Federal Immigration Minister – “People in Vancouver ask why we facilitate this. It is leading to inflated real estate prices. Great if you are well-established, but if you are a young family starting out, good luck being able to afford a house in Vancouver. A lot of people who aren’t rooted in Vancouver are inflating the costs.”


Kenney – “We had begun to devalue citizenship.”

Nine out of 10 wealthy immigrants accepted into Quebec’s investor immigrant program never come to Quebec, federal Immigration Minister Jason Kenney said Friday.
“I do think it is peculiar that the province that was given power to select immigrants primarily to reinforce the French fact in Quebec is in fact flipping Asian people into Vancouver,” Kenney said during a meeting with The Montreal Gazette editorial board.
“In principle, the Quebec immigration program should be about immigration to Quebec.”

Kenney defended the [national] investor program.
“There are millions of millionaires. There is absolutely no shortage of demand for this kind of program. We have a huge surplus of applications.”
But the immigration minister said he would like to see both the national and Quebec programs revamped to better reflect the demand from rich people while making the programs more valuable to Canada.
Under existing criteria, the national and Quebec versions of the program accept applications from investors with a net worth of at least $1.6 million, provided they make an $800,000 loan to the state, which is repayable without interest in five years.

Kenney said the “vast majority” of the roughly 4,500 people Quebec accepts under the investor scheme settle elsewhere.
“As far as we can tell, about 90 per cent of those people end up settling in Vancouver and Toronto. They don’t even come here,” Kenney said.
“Quebec gets the money. Ostensibly, they are supposed to be coming to Quebec, but they go to Vancouver and that is where they stop.”
He said in most cases, the family sets up a household in Vancouver while the breadwinner “goes back to Asia or wherever to run the business, where they are not paying Canadian taxes.”
“Here’s what often happens. Quebec will get the $800,000 for five years. B.C. will get the social services costs for health care and everything else for the dependents who have been brought to Vancouver.

“People in Vancouver are always asking me why are we facilitating this because it is leading to inflation of real estate prices. Which is great if you are well-established and you have paid down your mortgage. But if you are a young family starting out, good luck being able to afford a house in Vancouver. A lot of people who aren’t rooted in Vancouver are inflating the costs.”

“We have decided that we have to raise the price point. There is a huge surplus of people applying for these programs beyond our ability to admit them and we just aren’t getting enough bang for the buck.”
Kenney rejected suggestions that the program feeds into the perception that Canada is ready to sell citizenship to the highest bidder.
“It’s not citizenship, it’s permanent residency,” Kenney said.
“There is a compelling rationale to attract high net worth investors to help bring capital and ongoing investments into the Canadian economy . . . But the current one is not meeting those objectives. What we want is investment that puts real skin in the game, not just a loan so people can move in and out.”

Meanwhile, Kenney said the federal government is in the process of revoking the citizenship of 2,300 people, with at least 6,000 more cases under investigation.
He said a two-year investigation by the RCMP identified at least 8,800 cases of alleged residency fraud.
“Thousands of people were using crooked immigration consultants to create fake proof of residency in Canada. When we find several thousand people who have broken the law, it is pretty widespread.”

“We had begun . . . to devalue citizenship in the sense that we were not consistently applying the statutory requirements to obtain citizenship,” he said.

– from ‘Que. immigrant program funnels rich newcomers to B.C.: Kenney’, Montreal Gazette, 20 Apr 2012
[hat-tip Jeff Murdock]

102 responses to “Federal Immigration Minister – “People in Vancouver ask why we facilitate this. It is leading to inflated real estate prices. Great if you are well-established, but if you are a young family starting out, good luck being able to afford a house in Vancouver. A lot of people who aren’t rooted in Vancouver are inflating the costs.”

  1. “We have decided that we have to raise the price point”
    Wrong. The Federal gov’t has to stop accepting these interest free loans from the immigrant. Really, are they that addicted to the cash? With no plans to alter the flow of wealthy to this country it seems they are.

    “It’s not citizenship, it’s permanent residency,”
    What a moron. Permanent residency is the same thing essentially. It’s actually better for the immigrant since they get all the benefit of a citizen without having to give up their origin citizenship.
    What needs to change is eligibility for health care, social services, etc. And we need to start applying Canadian taxation rules i.e. worldwide income is taxed

    • 4SlicesofCheese

      Agree.

    • Agree re citizenship and residency being little different.

      Regarding the cash: The benefit from the difference between an interest free loan and a regular loan at almost zero rates, for a government, is almost zero.
      There was no substantive benefit to Canada from those loans. Heck, we’d bet (heavily) that the saved interest didn’t cover the cost of the program.

      • Agree, the investor should bring more value than just money (more below). If we need cash, the international community seems happy to lend at low low rates.

    • Strongly agree with you!!! When is the minister going to have such common sense?

