Comments In ‘The Province’ Regarding Foreign Buyers – “Affordability has nothing to do with the colour of your skin; it impacts every resident of Vancouver. Politicians need to step up on this. And please, please, please, look deeper than what the RE industry has to say on this.”

From the comments section of ‘Is it time to curb foreign real-estate buying in Vancouver?’, The Province, 14 Nov 2011:

“I run and own a successful mid-sized company, if I hadn’t a bought my small house 10 years ago, I would not be able to live here. My company would go somewhere else and 60 people in Vancouver would be looking for work. It strikes me that this is not about racism, as affordability has nothing to do with the colour of your skin. A lack of affordability impacts every resident of Vancouver. The Politico’s need to step up on this. And please, please, please-look deeper than what the real estate industry has to say on this, pardon me but they cannot be viewed as owning an objective POV.”
– The Drake

“I lease a 4000 sq ft commercial property in the city my property taxes are 24,000 a year (yes 24 thousand dollars a year.) These investors are buying to make money, treat them like the businesses that employ people in this city.” and “Last year my household income was 171000 I could afford a house but I’d be strapped for cash. If I moved to another city and earned the same I could buy a house and stIll enjoy my life. There is no reason Vancouver is as overpriced as it is except for speculation.”
– Paulys (13 Nov 2011 10:52pm)

“I was born and raised in Vancouver and I have never seen anything like what is going on now. I attended two first day sale events for a highrise tower in Burnaby and a low rise townhome, also in Burnaby. Both events were packed with Chinese/Korean purchasers snapping up everything in sight. The real estate agents on site didn’t even bother to give me the time of day although initially I was interested. I felt myself to be the victim of reverse racism due to my white skin and possible perceived lack of big money to spend. I employed numerous university students and witnessed time and again the purchase of large “family” homes, all the children going through university and attaining Canadian passports. The children have all gone back home, the properties have been sold and the children come back every 5 years to renew the passports. The parents aren’t interested in doing business here due to our red tape and tax issues but want a bolthole to escape from Asia.”
– anonymous (13 Nov 2011 10:55am)

“I would totally support restrictions on foreign buyers in GVRD. I was born and raised here, have multiple degrees and work my tail off (and save a tonne) but there’s no way I’ll ever be able to afford a million dollar home – and that doesn’t buy much. Its a darn shame that good people can’t afford housing. There won’t be much more complaining from me, but this will drive me to leave the GVRD.”
– anonymous (13 Nov 2011 11:55am)

“I realize this story is about foreigners purchasing Vancouver real estate to the detriment of your average born and raised here Canadian, but I’ve just got to mention how many young people I know here in Greater Victoria who plan on moving somewhere else due to the horrendous cost of living in the Capital region.”
– DC in BC

“My parents bought a house in west Richmond for just under half a million dollars. 50K in renovations and 6 years later, it was sold for just under a million dollars. I love them, and am happy for their success, but it’s stuff like that that’s ruining Vancouver. I’m 25, and I cannot come close to affording a house with my salary (I have a full time job). I’m looking to move out of the country. I’ve had it. If it’s not real estate agents pushing up prices, we have indifferent and out-of-touch politicians looking to raise taxes, and not offer anything worthy in return.”
– Allan Hall

“I just bought a house on an acre of land, in Hawaii, for the cost of a rock bottom condo here in Vancouver. Plus, the weather is better. 🙂 Seeya!”
– anonymous (13 Nov 2011 11:43pm)

34 responses to “Comments In ‘The Province’ Regarding Foreign Buyers – “Affordability has nothing to do with the colour of your skin; it impacts every resident of Vancouver. Politicians need to step up on this. And please, please, please, look deeper than what the RE industry has to say on this.”

  1. I really wonder what the hard stats are on people leaving the region/province. I know it takes time to gather such info but this blog would have you believe everyone is running for the exit. It seems to me that most are tired and thinking of leaving but I’d bet that those who actually follow through are few.

    Also I see comments like the one above blaming realtors for pushing prices up. Really? I don’t think the real estate association has any actual influence in pushing prices up. They’re salesmen. They sell. It’s the buyers who push prices up. They’re the ones bringing the cash to the table. You can’t fault a realtor for serving their seller well by getting an obscene amount of money. Just one tiny cog in a very large maniacal machine.

    Which leads to a very good question: Pardon my ignorance but what do you think are the actual causes for this speculative mania and huge run-up in prices? We’ve covered low interest rates, the real estate industry, Olympics, global boom, China, stock market insecurity, the media, neighbour’s success anecdotes, societal pressure, developmental land restrictions, shifting demographics, and… Is there any one thing that we can point to and say “Bingo! That was the cause!”? We can easily point to how it is irrational but can we understand the participants reasoning?

