“I am a Canadian-born Chinese male who is in his near 40s. My choice is to live on the westside and raise my family there but because of all this foreign money, I no longer can afford it. Something must be done. It is in the neighbourhood’s interest to stop foreign investment. These families send their kids to school in your neighbourhoods unsupervised…driving their Ferrari’s and BMW’s. How can unsupervised but very well off kids be good for any school or neighbourhood? Governments must step in to protect the integrity of these neighbourhoods and allow hard working 2 income families with strong family values to have a chance to live there.”
– anon206444676 17 May 2011 12:04am, in the comment section of the Vancouver Sun article: ‘Chinese Spreading Wealth Make Vancouver Homes Pricier Than NYC’.
Archived here because this kind of ‘call for action’ on the part of ‘governments’ has become common in the Vancouver RE discussion. We fear the unintended consequences of government intervention in the market, and believe that the speculative mania will run its due course regardless of such intervention. – vreaa
Vancouver Real Estate Anecdote Archive 
what’s the point of all this VREAA, no offense. We keep trying to make ourselves feel better by collecting all these antecdotal evidence of abubble yet the truth of the matter is the god@forsaken sheep HAM just keep comin.
Only gov’t can change this now.
I mean market is down 2-3% and we’re all shouting crash, yet there is another damn boatload of them bidding on properties that aren’t even for sale, do they know something we don’t?
The point of the anecdote diary/scrapbook/timeline/chronology is not “to make ourselves feel better” (nice thought) but to leave a trace of what people were doing/thinking/tellingthemselves through all this.
Check this out:
China’s Real-Estate Developers Struggle with Debt; Servicing China’s Total Debt Load is Problematic; Dramatic Slowdown in China Coming-
Mish, 17 May 2011
http://globaleconomicanalysis.blogspot.com/2011/05/chinas-real-estate-developers-struggle.html
This bear is capitulating.
everyone is saying all the right things and making so much sense but someone forgot to give HAM the memo.
they know that we must be idiots for not getting in now
after all,
blah blah blah never coming down again
blah blah blah
splat.
There is no “right” to live in a specific neighborhood.
The problems with the housing bubble is somewhere else:
1) Brutal misallocation of capital.
2) The moral hazard of CMHC insured mortgages. Taxpayers will pay for the mistakes of private banks. Once the private debt becomes toxic it will be turned into public debt.
3) Legitimization of criminal money from abroad (I am making a big assumption here, but I have no illusions about many of the “entrepreneurs” from a corrupt country with a one-party government)
4) “Owner”-renter segregation. Ownership is preferred by the government. For obvious reasons like property taxes and lowered mobility of serfs. That leads me to
5) Creation of a large debt-serf class. The debt-serfs are now happy. Most of them think that more debt means more wealth. We all know how this logic worked elsewhere.
3) Legitimization of criminal money from abroad (I am making a big assumption here, but I have no illusions about many of the “entrepreneurs” from a corrupt country with a one-party government)
more than anything else, bubbly – this is the onion in my ointment
with this kind of capital will come political clout, and that’s a scary thought.
[expletive deleted] THEM
[expletive deleted] THEM NOW
MeanJean, this is not the “fault” of any one in particular, but is the by-product of various economic policies by governments. Massive capital flows into countries like Hong Kong and Taiwan are common, in part due to their full or partial currency peg.
I’ll state it again, as I have multiple times: it isn’t necessarily a wasted effort to write your elected representatives and let them know your views, and I encourage you to write the ministry and department of finance as well. There are indications that governments are starting to realize that capital flows are causing inappropriate distortions in segments of Canadian real estate and it will cause more pain than benefit in the long run. There are things they can do, but are likely facing some lobby from the other side who have vested interests in seeing the status quo. A letter from you, and others, will go some way to lubricating any policy changes they will make.
One of the aspiring top real estate pumpers in Vancouver: http://twitter.com/thesimeon
Posting articles with clearly false information like “80 per cent of all real estate sold in Vancouver is to Chinese/Hong Kong buyers”. Perhaps Cam Good’s relative?
Well.. not :related: to Cam Good, but “Asian Business Development at Key Marketing Inc. ” sounds close enough. It’s amusing when someone’s thoughts sound so close to a party line, that that’s the assumption.. which turns out to be correct.
