‘Facts’ On Foreign Investors? – “Out of the 55,512 sales in 2010 only 195 were to people outside of Canada. Foreign investors only own 0.5% of the total housing stock of 774,600 residential properties in the Lower Mainland.”

From Garry Marr, Financial Post, 23 Jun 2011
“Local firm Landcor Data Corp. says it has been tracking property tax assessment bills to pinpoint the percentage of transactions driven by foreign investors in Vancouver’s suburbs — a trend the real estate industry says has been driving up average prices in the country’s priciest city.
Richmond and the west side of Vancouver, favourites of Chinese investors, were the focus of a first-quarter report form Landcor’s which looked at the profile of buyers from 2008 to 2010. It found buyers from the “Middle Kingdom,” as the company put it, dominated purchases.
In 2008, there were 69 sales of homes priced at $3-million or more, the most expensive $10.5-million, and 46% were purchased by Chinese buyers. By 2010, there were 164 sales in the same category, the highest-priced being $17.5-million, and 74% went to Chinese buyers.”

“Andrew Ramlo, executive director of The Urban Futures Institute, a Vancouver research firm that worked with Ledcor, says the data proves that influence of foreign investment is not a major factor in most of the Lower Mainland.
His group points out of the 55,512 sales in 2010 only 195 were to people outside of Canada — 0.4% of all sales for the year. Furthermore, he says, foreign investors only own 0.5% of the total housing stock of 774,600 residential properties in the Lower Mainland.
“These data contradict what seems to be largely anecdotal evidence indicating foreign investment is a significant driver to residential price increases in the Lower Mainland,” he said in a report.”

49 responses to “‘Facts’ On Foreign Investors? – “Out of the 55,512 sales in 2010 only 195 were to people outside of Canada. Foreign investors only own 0.5% of the total housing stock of 774,600 residential properties in the Lower Mainland.”

  1. errr.. didn’t we go over this whole thing earlier..

    that you could be a very recent ‘investor’ class immigrant or permanent resident etc. and still count as a local?

    • When does a recent immigrant become a local?

      For the landcor data to be significantly wrong to the degree implied by realtor anectodes, we would need a many times larger immigration than is really happening.

  2. “These data contradict what seems to be largely anecdotal evidence indicating foreign investment is a significant driver to residential price increases in the Lower Mainland”

    Ummm… no… they don’t contradict much, for a few reasons. I’ll leave it to commenters to list them. ^ mentioned one.

  3. This seems to have a bit more logic applied to it than the last “study” where they guessed the “origin” of the buyer by looking at the last name.

    But I am curious to see what arguments the “The Chinese are coming!!!!™” crowd have.

    • The other study was indeed a flawed one, but it wasn’t looking at just last names – it was a look at full legal names containing no Anglicization.

      • Which also doesn’t mean anything. Many people try to give themselves more international sounding names, ESPECIALLY if they are moving into a different part of the world.

        This makes a lot more sense, to look at tax returns etc.

      • That could very well be true.

  4. I’m not sure say to about this Globe and mail bog entry. For starters you can add Leith to the list of name brand Canadian investors calling for price declines. At the same time I liked his quote on the unappealing options for cashing in. I think it would be helpful to consider the flip side to these unappealing options (namely losing 40-50% of the house value). If you are wealthy enough (he probably is) then fair is fair, but not so much for everyone else.

    http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/vancouver-pizza-boy-sell-your-house-now/article2074029/

  5. All the foreign-money-or-not debate misses the meat of the matter, and distracts people from the most important conclusion: it’s a speculative mania.

    • Not really, those who argue foreign money is driving it are essentially saying the well will never run dry, so it isn’t speculation (I have a few other words I could use instead to describe it, but I try to keep my postings child friendly).

  6. bad news if you’re a renter. It means locals can afford current prices – and according to recent survey of purchases, most (80%) are putting down 25% or more.

  7. specialfx3000

    Rusty, I’d be interested in the data about the 80% you speak of. (local or Canada-wide?)

