“Just had dinner with a close friend. He is not realtor. But he helps facilitate rich chinese buyers to locate investment opportunities in lower mainland. He said he just helped a buyer from China bought the remaining 20 townhouses of a project located at 208 st and 82 Ave in Langley.
While this is not the first time we hear someone from China spend the mega bucks on houses here, a few comments my friend made were pretty interesting.
1) the buyer never saw the site. He is in China but his wife and children will come soon. which means they already got the immigration paper. He sent his assistant who used to live in Burnaby to come back to close the deal
2) according to the assistant, people like his boss considers houses liquid investment instead of real assets
3) the buyer is not looking forward to flip, he believes price eventually will go up
4) seems the developer provides the buyer rental guarantee for the 20 units
5) the assistant also helps his boss to close 2 deals in West Van
6) the buyer is also looking for opportunities here for property with business, like hotels, or retirement care facilities.”
- unicas, at RE Talks, 10 Sep 2011 7:36pm
When prices start dropping, this kind of demand will turn into supply, perhaps precipitously.
RE is not a liquid investment, it can turn ‘illiquid’ in an instant.
- vreaa
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Well, as it happens… Nemesis is reliably (if anecdotally) informed that the light industrial LakeCity development “LakeCityJunction” (as previously featured in PostCardsFromTheBlastRadius #11 – see frame 18, Leasing Agents DaviesHall/ReMaxCommercial) was similarly purchased prior to completion, in toto and sight unseen, by a ‘buy n’ hold’ offshore asian investor.
[NoteToEd: a link here would be OhSoNice... tinyURL ain't workin' at the moment or I'd a spared you the bother]
[done! -ed.]
“the buyer is not looking forward to flip, he believes price eventually will go up” – so he is looking to eventually sell at a higher price, or to borrow against equity as it goes up in value. Of course, the obvious question is “what if it doesn’t go up, or drops in value?” Will be hold or sell? Will he double-down on his bet and buy additional Vancouver units if the price drops? Doubtful.
“seems the developer provides the buyer rental guarantee for the 20 units” – uh oh. If I had a vested interest in selling some real estate, I can guarantee that I’ll be able to provide you with a tenant at a good monthly rent. Gangster? Sure, it’s not my place. Grow op? Don’t ask, don’t tell, it’s not my place. Meth lab? Same deal. Morons who let their dog destroy the place (or insert your own ridiculous tenant situation here), and will suddenly take off, leaving a damaged apartment, no last month’s rent, and a couple of months of emptiness? Sure, by the time you’re a problem, you’re not my problem.
Good luck to this buyer!
And how exactly did this buyer make his money? Most countries would be asking. But not Canada of course.
This is a classic ‘naked official’ (google it) scenerio.
“people like his boss considers houses liquid investment instead of real assets”
Ah so houses are bank accounts with a free call option. Really… there is nothing that could possibly go wrong. Nothing to see here, move along.
Langley definitely looks like it has a bright future. I guess this is a chance to get in while it’s affordable. Opportunity knocks.
LOL you zany troll you
Oh! Good catch, I had my bulging wallet half out of my pocket there. Yes, Langley, the culture abyss of the South Fraser. Where else could I ever find that big box lifestyle at those prices!
By the way folks, for those of you who haven’t yet realized (or are sensible enough not to even be bothered about these things):
Rollie = Rusty
(yawn)
ah – Rollie is an interesting choice of name. But it makes me think of a tootsie roll candy.
In terms of this purchase — I say huzzah! more townhouse rental units and they are in a new complex. Good to have them on the rental market.
Housing is definitely not a liquid asset for sure, not sure what this dude is thinking exactly. But I would be shocked if he is not worth hundreds of millions of dollars so these 20 houses might make up a few percentage of his assets at most. The issue at play is that the top 1% of chinese represents a 130 million people group and they all have a ton of money. That is 4 times the size of Canada, and when most of them want to move outside of China because of various political, environmental reasons, they can cause havoc for most places in the world that is desirable to live such as ourselves, Australia, etc. Our government doesn’t really have policy to deal with this type of situation because frankly, it has never come up before. Chinese inflation is around 9%, growth is probably even higher among the highest income earners, so this top 1%’s assets are just expanding quickly and they need to move it out of China fast.
The one thing that I don’t understand is why is this guy buying in Langley, it is not a usual area for Chinese buyers in Vancouver. But I guess he has never seen the site and probably has a anywhere will do for now atttitude which might make sense. I bet his wife and kid are going to live in West Van and go to the expensive private school up there. Again, in my earlier post this is the one consistent thing that I find with Vancouver. It seems that unlike other cities where these guys invest their money, the one place that they like to send their wife and kids is here. So he could invest in say Seattle, etc, but their family comes here. I think it has more to do with easy cultural integration (by that I mean you can keep on speaking chinese and not bother learning english) and the perceived safety factor.
