“The land has become a commodity – for people to manipulate and make it impossible for my sons to ever own a house here,” said Ms. Kidnie, 72. She and her husband have owned their house for 43 years.

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Real estate agents and accountants told The Globe and Mail some foreign clients keep new homes to use only periodically, if at all. The point, they say, is to invest as much money as possible in Canada, which is considered a financial haven.
Many come and go using Canada’s new “temporary resident” visa, which allows them to be in the country up to six months each year for 10 years with no strings attached. More than 300,000 Chinese citizens were issued those visas last year.
Residents of Ms. Cullen’s street choose their words carefully – stressing the money and absentee ownership, not ethnicity.
“It’s about wealth – extreme wealth – that could come from any area of the globe,” Ms. Cullen said. “Our community is just a place to park money – and that’s really hard for people to wrap their head around.”
Ms. Kidnie was worried enough to type up and deliver a questionnaire to 100 neighbours asking what they think of the “accelerating change,” particularly the loss of heritage homes. She received dozens of responses.
“Change is bound to happen – but this change is out of control,” Ms. Kidnie said. “I don’t want to give up on the neighbourhood. I like it.”

– from Vancouver house-buying frenzy leaves half-empty neighbourhoods, G&M, 30 Oct 2015

33 responses to ““The land has become a commodity – for people to manipulate and make it impossible for my sons to ever own a house here,” said Ms. Kidnie, 72. She and her husband have owned their house for 43 years.

  1. YVR Housing Analyst (@YVRHousing)

    They are willing to return equity to return their hood to full time residency. Quick solution: jack property taxes hard.

    • Actually if you google a guy named Saied Fard, his analysis make a lot of sense. There are ways that we can progressively fix this such as jacking up property taxes on land. I think progressive tax policies that taxes unproductive assets more than productive ones is more practical than collecting numbers on foreign ownership that can be fudged anyway.

      • YVR Housing Analyst (@YVRHousing)

        Yup. But that affects _my_ taxes so I’m against it

      • Yeah….good luck with that…

        Also, while I agree with the idea in principle, I think what’s most likely to happen is that prov/city will jack up the property tax without a cut in the corresponding income tax to offset the tax increases. We are now paying more in taxes than food, shelter, clothing, and healthcare combined!!!! For most families, tax is the BIGGEST expenses at 30%+ to 50%+ total income!

        Frankly, I think we need an immediate gov’t overhaul and tax reform first. Or replace income tax with property tax completely or something to close it. Otherwise, it will only be added tax burden on the local tax payers more than the foreign buyers.

      • @ YVR Housing Analyst (@YVRHousing)

        At least you speak the truth.

  2. Welcome to capitalism.

  3. burn vancouver to the ground

    Good to see you back VREAA

  4. The lady seem to forget that we live in a supposedly democratic and free country, not a communist dictatorship. So no lady, you don’t own the neighborhood nor should you have power over what your neighbors can do with their houses.

    My believe is that if you don’t like what’s happening, you are free to leave or buy up the houses and rent to people so you can have your little nice neighborhood, with the added bonus of being a little dictator to your renters.

    Otherwise, stop fing complaining as if your neighbors owes you something and have to live the way you like. I’m sure all those snowbirds are just all good neighbors too in their snowbird winter getaway places, where they live all here, and don’t the housing empty for months each year, and don’t price out the locals. Karma is a bitch isn’t it?

  5. “At least there’s hard data now — and from a professor, not some guy with a blog.” – Commenter Chimpeach

    [G&M] – New study: Vancouver housing market fuelled by Chinese buyers

    …”A new study that puts data behind the widely held but difficult-to-prove assumption that off-shore money is driving Vancouver’s superheated housing market has concluded the vast majority of houses on the city’s affluent west side have been bought by new immigrants from China, many of whom don’t earn their living here.”…

    http://www.theglobeandmail.com/news/british-columbia/vancouvers-housing-market-fuelled-by-chinese-buyers-study/article27064577/

    • While I suspect he is absolutely correct, his way of doing this is not very academically agreeable shall we put it. He used last names which is a terrible way of guessing someone’s nationality. I would be a mainland chinese buyer based on his assumptions and I am a Canadian citizen and resident. But the fact that our government refuses to collect data on this is just insane.

      • Well actually, Brian, given that your name has been anglicized I don’t think he would have counted you as a Mainland Chinese buyer.

      • Actually it would because my legal name is still my Chinese name. In his defence, he did say that he was trying to prove that ethnically chinese people were driving up prices in Vancouver Real Estate. But headlines that read “mainland chinese buyers” rather than “ethnically chinese people” are much more appealing. Now, granted, I suspect that he is absolutely correct. Andy Yan after all is simply trying to show just how much foreign capital has flooded one part of Vancouver. But I don’t think you can neccesarily draw the conclusion of what the headlines are claiming based on his research.

  6. Here’s a question for Brian and Space: if fundamental investment metrics no longer apply (e.g. price-to-income, price-to-rent, etc.), having been replaced by “wealth migration” from China, what is the measure that will allow you to judge when prices have gone too far? Simple question. Let’s have a simple answer.