    Either way, not sure why that’s bad news for renters when rent prices have not moved much during the last few years of insane price increases

  8. specialfx3000

    Thanks Rusty.

    Comforting to know that 80% are at the casino table paying with their own money.

  9. they’re all paying with their own money.

  10. The way it works is;

    Chinese family moves to Canada, buys home in the GVRD to raise family in a nice safe environment…. then Dad commutes back and forth to his factory in Hong Kong or Shenzhou, etc. to make products for Wal-Mart…… while Mom, the Kids, and Grandparents stay in their new comfy home in Canada….. thats the way it works – that’s why Landcors data doesn’t show whats really going on.

    • Then present your proof to support your assumption.

      • I’ve been in the real estate and construction business for over 20 years … I’ve done business with many Chinese who live here and have businesses back in China….. ALL the Chinese who came from China tell me the same thing; “it’s too hard to make money in Canada, becuase the taxes are too high – but it’s a great place to live”.

      • I’ve done business …

        So it’s another anecdote. If it really is that obvious why doesn’t it get caught by Statscan or the CRA or heck, even Immigration? Why, it seems, is all we have individuals who are telling the same story over and over?

      • “Astronauts”

        Many of those who returned to Hong Kong were husbands who left their entire families in their adopted homes, while they worked in Hong Kong. These husbands were dubbed Taai Hung Yahn (traditional Chinese: 太空人; Cantonese Yale: taai hùng yàhn), or “astronauts” because they spend their lives flying back and forth between Hong Kong and the adopted homes of their families. The absence of these husbands from their families often create tension in their relationships….

        http://en.wikipedia.org/wiki/Hong_Kong_returnee#.22Astronauts.22

        PS; maybe you should get your real estate license and get some first-hand experience if you dont believe me – BTW: this type of activity isn’t something the Astronaut dads advertise/flaunt to Immigration Canada for obvious reasons.

    • I they live here, then they are locals, like anyone else living in this city.

    • Factory is Shenzhou? I like that… not a real place, but a mix of Shenzhen and Guangzhou.

  11. I lived in Vancouver for 11 years ,sold 3 places, all were foreign none were local.

  12. Also, when I left vancouver my strata manager who lived on my floor by coincidence , asked me info on the people that bought my place. I said I didn’t know anything he then says” lets hope they actually will live in vancouver”. My realtor had assistants sell my place they were hired because they only spoke cantonese I hid in the stairwell when they showed it.. every time , and many buyers only spoke cantonese. It was rare when I heard Engrish. Also…. If it was a local buyers then why does Peter Ladner pushing his case about changing the rules for foreign investments? that wouldn’t make sense if everyone was a local now would it?

    • What was particularly interesting in the Ladner interview we transcribed here was how both he and the interviewer agreed that, to their way of thinking, even if foreign investors were somehow restricted, prices would not drop at all.

  13. Z- I didn’t write this but I found it on another blog, it’s pretty good:
    ————–
    I have bad news for those posters predicting a Vancouver real estate crash, with Chinese buyers licking their wounds and heading back home never to return.

    Those people misunderstand why people from China buy. Most of them are not looking for a quick flip or a set percentage of return, rather they are simply trying to remove their money from China’s financial system and into something real like bricks and mortar overseas. Whether the price is $1 million or $2 million, they will continue to buy.

    Why? They have little alternative. The Chinese stock market is too risky and bank rates in China are less than the inflation rate. Keeping all your money in China carries some potential risks, since Chinese government policy can change anytime and there isn’t a thing the average citizen can do about it.

    Vancouver’s schools, environment and large Chinese community are attractive to them. There are few other markets such as London or Sydney that interest them, but these too are seeing prices driven by Chinese buyers bidding up prices.

    So if house prices in Vancouver plateau out or even drop, they will not pull their money out and run home. They probably already own a high-rise apartment or two in China that is worth the same amount as a free standing house in Vancouver, so they will not likely be all that troubled by any weakening in the Vancouver market.