“believe that the speculative mania will run its due course regardless of such intervention.”
After reading some reports by knowledgeable economists on the subject, I am not as sanguine as you, vreaa. There are potentially a few more years of mis-allocation of capital to emanate from China and without some acknowledgement that Vancouver is the recipient of this capital and concomitant policies to mitigate the inflows, the situation may continue for some time.
I don’t know if restrictions on foreign ownership will have much direct effect but some cursory curbs may be enough to direct the momentum money to greener pastures in other parts of the world. Yes the foreign investment will end, and potentially reverse, at some point, as it has in previous booms, but there are consequences to sitting idly by and waiting for the fallout.
My concern in the past has been that people think foreign investors are the cause of their problems when it is simply not the case at all — tails do not wag dogs.
jesse ->
It’s a very tricky issue.
If we believed that govt were capable of surgically and wisely stopping detrimental speculation, we may be calling for attempts at such intervention; but govt’s always make such a good job of screwing up this kind of thing… we fear unintended consequences. For instance, we wouldn’t be surprised with an attempt at stopping foreign buyers while at the same time trying to shore up the market for local players (We can’t imagine legislation/monetary measures designed to crash the market, could you?).
We also believe that the market will look after itself, eventually.
But, as you say, that could take some time.
Or not (see the article by Mish today, referenced above).
Further (as rusty implied earlier today): a crashing China may give Vancouver RE a boost, as one of the only remaining ‘safe-havens’ for escaping Chinese funds; as one of the only apparently ‘strong’ RE markets left. — Such an outcome is possible, it’d be another perverse twist in the Vancouver RE bubble saga.
[PS: Agree completely that foreign investors are NOT the cause of our bubble. Our bubble is a speculative mania caused by local speculators and cheap borrowed money; foreign investors simply jumped on the bandwagon and have become an important sideshow.]
@vreaa, government intervention unfortunately may be required simply because of the magnitude of capital looking for investment. There are already significant distortions simply by differing monetary and fiscal policies of Canada and China that necessitate capital outflows by the country’s “winners”. If you believe that monetary policy is not optimized to foster long-term growth then it is not a stretch to think that berms need to be erected to ensure other parts of the world are protected from transient events (in this case a “flood of cash”).
I don’t know if Mish is right but… there is a chance the latest boom in China can progress for some years to come. If the latter is the case, Canada should be prepared for the consequences of doing nothing, including mounting debt loads, unhealthy resident migration patterns, a bloated unproductive real estate industry, and a blighted economic situation when the money disappears.
HAM is hype.
Vancouver West is off the boil. (seriously it is -33 foot lot value has fallen from 1.6 plus to 1.5 ish in 4 weeks)
Richmond has collapsed.
So if HAM goes home AND rates rise-then what?
Jim -> You may be right. We’ve also noticed that the Westside high-end isn’t flying off the shelves as it was a month ago.
It didn’t appear to be all HAM doing the buying but lure of the HAM myth as well. The myth was drawing locals into speculation alongside the HAM (and probably also the pump and dump schemes taking advantage of the froth). With the mortgage rule changes, the locals can’t play anymore, the casino set the minimum bet too high. Even if locals were less than half the market, even if they were only a 1/3, that’s enough to whack the market.
Ponzi schemes must grow or they die. All that has to happen is for the growth to stop. Just look at 2008/2009, it’s right there.
So if HAM goes home AND rates rise-then what?
——-
PARTY IN THE STREETS
DRINKING ALL NIGHT
and we all had a good laugh (those of us who don’t own, of course – but after being treated like lepers for the last 5+ years watching some serious crow eating will be sweet – until i get a pink slip.
Could legislation be as simple as: you have to live be a Canadian citizen and live 6 months of the year in Canada or you pay an additional 10% property tax on the value of your home? I’m definitely not an economist, so I’m interested in what’s wrong with this idea.
Nothing’s wrong with that, though a few UBC professors on extended sabbatical might be upset with you!
Here’s some food for thought from what Australia did, and I am not necessarily advocating for similar laws in Canada: http://www.news.com.au/money/property/australian-federal-government-gets-tough-on-foreign-ownership-rules/story-e6frfmd0-1225857643432
Under the rules, temporary residents and foreign students will be:
SCREENED by the Foreign Investment Review Board to determine if they will be allowed to buy a property.