    • Here is a simple answer for ya. How do you compare these metrics to other Asian cities? Singapore, Hong Kong, any Asian city for that matter. These ratios matter, our contention is that Vancouver is very cheap compared to any Asian city. And no other North American city has a greater ratio of Asians. Remember Vancouver is 51 percent Asian. At this rate in 30 years this city could be 70 percent Asian. At that point it stops behaving like a western city.

      • A non-answer, as expected.

      • If you can’t get my simple response, then you must not be very smart as expected. Let’s see if this breaks it down for you. Your simple answer is this, if the ratios in Vancouver are expansive by the standards of an asian city, then we have gone too far. So take your ratios from beijing, hong kong, shanghai, taipei and do your math, yes even you can do this. Then you get where Vancouver should be.

      • You may be interested, then, to consult this chart, published by The Economist:

        http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

        Select Canada and China.

        Canada is already much higher than China in both price-to-income, and price-to-rent.

      • Sure, let’s use national averages to do this. Not considering that China has a ton of garbage cities that behaves more like a 3rd world city than a first world one. What is Vancouver, the number 2, 3 best city in Canada behind Toronto and maybe Montreal. What do you think the price to rent ratio looks like in the Number 3 best city in China? Let’ start with Beijing, Shanghai, then what is no3, Hong Kong?

      • Just as China has “garbage” cities, so does Canada. So, on average, they probably cancel each other out. And even if they don’t totally cancel each other out, the difference in fundamental metrics between the two countries is so stark as to raise serious questions about the validity of your assertions.

      • That’s is an interesting chart, Elninja. Thanks.

        Nearly 90 percent of Singaporeans live in state-subsidized Housing Development Board (HDB) flats, and 90 percent of such HDB flats are owned (2013 & 2009 data respectively). Hong Kong has mass public housing programs in place as well. These are public housing leased out for 99 years, owner-occupied only and cannot be used as a registered address for a business, etc.

        Both HK and SIN surpass Vancouver in that chart. Why?
        I shall take a wild guess. Li Kashing Inc is big in both cities.

      • @El Ninja, they say in certain circles in Vancouver, Vancouver is the most beautiful city in China for a reason. You may not like it, doesn’t mean it’s about to change. Andy Yan’s research, noted in the above post may be a bit over the top, but does prove that Ethnically Chinese people are driving some of the biggest purchases in the real estate industry. Can you find another city in the Western world where this is the case, where you have one group buying this much real estate at the top. Again, you say my investment thesis has only one factor, the Chinese, I think that is all I need when this has been going on for a decade.

  7. @El Ninja – That Economist chart for China might not be entirely accurate.

    Give you 2 examples.
    1 – In Shanghai, property ownership was only allowed around 1990, right after we left. If we had stayed, we would be allowed to purchase our gov’t apartment for a certain price which is fairly high, relative to my dad’s income. However, the rents that my dad pay for the place for at least the last 12 years all gets counted against the purchase price! So the net price is less like than 20% of the office price! Also, wage liberalization also didn’t really occur until the late 90s. Before that, everyone pretty much made the same wage.

    2 – My wife’s city is one of those “garbage city” that’s so small that even people in her own province don’t know that city exists. Yet the city has a population of over 500,000. The condo market in that tiny city is cheap, at around less than 400RMB per square meter (or maybe 500 RMB per usable square meter). However, most of the city’s official registered hokou residents don’t actually work in the city! They work in Beijing, Tianjing, Shanghai, Shengyang, etc where the wage and housing prices are much higher. However, their official hokou have their residence in that tiny city. So depends on how the data is reported or tabulated, it might make a difference.

    As well, even in that tiny city, cash deposits in excess of 1 million RMB to the bank is a common sight. Nobody even blinks an eye. It’s the same as people here depositing say $500 cash at a bank branch. And the latest story I heard that is high school teachers make anywhere from 500K to 1M RMB per year giving private tutoring lessons to their students (straight from the horses mouth too). They can make that much because they basically don’t teach 30% of the required high level materials in class. It is a big problem that the education ministry is going to extreme length to try to stamp out since it is so unethical. But just to show how the stats can get skewed. btw, these aren’t the people coming to Vancouver.

    Lastly, in that tiny city, because the RE is so “cheap”, people just leave them empty. That is fairly common even in bigger cities like Beijing. So the Price to Rent ratio might also be out of whack as well since most of the official rent prices are for really luxury apartments for ex-pats, rich people, etc

  8. Actually Li Kashing Inc is also very big in Vancouver via Concord Pacific which is the development company he started to develop the Expo lands he pretty much got for free back in the 80s.

  9. @Brian – In econometrics, we have a concept called a parsimonious model which basically means Keep It Simple as in few variables in a model is better than lots of variables and overfitting. So sometimes the 1 factor model way outperforms more complex multi-variable models. Until off course there is a regime change, which is why we have LASSO/Ridge/ElasticNet models for multi-variable regression models, and also various regime switching, hidden markov chain models.

    Anyways, right now, I would say it is the concept of the flood of Chinese money and cheap interest rates that are the big factors. Not the actual Chinese $$ itself so much now.

    • Verbal diarrhea has reached new depths.

      • Great response, very insightful. I am sure you have made millions like you claim using this type of terse and insightful responses. Good job mate. You have really added a lot of value to this discussion.

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