Vested Interests Rule, Okay? – Any Change In The Vancouver Housing Market Will Not Be Coming From Government Policy

ClarkRennie610px

The interests of BC Liberal Party donors who fund Premier Christy Clark’s salary top-up appear to be determining the government’s response to the housing affordability crisis in the province, says NDP critic David Eby.
A lot of BC Liberal donations come from wealthy people in the real estate industry, and the party’s person in charge of keeping them flowing is himself a top marketer of condo developments, Bob Rennie.
A recent City of Vancouver study found that roughly 12.5 per cent of condos in the city are empty, Eby said. And yet the government has declined to take steps to discourage owners from allowing condos or other homes to sit empty.
Asked Eby, “Why would [Clark] rush to put an additional tax on international investors holding these condos empty if she’s getting major donations from luxury condo builders who want this to continue?”
Clark confirmed this week that she has personally received in total more than $300,000 from the BC Liberal Party in annual stipends since she became leader in 2011.


Elections BC’s database of political contributions shows many people and companies involved in the real estate industry gave the BC Liberals donations in the tens of thousands of dollars in 2015, the most recent year for which figures are available.
Names appearing near the top of the list, each having given at least $50,000 during the year, include the Aquilini family, Bosa Properties Inc., Concord Pacific, Developments Corp. Inc., Shape Properties, and developers Rick Ilich and Peter Redekop.
The fundraising chair for the Liberals is condo marketer Rennie, whom The Tyee recently reported gave the party $73,500 in 2015.
“Bob Rennie’s a great example,” Eby said. “Here’s a guy who is one of the most famous condominium sales agents in North America who is running the fundraising for the Premier who refuses to put a tax on speculative investors driving up the prices of condos in Metro Vancouver.”
People can’t help but ask questions about Rennie’s involvement in the party and how it might affect Clark’s policy choices, said Eby. “Why is she refusing to act? Is it because the chair of her fundraising committee is a condo salesman? That is a legitimate question in my mind and one we should all be asking.”


– from ‘Clark’s Pay from Donors Too Tied to Real Estate Moguls’, Andrew MacLeod, TheTyee.ca, 2 May 2016

131 responses to “Vested Interests Rule, Okay? – Any Change In The Vancouver Housing Market Will Not Be Coming From Government Policy

  1. Even the NDP isn’t proposing much of a change: David Eby’s only proposing a one-time 2% tax when foreigners buy a condo. 2% isn’t going to dissuade any foreign speculator.

    • Any proposal that works will necessarily impact those who are causing the problem, and guess what voting residents and foreigners alike are contributing to the problem. But nobody wants to vote for someone who says that.

    • I would prefer Florida method – triple property tax for non-state owners, and offset that with reduction in local income and/or sales taxes. I would prefer income taxes since a lot of the rich immigrants don’t pay any but still spend lots on goods and services that have PST/GST.

  2. You could completely eliminate provincial sales, income, and corporate taxes with a 1.25% property tax. Entirely revenue neutral for the province.

    • Why not charge say 5% property tax on non-resident owners, bare trusts, etc and just eliminate not just PST, income & corporate taxes, but also property taxes, Translink surcharges, School Board Fees, and maybe extra money for the hospital? that would really jack up our competitiveness, but unfortunately likely also jack up RE prices even more as more biz & people move into Vancouver.

      Ideally, we should tax luxury consumption & very high income still a little and put that money into a trust like Norway’s fund, and also for large infrastructure. We would also need to develop a second or third major center at say Metrotown and Surrey Central & Fraser Valley so Vancouver don’t become 100% like Manhatten. Lastly, Victoria & Kelowna/Price George should also be targetted for development, though winter might be an issue for Kelowna / Price George.

      Basically, a lot of potential for growing BC into a very nice and bustling place on the backs of foreign money. Too bad none of this will happen….

  3. Wait wait wait, isn’t this blog focused on convincing everyone that this whole fiasco was caused by locals and little foreign intervention happened? Where did this sudden change of direction come from? People who are commenting on foreign money, please, it’s just wrong, it’s al locals leveraging causing this bubble, little foreign money at play.

    • Please, stop being such a jack*ss. No one here has ever said that the Vancouver housing bubble isn’t multifactorial.

      • just waiting for 64% “trajectory” crash from vreaa’s fancy graphs/charts/calculation/projection, whatever the hell you call it.

      • Uhm…aren’t you the one who kept on insisting it is mostly local lunacy & $$ and frequently tried to school Brian on it. Not to mention all the name calling you did?

    • Vreaa claims that this bubble is mostly fueled by local leverage. I am just really curious as to how do we get to the average detached house price being what it is (I think the average in vancouver proper is like 1.8 mil now) in a city with an average income of what? 45K? I don’t care how much you leverage, the math doesn’t work. It’s not local incomes that is buying anything in that price range.

      • I can’t speak for VREAA, but for years, there’s been heavy leverage from locals, as well as foreign buying. In the last year, the foreign buying has gone from a stream to a flood, and it is unexplainable with local incomes.

        As an example of the madness, Richmond has exactly 8 houses for sale under $1M.

    • I suspect our generous host has discretely accepted defeat on the price-correction front and has, appropriately, shifted their focus to the multi-factor social ramifications of a stupendous run-up in local land costs.

      But considering they still continue to generate new content for everyone’s benefit maybe show a little respect.