FORCED to sell property when they leave Australia.
PUNISHED if they do not sell by a government-ordered sale plus confiscation of any capital gain.
REQUIRED to build on vacant land within two years of purchase to stop “land banking”. Failure to do so would also lead to a government-ordered sale.
We are not alone!! Just came back from London. New tower at One Hyde park.
Top 2 apartments bought by Russian for 186 million GBP. He is going to knock the wall out and make one big penthouse. Cost to redesign 60 million GBP.Total for penthouse apartment. $393 million!!!!How do the fundamentals work in that deal??????
the fundamentals don’t matter when you’re an oligarch
the world is yours
Much like those $300M yachts, these people have a huge problem and that is cash that is burning a hole in their pockets. They need to find a way to spend it! Pure and simple. If they don’t then who knows, they might wake in the middle of the night with guns in their face and losing all of it. Finding ways to spend tens of millions of dollars each year is as much as a headache for these poor souls are making hundreds of millions a year and keeping all those in power happy and onside with them.
For the sake of me, I don’t know why these people never just spend 1% of all that wealth doing something good so people will actually still remember them 100 years from now.
because they’re people
and what good is having anything if the other hungry monkeys can’t covet it?
welcome, to the finest slaughterhouse in the universe..
MeanJean | 17 May 2011 at 3:39 pm |
This bear is capitulating.
Ah, typical sign that we’re at the peak!!!
or
The bears are now admitting they were wrong!!!
I’m in the situation where I might still buy sometime in the next year, but with the knowledge that prices are likely to drop significantly in the next five or ten year. HAM may be real or not, and could continue or not. The one change I do believe in is demographic, when the boomer generation start selling.
“Legitimization of criminal money from abroad (I am making a big assumption here, but I have no illusions about many of the “entrepreneurs” from a corrupt country with a one-party government)”
comments like this fuel racism. Are you aware that you’re calling these new immigrants criminals? Check your attitude red neck
GFY, rusty. I have lived in 5 countries and have a lot more experience than you will ever have. This has nothing to do with racism. I know how business works in post-communist countries (China can be considered post-communist). Many of the noveau riche in this countries made money by hollowing out government corporations or borrowing money for a private corporation and transferring it to private account abroad.
China is ranked 72 on the transparency international corruption list out of 179 countries. Many of the business report about doing business in China talk about the fact that to get stuff done in China requires connections with the right people I think they call it guanxi. According to wikipedia
“At its most basic, guanxi describes a personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon.”
Being an immigrant to Canada and having seen how business is done in developing countries I can tell that those connections often mean you have partners in business who just collect a portion of revenue/profits … etc in return for doing favors and making introductions, otherwise you can’t get anything done. What makes this corruption in my view is not that many of the people you need to meet are in government positions and they use the public office to get family members to become business partners in local ventures.
Once again I agree with “small r” rusty. The illicit capital angle won’t be well received in general. Still, people like hearing it’s not they who caused their own demise.
Let’s suppose for a moment one level of government will actually do something about high prices in Vancouver. Any ideas what they might do? Some ideas on Vancouver-specific measures:
– Foreign property ownership restrictions similar to Australia’s
– Property tax hikes for vacant properties
– Increase downpayment requirement on insured mortgages
– Eliminate MI for investors
– Require countercyclical reserves on mortgage loans
– Accept investor appraisals only on a higher cap rate
– Tax capital gains on land as income (could be for non-residents and investors only).
I have never claimed that “illicit” capital is THE cause of the bubble. I explicitly mentioned CMHC and people’s willingness to become debt-serfs. I have also never mentioned that the government should “do something” except for stopping the moral hazard of CMHC.
The “illicit” capital component (which exists IMO) is just using the insanity in Vancouver market as a cover.
Rusty did not provide any counter argument. He simple used a smear of “racism” and called me a “red neck”.