“But I would be shocked if he is not worth hundreds of millions of dollars so these 20 houses might make up a few percentage of his assets at most.”
–
Therein may lie a myth; I don’t think we can assume those numbers.
It’d be wonderful to actually know the facts in these cases.
Is he using Canadian financing to do this deal?
I don’t know the deal and I don’t know the guy. but let me tell you, it is pretty safe to assume these number.
The top 1% is 13 million not 130 million and are not wealthy enough to buy foreign property. There are less than a million chinese (.1%) with personal wealth of $1.5 million and only 60,000 with personal wealth more than $15 million.
http://www.upi.com/Business_News/2011/04/12/Number-of-Chinese-millionaires-nears-1M/UPI-91891302666877/
Troll. Don’t throw facts in the way of a good argument.
oops, my bad, my math must suck today. Anyhow, 13 million is still a large number. I wouldn’t trust those numbers to be honest, the only way you can get those numbers are from some sort of chinese governmental organization who frankly don’t have a clue as to what is going on with the real chinese market or choose to emit numbers off of a sheet. Think about it this way, if you had a ton of money, you would want to not let the communist government know about it. And if they do know, it’s very easy to make them turn a blind eye by erasing a few zeros in the books.
To Jesse’s point, I think the Chinese would want to move their money out of china, that is at least some point of this exercise. The point is not to keep the money in a chinese bank account not matter how high the interest as the government can give you a bogus charge and take all your money. If I were them, I would want to move all my cash out of China, who knows one day I might be busted with bribery and all my assets get confiscated. Now if you are saying they are keeping it in some foreign account and then buying houses in Vancouver that might be true. The other thing is, how do they get Canadian financing? They obviously don’t want to report foreign income, so if they don’t do that, which bank will lend them money?
Why do I get an image of a locust devouring everything before it.
We are a complete patsy. Could you go and buy this many homes in China? No. Could HE? no!
so why do we allow people withj access to basically free money, to do this.
Funny guy
Actually, I think he could, so could you and me. But chinese land are leasehold only, you don’t have title. So it’s like buying ubc apartments, you lose it in 99 years or something like that.
so this Chinese investor is borrowing money to buy these 20-50 homes? lol
“Chinese investor is borrowing money”
OK follow this through. Rich Chinese Investor has $5MM sitting in a Chinese account earning 5% interest. He looks at Canadian VRMs and does the math: he can finance the VRMs using deposit interest on his Chinese bank account. He can even keep the units vacant if he wants and still pay the expenses.
People finance for all sorts of batsh!t crazy reasons, and not always because they lack the cash. THIS GUY CAN KEEP THESE UNITS VACANT, EVEN WITH A SUBSTANTIAL MORTGAGE, AND HE’S NOT THE ONLY ONE WHO HAS FIGURED THIS OUT. These are strange times indeed.
1. Exporting family.
2. Washing money.
3. Carry trade.
4. Inflation hedge.
…
99. Good Chinese restaurants.
100. Cap rate.
“Inflation hedge.”
The funny thing is, an inflation hedge is more a negative interest rate hedge. Someone should tell asset bugs that Canadian wages aren’t increasing all that much.
Funny stuff, blammo.
Bingo! I can’t say more [regrettably], Jesse… but that is, indeed, what’s happening.
‘Chalk it up’ to one of the ‘informational’/anecdotal advantages of having a VERY suave TaxAccountant.
I neglected to add (hey! like, it’s BBQ time, ya know?)… that ‘Nem’ is merely one of his two ‘obligatory charity/virtual ProBono’ clients.
Something to do with Feast/Famine and/or forward/backward averaging.
[Any CRA auditors with ISP tracking privileges who might be reading this are humbly requested to exercise the utmost in discretion/mercy.]
so Chinese investors are money laundering but they’re borrowing money to do it ??? This discussion gets crazier by the second.
If someone knows firsthand why Chinese are investing in Canada please fess up; all I’ve heard so far are far fetched and paranoid assumptions.
“why Chinese are investing in Canada ”
Why, or how? This is about “how”, pardon if I refrain from explaining the technical difference. The fact is many “rich Asians” are financing the deals because they can do a carry trade, as blammo listed, and I know a couple of people who are doing this. Choose to believe me or not. I don’t care.
Canadians do it too. To find out more send $9.95 to my PO box C/O Mr. Smith, and I’ll mail you the secret formula.
Chinese are investing in Canada lately because China refuses to float their currency. Chinese are also investing in real estate in other countries but it’s not as obvious because cities like NYC are large.
When China decides to float the Yuan I expect this will hurt the Vancouver housing market.
At some point the US will name China as a currency manipulator. But I expect China will run into trouble before that point because holding down the Yuan is is causing massive inflation in China and it’s only going to get worse. At some point if China doesn’t float it she will have major political problems with the populace.
off-topic : just curious, how do all these chinese wives beat their loneliness ?