      • Brian Chen

        Oh I am quite restraint in fact. You don’t want to see what I would write if I wasn’t showing respect. But are you sure that our host has accepted defeat on the foreign money front? Only vreaa can answer that point. I personally doubt it, might as well go down with the ship when you have been this adamant for this many years. Look, I don’t blame her or El Ninja for not seeing it. It is difficult to see in the previous years without having inside access to the players themselves. But now that the globe has done some investigative journalism and figured out what is going on, it is exposed to the sun light. I am afraid it is too late, you don’t drop a piece of honey and invite ants to crawl all over it and then try to build a wall to stop them. Especially since our government don’t even want to look at the blue print for the wall.

      • That’s class. Few posters are in the same league. Respect.

        Indeed, no one got it all right. I figured out a couple, but can’t really put a finger on some of the other factors

        Good reading from John Lee above: –
        2. Causes.
        2.1 Distraction #1: Low Interest Rates
        2.2 Distraction #2: ‘Desirability of Vancouver
        2.3 Distraction #3: Strong Local Economy
        2.4 Distraction #4: Geographic ‘Natural Boundaries’
        2.5 Distraction #5: Bad Zoning
        2.6 Distraction #6: Insufficient Social Housing
        2.7 Evidence for Foreign Investment as the Main Culprit
        2.7.1 Exhibit A: Business Immigrant Program
        2.7.2 Exhibit B: Studies of Ownership Patterns of High End Homes
        2.7.3 Exhibit C: Coincidence of Foreign Capital Flows and Prices
        2.8 Tying the Evidence Together

      • Brian Chen

        Let’s make one thing abundantly clear here. No one is suggesting that 100% of homes are bought by foreign money, that would be absurd. But what we are suggesting is that foreign money and the small supply of single family homes are the main reasons why you have seen a detachment of single family home prices in particular with 1. attached home prices and 2. the local economy. I don’t see how you argue that fact given that local incomes would be impossible to produce the average prices seen in the single family home market. Attached housing is probably supported by local leverage, hence why I recommend to my close friends to focus on land rather than house. But in all of my arguments I have been very precise as to only look at SFH because it is much easier to analyze a segment with such a tight supply.

      • class and respect? is there such a thing in the anonymous world?
        you mean, like this:

        “Please, stop being such a jack*ss”

        Anyway, did any of you catch the piece about people line up to buy townhouse in Langley? I thought this line up was a thing of the past.

      • Whatever helps you sleep at night, fred.

    • It is height of irony that a troll like Fred would lecture anyone on the concepts of “class” and “respect”.

      Respect is not a given; it must be earned. Brian has presumably read VREAA’s and other posters’ writings about the diverse causes and consequences of the housing bubble, including the role of foreign capital, so I found his remark about the blog’s “change of direction” to be childish. And in turn I gave it a less-than-classy response. Brian has, in the past, referred to me as stupid and ignorant. So, fair’s fair. But going forward, I do agree that name-calling is unproductive, and whether or not others to do it to me, I need to be better at not going that route.

      • Other posters, yes. But vreaa has always maintained that this is mainly caused by local leverage. That is my major issue. Vreaa’s credibilty and that of your own are a little bit questionable given the history of your predictions. I won’t stop pointing that out. Btw, for the record, I don’t actually have an issue with the name calling because it goes both ways, but it seems to bother you, so I will try to stop as well. But you bet that until the day vreaa comes out and points out that foreign capital is a major issue in our markets, or you can prove to me that it was somewhere on this blog that I missed, this will continue.

    • In terms of the influence of foreign money, here are my thoughts. Prices in any open market are set at the margin. This means that if a group of participants (in this case, mainland Chinese) have deep pockets, they will not only make winning bids, they will set a price floor for ALL transactions–even though, in number, they constitute but a small minority of the total. Local players, who are the majority, will set their expectations according to the floor set by the deep-pocketed minority. The seller holds to this, and the buyer accepts it, EVEN WHEN THERE ARE NO FOREIGN BUYERS INVOLVED. The mere threat of a deep-pocketed investor coming in and outbidding everyone is enough information for everyone to act on.

      If all the local buyers united and refused to take part in this dynamic, the whole thing would collapse. But locals buyers are not coordinated, and never will be. They don’t know each other, and they act in their own individual interests.

      This is not to concede that Chinese buyers are the sole cause behind the rise in prices. They are only a part of the cause. Without emergency-level interest rates, record debt levels, unprecedented intergenerational wealth transfers, financial illiteracy, opaque RE practices and market data, and a culture of RE speculation and obsession, the foreign money wouldn’t matter at all. All of these things are crucial enablers of the historic housing bubble that we are witnessing across Greater Vancouver.

      Sadly for the bulls, neither foreign nor local capital are limitless; ultimately, economic fundamentals must assert themselves. I maintain my prediction for a massive crash, and I bet VREAA does, too. Care to comment?

    • In terms of the influence of foreign money, here are my thoughts. Prices in any open market are set at the margin. This means that if a group of participants (in this case, mainland Chinese) have deep pockets, they will not only make winning bids, they will set a price floor for ALL transactions–even though, in number, they constitute but a small minority of the total. Local players, who are the majority, will set their expectations according to the floor set by the deep-pocketed minority. The seller holds to this, and the buyer accepts it, EVEN WHEN THERE ARE NO FOREIGN BUYERS INVOLVED. The mere threat of a deep-pocketed investor coming in and outbidding everyone is enough information for everyone to act on.