    • Rob -> “this blog would have you believe everyone is running for the exit”

      Far from it; the vast majority of citizens are staying.
      The fact that, at the margin, there are people being pushed away or attracted elsewhere is telling. Do you not think that those stories reflect important social pressures?
      We are as eager to publish the opposite stories; of people enamored with Vancouver, arriving here and spouting its praises… we’d post them if we could find them.
      If you have any such stories, please let us have them and we’ll headline them.

    • Rob -> “Pardon my ignorance but what do you think are the actual causes for this speculative mania and huge run-up in prices?”

      Two things:
      1. Cheap money.
      2. Local speculators (in the broad sense of the word: people overextending to buy with the expectation of future price strength).
      That’s all it takes! (all the other factors are good ‘stories’ that help along the overextenders).

      • it’s overwhelmingly #1, credit availability, imo. #2 wouldn’t matter otherwise. however, yes, if the everyone truly studied mises, there could be credit-credit everywhere and almost all would still choose cash.. there are several important components to to credit availability:
        (a) interest rate = price of credit. if credit were entirely backed by real savings, a low interest rate would indicate large supply of capital in reserve. when credit is created out of thin air, it makes everyone think that much capital exists while in fact it does not. fuels a boom in production for future demand that ultimately fails to materialize. bust and liquidation is unavoidable, necessary.
        (b) relaxation of lending standards
        (c) govt backing of credit contracts via sponsoring on the front end and bailouts on the backend
        (d) securitization of credit contracts spreads risk to the farthest corners
        dopey metaphorical short: crony uncles joe & cho call say you won lotto. blow savings on stuff and big party, they take your cash. later you find out just crank call.

    • Rob > Re realtors: I get flyers from realtors all the time; yesterday one arrived from a quite well known West Side realtor who proclaimed several times that “now is a good time to buy or sell.” It’s that kind of baloney that does encourage innocent and ignorant people. Realtors obviously have a huge interest in keeping this mania going.

    • Royce McCutcheon

      @Rob:
      RE: hard numbers, wasn’t there data out last month that showed inter-provincial migration to BC was negative for the first time in about a decade? That’s a pretty good indicator that people from here are leaving, no? Until the last couple years, I – and family who’ve lived here 40+ years – had never heard of people feeling like they had to leave because they felt they could make a better life elsewhere. Now, we’ve seen it firsthand – and with people who earn quite well.

      And, FWIW, I’m personally not “following through” yet, but I AM taking my first concrete steps towards leaving. I hate doing it, I love it here, and my living circumstances are very sustainable for now, but we do want a larger family and we see serious challenges associated with that if Vancouver stays as it is. My family’s quality of life is paramount and that consideration, particularly as we consider what we could achieve even with pay CUTS in other cities (where we’d actually be likely to earn more), has recently prompted me to do the responsible-albeit-slightly-risky-career-wise thing of spelling out to my employer that we are considering our options. This is incredibly difficult as I owe these folks so much and have known them – and had their support both professionally and personally – since I was barely into my 20s. But it needs to be done and it wouldn’t be fair to spring it on them.

      Anyways, it will be interesting to follow those inter-provincial migration numbers over the next few years.

    • The stats are out there. Did you ever watch the Global TV series titled “Generation How”? They mentioned that for the first time in a decade BC had lost more people than it had gained. So, yes, people are leaving and the worst part is that a lot of them are young professionals.

  2. All of the above…It’s basically supply and demand, which dictates prices in a free market. The continual runup in prices over the past few years has triggered way too much demand from all segments. Throw in some irrational thinking and you now have a beautiful overinflated bubble. It is what it is. You can either fish or cut bait and leave… and enjoy a much better different standard of living in other places. Or you can wait until the bubble bursts and try to pick up some good deals when demand evaporates, as overextended people will be really hurting big time.

    • Not_604 -> “The continual runup in prices over the past few years has triggered way too much demand from all segments. ”

      Agreed. And note that this is the reverse of the supply/demand dynamics in more typical times; it defines the market as a speculative mania. The buyers are momentum speculators.

  3. I personally have NO problem with Chinese party members using Vancouver/Canada as nothing more than an insurance plan for ill gotten gains.

    go china!!
    http://www.theglobeandmail.com/news/world/worldview/vladimir-putin-a-man-of-peace/article2236707/

  4. mean westside lady

    And Christie Clark wants BC to control its’ own immigration so we can ramp up the number of investor immigrants piling into Vancouver.
    Go Christie.

  5. “Is there any one thing that we can point to and say “Bingo! That was the cause!”?
    Densification.
    25 years of aggressive immigration; adding 45,000 new migrants to Greater Vancouver. Couple this with the loss of 40% of our detached dwellings and it’s like lighting the TNT wick on both ends that have now met in the middle.
    No-one here is aspiring to buy a condominium. The argument here is that a detached dwelling is out of reach, and affordability for this property class is not coming back in my lifetime.

