“According to this message, I should basically get out of town, along with everyone else who makes a decent dual-income salary.”

Posted on 8 March 2011 | 37 Comments

pricedoutfornow at vancouvercondo.info March 7th, 2011 at 7:13 pm–
“On CBC radio this afternoon they interviewed a realtor to talk about the HAM [‘Hot Asian Money’] phenomenon in Richmond and Vancouver-westside. The radio host sounded downright sad when she said “But this means that young people basically won’t be able to buy houses in Vancouver or Richmond anymore?” And the realtor said “Yes, that’s about right. They will have to go to the suburbs” to which she responded “But Richmond IS a suburb!” And the realtor giggled and said “Ya well I meant the EASTERN suburbs”.
So according to this message, I should basically get out of town, along with everyone else who makes a decent dual-income salary. And great, let’s blame the Chinese! This is bad for Vancouver, when Canadians are basically told outright to leave if we want a house.
Of course there’s no talk of the fact that people have been bidding up properties for YEARS with cheap money and loose credit. Who really cares about the prices going up $200k in the past 4 months? What about prices more than doubling in the last ten??”

This entry was posted in 05. Where do Buyers get the money?, 07. Avoiding Vancouver, 14. Social Effects of the Boom and tagged Anecdotes, British Columbia, Bubble, Canada, Housing, Real Estate, Sentiment, Vancouver. Bookmark the permalink.

37 responses to ““According to this message, I should basically get out of town, along with everyone else who makes a decent dual-income salary.””

rf | 8 March 2011 at 7:18 am | Reply

I’ve gotta echo this sentiment. I keep asking myself lately, “what’s in it for us?” HAM doesn’t pay income tax (Dad works overseas). The kids and mom get resident status and can use the health care system. They get a cheap university education (which Michael Ignatieff and Adrian Dix now want to subsidize even more).
Aside from the HST on a a couple of Mercedes…..what’s in it for Vancouver.

This country goes up in arms when a Australian company wants to buy out Potash corp., but this city doesn’t seem to care that we are literally selling the land out from under our feet to the highest bidder. And lot of these bids are basically dirty money or corrupt money from mainland China.

Seriously, what’s in it for Vancouver long term?
- jesse | 8 March 2011 at 8:19 am | Reply
  
  I don’t see lobbying at the local level as very useful. There needs to be an appeal to macro risks and that is Dept of Finance territory. Also targeting rural reps as bubbles in the cities can be argued are sucking bailout $ due to dependence on construction and RE. Convince them city focused asset bubbles are bad for rural constituents.
- Nemesis | 8 March 2011 at 8:34 am | Reply
  
  “Seriously, what’s in it for Vancouver long term?” – rf
  
  “All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” – Sun Tzu
  
  So, in answer to your rhetorical question, rf… It depends on whether you’re an adherent of MAD or NUTS (see Herman Kahn)… 😉 Either way, HollyWood got there first… Coming soon to a neighbourhood theatre, near you…
  
  RedDawn [2011/MGM]
  
  http://tinyurl.com/49muvsc
  
  http://tinyurl.com/4jbqy2l
CH | 8 March 2011 at 7:50 am | Reply

Can anyone comment on if the Liberals, at any time, have spoken about trying to stop or at least curb property speculation? Or at least addresses the problem of high housing prices in vancouver?
Seems everyone else in the world sticks up for themselves except us.
jesse | 8 March 2011 at 8:13 am | Reply

Why would a party speak out about an asset price bubble? By doing so they insult homeowners and threaten to “take away” their “hard earned” savings. Not good politics.
Westsider | 8 March 2011 at 8:26 am | Reply

Agree with all the posts, but the Government should have started working on controlling RE speculation years ago, like say 1986, when we “invited the World” to Expo. I lived in McKenzie Heights then and there were Asian buyers buying 3 and 4 houses at a time. So this is nothing new, it’s just ramped up a bit by a greed factor of 10 and a monster economy in mainland China.
vreaa | 8 March 2011 at 8:30 am | Reply