      If all the local buyers united and refused to take part in this dynamic, the whole thing would collapse. But locals buyers are not coordinated, and never will be. They don’t know each other, and they act in their own individual interests.

      This is not to concede that Chinese buyers are the sole cause behind the rise in prices. They are only a part of the cause. Without emergency-level interest rates, record debt levels, unprecedented intergenerational wealth transfers, financial illiteracy, opaque RE practices and market data, and a culture of RE speculation and obsession, the foreign money wouldn’t matter at all. All of these things are crucial enablers of the historic housing bubble we are witnessing.

      Sadly for the bulls, neither foreign nor local capital are limitless; ultimately, economic fundamentals assert themselves. I maintain my prediction for a massive crash, and I bet VREAA does, too. Care to comment?

      • Fair enough, I am not disagreeing on your theory. But there are a few major problems with it.

        First major problem is assuming that foreign buyers are a small part of the market. In single detached homes, they are the market. And this has been for quite a few years now (last year the total turnover rate of Vancouver SFH is 9%). Since 2005, assuming a year over year turn over rate of say 6% average, you are looking at a total turnover of about 60% of SFH’s in smaller Vancouver. And if Andy Yan’s numbers are correct, you can assume that Chinese ownership of SFH’s in Vancouver most likely make up a large percentage of the total base. My numbers show that could be as large as a quarter by looking at agent names. That is not a temporary occurrence or a negligible effect when a quarter of the total supply (not marketed supply, but total supply) is sold to a particular group. And this number is only increasing, (look at Andy Yan’s research) more stock will likely fall into Chinese hands. This means that in about say a decade at most, the majority (over 50%) of Single Family Home owners in smaller Vancouver could be Chinese. That isn’t insignificant.

        Second issue is assuming that given the current government policies, foreign money will go down. We have seen clearly the opposite as there have been a massive acceleration of foreign money. I don’t understand why people are assuming that the chinese will stop coming here or this is a short term temporary occurence when demographics have clearly shown that Vancouver is fastly becoming more Asian. Look at the demographics data and David Ley’s research and tell me how you conclude wealthy chinese showing up in Vancouver is a short term occurence that will stop in say 5 years. Anyone who is looking at the data presented by the various news outlets (who are about 5 years too late btw), would say that unless you put a stop to it, Vancouver is one of the best safe havens for their money and their people.

        The last thing is a failure to understand just how small Vancouver really is. Especially in the single family home market. We are not LA or New York or London, we are tiny in the detached markets here. So any real capital injection will send our prices higher.

        My own annecdotal evidence through knowing these people are that if anything, more of them will come. And anyone who thinks they are here to speculate on the real estate you got to give your head a shake. They could make much more money doing their own business in China, speculating real estate here may seem like a good venture to you but to them we are the small fish. We are the escape route and a life vest to many of them as well as a safety deposit box for their families and their children.

        One more thing, just curious. Given that we are sitting at zero interest rates for so long, why haven’t we seen the massive inflation that should accompany this?

      • @Brian: my opinion on the ultra-low interest rates issue is that it has allowed locals to heavily extend themselves into condos. This is likely the major cause of the high (but stable) condo prices.

        This spring, however, condo prices have risen sharply in some areas– speaking with realtors, I’m attributing a large part of this to locals who’ve cashed out of their houses, and are moving down into condos. And as prices are set at the margins, these “marginal buyers” are coming in with cash.

      • @M, agreed, that’s why if you read my arguments I keep it strictly to detached. Because I know the condo market is a cesspool of local leverage / downsizing like you say. But the two price correlations have decoupled.

      • The Chinese don’t account for an especially large number of buyers in North Vancouver and much of the Fraser Valley / Lower Mainland. Yet detached home prices have gone through the roof. These are locals who, inspired by the foreign capital narrative and the ‘promise’ of ever-rising prices, are leveraging themselves to the hilt.

      • You are right, they don’t. But you do have priced out locals who would have otherwise bought in Vancouver who are buying in those places. You are not looking at overleverage because those are the types who could actually afford one mil plus. They just would have bought in Vancouver instead if the prices were lower.

        And true there are those locals who have leveraged. But again, when you look at my argument, notice also I restrict it to four areas of single detached homes, Vancouver Burnaby Richmond and West Van. Why do I do that? Because I only really comment on subjects that I know very well and I know the detached home markets in those four areas extremely well. I don’t profess to be an expert on say surrey for example.

    • Wait until taxpayers find out! Hey…where’s the Canadian Taxpayers Federation when you need them?

      • Consulting with BC Lib Gov’t on how to reduce corporate taxes, and privatize K-12 school system using vouchers that will somehow magically allow everyone to go to the best schools without extra cash!! I seriously don’t get how school voucher would help low / middle income families get into those top notch public schools. It’s not spaces & high quality teachers at those schools will simply magically appear out of thin air.