Go to Richmond and you’ll find them. For those wives who tend to know a bit of English, they’ll go to downtown and blow a lot of money away at Holt Renfrew. For those who don’t know English, they prefer Richmond where they can get around speaking Chinese mostly.
“Buying things at Holt Renfrew” was not the answer YVR2 (clearly a cad) implied.
//..anyway, this sub-sub-thread of topic closed (family blog).
I am so fed up! WHEN IS THE CANADIAN OR BRITISH COLUMBIAN GOVERNMENT GOING TO DO SOMETHING ABOUT WHAT’S HAPPENING IN VANCOUVER? EVERY other society I know of has rules about foreign investing/ownership that are in place to try to protect local citizens. Vancouver as far as I can tell has NONE. There are vacant houses all over the city owned by overseas investors. Tried to rent recently? Been able to find anything secure? One house after another is owned by an overseas landlord who’s ready to sell at anytime or is simply letting a property go to rack and ruin while he/she decides just when to sell. (By the way, we’re attractive renters — a professional couple, nonsmoking, no children, no pets, excellent references — but none of it matters, there’s so little available.) Does Vancouver realize that it’s getting to the point where no one will want to live here or move here?
Thanks VREAA, if it weren’t for you and the commenters, we’d be convinced we lived somewhere completely insane. I just don’t get why the issue of housing is so important for so many, and so many are so enraged about it, and the press and the government do so little about these issues.
By the way, this isn’t a racial issue for me, it’s one of economic injustice. I’ve taught Chinese students for years. Just recently one of the families I know has been through hell trying to rent here too.
“Thanks VREAA, if it weren’t for you and the commenters, we’d be convinced we lived somewhere completely insane.”
Well, y’all do live somewhere completely insane, at least in terms of housing prices vs. the economic fundamentals.
It’s just my guess, but if you can hold on for two or three years, I think you’ll find things change for the better.
another funny guy
“we’re attractive renters — a professional couple, nonsmoking, no children, no pets, excellent references”
pls list your requirements and budget and I will find you one.
you can blame the City of Vancouver for the lack of family housing. City Hall continually approve project with zero appropriate family units. The municipal gov’t is basically anti-family.
You must be new here. Don’t worry, it’s OK for first time posters to expect that the government and media ought to “do something about it”.
Sounds lke you are finally starting to figure out what’s going on. Stay in Vancouver if you really want to live life as a street peasant in the 2nd world. Foreign investors/speculators care about one thing – making money and if that means leaving their real estate investments empty and forcing rents through the roof – so be it. The Chinese are buying up all desirable coastal properties around the world and Canada will be the last place to do something about it. Even the Chinese government has put restrictions on Chinese real estate investors/speculators because they’re holding roughly 200,000 empty properties off the market which has helped them force up real estate prices. Even the Chinese government can’t control their super rich anymore than they can control corruption within their own ranks.
Furthermore, the Chinese government is encouraging these investors to buy offshore to hopefully help alleviate the problem of affordable housing in China. This is state capitalism gone AWOL and you are caught on the front lines unless you are a multi-millionaire. Get out before the only option you have is poverty. Every other major Canadian city is becoming less affordable while you contemplate your navel in “lotus land”.
Dont’ believe the high level stats you see for certain housing markets either – even in markets where average prices are down, it’s increasingly more difficult / unaffordable for move up buyers. For instance, the spread between starter homes in less desirable areas and the same in more desirable areas keeps getting wider and wider. This is a global phenomenon whereby the rich are getting richer and the middle class is getting poorer. At the same time, income/wealth inequality within the middle class ranks is growing rapidly and will continue to do so. You have to pick your battles wisely and staying in Vancouver is certain suicide. It doesn’t matter how good your working salary is when you are competing for real estate ownership with investors/speculators who have many millions of dollars.
Remember, Soros broke the Bank of England 20 years ago and this kind of high-powered money is now buying Vancouver – the only immediate local winners are those who own and eventually sell out to go elsewhere. Eventual winners will be non-owners who see that facts and leave before they are unable to afford even the most basic accomadation elsewhere. Sorry but that’s just life.
Thanks alice-esl for the offer, that’s very kind of you! After several months of searching we think we’ll be signing a lease very soon, but we’ll see how things go. The family I mentioned in my first post above who’d had a hellish time was from Taiwan — mother plus four kids — and they’ve had to move a number of times in several years, had a landlady (overseas) who wouldn’t even turn on the heat when it went off, etc. etc. — I mean, it’s incredible. “The best place on earth”? Who writes that bumpf? Not someone looking for a house (unless their resources are bottomless) or a rental. And I meant to say above that I don’t know why IF housing is such a crucial issue nobody who seems to have any real power does anything about the fact Vancouver is simply being sold off.
Yank, thanks for the encouraging words. You’re right, we do live somewhere insane. But I don’t see things improving. I hope you’re right that they will.
Finally, Israel took it to the streets recently, to protest among other things unaffordable housing. Come on Vancouver! DO SOMETHING!