As we have noted before, do not expect our governments, at an level, to step in and begin the deflation of the RE asset bubble. The vast majority of politicians are supported and influenced by voters, lobbyists, and vested interests who benefit from ever rising prices. As just one example, see the recent Christy Clark campaign contributor analysis on these pages: 52% of her backing comes from RE industry. [BTW, no one has refuted that analysis, thus far.]
In fact, it would probably be hard to find a BC politician who isn’t themselves directly benefiting from rising RE prices.
davers | 8 March 2011 at 9:37 am | Reply

If the rich chinese want to buy this place, I wont fight them…

http://www.realtylink.org/prop_search/Detail.cfm?areatitle&ARPK&ComID&agentid&MLS=V864096&rowc=20&rowp=16&BCD=GV&imdp=9&RSPP=5&AIDL=22&SRTB=P_Price&ERTA=False&MNAGE=0&MXAGE=200&MNBT=0&MNBD=0&PTYTID=5&MNPRC=200000&MXPRC=3900000&SCTP=RS

2.4 mill, quite literally a shack. But you know what they say, location, location location!
- vreaa | 8 March 2011 at 9:59 am | Reply
  
  Land value only, as discussed previously [4 Mar 2011].
paradox | 8 March 2011 at 9:57 am | Reply

There is one thing with the chinese buying up all houses here. The other things which people dont see as unintended consequences are :
1- chinese / asians dont pay taxes generally, not a cultural thing, and ask all people working in the construction trades – evth is paid for cash.
2- the change in the compositon of our nieghbourhoods has brought about many business clousures, mainly restaurants as chinese / asians barely eat out themselfs.
3- chinese / asians are not spenders overall with vey little positive impact in the ecnomy here.
- UnagiDon | 8 March 2011 at 10:34 am | Reply
  
  “chinese / asians barely eat out themselfs.”
  Ever been to Sun Sui Wah?
  
  “chinese / asians are not spenders overall”
  Even been to Metrotown? (Although, to be fair, it is much cheaper to buy most consumer goods back in Beijing. “North Face” jacket for $30? Yes please.)
- TP | 8 March 2011 at 6:25 pm | Reply
  
  What you just generalized is true of all 1st generation immigrants.
interested | 8 March 2011 at 10:01 am | Reply

Hang on. “HAM doesn’t pay income tax” ??? That doesn’t sound right. Isn’t any owner of real property in Canada subject to capital gains (which would impinge upon the profits of speculation and flipping)? If you are a resident of Canada, you pay Canadian income taxes. If you are not a resident of Canada, then you are not eligible for universal health care or residential tuition fees for education. I seriously doubt that alleviating the costs of a post-secondary education for foreign students is what Dix has in mind.
Correct me if I’m wrong, but there are times when we need to temper the hyperbole with facts
- rf | 8 March 2011 at 1:09 pm | Reply
  
  If mom and kids are the only ones that are residents, and they don’t work, then they don’t pay income tax.
  If it’s in the mom’s name, and she’s a resident, and it’s her principal residence, she doesn’t pay capital gains. We get property taxes and consumption taxes. That’s it.
  If you are a resident, you are eligible for health care and tuition. They dont’ pay income taxes, but the rest of us pay 43.6% on every dollar we make over 126k.
  Not much left over to spend $2mil on a dump.
  It’s hardly hyperbole.
  