  4. Imagine a world with 0% rates for 50 years
    Monday, 2 May 2016 | 8:10 AM ET
    “If the government absolutely said interest rates are going to be zero for 50 years, the Dow would be at 100,000,” Warren Buffett said hypothetically.
    http://tinyurl.com/zmcj2e6

    • Warren Buffett, Bill Gates, Charlie Munger discuss NIRP, the US dollar, markets, Grexit
      Rebecca Quick, CNBC, Released on 5/4/15
      Munger: “I’m deeply suspicious about printing money and throwing it around instead of printing money and building infrastructure and so on. Everybody is relying too much on these monetary tricks.”
      http://tinyurl.com/hkxtfln

    • Charlie Munger says we’re starting to look like Japan, and that could be trouble
      Fred Imbert | @foimbert
      Monday, 2 May 2016 | 9:36 AM ET
      “I strongly suspect it was massively stupid for our government to rely so heavily on printing money and so lightly on fiscal stimulus and infrastructure,” Munger told CNBC’s “Squawk Box.”
      http://tinyurl.com/jp8lh8r

    • Zombies-To-Be and the Walking Dead of Debt
      “Using credit–which most other economists ignore–to explain why Japan, the USA and UK are among the “Walking Dead of Debt” and why China, Canada, Australia and South Korea are on their way to joining the Debt Zombies. This presentation is based on work I’m doing for a new 25000 word book for Polity Press entitled “Can we avoid another financial crisis?””

      @20:11 ~ Canada

    • New Nothingness: Central Banks Are Powerless “They Should Go Away” Steen Jakobsen
      http://tinyurl.com/j4z8nsv

  5. EB-5 Visa Applications Doubled In 2016
    “EB-5 applications doubled to 6,277 in the fist quarter of 2016 compared to only 2,941 filed in the first quarter of fiscal 2015. The program has seen an uptick in applications after calls by both Republicans and Democrats to end or reform the program.
    The number of pending EB-5 petitions jumped 62.6% from 13,526 in the first quarter of 2015 to 21,988 this quarter. However, the approval rate for the EB-5 petitions declined from 56% in the first quarter of 2015 to 20% in 2016. ”
    http://tinyurl.com/j6lbfab

    • Chinese buyers to reach new record in 2016
      “The demand, however, could be affected by the ability of Chinese buyers to expatriate funds from China, Investorist chief executive Jon Ellis said.
      But experience with Chinese clients “has shown that they are very resourceful and they will find a way to effectively navigate the changes to foreign capital allowances,” he said.”
      http://tinyurl.com/gvcczpb

  6. 2490 E Pender – bought almost six months ago for $1.255M – got the white tart treatment. Now it’s listed for $1.899M – a $674K jump. Ka-ching, ka-ching, ka-ching. There’s a one day one hour Open House – that’s a new twist. One hour? Cram those house horny suckers in. Make them panic.

    Actually like the area but this typically dismal 70’s Special sits below grade with no view, no garage, and nowhere near Skytrain. Check the houses on either side – houses beautiful not.

    It’s a gritty area. There’s a plethora of three storey walkups north of Hastings that house an assortment of the working class, some less than genteel. South of Pender is quite nice.

    • When Down Jones is at 100,000, any house less than $2 million is a bargain. We shall all be multi-millionaires! Who needs inflation?
      Japan’s ZIRP since mid 90s was two decades old, NIRP is the hallmark of the 21st century.

  7. 5296 MCKINNON

    A uniquely silly house; a mish mash; a grab bag of silliness: cartoonish river rock + stucco + blue shingles + fake tudor verticals + vinyl siding + gables + shed dormers + a grey asphalt pent roof + an orange entry door + an acre of white garage door … Must have been the builder’s toddlers that designed this. All this and no lane for a mere $1.83M.
    If you buy it you’ll show that you have a sense of humour – certainly not house aesthetics.

    A hundred years ago it would have been lakefront. Now it’s weirdness at the bottom of a hill.

    You don’t get a lane, so you’ll have to park in front. What kind of a car would be appropriate? A Nissan Juke? Maybe a Kia Soul. How about a baby Hummer – the Tonka yellow.

  8. If you think Vancouver’s benchmark house price up 30% yoy is fantastic investment, there is one city where prices have jumped 1432% yoy.
    http://tinyurl.com/jmna5om

  9. Two “GAO Shan” listed, one located in Beijing and the other at 8 Hyde Park St, London UK.
    https://offshoreleaks.icij.org/
    Namesake of the new owner of “1075 & 1059 Nelson Street, Vancouver”.

  10. Minister de Jong says the property transfer tax return form will now include citizenship disclosure beginning June 10th.
    “We will be requiring individuals to provide their principle residential address.”
    http://tinyurl.com/hzycdrb

  11. Hong Kong and mainland China top the global list of people and companies hiding money in secretive offshore tax havens, according to the Panama Papers database made public by a group of global investigative journalists on Tuesday.

    Together the two jurisdictions accounted for nearly one in four individuals or parties around the world who established the 366,000 overseas shell companies listed in the database.
    http://tinyurl.com/hmlngfh

    • What proportion of rich people – $10M+ investable assets – are now Chinese? If it is close to 25% of World total then that’s about expected.