    • 2008-2010 saw >5000 investor immigrants to BC. They each give an interest free loan of $800k for 5 years. In steady-state, that’s a $20B (=$800k * 5000 * 5) capital injection. In comparison, BC GDP is $200B.

      If those $20B were to be borrowed at the BoC rate of 1.6%, that would cost $320M annually. So, having those interest-free loans effectively allows the BC government to save $320M in borrowing costs. In comparison, the BC 2012/13 expenditure budget is $43B. So, these interest free loans allow the BC government to decrease their expenditures by a mere 0.74%.

      I still don’t get it. Why is the government so intent on allowing in rich immigrants. What is their motivation?

      #1) The interest-free loans help the government balance the books? I don’t think so. The 0.74% reduction in the budget is negligible.

      #2) Stimulating the economy. They theorize that rich people will come here, spend money (on houses, cars, etc.).

      #3) A political bargaining chip. Foreign governments exert political pressure on Harper to grant their cronies Canadian citizenship.

      Are these plausible explanations, or am I missing something here?

      • You are not missing anything Jeff. During the period of time when people from Hong Kong were coming to Canada under the Investor program and doing nothing more than buy a house (versus actually make an investment or start a business) the government of the day came up with a better plan to end the practice. Now you see what we have.

        Hopefully that will end soon too.

        I did write a post on this already that has disappeared into the vaults (the second post lost lost this week) but if necessary I will repeat. Our investor program has lost focus. It does need to be tailored to circumstances and to take into account the vast flows of wealth that are coming from overseas.

        I am concerned that our host here has taken it upon herself to determine what is valid commentary and what is not. I brought forward reasonable remarks and so I am surprised they did not meet editorial standards.

      • Farmer -> Please take a another look.
        None of your posts are ‘stuck in moderation’.
        No posts are ‘lost’.. they get held up until I see them, then I let them through. We don’t censor posts here.
        This is the price we pay for not getting sprayed continuously with effluent from the likes of ‘fred’.

      • I will look tomorrow. I will also apologize if I am mistaken. I know of two posts that never appeared though. Keep in mind I am useless with a laptop so don’t be offended…..but those two vanished after hitting the send button. I just figured you deep-sixed them because they did not fit the model here.

  2. Carioca Canuck

    You don’t gave to give up your original citizenship to get a Canadian passport. Canada permits dual citizenship.

    • 4SlicesofCheese

      I believe China does not allow dual citizenship.

    • “Canada permits dual citizenship”.

      but the country of origin may not

      • doesn’t matter … can’t tell another country what to do … except the IRS … probably why superman renounced
        http://tinyurl.com/3soopr7

      • Neither does the USA. So, as a Canadian you get US citizenship and turn in your Canuck passport. Then you come back to Canada and say “those mean Americans took away my passport.” And, voila, the Canadian government says… “tsk, tsk… here’s a new one.”

        I don’t know, but I suspect that it works for other countries as well.

  3. Is there really a lack of investment capital in Canada? Or just lack of willingness to use it for actual business investments? There seems to be more than enough money for housing.

    There is probably an assumption that “investors” bring with them a certain business skill set and entrepreneurial attitude. Perhaps the investor program needs to require explicit evidence that applicants actually have these two traits, because this type of immigrant brings more long term benefits to the country than just a lump of cash.

    • There is no CMHC equivalent for businesses.
      Rightly so, most would argue.
      Lenders have to assess the risk; as it should be.

      • I don’t see the connection of CMHC here. However I would like to point out that there were no lack of successful immigrant investors/businesses in the past that were sold for good profits to multinationals, e.g. Amerisource & GEA.

      • ToL -> What we meant, in long form, was “if you’re seeking a business loan, the lender is not backstopped by the taxpayer, so there is onus on the lender to assess and price risk appropriately; this is not so when you seek a home to buy a leveraged piece of RE, in which case the lender is backstopped by the taxpayer via CMHC and, as a consequence, the risk is mispriced.”.

    • Spending time in Canada embedded in a complicated first-world business is not the same as doing business in many countries these investor immigrants come from. Kenney is speculating that there are enough competent entrepreneurs in the weeds who will contribute far more than just a $800K loan ever could.

      This is the first I’ve heard Kenney call out Vancouver real estate explicitly. He of course got it wrong — it’s not these investor immigrants who are driving the market, Vancouverites choose to believe it and go along for the ride.

      • Agree, that’s an ongoing crucial point.
        The indirect effect of the immigrant investor story, causing locals to speculate on RE, has been far greater than any direct effect of foreign investor RE buying.

      • thanks for restored focus. to close the casino, have only to end policy of cheap credit for housing. the can biz environs are typically unfavorable/uncompetitive save a few natural and geographic advantages. primary culprit? it’s the taxes. now, what else would you expect everyone, locals and non-, to do when there is a fancy tax-sheltered casino open?