    Even if their $1.4 million house in Vancouver dropped to $1 million, that is still worth 6.6 million renminbi (at current exchange rates) that the Chinese government can’t touch. That is a lot of peace of mind.

    Ironically, the Chinese government puts controls on foreign investment in its real estate market, limiting the number of apartments foreigners can own. Maybe the fear in the Canadian real estate industry that Canadians may push their government to do the same thing that China does to foreign real estate investors is driving them to downplay this issue.

    This reporter needs to have another go at this story. Next time please omit the claptrap from the likes of Colliers and their ilk and go out and visit some housing sales in Vancouver and talk to all the Chinese fresh off the plane and with the cash in hand to buy a house, no matter where the price may be heading.

    • son, i am disappoint.

    • vancouver is going to be a very silly place in 20 years.

      (yes, moreso than now)

    • Thanks for relaying this Z (which blog did it come from?).
      This is the ‘new Monaco’/limitless supply argument.
      There is a small chance it is correct. But it’s not the way we suspect this will play out…

      What will prospective new foreign buyers do if/when the $1.4M house drops to $1M (and the loonie to 90c with it, for a foreign currency equivalent drop to $860K)? We suspect that those foreign buyers (momentum investors almost to a man) will at the very least pause their buying (and that some owners will start selling). These guys are NOT value investors, they hate a falling market, suddenly that safe haven starts looking like a losing bet (and all the subconscious concerns that Canada just may go the way of the US surface).

      Who is going to buy that $2.55M new build on a 33’ lot in PGrey when the market is dropping?
      Value investors aren’t going to step in until it’s selling for <$1M.
      Momentum players are going to scarper.
      Families looking for accommodation will sit on their hands.

      So, yes, a limitless supply of Chinese multi-millionaires looking for any scrap of land in Vancouver and prepared to pay anything for it may, just may, keep this market afloat, and completely divorced from fundamentals, forever.
      But that's not the way we see it playing out.

  14. I honestly forget, maybe the globe and mail or vancouver sun?.My point for posting it is that I agree and it’s what I have been saying since 2005, it’s not going to crash and even if it did, the young people and many others will still not be able to afford anything. It’s a shame.

    being in Florida now, Vancouver has the job market of Miami Beach and salaries to boot and houses of star island.The only difference is that in Miami if you cant afford it there is still many areas in south florida you can go to which ironically are in many ways better

    Vancouver = South Beach North

  15. Well, we respectfully disagree. We still see a very high chance of a crash.
    But we do agree, even after a crash (say 50% off), RE in Vancouver would STILL be very richly priced by fundamental and global-comparison standards.

  16. Even if there is a crash lets say,…..it just presents a buying opportunity for more foreign folks lining up that haven’t done so yet to get a deal( with cash just like the current crop) and which that will pump up the market even more. If that happens still many young people will not have the money to get a place or even a down payment.

    There are others waiting on the sidelines you can be sure of that, many Im sure are foreign

    • Z -> You are assuming that there are foreigners and locals waiting to buy pullbacks… there may be a small number of such buyers BUT, we believe, the vast majority of buyers have been buying ‘comfortable’ that prices can only go up. We anticipate that there will be a marked drop in demand once it becomes clear that prices can drop substantially.

      We’ll have to see how it plays up… you anticipate that any pullback will be met with waves of buying… we anticipate price drops will be met with drop in demand and then anxious selling.