  TPFKAA has some decent examples of what’s in for Vancouver. The unfortunate trade off is the inflation on so many basic necessities.
  The rampant tax evasion of those benefitting is disgusting in it’s own way.
  - Nemesis | 8 March 2011 at 1:27 pm |
    
    “rampant tax evasion”…. More than you can possibly imagine, rf…
    
    In that regard, they don’t call Blighty ‘Treasure Island’ for nothing… and Vancouver is but one constituent/hub in the archipelagoes of elusion… 😉
    
    [UK Guardian] – The truth about tax havens – What do we really know about tax havens? In an extract from his new book, Nicholas Shaxson explains how they work and why they are so rife with secrecy, corruption and intimidation.
    
    http://tinyurl.com/38y6onu
    
    [UK Guardian] – The truth about tax havens: part 2 – A second extract from Nicholas Shaxson’s book explains how a mafia scheme became a pillar of the financial system – and how the government let it happen.
    
    http://tinyurl.com/29m5vqw
calguy | 8 March 2011 at 10:22 am | Reply

Don’t forget all this HAM is benefitting the realtors/RE industry. Think of the sales comission (which has gone up), and with the prices skyrocketing, they are making fortunes. I doubt the realtor has kids of their own or has lived in Vancouver/Richmond to appreciate the statement of telling people too bad, move east to the burbs’. Sorry, no offense, but I would rather live in Vancouver than Langley. Unfortunately many people have this dilemma – condo in Vancouver or single family home in Langley??
Village Whisperer | 8 March 2011 at 11:54 am | Reply

Wealthy people (Asian or otherwise) can only buy all these homes if there is someone willing to sell them. And the Asians only have all this wealth because all the rest of us insist on cheap products from China instead of manufacturing things here in North America (for a higher price).

There is nothing wrong with speculators. The problem comes back to government intervention when the market should have corrected on it’s own. It will correct at some point and the ones that will suffer the most are those that have paid these absurd prices (Asian or otherwise).
TPFKAA | 8 March 2011 at 12:41 pm | Reply

What’s in it for Vancouver? Well, actually, I don’t have the numbers to back it up, but let’s see:

Each Chinese investor immigrant who comes and buys a tear down on the west side dumps in, say, 2.4 million to the prior owners – lets assume locals – who then take the money and hide it under their mattress??? Or just maybe, the sellers spend at least some of it in the local economy. It is a lot of money after all. It will support servers and delership staff at least.

Then, the immigrant family pays another 800,000 in construction that lines the pockets of contractors, tradesmen and general labourers who WILL dump most of that money back into the economy in their daily lives. Then, the family buys all new furniture, appliances, clothes, computers, tv, etc etc. Then, they put their kids into private school thus paying the teachers salaries that will in turn get spent in the economy. Then they buy groceries, clothes, gas, cars, etc etc. Then they employ tutors, buy school supplies, pay tuition fees at UBC, SFU, all the colleges like Kwantlen, Langara, Douglas, if they are not blessed with smart kids, and so on. (FYI, many go through hundreds of courses, dropping them if they are not going well, on their journey towards graduation. I knew one girl whose parents spent 100.000 in one year on tutoring and school fees. Its all spend, spend, spend of their Daddy’s money until graduation). You can see where this is going. Each Chinese immigrant family is a pump that generates a huge flow of dollars from Asia into BC residents’ salaries and businesses. It supports jobs, keeps businesses alive.

Now, of course to be dependent on this to prop up the economy (probably to the tune of 30% of gdp or more) is obviously a long term disaster, but the dependence has already been built up. The city is a junkie for this money. Outside of the docks, weed, some lumber, transportation and warehousing, and a few odds and ends like EA games and some biotech research that are made/carried out here, there is little else to sustain the economy. If the plug gets pulled on HNW immigration by some government, they will be the ones responsible for an economic apocalypse, with all the attendant ills of several thousands of young men previously in construction or retail or dining who suddenly become long term unemployed.

In fact, since the economy is currently founded on this house of cards, the higher the prices paid by our Oriental cousins, the better it is for the local economy. We should in fact cheer each HNW family’s purchase of a 3 M shack. The inevitable crash will come, but for now I think it is highly unreasonable to claim that these immigrants bring nothing to the local economy.
- SmallTalk | 8 March 2011 at 1:22 pm | Reply
  
  I think you have eluded to the fact that this is not sustainable in the long term. I think it is even worse. If this is going to be an “economic apocalypse” (in your terms) it better be sooner than later, as there will be less casualties.
  