      • “it’s not these investor immigrants who are driving the market…”

        I guess you didn’t read the thread “west-side street level analysis”.

        Furthermore, Kenney just outlined that fully 90% of all Quebec immigrants to the investor program end up elsewhere and most in Vancouver.

        Not sure the reason you deny facts even when served to you directly. Wealthy immigrants have probably been the primary reason for the recent run up in the Vancouver detached market.

      • Well Formula, it seems pretty obvious to me that if enough speculators from offshore buy and then leave homes vacant that the outcome would cause prices to rise elsewhere as supply came off the market.

        I agree with you that a segment of investor immigrants (wealthy overseas buyers) have played a conspicuous role in the current excess of prices. We can judge this most easily by looking at the parts of the city that are favored most by foreign buying. Have prices not gone parabolic in some cases?

        On this site there is a general agreement that price declines happen from the margins. Small changes in buyer behavior can lead to dramatic end results. It is not a very big leap to also appreciate that speculative bubbles are formed in just the same way and that the marginal extra buying can cause a hot market to boil over.

        We still do not have enough of the facts though. Realtors and the cartel that collect and protect the information are being less than forthcoming in giving us the details. They would like us all to accept that home buying is privileged information and should be protected behind a veil of secrecy.

        I would argue that the system needs greater transparency and openness. Most of us are listed in phone books after all. What is the real difference. Only that those who are hiding have something to conceal.

      • I see what f1 sees – maybe it’s the proverbial “elephant in the room” that so few want to see. Vancouver RE has always been about offshore money and the recent surge of rich Chinese immigrants is just another example.

      • “Vancouver RE has always been about offshore money”

        not always, just since the late 80s

    • theragingranter

      There is a massive misallocation of investment capital. This misallocation is exacerbated by ultra-low lending rates, a consumerist orientation, a real estate-obsessed public, and lazy, unimaginative business class. It is a troublesome trend, all the more so because I don’t have a clue how to reverse it, other than to start increasing rates. I cannot, however, breathe new life into our entrepreneurial class. We need them to lead, not sit there and wait for a government policy to fix things.

      There was a headline in the G & M right after the Budget. It went something like this:

      Entrepreneurs laud new research funding initiative

      Do you see the irony in that headline?

      An “entrepreneur” thrilled with a new government funding arrangement.

      I once suggested in a Globe and Mail thread that the SR&ED funding program should be scrapped. I was instantly attacked by several commenters who said, “You don’t know what you’re talking about! Many tech companies would not exist if not for a steady stream of SR&ED credits! You would be killing off the Canadian tech industry!”

      Sadly, I believe those comments. Think of it. Our best and brightest, our “innovative class”, is only as good as the next government cheque. Ouch. Feel free to suggest ways of fixing this situation. 🙂

      • Are there perhaps opportunities open to genuine entrepreneurs as a result of the current terrain?

      • theragingranter

        If I could answer that question, I’d be an entrepreneur. Sure wish I was.

      • on terrain opps. quite obviously, there will be money printing … and not just a trickle … say, as in noah’s ark. sadly, all one needs to benefit is put money in a debasement-resistant form, place out of reach, and wait … as if having mixed epoxy. there are other possibilities of course. but why complicate things unnecessarily before the fog has begun to lift?

  4. It is a bizarre system and unique in the world (which is a bad thing). Lend the government 800k for 5 years at zero (no questions asked about how you got the money).

    Equivilent to the Government saving 80K+/- in interest expenses. That’s it!

    It would be better to be done with this joke and instead attract successful honest entrepreneurs who want to start a business here not just come here, buy a house and park the wife and kids.

    • Seems the immigrants with the real drive and ambition are mostly broke though. There is no real shortage of good ideas or even a lack of potential investments. What is missing is a way to marry up the money with the people who want to create an enterprise.

  5. theragingranter

    Yeah, save the Feds on interest, and cost the provincial treasury a fortune in education and healthcare expenses. What’s not to like?

  6. theragingranter

    I will give Kenny some credit though. Sure he’s a blowhard, but at least he is trying to deal with this some how. He’s the first immigration minister I’ve seen in 30 years who seems to understand that not every single aspect of immigration is always good good good. That there are problems with people exploiting the system and abusing our country. Even 5 years ago, such an utterance by a minister would have sent the media into a tizzy of headlines and hysterics about “intolerance” and “racism”. Kenny has managed, however slowly and hesitantly, to move the goal posts of the discussion enough so that a minister can actually stand up and say, “There’s a problem here. Some people are abusing the system.” It might seem like paltry progress, but consider where we were even five years ago. This discussion wouldn’t have happened, because no minister would have dared say anything about it.

