“I have a have a good friend who is from mainland China. He rents in Burnaby, and it was pretty easy for me to convince him that right now is not a good time to buy. He is frugal, even though his family could easily afford these outrageous prices for cash. He came here as a business immigrant.
His dad is a developer in China, and he knows some developers here. For example, he recently told me some of his fathers’ friends will be starting a new condo tower build in Richmond.
Here’s are the possible explanation that he offered for why the influx of foreign cash seems to have dried up:
1) In 2010, the law came into effect in China, limiting the purchase properties to two more. I.e. if you have zero, you can buy two more. If you have 20, you can buy two more. Now, those who have the money have already bought 2 more properties, so they can’t buy any more. People who need to sell – e.g. to buy a house in Vancouver – can’t find a buyer. As a result, he says that the prices have taken a tumble in some areas of Beijing from up to $3000 per square meter down to $2000.
2) Chinese people prefer US over Canada – Seattle, San Francisco, LA. According to him, US is the #1 choice. Furthermore, business immigration quotas have been reduced in Canada. He says that it’s now easier (and cheaper) to go the states if you have money. I don’t think I need to spell out the obvious differences in the real estate markets. In his opinion, it’s unlikely that the Chinese would speculate in an area where they can’t live. I.e. he doesn’t think that they would invest in real estate if they can’t get a visa to live here.”
“In addition, let me tell you about a young couple I pried from the hands of the condogeddon. A friend of mine, a young teacher and her boyfriend (engaged) just sold the apartment they shared with his brother. I explained to her the obvious reasons why real estate is overpriced – price to rent, interest rates, speculation, etc. It took no more than 15 minutes. I then provided her the links to this blog, and a couple of other resources to research on her own. They walked away with a profit, and are renting a better place for less than what the mortgage and condo fees were – without the need to share it with his “quirky” brother.”
“Feel free to publish this on your blog.
Furthermore, do you have any questions you’d like me to ask my Chinese friend?”
– this from ‘Some Guy’, via e-mail, 24 Mar 2012
Thank you, Some Guy.
Do any readers have any questions they’d like him to extend to his friend?