  12. Hat tip to singtao et al

    Canada Chaoshan Business Entity Investment Group Ltd.
    Connected to 16 officers
    Connected to 1 intermediary

    Incorporated: 09-JAN-2012
    Status: Active
    Registered in: British Virgin Islands
    Linked countries: Hong Kong

    Data from: Panama Papers
    Agent: Mossack Fonseca

    Six others have addresses in China.
    Cai Guang, 6989 Laurel St Vancouver BC, Canada V6P 3T6
    Chen Xiangeng, 3098 Cardinal Court, Coquitlam BC, Canada V3E3C4
    Chuang Xun, 2734 Euclid Ave, Vancouver BC, Canada V5R 5B9
    Feng Ru Ji, 1463 West 57th Ave, Vancouver BC, Canada V6P 1T1
    Qiu Shaoxiong, 7028 Angus Drive, Vancouver BC, Canada V6P 5J7
    Zeng Bin, 1388 Dogwood Ave, Vancouver BC, Canada V6R 1J8
    Zhao Caiqiang, 333 East Hastings Street, Vancouver BC, Canada V6A IP3
    Zheng Huanming, 3861 West 14th Ave, Vancouver BC, Canada V6R 2X1
    Zhou Weiliang, 6591 Bouchard Court, Richmond BC, Canada V7C 5H4
    Zhou Weimao, 725 West 61 St, Vancouver BC, Canada

    • There are three (3) CUI JianPing listed in icij, two of them sharing the same address in Shenzhen and the other one at a different address also in Shenzhen. No direct link to their namesake in Vancouver that some had unkindly accused of alleged irregularities at the Tokyo stock exchange, cleaning out investors
      http://tinyurl.com/zg6d5oh

    • And their potential wrongdoing is?

      There are whole host of reasons for off-shore accounts, ranging from legal to criminal and everything in between. A lot of hedge funds, including ones managed by local Vancouver firms, have offshore accounts / trusts. Would you consider those to criminal as well?

      Let’s have some proof of wrongdoing first before you start white dox people may very well be innocent of any crime.

  13. The media is in the business of reporting. The burden of proof rests with the individuals, as is the case of Huawei’s employees rejected into Canada.

    China quiet reforms reshaping it’s oil and gas sector.
    http://tinyurl.com/hsaa8su

  14. Chinese government reaching in to pop the bubble blown by the real estate broker.

    • China is introducing new stringent revamp to rein in its real estate industry. Agents are accused of bait and switch, false listings, and raising prices with or without the knowledge of the homeowner.
      http://tinyurl.com/z49gvj2

    • In Vancouver:
      “The man said the episode began when Ms. Yang’s assistant, Mo Tao, phoned him to promote a west-side house in which he had expressed an interest. Ms. Yang had just listed it for $4.28-million, however, he said Ms. Tao told him that price was just a low-ball enticement to start a bidding war. He claims she told him he must offer at least $1-million more to be competitive, which he found offensive.”

      “The multimillion-dollar house is near Point Grey, one of Vancouver’s most popular areas for foreign investors and speculators. Records show Ms. Yang sold it once already this year – for $4.42-million. The new MLS listing classifies the home as owner-occupied. However, the buyer relisted it for sale with Ms. Yang just five days after taking possession. Sales records show the same investor flipped at least one other home last year, making a quarter-million-dollar profit in three months.”

      The realtor’s thread:
      “I’m telling you – people above me are from Harbin [China] gangs. Gangsters, right? You don’t fucking want to be alive.” That call was followed immediately by another, also in Mandarin, from an unidentified man, also recorded. That caller repeatedly demanded to know the businessman’s address and told him, “You have lived for too long.”
      http://tinyurl.com/zcod2zc

      • Layla Yang has started a thread in a local forum complete with exhibits from her legal team. The title is ominous, “wrt the death threat case, I want the false accuser to suffer the consequences.
        http://tinyurl.com/hkme6h3

  15. Friday, 13 May, 2016

  16. The Hongcouver ~ by Ian Young

    Panama Papers expose secret offshore firms of Vancouver developer Michael Ching, wanted by China for graft

    Exclusive: Property magnate and would-be refugee, suspected of embezzlement and hiding assets, is identified in leaked documents by his HKID number, connecting him to two now-defunct tax haven companies set up in 1990s
    http://tinyurl.com/hgxoz3l

  17. Move money around the world without attracting attention – The FT explains
    http://tinyurl.com/gn477vb

  18. If you have a second passport, good luck. If not, time to look for a safe exit.
    You don’t want to here, when all hell breaks lose.
    http://tinyurl.com/h9xkmal

  19. B.C.’s Asian influence figures prominently in Panama Papers
    Large percentage of B.C. addresses in leaked database linked to shareholders of business entities in China, Hong Kong and Taiwan
    http://tinyurl.com/zt4zpv6

  20. Chinese pour billions into US real estate, surpassing Canadians as biggest foreign buyers
    http://tinyurl.com/hddftzq

    • MingpaoCanada today ran the same story on the 20-ish Student-Lord of Point Grey’s 31 million-dollar-mansion citing an article from The Beijing News. So now the “racists” are clamoring for the Chinese Government to investigate the source of funds!

    • “Despite Beijing’s ongoing anti-corruption campaign, there is no effective way to stop flows of illicit money being channelled into foreign property markets. The Chinese authorities can, however, cooperate with foreign law enforcement agencies to investigate suspicious property transactions.

      Early Chinese settlers from Hong Kong, Taiwan and the mainland were keen to assimilate into the community. Yet, these newcomers have deep pockets and make no apologies for flaunting their wealth. If they do not change their outlook and attitude, they will only have themselves to blame when things turn sour.”
      http://tinyurl.com/zkh6rcv

  21. Property crackdown in UK

    There has been concern recently that the UK, particularly London, had become a place where rich foreigners could buy properties but hide their true ownership.