  7. theragingranter

    Sorry, I’m not trying to dominate the thread with my inane drivel. But has anyone read this? I was going to include some choice quotes from the article (particularly the one about encouraging single women to “get on the property ladder”) but I’m lazy today. Perhaps VREAA is more motivated, and will do a post on this article. It’s no secret VREAA does all the work around here. The rest of us just show up for the stimulating discussion. Free-riding bastards that we are. 🙂

    • Actually, there are broad swatches of time on this blog where it really is all in the discussion.
      Your posts are very welcome RR, keep them coming…
      Great link… will headline, with feminist critique. 😉

  8. ‘It’s not citizenship, its permanent residency,” Kenney said.’

    A laughable case of political double-speak. The problem with the immigrant investor program is it’s based off the conservative political ideology that “rich people create jobs.” I’m afraid to say that even some renowned real estate bears – such as Garth Turner – who are conservative believe in this fallacy.

    I remember getting into a heated debate with Garth when I claimed the “investors” don’t create jobs – the entrepreneurs, scientists and artists do. I still hold strongly to this statement, in part because of my experience as an entrepreneur in my mid 20’s. Let’s just say, most entrepreneurial minded people would like nothing better than to remove investors completely from the equation. They add nothing of value to the health of a business – they’re just idiots with money – who you need to pander to because in order to make money you must already have money. In the end, starting off as an entrepreneur with no money is like having the worst of both worlds. You still have that boss in the room, with no product knowledge, who is holding you hostage (e.g. your “angel” investor) AND you’re taking on most of the risks of running a business. Make no mistake, you’re still very much an employee, but taking on the risks of an employer.

    You also have to deal with rampant corporate welfare. If at any time your little business shows signs of being a nuisance to the big dogs – your competitors will receive a two million dollar, zero interest loan, courtesy of “conservative” ideological governments who believe in “protecting jobs” and “the rich create jobs.”

    In the end, my business failed in part due to my competitors receiving constant high paying loans at almost no interest, and bullying angel investors tying my hands down always telling me how to run the show or trying to force me into selling my business to them. Given my experience, I can’t in good conscience recommend to young people that entrepreneurship is a good “outie” from this economic mess, at least not today, but perhaps in the future it will be if you keep up with your entrepreneurial skills/habits in day to day life.

    What I do recommend people younger than me do is take a job that pays decently and has low stress. Make sure you don’t have to pay any student loans in order to acquire the job (hard to do in this day and age, I know). Live a minimalist lifestyle and find a way to save half your income every single year. Read up and study the aristocratic speculative casino game that the rich play – that we call “investing.”

    I’ll give you a hint that will save you 5 years of study that it took me: The rich have four “asset chips” in which they play. They are equities, real estate, commodities, and bank shares. All of these chips follow cycles in the aforementioned order. The degree of risk also follows chronological order, with equities being the riskiest and bank shares being the safest.

    The “wildcard” is of course the government – who is only capable of extending the cycles into another cycle. For example, world governments extended the real estate cycle well into the commodity cycle. To Canada’s credit, they’re the only government that has somehow managed to extend real estate (2nd cycle) into the bank share cycle (4th cycle). This is unprecedented throughout history, but it’s showing signs of breaking from the moment the bank share cycle started.

    We’re currently just starting the bank share cycle – which is why Garth babbles on about his preferred bank shares and is optimistic the USA will see a resurrection of stocks five years from now despite the fact the technicals say otherwise. My only problem with his advice is that he suggests minor diversifications outside the current cycle, which means he may be unknowingly following the unwritten “rule book” I discovered. These minor diversifications outside the current cycle will just end up being stagnant or losers.

    So why I’m I telling people this and what exactly does this mean? And how does this help you start a business? Because if you save enough income and dump ALL your saved income into the next appreciating asset cycle, wait out until that cycle tops, sell it all, then dump it into the next cycle, rinse and repeat, etc. you’ll generate capita quickly. Don’t get me wrong, you’ll never become rich doing this by working a job – unless you’re a doctor. That’s because you have the law of percentages working against you (e.g. 50% of 100 million is 50 million while 10% of 10k is just 5k, it’s a rich person’s game after all), but you will eventually have sufficient capital to reasonably start a business without you starving day after day. The objective is to remove that “devil in the room,” the angel investor, who is anything but an angel. Believe me, in the long run it’s worth it. This is what I’m currently doing today, and while I missed the first two cycles when I was young and uneducated – I’ve mastered/timed these last two rather beautifully. Yes, this means your business dreams (and mine) will have to be suspended until middle age-dom. You’ll be seemingly wasting a lot of your time with this unproductive stupid game called speculating. It’s a real drag, but it’s the price you pay if you don’t want your business to be held hostage by a dumb arse speculator. Yes, there’s a certain irony in that the only way to free yourself from being a victim of speculators is to become a speculator yourself, but it’s the only path of achieving true freedom.

    Of course, all of this could be avoided if the banks went back to doing their boring jobs – handing out loans to small businesses, but that will never happen in your lifetime or mine. Along with the government just doing it’s job – regulating businesses properly to insure ethical practices (maintaining the law). That will never happen in a thousand years.