Thanks again VREAA for being a forum for indignation. Why not send every single post you’ve ever gotten here from frustrated Vancouverites directly to:
Vancouver City Hall
The BC Premier
Stephen Harper
“The family I mentioned in my first post above who’d had a hellish time was from Taiwan — mother plus four kids — and they’ve had to move a number of times in several years, had a landlady (overseas) who wouldn’t even turn on the heat when it went off, etc. etc. — ”
your point?
..”nobody who seems to have any real power does anything about the fact Vancouver is simply being sold off”…
–
Well, firstly, we’re not convinced it’s really being sold off. In a way, perhaps, but far more important is the massive speculative mania rolling through our hills. When this bubble bursts, lots of properties will have to be sold at lower prices. After the dust settles (perhaps before the end of this decade?) we’ll know who really owns the place. Perhaps, then, we’ll be able to say whether it’s been ‘sold off’ (I take it you mean to foreign holders).
With regard to why nobody seems to “do anything” about all this: You must realize that the vast majority of those with “any real power” have had a personal interest in steadily increasing prices: either because they are in a business related to RE (remember that 52% of Christy Clark’s leadership campaign funds came from RE sources), or by virtue of their own RE holdings, or perhaps simply because they were happy to see the price of their house treble (thus assuring them of a sound retirement (or so they think)).
Only recently have a few public figures spoken out: Peter Ladner (because his four children in their 20s and 30s don’t own property and he believes they are ‘priced out’) and, more recently, and somewhat hesitantly, remarks about the undesirability of high prices being made by Mayor Gregor Robertson.
We continue to believe that this bubble will not be legislated away, simply because vested interests in the Municipal and Provincial government structure won’t move to jeopardize their own positions, even if such a move may ultimately be for the ‘greater good’. And the vast majority of citizens would never vote the bubble away, even if given the opportunity.
So, it will expand until it can no more, and then it’ll implode.
And then, nothing that the local governments do will be able to stop the collapse of prices (50%-off, minimum).
What about online petitions or any kind of surveys involving large amount of people?(I realize that costs money and only a non profit organization with strong motivation would be able to do it though)
Or maybe articles in foreign newspapers?
I don’t know.It should be a way to make provincial or municipal government sensitive to this.
It should be public and all over ,like a VREAA multiplied by one thousand times.
Vancouver did take it to the streets recently, over a hockey game. Reassess your expectations of vox populi in the GVRD and live a happier life.
So when the SHTF – if it ever does – and valuations decline, most of these overseas investors will just default on their mortgages and leave the Canadian bank who gave them the VRM holding the bag?
If not, ah whatever, Just let them come. I am through with indignation. Just dump the money here; some of it may trickle down. Renting’s not so bad. If it gets bad enough all these vacant properties with overseas owners will make for nice little squats.
It could be worse; the monied interlopers could be from an aggressive empire building superpower that tried to invade and take over your country just 60 years ago:
http://prian.eu/pub/18491.html
http://www.rakennuslehti.fi/uutiset/talous/25767.html
At least here we know the worst that can happen is that we might not make it onto the skytrain once in a while.
Alice-ESL is more like Alice-EFL. Try harder with your Engrish.
坐井观天
A while back, there was a post wondering why the new comers (aka Chinese) are not socialize with the new neighbors. Well, the perception in my community is that “If you don’t speak good English, they (aka White) don’t want to talk you, ..”
“Alice-ESL is more like Alice-EFL. Try harder with your English”
hahaha! you said “are not socialize”. Genius! I am so sorry for doubting you. Please, apologises accept, genuine Chinese person! LOL! Trollie is a bad ethnic puppet Troll.
What is being “sold off” would be future generations, people’s children/future children of Vancouver. ( I think that’s what she means?)
I have seen some nice character homes being sold off and torn down to build large homes on lots that can barely hold them. I did’nt realize that renting is that difficult in Vancouver either.
Hi, what I meant by “sold off” is “being sold off to anyone with the money, from anywhere, including to people who will not ever live here, without any regard to/for people who have to live here for their work or their families or both.” Many other cities in other countries limit foreign investment in real estate/foreign ownership so that permanent denizens of those cities are not priced out.
Vancouver is being both sold off and torn down. Many smaller and more affordable (and many perfectly decent) houses are being destroyed.
ALice-ESL — my point about the family from Taiwan is that everyone who wants to rent in Vancouver is vulnerable, not just those of us who have Mandarin or Cantonese-speaking landlords and don’t ourselves know Mandarin or Cantonese. (I’ve started learning Mandarin. And I can definitely believe it when you say that Mandarin and Cantonese speakers here worry that if they don’t speak good English, whites won’t want to talk to them. That’s one reason I wanted to learn some Mandarin. Vancouver is actually an extremely racially polarized city, underneath all the politeness, and I think it’s very sad there isn’t more communication between various ethnicities.