  17. I thought I’d put in my 5 cents worth. Going around with family & friends looking at rentals, we have noted that 95% of rental homes offered for rent and upon our enquiry where the home owners are located, we are told offshore, some have not even seen the homes they have bought and now renting out. So yes, offshore buyers are here in droves regardless of what others are saying. Most rental homes are being shown by young Asian girls, with western names and we never see the same girl twice. On further inquiry, most of these homes have been recently bought by offshore buyers and are now being offered for rent to local Vancouver residents at hefty rents I might add or given a basic price and asked to bid higher. Do we have a lot of local residents that can afford these rental homes, I know we can’t, our income has not kept pace with the cost of living and now we have been paying approx. $2000+ more per month from last year and again find we have to pay about another $2000+ more for a rental this year. (Yes that right $4000 more per month in just 2 years). We been looking for a rental house for our family for the last 2 months and have seen upwards of 30+ homes in total not necessary in move in condition or clean and these are the cheap ones. We dont see why we should be forced to move away from our area or province but buying a home here now seems out of the cards as we have to re-evaluate what and where we want to be for our retirement. Usually there is a line up of renters at the door eager to get in, but chatting to a few, they are in the same position as us, needing to rent but can’t afford to buy and thinking of returning back to the old motherland. They have sold their homes or evicted because landlord sold to offshore buyers and now can’t find an affordable rental. Some thinking, if they are not tied to a job in BC to move away from this Province. Some young adults would move with their parents. There is a surplus of apartments or condos or basement suites in houses to rent, but these are too small and unsuitable for families. Why are offshore buyers buying up our homes and jacking up our rents and house sale prices? I’m beginning to feel we long time residents of BC are NOT WELCOMED in Vancouver anymore and have to move elsewhere/overseas to make room for these newcomers and homeowners from Asia or else we are their working slaves, paying their mortgages. I consider we make a good mid-class income, but obviously the cost of living has shot up. My rough estimate (taken from approx. basic needs, housing, utilities & food) rose last year(2010) due to increase in rent by 120% and close to 120% this year (2011). Our landlords sold rentals to offshore buyers and we had to move, twice. I havent calculated for this upcoming year, don’t know what the rent will be yet. SOMETHING IS NOT RIGHT HERE. Can anyone explain what is happening. I feel like we’ve been caught on a rollercoaster that doesn’t stop. Our kids, even if they could find good paying career jobs in Vancouver, will never afford to own a house here let alone raise a family and indicated they will follow us. We are the backbone of Canada, we have always worked, been small business owners, had hope to keep working and not retiring just yet, but if we do retire earlier, well, what the hell, even if we go overseas, our pensions, CPP, OAS, RSPs and savings will follow us where we could do the same thing as Asians are doing and buying a home for cash somewhere else in the world. Well, Canada can’t have it both ways, its old horses will find better pasture elsewhere.

    • 36 -> Thank you for sharing your story.
      Please clarify: you’re looking at homes that are asking $4K more per month than similar homes last year?
      For discussion, could you let us see examples of these properties? Links?

  18. Ímpossible to compare exact homes as the same houses not up for rent, however, u can check archived rental listings for the last few years and can see for yourself that prices have risen substantially for comparable properties, same size & sq. footage and location. Two years ago we could have rented from 2500/3000 for a decent property, today we are lucky to find similar properties for 5000/6000 plus increases in utilities & food and taxes . We are unfortunately experiencing looking for same type of properties, want to stay in same area, and know what was around 2 years ago and what they are asking for similar properties today. i.e. what would have sold at 1- 1.2m 2 years ago, now sells for 1.4-6+. The difference in prices would reflect a higher monthly mtg. payment, thus higher cost to renters to carry the offshore buyers mtg. for that rental house. We have also found that a lot of offshore owners are splitting the house up into a main house and a suite and are charging more for the house (less sq. footage if minus basement) and also charging for the suite. If you want the whole house they add the 2 prices together. Also, they are putting bits of furniture in some houses and renting them out as furnished houses and charging more. Lots of trickts. We were getting ready to buy our own house, but due to the surge of offshore buyers house prices have risen, so instead of us paying off our own mortgage we are now paying some offshore buyers mortgage. Sore point and sour about entering the Vancouver real estate market at such high prices, so now considering overseas properties as they are cheaper and so is cost of living. As said, we’ve been looking for the past 2 mths and we know (experience) the type of homeowners 2day as compared to more local owners 2 years ago, even last year. Not the same market. We ARE experiencing long lines of potential (local) renters and chatting to them and homes that are being shown by young asian girls for absent offshore owners, apparently when asked they are either related or friends. We now make a point of asking who and where the owners are since we don’t want to give a deposit cheque to just anyone. What was mentioned in previous comment was actual experience not fiction. Believe it or not. I would suggest you hit the pavement and go on as many rental viewings yourself as we have as a potential renter for a house and get first hand experience yourself, then you can write about it. We find it is very sad about what is happening to Vancouver, it was a nice place to live, work and retire in, not anymore and we don’t want to buy a house here.