    Sorry for the long novel of a post, but I feel this anecdotal experience I had with my failed business explains much of the failings were seeing in the world today and our immigration policies. It explains why modern conservative ideologies just plain suck; and how the NDP is just a sell out to the political pressure.

    My point is further emphasized when I made more money selling my entire business than actually running it. As a young man, I unknowingly played into the commodity cycle when all that silver stored in my parent’s basement was suddenly worth 40 dollars an ounce. My business was in manufacturing silver jewellery. This moment made me scratch my head and realize there’s an “invisible hand” at work when a failed business could be so profitable. That invisible hand is legalized speculating cycles – that has existed for thousands of years. So you must be mindful that depending on what business you decide to start when you finally have the capital – it too could be a part of the speculation cycle. So if you want to start a residential construction company, be prepared to sell it at the top of the real estate cycle and lay people off. Sadly, you would have no choice even if you love the business and the people. So you may want to consider starting a business not as heavily influenced by these cycles if you’re a bit more faint of heart.

    • theragingranter

      Too long. Please edit for length. Or, do what I do, and make multiple shorter posts of questionable value.

      • Too funny, man! I might try that Raging. Why have multiple thoughts all at once. Dons post was interesting though. I read it all and he had a few good points. Like living inside another persons head for a few moments though and seeing how they think. Always an experience.

      • theragingranter

        You’re right. It was a good post. The speculating cycles explanation in the final paragraph was worth it.

      • I really enjoy most of the posts here, Raging. Even when they veer off the track of real estate (politics excepted). I get a few tidbits of news here every day that I never would have come across otherwise. Some really good ideas too.

      • theragingranter

        It’s a stark contrast to Greaterfool.com for sure. Garth is always entertaining, but his sycophantic followers are insufferable. 200+ comments a day and not a single sentence worth reading. His posts are often brilliant, but I’ve given up on his fan base; they seem more interested in clamouring for the host’s approval than saying anything substantive. It’s very nearly as bad as reading comments from a bunch of real estate bulls.

      • “It’s a stark contrast to Greaterfool.com for sure.”

        Yeah, VREAA has credibility, whereas Garth does not.

      • And yet it is impossible to look away.

    • Rich immigrants create very few direct jobs compared to rich locals based on my knowledge. Furthermore, the few direct jobs created by rich immigrants generally benefit other immigrants. This is largely a function of Canada’s flawed immigration policy. The US program is much better at directing money to those who have the highest potential to create the most value and the most jobs.

    • +1 for equities, real estate, commodities, bank shares.

    • Don’s comment was fascinating albeit long. I agree that VREAA is the place to go to read decent discussion, it took the place of Ben’s blog when he gave up on his readership to take that US job. The discussion there was fascinating, too. The only thing this blog could use, as it starts to get over 100 comments on each article entry, is VCI’s comment-rating system so that we can get through the articles and comments in a reasonable amount of time and you can stop locking up innocent comments in moderation when fred simply gets his comments FORECLOSED like they do on VCI.

  9. “It might appear that feng-shui makes man the victim of fate, but this is not the case. For one thing, there was a moral dimension to the belief; and to gain the full benefit of an auspiciously placed home, the family itself had to remain honest and upright.”

  10. Rebecca Kovacs

    Sorry if this is too off topic: http://www.vancourier.com/opinion/Letters+week/6490294/story.html
    Can anyone explain to me why people think there is a good argument in comparing Vancouver to legendary cities like London and NYC? Really?!

    • reality check

      Well if it isn’t Ms. Kovacs, the legendary hater of all things eastside. Yes there is validity to this argument because rich people are placing some of their wealth into Vancouver real estate. The world is now a global economy and the rich are searching for safe places to store wealth. In fact there was an article recently about how the young rich of London are looking to emigrate as the UK increases taxes to try to balance their budget. Perhaps they will put Vancouver in their sights.

      • These pretzels are making me thirsty

        I call BS..Vancouver has no economic or any other solid fundamentals to justify the cost of living.
        This is all because of lax immigration rules and policy, and rich from other countries trying to park their ill-gotten money. Comparing Vancouver to NYC or London is laughable delusion

      • I did read somewhere that the Irish are setting up for a whole new wave of migration and plenty are setting their sights on Canada for the better prospects of employment and career. I wonder if those bonnie lasses can knit and raise chickens?

        (yes I know bonnie lasses is Scottish Jesse, so no need to send me to the dictionary)

      • Agree Pretzels. Those cities are two of the preeminent financial centers in the world, providing the depots and storage facilities for a large chunk of all the planets gold and housing most notable of bourses. Last I checked Vancouver’s VSE was shuttered essentially over a corruption scandal involving mining shares…..well, you know the story….and the city got sent packing to be hewers of wood again and might well remain a financial backwater for good. And that’s what happens when upstarts mess with the big boys. The punishment continues to this very day.