  Unless we are all going to be butlers and lackeys to the Asian immigrant population, and create an economy of flipping condos, which is fundamentally flawed, then we better do something about this.
  
  Unreasonable fortunes have been made, and are being made, out of this highly leveraged HAM. This is the money that was supposed to be funneled to the local businesses as investment, such as gaming companies and the one that I worked for (Vancouver software industry is — the ones you called odds and ends– estimated at approximately 2 billion a year revenue), since most of these immigrants come here on Business Class immigration cases.
  
  Vancouver economy seems unbelievably superficial and unsustainable compare to some similar sized cities in US. If the sell-out local politicians not going to stand up for us, then we need to do something about it.
  - Airedales | 9 March 2011 at 9:01 pm |
    
    Can you imagine the Chinese pushing out the population of long-time Calgarian’s from their very own city so that they would have to commute from farming towns an hour drive to the East. Never happen!
    
    It’s just a matter of time before the Chinese describe the local lower mainland population as “inland thugs” – much as the term is used in California but instead reflecting a racial tension and income disparity that is bound to explode in increasing crime, gang violence, and eventually a collapsed local economy.
    
    It seems pretty obvious from afar that Vancouver is just a tax-shelter suburb of Shanghai and the real West Coast experience from a Canadian perspective is found just over your southern border where immigration and regulatory policies prevent cities from being bought by foreign invaders.
    
    How many Canadian students outside the province of BC even contemplate going to UBC now compared to 10 years ago. How many Canadian professionals consider moving to Vancouver for career opportunities?
    
    Bottom line: in the long run Vancouver gets absolutely nothing good out of the most incredible RE bubble in human history. In the short run, sellers are getting an incredible financial opportunity to leave and re-join the rest of Canada.
- Bullonly | 8 March 2011 at 11:24 pm | Reply
  
  Let me guess, you don’t work in the trades? Contractors lining their pockets with cash? Hardly. Try hanging drywall and taping over your head all day and see just how “heavy” your pockets feel. The trades are getting hammered by an imported labor force that work for crumbs. The industry is in cannibal mode.
  - TPFKAA | 10 March 2011 at 3:54 pm |
    
    Heh. A bit too late to jump back into this thread I am sure, but FWIW I’ve done more than my fair share of installations of railings in luxury condo developments soon to be bought up by Chinese immigrants. (I have an eclectic range of professions). My point is that all the money I, my esteemed Canadian colleagues, and illegal foreign workers earned, HAS to be spent locally since we all live here. This props up local jobs like truck drivers, check out clerks, bar owners, and so forth. That’s how economies work. Some primary source of wealth (translated into dollars) pumps it in, and like raindrops it descends through the population before funnelling out the other end into savings or abroad where it pays for the goods we import. I am sure EA games brought in a ton of money from markets all over the world, as did the sawmills in times past, but tell me where are we adding value to stuff now that the rest of the world wants to pay us for? where are we creating wealth? We aren’t. We’re just letting the immigrants homw purchase money filter through and pass out the other end back to China with every item we purchase. There will soon be a huge population here, and when the income streams like EA dry up, as they are doing, to be replaced wholly by an inflow of rich people, it will be time to get out before the rich peoples money stops flowing. When that day comes, there will be a chaos beyond anything this city has seen before out of the ashes a new economy will arise. Eventually.
Jarred | 8 March 2011 at 1:24 pm | Reply

When I was at UBC, Dr Robert Van Pelt said that the Chinese in Canada reminded him of the Jews in Europe during the first half of the 20th century, focused on higher education, finances, and accumulation of material wealth. The question is, will 1933 come about again?
- Canayjun | 8 March 2011 at 3:11 pm | Reply
  
  When things go wrong, people want someone to blame. Things are going wrong in a big way right now, all over the world. And I’m guessing, it will be easy for some people to blame a specific ethnic group for some of the problems. In reality, widespread governmental mismanagement and corporate greed lead us here. Ordinary citizens are mere pawns in all of this.
  