Finally, VREAA, much as I have enjoyed things on this website and learned from them: as to all the arguments why nothing can/should be done — well, you couldn’t have said anything that would disillusion me more. All this anger, and nothing can be done? Come on, how defeatist! Nothing GETS done because people think nothing CAN be done! It’s a self-fulfilling prophecy. Why be so passive, why be so hopeless? Aren’t those reasons why things have come to such a pretty pass already? Wherever people are gathered in Vancouver, they talk about the problems with real estate, and since I’m involved in both Caucasian and Asian communities, I hear things from both sides. I DO believe that rampant speculation by investors overseas FROM ANYWHERE should be curtailed as it is in other cities, and I don’t know why anyone would lie down and just take what’s going on.
Okay, tell us what you think folks should do.
Don’t retort that they “should do something”…. Tell us specifically what you think they should do.
–
Remember that we are NOT being ‘defeatist’; we are of the opinion that, to a large extent, the market will “look after itself”.
What could you have ‘done’ about the tech mania in 1999, the US housing bubble in 2006, the tulip mania, etc etc..?
Sorry, what I wrote below should have been entered as a Reply to your queries above, VREEA, so I’m posting it in here. Forgive the ire, but I think the situation is long past due for more!
VREAA: Oh, there were lots of things to be done about what’s happened in the U.S., and being a dual citizen I did some things! I wasn’t aware of the tech bubble till it burst, and was politically involved with other causes for a few years after that time — but I did do something about Wall Street malfeasance this past few years when it became more and more obvious. I fed information to a New York Times reporter about certain scandalous things I’d encountered when dealing with Bank of America. I wrote an op-ed piece about the banking crisis. I wrote to the head of the committee that was deciding whether or not to bail out bank executives (I said prosecute them!). I wrote to my former Congressman and Senator. I wrote to the White House. I began a process of ceasing to deal with (boycotting) financial institutions I felt had played a scurrilous role.
Now the tulip mania was about 400 years before my time, no?, so I can’t take any responsibility for sitting on the sidelines there.
As for what to DO here in Vancouver, I already made specific suggestions, but I’ll add more; they’re all kind of obvious places to start:
1). Write the Mayor, write the Premier, write the Prime Minister about unaffordable housing in Vancouver and about protecting local denizens from rampant speculation. Writing letters to politicians is one thing I do, I also phone their offices.
2). Join a neighbourhood committee, or start a new one. I’ve been on one of the Vancouver Cityplan Vision Implementation Committees. City Hall also tried to tell some of those committees that “there’s nothing you can do,” which only makes me want to do more.
3). Commit some Henry David Thoreau or Gandhi or Martin Luther King civil-disobedience! Organize a boycott, a sit-in, a march! I’ve made my voice heard in a protest rally at City Hall about housing issues, for example. The more people protest, the better. You say that vested interests here have a vested interest in nothing changing. Well, if those vested interests are going to lose the next election, maybe they’ll listen?
4). Tell Heritage Vancouver you’re sick of seeing older, smaller houses that are still livable (and might be affordable if they continue to exist and there IS a crash) destroyed.
5). Someone in a previous post mentioned squatting in one of the vacant mansions around here. Hey, why not? More civil disobedience. Squat and call up a newspaper to come take your picture. Preferably a newspaper from out of town, as I see very little coverage of housing unaffordability in the newspapers of record in this town.
6). Which brings me to the next point: write the newspapers! There are columnists and reporters at the Sun who deal with housing issues; Don Cayo is one recent example. Write him! Tell him to read the VREEA!
WHy on earth WOULDN’T people call their MLAs etc. to ask that the exact same restrictions that exist on foreign investment elsewhere be put in place here? In New York City apparently you can’t flip a property without paying huge taxes on it. Same as in Miami. In Sydney foreign ownership is very tightly restricted. Julian Lee: Foreign investors are prohibited IN CHINA, among other countries, from owning property before they’ve lived there 5 years.
Like I said, the ideas are just a start. I mean, is there no tradition of activism in Vancouver? Didn’t people successfully prevent the highway from cutting through downtown?
Peter Ladner has written about all this in recent (summer) columns in
his magazine, Business in Vancouver.
More info. about landlords here: In our search, we looked at dozens of places. The number of local landlords we met with whom we could communicate well in English, our native language? Two. We were looking to rent on the West Side, and the majority of owners we encountered were from Mainland China (many still lived there) and they were using the houses/condos (many at UBC) they had bought as “holding properties,” eventual sell date uncertain. In our search we ran into other potential renters and they were having the same experiences. This is part of what I meant when I said Vancouver is being “sold off” to
foreign investors who don’t necessarily have any strong connection to the community here and may frankly for that reason not make ideal landlords for people who have to live and work here.
VREAA: I do appreciate all the information you’ve gathered and your wisdom about various things in the whole picture. The information provided could be a catalyst of us who would rather take a Jericho approach. I myself don’t want to live life as some kind of surrender monkey and I hope other readers of this blog may be inspired to action too.