      • “I did read somewhere that the Irish are setting up for a whole new wave of migration and plenty are setting their sights on Canada…”

        coincidence. The wee lass I rented my car from @ YEG had just moved here once month ago from Ireland.

      • I’m partial to the Irish Lasses myself. Their sassy, don’t mind sitting in a bar, cuss you out with witty charm and, man, can they ever dance! The best ones knit and cook just like Mom.

      • reality check

        Hi Pretzel, I don’t disagree. I’m not saying that Vancouver is a comparable financial centre, I’m saying it’s a place that rich people are storing their cash in real estate.

    • Rebecca -> Not off topic at all.
      The “New York, London, Vancouver” argument is well known to us; and completely laughable.
      Also known as the “Vanhattan” argument, and closely related to the “Limitless Demand” argument for ever increasing RE prices.

    • One would note, for the record, that both pretzels and myself used the word ‘laughable’ to describe this comparison, at precisely the same time (1:45pm), independently, in simultaneous posts.
      Co-incidence? I think not!

  11. Anyone care to time travel? Then lets go back to July 9th 2007 and read an article by Vanessa Richmond where she asks “Is the Vancouver Housing Bubble about to Pop?”

    The Tyee, July 2007.
    http://thetyee.ca/News/2007/07/09/BubblePop/

    I cracked up when I read it. The conversation of five years back is almost identical to today. Even the 41 comments sound like 2012. They are priceless. Maybe Fred is right. We are repeating ourselves.

    I mean honestly, if an alien with no knowledge whatsoever of the markets came down from space and just read 5 years worth of our comments and then looked at the actual facts they might just conclude we are all crazy here.

    But we can fight back. We just need to hold hands, get into a meditative trance, deep breathe and say Ooooooooohhhhhmmmmmmmmmmm! That ought to do the trick. Releases energy at the minimum.

    • As you likely know, the “what would aliens say?” thought experiment is useful when thinking about markets.
      Aliens looking at the Vancouver RE market would likely be puzzled by why individuals living in such a vast country would be fighting with each other for the opportunity to sacrifice the fruits of 20 or 30 years of work for 4000sqft of dirt, all in one very tiny corner of the space available to them. They’d likely conclude that there must be some kind of very valuable, essential resource under those small parcels of land.

    • And, yes, the earlier bear arguments through the bubble seem bizarre now; as they always do while a spec mania is underway.
      The bubble here started in 2003, and was unequivocally underway in 2006.

      • had you bought in 2008 when you could, would you say the same thing like this? dont think so. you were to join eyethebye’s crowd.
        what a sad life and a waste of resources.

        [Regardless of whether one owns or not, one knows this to be a mania.
        Are you simply ‘talking your book’, fred?
        And, yes, if examined, all of our lives have a certain poignancy to them, don’t you think? -ed.
        ]

      • I was only going through a little self analysis and introspection after I came across that Tyee piece. There is no criticism directed at anyone here for sure. Just thought it was interesting how we can get lost in our ideas and sometimes not even realize there is little new under the sun.

        Vanessa was actually right though, and close to the truth. But how could she have forseen that we would get emergency rates, massive QE intervention in the US, a commodity bubble (almost) and an unprecedented flurry of construction activity out of China. We got the spillover of course in Van R/E.

        Just goes to show the future is not so easy to predict.

      • At least we know you are an avid follower of the site Fred. It only took 30 minutes for you to respond after your name was invoked.

      • Interesting that several US cities including Seattle are seeing multiple bids on 75% of offers acdording to an article in Bloomberg Businessweek. Some locales are seeing very strong interest from foreign buyers (mostly China). The article noted that a recent SFH sale price was 475K above list. Sounds familiar but apparently Vancouver houses sell for 500K above list because of different reasons like locals with cheap credit and no limit.

    • theragingranter

      We’ll be right eventually. We don’t need to get the timing right. The results will be pretty much in line with what we’ve been saying. Whether it happens tomorrow or in five years or in ten years is immaterial. The behaviour I’m witnessing with regards to real estate long ago stopped making any sense. And that tells me that it will not continue forever. I am completely comfortable in my assessment, and in my decision to stay on the sidelines.

      • Renters Revenge

        Ditto.

      • This is for Renters Revenge and isn’t related to theragingranter’s post. Revenge, you asked a few days ago in the Carney thread about CRA’s TFSA grab, which bullwhip had referred to. I’d seen something about it but couldn’t find a link at the time. Here it is, though: http://business.financialpost.com/2012/03/08/cra-probing-high-flying-tfsas/#more-149916

        Basically the story says that CRA is targeting a small number of TFSA investors who used some extremely aggressive swap transactions to sell certain securities into and out of TFSAs repeatedly. Doesn’t seem like it would apply to the vast majority of TFSA holders who just happen to have had successful investments in the TFSA. I don’t have any special knowledge about the story, just saw it and thought it was interesting.