    • I think this is a good point. Most posters do seem interested in west side SFH. Let’s turn it over to condos though, even in the Burnaby or North Van periphery. In some ways it’s more interesting because even at 2-3 times “fair value” many posters could buy them even with sensible debt multiples. The prices are still mad, but it’s actually doable. The relative value argument between the assets classes is interesting. Because SFH are so expensive many more family types/income levels compete for condos, but they are actually buildable, so supply could help. If the gap gets too big no one will ever be able to “graduate” from condo to SFH. It turns out they are all part of the same matrix. Credit easing, bull market stories: bubble. It works until is doesn’t.

      • It may be doable for some, but still are out of line. Condos are not affordable for many families, and they’re way out of line compared to rents. We’re *renting* a SFH in Vancouver with 4 beds for a smaller monthly cost and way less downside risk than buying a 2 bedroom condo even in the ‘burbs.

        What’s 3x median *family* income, now – $70K? Many *family* condos out there for $260K (3x income plus 60K down), even in the burbs? Nope. It’s still jacked on cheap credit.

        But also, there is a greater downside risk to condos. I know several people now who’ve been bankrupted or otherwise hurt by special assessment. In Vancouver, they tend to be built so dang poorly, and the maintenance in many buildings appears to be going to the developer and not to reserve because the developer keeps its finger in the parking and elevator pie. Strata can also be insane. I am more willing to be housed in apartments than to buy them, because there’s just so much more depreciation going down in an apartment, and the price in no way reflects that in our market.

  6. I don’t care that foreign speculators are here running up our RE prices. They are not sophisticated investors and are only momentum chasers meaning that they are only buying because prices are going up, and once prices start to go down they will bail out just as fast. Foreign speculators just ensure that the crash will be that much more spectacular.
    Bring it!

    • I totally agree. The more speculators who buy without any intention of living here the louder the pop will be once the bubble bursts.

      I also get the impression we’ve turned a corner in terms of the public perception on housing. Up until about 3 months ago the media and the regular guy on the street were relentlessly positive about the housing market here. Now I hear comments along the lines of ‘it can’t continue to go up’ ‘we’ve got a problem with affordability’ ‘I might sell and rent for a while’. All music to my ears!

  7. @Vesta: Re “It’s a good time to buy or sell” is a fine statement to make. People tend to have problems with it in a way of thinking if it is a good time to buy then it must be a bad time to sell, or if it’s a good time to sell then it must be a bad time to buy. What that statement really means is that if you want to sell then it is a great time because there are a lot of buyers and the prices are good. If you’re a buyer then the lending rates are favourable and you might as well take advantage of them. If we look to much of the US, where the market has and continues to crash, it’s a terrible time to sell but a great time to buy (maybe).
    Think of the couple downsizing, they can sell high and buy in at a lower point taking cash off the table and financing if they wish at great rates that may be lower than their current other investments are performing if they wish to. Think of the older couple who can sell off a large, mostly empty, house. They can sell it off and buy a nice property on the island or in Mexico (or both). Yes, it is a great time to sell. And think of the young family who wants to buy in that doesn’t buy into the rationale that prices are off their nutter. Well, the interest rates just keep making look very attractive and so it is a great time to buy from a financing POV.

    Personally, I’d rather see interest rates go to 10%, trash the market, buy in then, pay the banks a hefty premium for a short term on a house that had a very small loan (at a hefty monthly payment) and then when interest rates swing back to low and prices rise… sell. BUT that could be a VERY long time from now and, unfortunately, we have a finite number of years on this planet.

    • Rob-> I hear what you’re saying about what “it’s a great time to buy or sell” might mean. But listen to this too: I was having a conversation the other day with an intelligent and well-educated person who said his realtor had told him now was a good time to buy “because prices can only go up.” He had accepted this as truth. I told him everything else I knew about what could happen (based on what I’d heard and on some of the good information I’ve found on this blog). He blanched. He hadn’t heard any of the negative stuff.

      And IS this a good time to buy just because interest rates are low? There’s lots of savvy information on this blog that suggests it’s still a suicidal idea for many. I think realtors do bear some responsibility for putting lipstick on dangerous pigs.

    • It may be a good time to buy, but from an investor’s point of view it’s a better time to sell. They don’t put that in their pamphlets.

      Sorry, too much conflict of interest to read anything other than self-interest. Thanks for the notepads though!

    • Rob: In other words, it’s a good time to sell in Vancouver and buy almost anywhere else — either outside Canada, or outside another major city in Canada. Agreed. But I don’t think that’s the plan this Vancouver realtard was humping.