Thanks again, and forgive my impatience.
On top of leaders not understanding the issues, the newspaper mandate for articles to be understood by a grade 4-6 reading comprehension result in no level of detail or articulation to delve into any real issues at hand.
Well you can write you MP, MLA, and council candidates asking what their policies are on providing stable, affordable, family-oriented dwellings in your constituency.
It is a complex problem, unfortunately most political leaders don’t really understand the problem, in part because the rising tide has floated their voters’ boats. The biggest tell is them claiming it’s an unaffordable city to live in, when they really mean unaffordable to own in. Once you’re on the wrong train every stop is the wrong one.
I totally agree with vreaa here. If you believe that there is a speculative mania going on, then you should just let it play itself out. There is no need for regulation. In the end, in any speculation bubbles, those who stay on the sidelines will be the winners when the whole thing crashes down. It is free market economics, if you buy in this climate, then you accept the risks of a big crash. If you don’t buy, then you also accept the risk of being priced out of the market, all is fair in my opinion.
Btw, I am unsure what kind of legislation other cities have. I don’t believe that china has ownership restrictions when it comes to non-mortgaged properties. So you could in theory buy 20 properties as long as non of it is mortgaged. However, chinese property are lease holds, not free title, so it is simply a lease that you are getting which will expire at a certain time.
As much as I agree that foreign capital inflows are a symptom rather than the cause, Canada stands stark amongst its Pacific peers when it comes to foreign ownership and income declaration enforcement.
The gov’t's policy has been to let the bubble thing pop on its own, at least in public, but there are hints they aren’t oblivious to Vancouver and Toronto attracting offshore money and towing along locals who should know better. I think they are waiting on Europe to play out this fall and will have additional policy announcements in the early new year regarding credit growth and, potentially, capital flow restrictions and foreign income verification, though this would be a brave move IMO.
Based on recent sales and for-sale inventory growth I don’t think there is a major rush. And I think Carney has figured out that China’s wealth exports are as temporary as all other investment booms in history, though it may go on for some years yet, hence the impetus for temporary capital curbs.
VREAA: Oh, there were lots of things to be done about what’s happened in the U.S., and being a dual citizen I did some things! I wasn’t aware of the tech bubble till it burst, and was politically involved with other causes for a few years after that time — but I did do something about Wall Street malfeasance this past few years when it became more and more obvious. I fed information to a New York Times reporter about certain scandalous things I’d encountered when dealing with Bank of America. I wrote an op-ed piece about the banking crisis. I wrote to the head of the committee that was deciding whether or not to bail out bank executives (I said prosecute them!). I wrote to my former Congressman and Senator. I wrote to the White House. I began a process of ceasing to deal with (boycotting) financial institutions I felt had played a scurrilous role.
Now the tulip mania was about 400 years before my time, no?, so I can’t take any responsibility for sitting on the sidelines there.
As for what to DO here in Vancouver, I already made specific suggestions, but I’ll add more; they’re all kind of obvious places to start:
1). Write the Mayor, write the Premier, write the Prime Minister about unaffordable housing in Vancouver and about protecting local denizens from rampant speculation. Writing letters to politicians is one thing I do, I also phone their offices.
2). Join a neighbourhood committee, or start a new one. I’ve been on one of the Vancouver Cityplan Vision Implementation Committees. City Hall also tried to tell some of those committees that “there’s nothing you can do,” which only makes me want to do more.
3). Commit some Henry David Thoreau or Gandhi or Martin Luther King civil-disobedience! Organize a boycott, a sit-in, a march! I’ve made my voice heard in a protest rally at City Hall about housing issues, for example. The more people protest, the better. You say that vested interests here have a vested interest in nothing changing. Well, if those vested interests are going to lose the next election, maybe they’ll listen?
4). Tell Heritage Vancouver you’re sick of seeing older, smaller houses that are still livable (and might be affordable if they continue to exist and there IS a crash) destroyed.
5). Someone in a previous post mentioned squatting in one of the vacant mansions around here. Hey, why not? More civil disobedience. Squat and call up a newspaper to come take your picture. Preferably a newspaper from out of town, as I see very little coverage of housing unaffordability in the newspapers of record in this town.
6). Which brings me to the next point: write the newspapers! There are columnists and reporters at the Sun who deal with housing issues; Don Cayo is one recent example. Write him! Tell him to read the VREEA!
WHy on earth WOULDN’T people call their MLAs etc. to ask that the exact same restrictions that exist on foreign investment elsewhere be put in place here? In New York City apparently you can’t flip a property without paying huge taxes on it. Same as in Miami. In Sydney foreign ownership is very tightly restricted. Julian Lee: Foreign investors are prohibited IN CHINA, among other countries, from owning property before they’ve lived there 5 years.
Like I said, the ideas are just a start. I mean, is there no tradition of activism in Vancouver? Didn’t people successfully prevent the highway from cutting through downtown?