    Mr Cameron said that to stop that happening, foreign firms which own property in the UK must declare their assets in a public register.

    The register would mean “corrupt individuals and countries will no longer be able to move, launder and hide illicit funds through London’s property market, and will not benefit from our public funds”.
    …………………………………………
    Mr Cameron said they were looking for greater transparency and were introducing a code of conduct for professionals such as accountants, solicitors and estate agents who enabled corruption, either knowingly or unknowingly.
    http://tinyurl.com/zgr8xdh

    • WSJ / Bloomberg / CNBC – Malaysian PM’s stepson, used the 1MDB funds to buy a US$34 million London house, .

      and to finance “The Wolf of Wall Street”

      He spent at least US$50 million on luxury properties in New York and Los Angeles, and FBI is now investigating how he financed these purchases. “U.S. officials could seize assets if they find that the properties or any assets were bought with cash tied to corrupt practices.”

  22. Money! Money! Monnnnneeeeeyy!
    Greatest capital flight in history. China’s money.
    This is what is happening in Australia and playing out here.

  23. Governments terrified of popping foreign-buyer housing bubble…
    http://www.cbc.ca/news/business/crea-home-prices-foreign-buyer-economy-1.3580780

    • So… they come here and buy luxury cars, no one complains, Holt Renfrew has doubled its size to sell luxury items, no one complains, but now we are complaining about them buying our houses? Talk about having the cake and eating it too.

      Here is the other thing, for those who say their money is corrupt. Sure, that may be the case. But by that rationale should we also ban adidas and nike from being sold here because their products are made by sweatshops in Asia? So if we are trying to uphold standards outside of our borders, then why do we get to pick and choose which ones we uphold? Just uphold them all.

      They don’t come here by accident, Vancouver is an immigrant built city. Who are we to pick and choose? Guess the natives should have just banned immigration a long time ago if that was the case.Then none of us would be here.

      • Foreigners buying local property vs. consumers choosing which runners to buy. That’s an apples to oranges comparison if there every was one.

        Who are we to pick and choose immigrants? Um, citizens of Canada. And we most definitely SHOULD pick and choose who can come to our country. I say that as a general matter, not in relation to Chinese immigrants specifically, whom I welcome. The Chinese are mostly law-abiding, and their basic belief system is compatible with Canadian values. Muslim extremists, a whole other story.

      • So if there is a steady stream of foreign money coming into Vancouver Real Estate El Ninja, are you for it? Against it? Don’t care? What is your stance? Or if there is a steady stream of wealthy asians who want to immigrate here would you support that?

        I don’t see how you can say that the purchases in Holt Renfrew and real estate are different when in fact they are done by the same people, you can’t really have it one way and not the other. We can say, we don’t want your money, so don’t migrate here or we say welcome, buy what you want. I don’t see how you establish a middle ground. I have maintained for a long time that they aren’t here for tourism, they want this as their second home. So you are right, it is not an apples to apples comparison, but it is directly linked.

      • As long as they pay taxes and respect the law, I have no issue.

        Your RE / Holt Renfrew comparison is poor. The fact that wealthy Asians are buying luxury goods here doesn’t deeply impact most residents. It’s just not much of a benefit to them. Sure, it may add some service jobs, and contribute some tax money. Otherwise it’s not particularly relevant. The city does not live and die by the fortunes of luxury good sales. So, the cake that you claim people are having and eating, too, doesn’t exist.

      • Sure, but holt renfrew is only one example, there are other high end service jobs that make up the proverbial cake. You are looking at car dealerships, construction, real estate service, restaurants, etc. I wouldn’t underestimate the impact of all this money has on these industries. BC has one of the hotest economy in Canada apparently and I wouldn’t be surprised if it was largely made up by this service sector that relies on this foreign money. According to stats Vancouver and Toronto are creating most of the jobs, many I would bet are service related. If you take out the foreign money from the equation then Vancouver would be back to what it was. And as much as some want it that way, I think I also represent many who likes it the way it currently is.

      • The city & province to a large extent does live and die by FIRE industry now. I believe latest quote is that RE contribute directly and/or indirectly to ~25% of our province GDP!!!! If all that foreign $$ goes kaput. there could be a very large depression wave if it rolls over into the general sub $1.5M market.

        Personally, I believe this flood of foreign money is a godsend to us to basically tax the hell out of it and shore up our provincial finances – reduce debt, invest in healthcare & education, much needed infrastructure spending (over 50% Richmond Elementary schools are currently in critical need for earthquake upgrade I think), etc….

        But unfortunately, the people are vested in RE and politicians are all bought & paid for by RE industry to actually take advantage of this.

      • With regards to law abiding and tax paying, most of these rich I believe are actually following the law. Granted, there are displays of wealth and showing up, and disregard for some social norm here. However, those aren’t not the same as law breaking. Basically the system is importing a lot of self-involved spoiled brats, and those who indulged in corruption back in the mother country. But by and large, they aren’t committing crimes here (by which I mean the ones that would generally result in court & jail time).

        As for taxes, I know a lot of anger and outrage has been raise but again, I don’t believe there is massive tax evasion occurring for the simple fact that students, mistress, lonely housewives don’t have active earned income and hence no income tax. And given that Canada’s social benefit system is based purely on income, they do qualify and take advantage of it. You could say, well if you are rich then you shouldn’t take the benefits out of moral believes. But that’s not how most people, Chinese or not, operates. We had massive welfare fraud in the 80s before NDP clean it up in the 90s, and I doubt most of those fraudsters are Chinese. Nor the current scammers & fraudsters for pyramid schemes, penny stocks, etc.