So to clarify, I disagree with using a broad “illicit money” brush to paint all immigrants. Apologies I didn’t read the context.
i think some of these proposals are what we need – i think the aussies were right to issue limits and regulate the market slightly – if it comes down to market ideology and maintaining an always improving as opposed to declining standard of living, i think the choice is an easy one to make, as long as it’s not an issue of just kicking the can down the road for the matter to fester and grow into something worse (after all, isn’t that what living in the west is all about?? freedom to grow to realize one’s potential?? you can’t do that during a decline or worse, a war, at least not without shooting down some krauts first or killing Osama Bin Laden, first)
we just need to discourage the idea that it’s the quick easy money we all know it is. make it 20% more difficult or 20% less profitable and 90% of the HAM flippers will probably fuck off. make the country 20% more difficult (HISTORY LESSONS, AND LOTS OF THEM) to get citizenship to and 50%+ of the people who are going to game our system and get a passport and be a paper canadian will probably also fuck off.
people are lazy, that’s why they flip houses.
rusty he didn’t say that
the reality of ‘modern’ china is that the communist party consists of 100million + members – if you want to get anywhere other than re-education camp, you have to be in the party – Ai Wei Wei? not in the party.
the problem with ‘modern’ china is the same that faced germany in the 30s – the party has convinced the majority race that the state/party/race are all one and moving in ‘harmony’ – and that this is a good thing, and ANY attempt to offer up a different approach is not harmonious and therefore evil, as disharmony is to society what tanks are to peasants in Tiananmen Square.
don’t be so touchy about your shitty evil government and the corrupt hacks that populate it’s ranks – if capital flight out of china is capped at $200k, how are these people getting $1,5,10,15,20 million+ out of the country?
if you can’t get really rich in china (like, VANCOUVER rich) without being in the party, then we are left with some uncomfortable conclusions.
what’s worse, a somali warlord or autocratic party-droids? tunisian dictators? these people make the poor irish/poles/italians/ukrainians/etc who came to canada between 1800-1960s look like .. well i am out of similes but you get the idea.
it’s not racist to say the Chinese Government as run by the Communist Party are the antithesis to the average modern canadian’s values and probably are committing vast amounts of espionage on our society and probably a bit of economic muddling as well (ask Mr. McFadden or check out who – and how many of them! – the aussies discovered in their backyard pretending to be students and tourists) canadians don’t understand who they’re in bed with right now – they don’t really know it or understand it, because, people being people, they don’t really want to know anything at all if the answers are depressing or shocking or require any actual action on their part.)
again, to reiterate: chinese people and the chinese state and it’s cadres/apparatchiks and agents are TWO separate entities. i think what is being implied is that wealthy elements of The Party have decided to roost here, and all that entails.
all is well, after all, they’ll totally see things our way one day, right?
LOL
not all red necks are racists, and not all racists are red necks – just like not all Chinese are economic criminals or human rights abusers and not all economic criminals and human rights abusers are Chinese (surely the Americans have them beat there for innocents killed – aside from Mao’s 70million dead – and sheer quantitiy of graft – the average party member working in a police station in Guangzhou probably rakes in a couple hundred dollars a month in petty bribes – not exactly Goldman Sachs…
the mainland chinese angle is fundamentally just Japan Redux – watching them burn through their foreign reserves to prop it all up while watching the americans inflate away the value of their t-bills is going to be incredible
for the record – i’m not a racist – i hate everyone slightly, especially people who benefit from the oppression of their own people by keeping them blind as to how they’re really governed – sort of like a few other places i know.. mmm..
Can someone please tell me what the hell Tsawwassen Springs is all about? What sort of ridiculous prices are they charging? I grew up in Tsawwassen, it is a cultural wasteland.
everyone i know from Tsawwassen moved to Vancouver as soon as they were adults.
jesus, sounds like $400k for a condo in Tsawwassen on the municipal golf course. errr. is anyone buying this?
People from NY or London would say the same about Vancouver – “one art museum? how cute!”
the funny part will be when all the people who’ve moved here in the last 20 years wake up in another 20 years and start spouting off the kind of shit i spout off about, like how nice it was 20 years ago.
hahaha… great comment, with honest and genuine insight.
Most of us are immigrants a handful of years back; we all want very similar things (decent place to live; security for self and loved ones; etc).
[It is very dangerous for the speculative mania in RE to be blamed on a subgroup of the society (eg one group of immigrants).]
well i’m an honest and genuinely insightful kind of guy
but that sort of thing doesn’t go over well with (most) people, because they’re not used to it.
i just came back from Buntzen lake (gladly missed the first half of the hockey game) and there was no one there except a few chinese uni students having a picnic – i told them they picked a smart time to come to the beach and they laughed and said they don’t like hockey.