Peter Ladner has written about all this in recent (summer) columns in
his magazine, Business in Vancouver.
More info. about landlords here: In our search, we looked at dozens of places. The number of local landlords we met with whom we could communicate well in English, our native language? Two. We were looking to rent on the West Side, and the majority of owners we encountered were from Mainland China (many still lived there) and they were using the houses/condos (many at UBC) they had bought as “holding properties,” eventual sell date uncertain. In our search we ran into other potential renters and they were having the same experiences. This is part of what I meant when I said Vancouver is being “sold off” to
foreign investors who don’t necessarily have any strong connection to the community here and may frankly for that reason not make ideal landlords for people who have to live and work here.
VREAA: I do appreciate all the information you’ve gathered and your wisdom about various things in the whole picture. The information provided could be a catalyst of us who would rather take a Jericho approach. I myself don’t want to live life as some kind of surrender monkey and I hope other readers of this blog may be inspired to action too.
Thanks again, and forgive my impatience.
So… You think that there needs to be higher taxes on speculation , and foreign ownership restrictions or…? Do you understand what could reasonably be done? Just wondering, but saying “something” needs to be done versus offering concrete suggestions on what to do are different and one wholly more difficult than the other.
But I like the attitude!
I’ve made six concrete suggestions above about how any citizen can make his/her voice heard about what so many Vancouverites talk about these days — unaffordable housing. I don’t know much about taxes and foreign-ownership-restriction details, but yes — if it works elsewhere, why not higher taxes on speculation here and why not foreign-ownership restrictions? Ask your MLAs and MPs about this, ask Stephen Harper about it (you can email him very easily!), point out that Vancouver seems to stand alone in not requiring any of these things and has created a terrible housing crisis for people whose jobs require them to be here. No I don’t understand necessarily what could “reasonably” be done here, but if so many other countries have done it, why in God’s name can’t Canada?? I mean, does Italy say to would-be foreign owners, “Come on in and tear Turin down, we need the money!” Isn’t that what Vancouver is saying? And all I’m saying is, if you don’t like the situation, write to politicians about it! Write to whoever sets tax policy in Canada!
Thanks for liking my attitude.
I do find it so odd — it’s happened to me before — that when I speak passionately about doing something about anything here, there are people whose first response is “Wait a minute!” or “Calm down!” or “Don’t move too fast!” It’s too bad no one moved fast enough to ensure that Vancouver remained affordable, because not only may there be a big crash comin’ (thanks VREAA for outlining that scenario), people are going to leave or not come here in the first place. Peter Ladner had a very funny anecdote in one of his columns I believe how recently a pair of surgeons decided not to move here because housing is so unaffordable. A PAIR OF SURGEONS! Think About It, as UBC’s motto used to be.
Vesta -> Sound and Fury?
I, too, like your energy; it’d be good if somehow it bore fruit.
For the record, we’ve done a bit beyond the blog: written the MOF regarding the need for tighter mortgage regulations, spoken to Canadian and US journalists (always initiated by the other party, though), and a few other things as an individual (rather than as vreaa: the anonymity completely devalues the weight of the opinion in some quarters).
Do not mistaken our apparent inactivity for complacency or resignation.
We care a lot about the effect of the spec.mania ‘pox’ on Vancouver, and we would be advocates of any action that we genuinely believed had a chance of speeding its ‘cure’.
You list things that can be ‘done’.
1, 2, 3, & 5 are all essentially/largely methods of calling for ‘affordable housing’… well, join the choir (small, but a choir nonetheless). Your letter will get a polite reply and then be buried. Your civil disobedience will be given a parking ticket and its spirit ignored (BTW, you may well be at risk of catching some of the built up post-riot flak). Regardless, it’ll all be lumped in as another voice calling for ‘affordable housing’. There are numerous impotent ‘programs’ trying to address the problem of ‘affordable housing’, your pleas will be grouped with those efforts. They are all attempting to paper over cracks. NONE of those initiatives involve the most important aspect of the beginning of a cure… a price crash of 50%-66%.
You may talk to everybody, from Harper down, as persuasively as you can; you are NEVER going to get anybody to take steps that speed the coming crash. You must realize that well over 70% of voters (perhaps 80%!) are RE owners; no policy maker in any elected position will move against such a strong constituency. This is what happens in bubbles; almost everybody is co-opted. This phenomenon is part of the beast.
If you’re going to call for anything, call for a crash in housing prices.
If you do, you’ll be received as if you were throwing bricks at windows.
Remember that the entire economy, the whole myth of bullet-proof Canada, will be at risk when the RE engine stalls.
Writing to newspapers is possibly a good idea. The Sun did indeed publish Gord Goble’s fine piece on renting… but, even then, that was likely largely only noted by those of us who already agreed with Gord. (Do we have any evidence that it was read widely, that it changed any minds?) Local MSM is definitely not going to publish an op-ed piece predicting a crash. (I’d love to be proven wrong on that).
