are so much higher, and the economics of staying in Vancouver just don't make sense.
The other industries that could be thriving and building up a real economy in city are some of the biggest casualties in this whole mess. Unfortunately, all of the politicians from municipal to provincial are in bed with the real estate industry, so nothing truly effective and meaningful will be done.