        I don’t like rich people living in $3M house driving $100K cars getting childcare subsidy while I’m paying full taxes anymore than you do. But until our system gets reformed to take into account assets or deemed / equivalent income like they do in divorce cases, there isn’t much I can do. Realistically, no gov’t is going to reform the system cuz it simply is a non-starter with most voters, despite how much they complain about Chinese tax dodging.

      • The legitimacy of not reporting worldwide income to the CRA is more than just “I live abroad”. In an awful lot of cases, astronaut parents ought to be deemed residents for tax purposes. Significant residential ties to Canada include: a home in Canada; a spouse in Canada; dependants in Canada.
        http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

      • M has it right. Reform isn’t necessary; current law already accounts for these cases. The income earners in these families are liable for Canadian taxes under the “significant ties” criterion. If you have family, assets, or other ties to Canada, you will be deemed a “resident” for tax purposes whether you live there or not. I am quite familiar with this rule, having come in and out of Canadian tax residency more than once myself.

      • Thanks El Ninja. All we need is for the government to give the CRA the resources (i.e. staff) it needs to be able to follow up on this. The last government said good things about cracking down on tax cheats, but at the same time, they cut CRA’s budget.

  24. That residency law M & El Ninja quoted only applies to existing Canadian citizens, not foreign citizens who was never a Canadian citizen or PR.

    For example, if a Chinese tycoon marries a CBC (hence Canadian citizen) wife who was working China and after a couple years, the wife moves back to Canada with her 2 kids. The dad sends monthly $ over. Are you saying the dad will now be considered to be a Canadian resident for the purpose of taxation? You think China or any other country in the world is going to enforce that kind of rule? Even US don’t go that far with their taxation laws and they can pretty much get away with anything.

    Most of the astronaut mainland family, the dad or income earner stays in China and never actually came to Canada to be PR or immigrate. So all these talk about worldwide income simply don’t apply to them.

    • Wrong. The determination of “residency” for tax purposes does not consider citizenship.

      • Yes, if a Canadian leaves the country to work elsewhere, that residency rule is used to determined whether s/he still needs to pay Canadian income tax, or if deemed non-resident then no income tax obligation.

        It does not apply to people who never was a Canadian citizen nor live & work in Canada. Look it up.

        Now, even if you were right and CRA do have power to deem complete foreigner as resident for tax purpose, as I said, good luck trying to get any country to comply with that order. If CRA do it to enough rich and hence powerful people in other countries, you bet retaliation will be swift on any Canadians who works in that foreign country.

      • Sorry, you’re wrong. If you maintain “significant ties” to Canada in the form of property, children, a spouse, or other, you are deemed a resident for tax purposes. Doesn’t matter if you’re a Canadian national or not.

        No one is arguing that enforcement is effective. The point is simply that the law already provides for the taxation of these individuals. You had said a change in laws was necessary; I’m saying enforcement of current law would suffice.

    • @Space889: Agreed that higher property taxes are probably a good way of dealing with it, but that requires changes. Tax law already exists to tax the income of those maintaining residential ties to Canada.

      With regards to a Chinese tycoon “marrying” into Canada, with their wife/kids in Canada, they have now achieved the threshold to be deemed a resident for tax purposes. Of course, it only “matters” if you get caught.

      With regards to China or anybody else enforcing our tax laws, of course they don’t have to. It’s up to Canada to enforce our tax laws. If a Canadian citizen absconds somewhere else, it might not be possible to recover money from them– except via their Canadian assets, such as property.

      Also, the US’ tax laws are pretty extreme. A US citizen must report and pay taxes on their worldwide income, even if they don’t have any ties to the US. A child of a US expat is automatically a US citizen, and is also subject to US tax reporting on their worldwide income, even if they have never set foot in the US in their life. Of course, it only “matters” if you get caught.

      • Again, the US law only applies if you are an US citizen, or if you stay a sufficient amount of time or earn sufficient income in US. It doesn’t apply to foreign nationals who’s wife and kid are in an US university studying.

        That’s the same with Canada. It applies to Canadians leaving the country to work somewhere else, or foreigners coming into Canada to work, not foreigners who always stayed in their home country and work and earn income. If you don’t believe me, please look up CRA residency law and it’s pre-conditions.

        As for asset seizures, it’s fairly useless because in Canada, assets are individual based. So if Mr. A commits some financial crime and gave proceeds to Wife B to buy a house in her or her relative’s name, the gov’t have to prove that the money is the proceeds of crime before they can seize it. It is not a quick and simple case. If Mr. A does what any competent criminal do and hire high priced lawyers & accountants to wash the money, or just hit the casino, it becomes extremely hard to seize it.

      • With regard to property tax, my pre-condition for higher property tax, even just on foreigner owners alone, is that the $$$ must be used to do any combinations of below, not general additional revenue for gov’t
        1 – pay down provincial debt
        2 – one time plug for our heatlhcare, education & infrastructure deficit
        3 – establish a prosperity fund for purpose #2 with strict rules on usage
        4 – reduce personal income tax & fees first!