      • And don’t mess with the CRA. They will tax you at a 100% if you cross them on the TFSA rules. It was just a matter of time before there was shenanigans being played with those accounts. Some sharpies actually had the idea you could invest in a private venture or real estate flip by using one and so of course they got caught out when the leveraged plays returned way too much into the plans. If I am not mistaken, you cannot use it to invest in any project where you yourself are a shareholder with greater than 10% of all stock and interest. That’s off the top of my head. I will have to go back and look.

    • theragingranter

      Thing is, maybe it would have popped, if not for the financial crisis of 08, and interest rates that only went lower when they needed to go higher. Nobody could have predicted the interest rates that we have now. Concerns about a housing bubble were relevant in 2007, and remain relevant today. In fact, they were relevant as far back as 2002 IMO.

  12. Vancouver in the Rearview

    So I managed to get on CKNW to rant at Michael Levy and Bill Good on Thursday:

    http://www.cknw.com/news/audiovault/index.aspx; you’ll

    Click April 19, 10:00 AM, and advance to about 23 minutes, and you’ll get to hear me take up the same rant I’ve offered here a few times. They didn’t have any argument, but both Levy (the carnival huckster) and Good (the boomer apologist) carried on about how they should get to keep the money they ‘earned’ while the next generation gets crushed.

    Enjoy!

  13. I agree with some of you, at least Kenney spoke out against some of the stuff going on.. I liked how he said the investors come, pay the 800K to Quebec go to Vancouver, drop off the wife and kids and then go back to being the bread winner back home. And Vancouverites are stuck for the social costs of that. Meanwhile back here in Calgary, I have run into more people from the Lower mainland and when I ask them about any desire to move back, they all said, no way! It is not worth it in terms of salary, neighbours, commute time, and oh yeah having a nice house at a decent price!

  14. I think you guys are being toyed with by the masters of pushing emotional hot-buttons, the CPC…

    Kenney does not have a record of ‘getting it right’ on any other issue, whatever makes you think he is describing the situation accurately now? There is no evidence that this program is having this effect and he doesn’t present any. The program was created presumably with good intentions and probably does work more or less as intended.

    The yellow panic or whatever being expressed in this thread is appalling, why are you taking the bait? We already know the asian influence on the market is about par with the gay influence, and theres no rush to buy RE before the gays drive all the prices up, this whole asians driving RE prices thing is completely fabricated, whats driving prices is the ‘don’t be priced out mentality ‘ of the gullible and emotional.

    If Kenney is correct in his assertion this program is causing high RE costs I’d need to actually see the data that supports it. I am confident he cannot provide it, anymore than the CPC ever can support thier other emotional panic button assertions.

    Don’t be baited by this kind of garbage from Kenney.

    whiteshoes

    • Sorry but you are wrong and our immigration minister is right on this one. The Quebec program is a well known loophole used by Asian immigration consultants with their lawyers in Montreal to get their clients into Vancouver. The rest is fact as well and this has nothing to do with racism.

    • whiteshoes, you should drop your resume off at the Vancouver Sun. You’d fit right in there.

    • Don’t be such a fool, Whiteshoes. The Federal Government has the data, the banks have the statistics and evidence in mortgage applications, OSFI has reviewed the numbers and rendered a fair verdict and Jason Kenny is speaking from a position of strength backed by facts and hard data. What planet are you living on that you think everything invisible to you is also invisible to those who make decisions on behalf of the country?

      Don’t plunder the racism card here. It will not fly anymore.

    • “this whole asians driving RE prices thing is completely fabricated” So why are no Asians speaking out against this supposed fabrication?

  15. I would be more inclined to feel the high RE prices are more a product of the CPC policies of many years of next to zero interest 0/40 etc mortgages to people with no money or skin in the game that have been offered to *everybody* than some asian demons abusing some Quebec program that may or may not have allowed at most a few thousand im migrants to live *somewhere in Canada* but what would I know…

    Perhaps it would be better to blame the RE bubble on the things that are demonstrably causing it rather than some bogeyman that certainly can’t be demonstrated to exist and that is being offered as a scapegoat for the negative effects of a 600 billion dollar govt program?

    There are concrete reasons for the bubble, but some rinky dink immigration program whatever its merits or drawbacks isn’t a driving factor.

    whiteshoes

    • Apparently you are unaware that more investment capital has fled China in the last few years than has been contributed from overseas investors.

      Amazing but true.

      You must also not be aware of the report issued by the Chinese Government itself suggesting that the majority (let me repeat…MAJORITY) of millionaires are either in the process of finding residency overseas or intend to do so in the future.

      Nor can you understand the significance of the flight of capital taking place due to restrictions placed on Chinese nationals where second and third properties are concerned as the China bubble deflates….nor why this would heavily impact desirable cities such as Vancouver, London, Toronto, Sydney and Hong Kong.