    • this is topic #1 of interest to me (i am a renter) and i don’t think we’ll ever get any straight facts on it until a professional, DISINTERESTED journalist goes out there and literally checks out hundreds of rental properties and compiles the data.

      until then, it’s just a murky grey area full of bias, greed, bullshit and racism.

      i wouldn’t be surprised if you’re just trolling, to be honest, though most trolls wouldn’t put the effort into typing anything that long out. sorry to be a wanker, i just want answers and none are forthcoming. i can understand a nice 3 or 4 bedroom house on a real yard with a garage costing $2k – but $4k, $5k, $6k – you have to be pulling down serious cash to pay those rents, and lets be honest, the average canadian family (of any descent besides dad being in the party) cannot afford that, in fact those rents would make up 50-100% of most double income families’ after tax income.

      the question is, how long can these absentee landlords hang on before they start dropping rents or bail altogether? how many of these owners are actually taking part in ‘real estate pools’ etc (i have heard this practice is quite extensive) it is unfortunate that our language barrier is so high. i am trying to recruit a few cantonese friends who are pissed at the situation as well to translate some things and poke around, we might get some answers out of them.

      there will be some who disagree with this very broad statement i’m about to make, but i feel (think, for those of you that hate feeling) that absentee landlords do absolutely nothing of any positive benefit to a local community and it’s nation at large. we are so eager to wave the flag at sporting events but not to exercise our national interest when it comes to matters of housing, costs of living and finance.

      https://encrypted.google.com/#q=absentee+landlords+scotland+history&hl=en&prmd=ivns&tbs=tl:1&tbo=u&ei=d_QbTuisKeHniAKIssSbCQ&sa=X&oi=timeline_result&ct=title&resnum=11&ved=0CFoQ5wIwCg&bav=on.2,or.r_gc.r_pw.&fp=d0bc0128cd6e4604&biw=1920&bih=904

  19. I am very serious. Had to look up “troller” … I’m not that. It’s location, but even for this location prices are ridiculous and have doubled, but this is one of the areas that offshore buyers are targetting amongst others. Check this website hope it helps: http://vancouver.en.craigslist.ca/search/apa/nvn?query=&srchType=A&minAsk=&maxAsk=&bedrooms=3

  20. my apologies – i am familiar with craigslist

    most people who can honestly afford to rent a “$5000 a month” property in west van would probably find it far cheaper just to get a mortgage and buy the damn thing.

    should be interesting when the S hits the F!

    keep posting your experiences, i am interested.

  21. No,not interested in buying anymore, not a matter of affordability but value for our buck, we don’t trust Vancouver real estate market now or the quality of lifestyle in Vancouver, if our governments are allowing and blessing citizens of foreign countries to play havoc with our economy, cost of living, jobs and lifestyle, do we really want to be here … we’ve been outbidded by offshore buyers anyway, we are not playing that game, so why bother. Would hate to be stuck with a huge mortgage that could outweigh the actual cost of the house value in the future. Dont want to be somewhere where our own children can’t afford to buy or are not given preference for career jobs. Want to be free to go elsewhere without anything weighing us down. As said before, we are re-evaluating everything.

    • ohhhh you want to live in the old canada,

      sorry pal,

      times change

      just let go of it ok?

      like, seriously – forget about it, you xenophobic bigot. this is PARADISE, haven’t you heard??

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