  8. And here’s an interesting story: http://pricetags.wordpress.com/2011/11/15/generation-y-bother/

    The economic hardships young people and families are facing (and not just in Vancouver).

    • Here’s the one I read: “Buy when you can and sell when you have to” vintage realtor: If you don’t have money or leverage, don’t waste my time. Hold on until they drag you out screaming, but if they do, I’m here to help. Other interpretation on the sell side: only sell if you NEED to move cities or NEED to buy more house, never on valuation. Hey it’s worked for most of 30 years.

  9. As a Chinese myself

    ” The parents aren’t interested in doing business here due to our red tape and tax issues but want a bolthole to escape from Asia.”

    It’s so true.

    As a Chinese myself, I want to say that in early 90s vast majority of Chinese who came here with every intention to start a new life in Canada. Some of them even sold their condo / business in China /Hongkong prior their arrival in Canada (and they were forever regretting for that later).
    Sadly, most of them HAD to move back to Asian or became astronauts. When they went back, they brought their stories back, and the perception in Asia is that Canada is a place to retire/relax, but not a place to make a living. Since then, very few of the new breed of immigrants has intention of working in Canada.
    Someone in this site mentioned that $24000 for 4000sft warehouse, that’s nothing. Try to rent a tidy place in a mall to start a business (any mall, not just so called Asian mall), you will be shocked!!!!
    Can someone explain why Walmart is allowed to open 24 hours, just to kill all the competitors?
    Furthermore, let me tell you a lot of rich immigrants want to invest in Canada. In China, they are angle investors in all sorts of tech savvy stuffs, but here they don’t know how(all sorts of barriers: language, legal, etc) in Canada, so they end up doing what is easiest one: investing in RE. If the government is a bit more active on this front, or any organization can show them the way……………..
    Want to change government policy? Sure, go ahead. Change them all!!!

    • I think that’s an interesting perspective. Many past immigrants have expressed frustration at the difficulties they face leveraging their previous experience in Canadian business environment, or even try to make a go of it in what is a more heavily taxed regime than many countries of origin.

      This is important. When we hear the stories of astronaut families it’s a fair callout that there are many predecessors who bought the Canadian dream and were disappointed. Now Canada perhaps has earned itself a deserved bum rap and lack of attachment is part of the consequence.

      I think this goes a long way for inter-provincial migrants too, who come to Vancouver and then leave when they find it’s not what they had envisioned.

      Food for thought.

      • this experience is not specific to immigrants. you could extend the observation to local born who left for work elsewhere too … or why not just any former resident. it may be instructive to take seattle and compare side by side. very similar in many respects but with a less burdensome tax regime and the economic base is stronger and more diverse.

      • well fuck it

        lets just make our official language putonghua

        after all, we have to make it easier for them, otherwise if its not easy for you,

        WHY BOTHER CONTRIBUTING TO YOUR ADOPTIVE COUNTRY IN POSITIVE WAY?

    • “Sadly, most of them HAD to move back to Asian or became astronauts.
      ???

    • I dug this up from an old ‘Atlantic’ article. The Chinese aren’t so clever, they are simply late to the party and discouraged:

      “What might be called developmental disequilibrium exists whenever countries or entrepreneurs can replicate the activities of the developed world in the underdeveloped world.

      A year or so before the hand-over of Hong Kong from Britain to China, I was sitting in the lounge at the Hong Kong airport eavesdropping on a conversation between two rich Chinese businessmen on their way to spend six months in Vancouver in order to get Canadian passports — their insurance policy in case things went wrong in Hong Kong. They were complaining about having to stay so long in Vancouver, because they could see no way of using their time there to make money. To hear them describe it, Vancouver was an economic desert. Why? Vancouver, after all, is richer than Hong Kong.

      The answer is to be found in the absence of developmental disequilibriums in Canada. In Hong Kong these businessmen had become rich by exploiting the differences between the developed world and poor, but now open, mainland China. They simply copied what was done in the developed world and replicated it in China. What were commodity operations with low rates of return and few growth prospects in the developed world were high-return, high-growth opportunities in China. These businessmen were skilled at replication and at knowing the exact time when mainland-Chinese conditions were ripe for any particular activity.

      Vancouver held no replication opportunities. All the normal First World activities already existed there. To get rich in Vancouver one needed breakthrough technologies or new sociological concepts. The businessmen had neither. For them Vancouver truly was an economic desert. “

  10. OT.
    MIsh posted this article: Chinese TV Host Says Regime Nearly Bankrupt
    “Every province in China is Greece”

    China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.

    Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

    The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not to post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.

    In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

    Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

    He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said.

  11. Holy shit.
    Professor Larry Lang – soon to be appearing on the back of milk cartons.

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