  The Chinese are no different than the rest of us. Perhaps they are a little more gullible about house prices though. They are not causing the housing bubble in Canada. They are causing pockets of real estate to inflate over and above the already massive housing bubble that began forming several years ago. And…they will end up losing more money than the average Canadian when the housing bubble deflates or pops. I seriously doubt a soft landing is even remotely possible anymore.
- jesse | 8 March 2011 at 3:58 pm | Reply
  
  Not even as far back as 1933. Fiji about 5 years ago, Indonesia (Sumatera) about 15 years ago, and Malaysia in the late ’60s. Each is a case of an ethnic minority (in this case ethnic Chinese) who succeed financially, breeding resentment from locals.
  
  The excuses given were corruption, tax evasion, favoritism, etc.; similar arguments to the ones being given today. In those cases, nobody wanted to admit that — maybe — specific cultures fostered success more than others and those who work hard/smart are rewarded. Is the same thing happening in Vancouver? Probably. I often wonder as I sit down in front of the TV for a gluttonous evening of UFC Unleashed.
  - Canayjun | 8 March 2011 at 4:37 pm |
    
    Huh. I wonder if it has anything to do with zero down, 40 year amortizations. Banks who would give out mortgages as long as you had a pulse and people who were willing to sign their name on the dotted line even though they couldn’t really afford to buy a house.
  - Nemesis | 8 March 2011 at 5:56 pm |
    
    You might like this one, Jesse… It’s the definitive work on the phenomenon of the Overseas Chinese…
    
    Lords of the Rim : the invisible empire of the overseas Chinese / Sterling Seagrave.
    
    [Publishers Weekly/Library Journal] – “On one level, this book is a lively version of Chinese history from 1100 B.C. to the present, through the screen of the dealings of its merchant class. On another level, it is an Arabian Nights tale of scandal, war, politics and, above all, money-making. “To be rich is good,” runs an old Chinese proverb. On yet another level, it is a brilliant analysis of the enormous power wielded by a widely scattered group of 55 million Chinese merchants who live in self-imposed or government-ordered exile throughout Asia and, increasingly, in the U.S. and Canada. In the scramble of Western entrepreneurs for footholds in China’s enormous markets, asserts Seagrave (The Soong Dynasty), this is the group to reckon with. They’re already there. They have a hammerlock on commerce in nearly every country of the Pacific Rim. It is they who financed the current economic boom that has made China the third largest market in the world after the U.S. and Japan, and they who have the greatest stakes in which direction post-Deng China takes. His is an engaging and absorbing history appropriate for the general reader as well as the specialist. Highly recommended.”
- Nemesis | 8 March 2011 at 5:46 pm | Reply
  
  It’s neither a ‘Confucian’ nor an ‘Abrahamic’ thing, Jarred – it’s an ‘immigrant’ thing; and – frequently – a ‘money’ and a ‘tribal/familial’ thing… as for 1933??? If you’re referring to Reichskristallnacht, that was 1938. Hopefully that was not the allusion you intended… See also my reply to Jesse (below)…
paradox | 8 March 2011 at 4:58 pm | Reply

For all those out there that still believe in the american dream (becoming reach through hard work), let me tell that it does not exisit in reality, that is why is called a dream in the first place.
If you ever had a job, be it engineer, teacher or else, and have paid your taxes in this country, I would like to know how many of you have saved/earned 2.4 million to buy that Vancouver shack?
Chinese have money because they dont pay any taxes for a start. They did not pay in China where they stole the money anyway and they dont pay here either. That is why most chinese deal in cash. No invoices, no traces.
I worked as a barman in Mexico making coctails for the tourists there for 6 years, and I can tell that from all the canadian tourists I saw there, positively less than 1% were of asian origin. I dont think they are spenders.
- UnagiDon | 8 March 2011 at 6:23 pm | Reply
  
  “If you ever had a job, be it engineer, teacher or else, and have paid your taxes in this country, I would like to know how many of you have saved/earned 2.4 million to buy that Vancouver shack?”
  