Writing to Federal departments about the possible need for restrictions on off-shore speculators using Canadian housing as a “poker-chip” is also possibly useful. But we suspect (as jesse suggests) that they are already aware of this concern and are assessing when and how to act (if at all). Could more letters sway them to act? Possibly, but probably not. They definitely wouldn’t be acting for fear of not being re-elected – if anything the majority of voters will want prices shored up; regardless of source of funds.
Essentially, we agree with your broad sentiment but we differ with you regarding your assessment of action that may be useful. We see giant market forces that will inevitably play themselves out; regardless of whatever we try to ‘do’; regardless of what policy makers may do or say.
Thanks for your thoughts; Keep us informed of any letters you may write or action you may initiate.
—
[PS: We have long documented people avoiding (either leaving or not coming here in the first place) Vancouver; see the 'Avoiding Vancouver' sidebar category (over 200 stories; Ladner's two surgeons included).]
[PPS: The crash may have already started.]
@Vesta, my point here is that complaining about affordability lacks context. In the City’s eyes “affordability” is, from what I can tell, concentrated on lower and lower middle class households, sometimes families, and concentrating on providing “affordable” housing in the way of developer-funded social housing projects and rezonings for improved access to adequate housing especially in the DTES.
What I do not see is a broader dialogue surrounding affordability for ownership of the middle class, which has had to take to debt accumulation, speculation, family financing, and subletting their accommodations in the name of securing stable housing within the City itself, often acquiescing into smaller and less-desirable locations or simply moving elsewhere.
As you mentioned, stable tenure of rentals is a chronic problem and a dearth of stable family-oriented rental dwellings is a big concomitant problem too. Vision has provided some acknowledgement of this, though not in any formal plan, in the form of providing more concentration on cooperatives and rezonings into denser townhouse-like accommodations in less-dense areas of the City. At least it’s on their radar. I think it was Cnclr. Jang who mentioned this but I forget.
The issue here is that due to rental instability, families will overwhelmingly prefer to own and have been enabled to do so through low mortgage rates and government underwriting. Family housing is simply unaffordable for those who are uncomfortable taking on what amounts to a large and risky interest rate swap.
But the problem is also exacerbated by the City’s seeming inability to drastically alter its zoning, instead allowing off-label density increases through detached dwellings with “semi-legal” suites that the City inspectors turn a blind eye to, a disgusting and disingenuous act of which the City should be shameful. The proper answer is not to cram in substandard basement suites into a lot but to figure out a way of subdividing it to increase density. Many families are uncomfortable or unwilling to rent out half their properties. This is happening in some neighbourhoods — Mt. Pleasant/Cambie and Kits are prominent ones — but I am in agreement with former premier Mike Harcourt who stated that the City needs to reconsider the concept of maintaining single family dwellings at all. Vast swaths of the City are begging for increased density a la European model, something I think you’ll find urban planner visionaries and kibitzers would love to see, but they face resistance from existing residents who are in effect land hoarding. This is even more prominent on the west side of the City, ironically where property prices are the highest and most desirable due in part to school catchments filled to the gills where other schools sit half empty.
This is just to provide a background on some of the issues as I see them, having studied them for some years now. In my view, if you are going to organize a group, be sure you know your sh!t and can converse with people who have thought long and hard about the problem, though perhaps not enough in terms of root causes and solutions.
Personally I would highlight on a quest:
1) High prices are the problem. The longer prices stay high the more concentrated the City becomes on real estate and the more danger it presents if a recession hits. This is exactly akin to an addiction in so many ways I cannot begin to describe, nonetheless a simple apt analogy councilors may find enlightening.
2) Availability of credit is unsustainable.
3) Rezoning for (preferably non-strata) ground-level family-oriented dwellings is necessary to keep the City’s demographic healthy.
3) Disingenuous zoning of semi-legal basement suites is shameful and breeds family/landlords who are diverted away from enjoying and contributing to the City in productive ways
4) Cooperatives are a way to provide an alternative to enable secure accommodations for non-owners; market housing generally does not do this.
5) The perception of foreign ownership pricing out locals is real and its derivative effects — say locals attempting to keep up and justifying overpaying — are worthy of consideration. My fear is that this issue diverts attention away from the other issues I listed above, which are more the key and chronic issues that will remain if foreign money, for whatever reason, decides to or is forced to leave, perhaps due to “problems back home”.
Unfortunately the discourse is that high prices are justified because Mr. Market knows, blah blah blah. When you hear that, you know they don’t understand the problem. Prices are high compared to future revenue streams. Keep saying this until you understand it like Ohm’s Law or the accounting identity and make those of influence understand it too.
“Ohm’s Law”….
That’s a Yoga thing, right? Right?
[hahaha -ed.]
Thank u vesta!
Please continue any discussion regarding suggested ‘action’ on this follow-up thread: ‘Consequences, Intended and Otherwise’