      You, my friend, are living in a bubble of your own making if you can deny the obvious. Jason Kenny is telling it like it is and many of us back him up 100%. So stump your Liberal/NDP agenda elsewhere.

      People in Vancouver are sick of what is happening. They want homes too.

    • ++1. cmhc + boc policy = +80% of pb. another +10% for punitive tax rates on the regular, productive economy relative to tax-sheltered housing spec. all the rest at most a rounding error. wasn’t aware winnipeg and hamilton were also ham havens …
      http://tinyurl.com/767txej

  16. bogeyman?! me thinks whiteshoes needs to stop drinking and driving 😉
    this site is awesome. thank YOU for it. everyone who thinks they are alone in this insane bubble can find comfort here.
    and humans behave like sheep, doesn’t make it right!

  17. Wow! Another example of the further one gets from the local community/economy the more off the mark the policies become. I was not aware of the “loan for residency” programme. What a useless boondoggle.

    There have been arguments back and forth about the effect of off-shore absentee housing investors/speculators or just someone who is buying an address of convenience. I suggest that a relatively small percentage increase in buyers for whom price is not an issue can, and in Vancouver, have had a significant influence in increasing real estate prices. Hopefully the Minister does have his ears open and will effectively fix these two problems at one time.

    This will help reduce the seemingly ceiling-less prices in Vancouver, but it is only one part of a bigger equation. The biggest factor is that overall year to year demand is greater than supply.

    • There are over 25,000 properties for sale in Greater Vancouver right now. “Demand is greater than supply”? Confession: I’m scratching my noggin on that one.

      • Agreed, but that is a very small percentage of the overall housing inventory isn’t it. Realtors I’ve spoken to recently to recently are still very bullish on the market despite some slowdown. Renters are certainly not in short supply based on recent experience.

        I don’t have the figures at hand, but I recall that over the past number of years there are more people wanting to come into Van and Metro than there is housing being produced; that drives prices and rents up. It also forces those who want to be in Van to go further out and those who want to be in Metro to do the same. I know of one young couple who live in Cloverdale and each spends 2 1/2 hours per day commuting to their jobs in central Van.

      • Bill, I don’t know where you are getting your information but rents are not increasing substantially: according to rental surveys rents are iincreasing on the order of about 3% per year, below the provincially-mandated cap. Information from professionally-managed units I have indicates that there is lots of selection of tenants but little ability to increase rents substantially. When they try the quality of tenants drops like a stone.

        This is what we would expect from a large but predominately healthy metropolitan rental market: competitive prices but lots of tenant selection. While there is obviously more demand than supply, the excess demand is, likely, not the type of demand landlords would want.

        Still, if your Realtor acquaintances are bullish on Vancouver, all the power to them. For what it’s worth I don’t think things are going to improve much on the demand side in the next while.

      • Jesse, I was speaking about the people looking for suites. Based on my own and others I know, the demand has picked up over the past 2 or 3 years. I have also increased my rents 5% this year. I’ve also had better tenant applicants as well.

        Agreed, I see prices levelling.

        Are the graphs on Valley sales, inventory, etc. yours? If so what do the initials “IMO” (not sure, can’t relocate site) mean? Do you have any data on Van and some comparison between population growth, demand vs. net new units per year, Is there any data based info on total people looking, those who rent or buy in Van, those who go further out, those who go back to wherever?

      • Hi Bill, The graphs on housing analysis come directly from the real estate board stats, I just display them.

        IMO = In My Opinion

        I do track population growth of BC but not Vancouver; from past perusals of the data I graphed here (Cansim Table 051-0047):
        https://docs.google.com/spreadsheet/oimg?key=0Aku6wWaKdvsQdFM0RXUtWWFzT2xESllERlJvVU5FY3c&oid=15&zx=3qp8yfq5aqjb

        I track CMHC starts and completions for Vancouver CMA, not Vancouver City specifically. Here are the latest graphs:
        http://housing-analysis.blogspot.ca/2012/03/february-2012-cmhc-data-vancouver-cma.html

        While looking at the City of Vancouver may prove somewhat informative the City’s no island (yet), so I haven’t bothered tracking it given that so much of the population growth is away from the City itself. Region-wide it doesn’t appear that Vancouver is in a shortage situation. While I get that people may desire to live closer to the core of the city, prices have a way of adjusting for this through relative movements: prices on the outskirts are likely more sensitive to transportation costs so we would expect a house in say Mission to be more sensitive to $1.40/L gas than a condo in Collingwood or Yaletown. Likewise the rents in these latter areas would be stiffer as residents do their budget calculations and price accordingly. That said, while I’m sure many are doing OK with renting out suites in the downtown core I’m not seeing valuations in line with what I can get falling off a log in the US. Food for thought: I can get 7% geographically-diversified yield on a jellybean residential US REIT.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s