  Count me as someone who has a real job and cannot afford that shack.
  
  “I worked as a barman in Mexico making coctails for the tourists there for 6 years, and I can tell that from all the canadian tourists I saw there, positively less than 1% were of asian origin. I dont think they are spenders.”
  
  I think you just misunderstand Chinese spending habits. Why would they go to a 3rd-world country like Mexico?
matt | 8 March 2011 at 7:54 pm | Reply

There is certainly no shortage of people complaining about foreign real estate investors. However, what entitles any of you to a home with a white picket fence and 2.1 kids in Vancouver? Why is it so unjust that you can’t afford an aspirational lifestyle? Just because you think you work hard to make $69000 a year doesn’t entitle you to a 2400 square foot home. Just because some of us want ponies doesn’t mean we’ll get them.

What’s perverse about the Vancouver housing market is the fact that we are collectively socializing the risk that is incurred by real estate speculator due to a fallacious idea that a high rate of home ownership is required to build a strong national economy. If these risk takers start defaulting mortgages due to a sudden decline in house prices, we are on the hook for their glorious ride.
- vreaa | 8 March 2011 at 8:27 pm | Reply
  
  Both of your major points are important and you state them well.
  
  To address one aspect of the first point: Yes, there are some individuals who are perhaps unfairly expecting too much; isn’t that always the case? However, we would argue that there is a far larger percentage of prospective buyers who look at the Vancouver RE market and are disappointed with how little they can afford compared to others with similar incomes in other North American cities.
  For instance, we hear of dual income (low to low-mid 6 figures) families who are unprepared to overextend themselves into $1.5M-$2M properties; unprepared to take massive debt to buy homes the equivalent of which they could far more readily afford in other cities. These are not people with unrealistic expectations; their expectations are realistic, the market is unrealistic.
  The argument being made by the bulls is “expect less” or (different version, as one permabull at RE Talks puts it) “the cure for higher prices is moving to a destination with lower prices”. This position is what infuriates ‘pricedoutfornow’ and many of the rest of us. It is the argument used in all bubbles: “That’s what people are paying for [asset name]; take it or leave it”.
  Well some of us are doing neither! We’re hanging around and not buying it. We are calling out the BS; and we can wait and watch as it all implodes.
  - Nemesis | 8 March 2011 at 9:18 pm |
    
    “Well some of us are doing neither! We’re hanging around and not buying it. We are calling out the BS; and we can wait and watch as it all implodes.” – VREAA
    
    “Douzheng shenghuo chu yishu laodong renmin shi zhuren” – Wang Weixin; Wang Liguo (王利国) – 1974, July
    
    http://tinyurl.com/5we354l
    
    😉
  - vreaa | 8 March 2011 at 9:22 pm |
    
    Yeah, that’s us — ‘peasant artists’ ‘painting murals’. Nice.
  - matt | 8 March 2011 at 9:31 pm |
    
    From some of the previous quotes you’ve posted, it sounds like many people are empowering themselves by walking away from Vancouver and the ridiculous market. I applaud these people for their courage and for demonstrating a noble sense of self-restraint and financial responsibility.
  - Nemesis | 8 March 2011 at 10:18 pm |
    
    Encore [and this evenings final] performance. A socialist realism interpretation of Nemesis’ schtick/raison d’être – as lovingly depicted by Beijing No. 76 Middle School [collective work – 1971, April]
    
    “Rang zhexue bian wei qunzhong shoulide jianrui wuqi!” –
    
    http://tinyurl.com/6c75zu6
- rf | 9 March 2011 at 6:47 am | Reply
  
  It’s one thing for those making $70k a year…….but the same issues of affordability are applying to families making $300,000/year.
  In every other city in North America (except maybe Manhattan), the mortgage is paid off in about 5 years with that kind of income.