        Basically we are sitting on a flow of free $$$ that could really help the province and the people who actually live and work in it. But unfortunately, personal petty interests means this great opportunity will be wasted.

  25. You want to really tax foreign ownership $$? The easiest way is to tax something that can’t be avoid – property tax. The property is here locally, gov’t knows where it is, and can levy a tax on it. If the owner isn’t a tax filing resident or one of those bare trusts type that tries to get around tax laws, triple / quadruple / quintuple the property tax. If it is rent out to a tax filing Canadian then there can be some kind of credit.

    Off course, this must be balanced with an equal amount of personal income tax & other taxes reduction, not simply a tax grab. However, the chances of that happening is pretty much 0%.

  26. Klump: “Many homeowners are deciding to stay put and continue accumulating capital gains.”

    I love how he blankly assumes that continued gains are a given. And he doesn’t seem to realize that there are no “gains” until one sells.

    This is CREA’s “chief economist”, folks.

    http://vancouversun.com/news/local-news/drop-in-vancouver-area-home-sales-suggests-owners-spooked-by-rocketing-prices-crea

    • Ever heard of “total return”?! that’s how everyone things of returns now, including asset management firms, mutual funds, pension funds, etc. Hedge fund’s 2-20 model doesn’t apply to realized gains only, but on all gains including those still on paper and could in theory disappear the day after fees are taken.

    • I think the issue here is that there is no real pressure to sell. People assume that in the detached markets the buyers are overleveraged. But in reality, that is hardly the case. Are there some locals who are overleveraged, sure. But I can tell you from experience that most buyers (not locals, but buyers) can afford this quite comfortably. Its their wealth, not their declared Canadian income that counts. Take the 31 million student buyer for example, declared probably 0 canadian income, his downpayment alone was 20 mil. Probably borrowed the 10 mil just because his parents can’t get all that money out of china. Can he afford the place comfortably? Stats say no, but in reality absolutely he could.

      Also, it is wrong to assume that the transactions represent a small percentage of the market. In the city of vancouver, detached houses turned over 9% last year and about 6% the year before. This year, they are on track to turn over another 6 to 8 %. So, by the end of this cycle of this year, about 20% of the detached homes have been turned over in this latest run of the market. This is not a small representation of its value.

    • Pressure to sell or no pressure to sell. Doesn’t matter. Hedge fund policies. They don’t matter. For a homeowner, there is no gain until it is realized. End of story.

      • Sure, how is that different than any other investment? I don’t realize a profit on my stocks until I sell, I don’t realize a profit on my gold holdings until I sell. Why is this any different? So what you are saying is, people should not be counting on their profits on any investment, including homes until they sale. I think that is just a general platitude.

      • Correct. No different from any other investment. It’s all on paper until you sell. Unrealized vs. realized. In the end it’s the latter, not the former, that matters. Klump speaks as if there were no difference between the two.

        The fact that management fees at hedge funds are calculated on the basis of unrealized gains is a separate and irrelevant point.

      • home owners do not give a rat ass about gain or loss. they have a place to secure shelter for their family, period. when will stubborn bears ever learn!

    • It does sound whacked, but it has been known to work. The guy who owns Hobbes Florists pulled that stunt – he saw a property he wanted; wrote the guy a letter; a few years later the guy sold him the house.

      It has become a ploy used by lots of house horny wannabes; like a cover letter with a resume or business plan.

      People give fortunes to psychics and other con artists – why wouldn’t it work sometimes with a gullible lonely oldster. Bernie Madoff conned out billions of dollars – these turkeys are small fry.

      If you’re dumb enough to give, there’s always someone smart enough to take.

    • and this guy is a lawyer? what world does he live in!

    • Can’t read the article, but since the house is in Canada, it would be fairly easy to place a lien and do a tax sale to collect? No?

  27. Deemed resident for tax purpose:
    http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-eng.html

    The argument that astronaut primary earner is liable for filing Canadian taxes because their spouse is in Canada doesn’t seem to be so clear cut, especially if China has a tax treaty with Canada. Even if it doesn’t, the deem resident rule only applies if the individual enters Canada after significant residency ties have been established.

    In any case, I don’t think it’s a slam dunk for CRA to prove deemed residency status for a lot of astronaut primary income earners. And as I said, even if they could in a Canadian court, good luck trying to get that order enforced in Canada. Granted, they could potentially arrest the person when they come to visit for failing to file & pay tax, but I doubt that’s something Canada wants to do.

    • Why do we repeatedly fall into the trap of inflating bubbles even though history shows they always end badly? Blame your brain.
      http://tinyurl.com/hhh93pb

      • Macleans mag? Really? Wanna buy my farms!

      • Fred, you’re from Harbin right!?

      • from the above article ~ “Vancouver real estate recently broke all records for volume. People can’t get enough. This is yet another necessary bubble component. Volumes are always highest at the top, never at the bottom. The panic to get in creates a gaping hole of demand in the future. For instance, let’s say over the next five years 100,000 people would normally buy real estate based on their family needs and other factors. The great euphoria and subsequent price rise, however, sucks that demand into this year, and it can be seen readily with today’s high volumes and skyrocketing prices. Who’s left to buy two years out? There has already been a massive flight of capital out of China of over $1 trillion. Will that continue endlessly? Of course not, the Chinese government will stop that at some point, leaving the locals of Vancouver and eastern Australian cities holding the bag.”
        1) It is more like $3 trillion.
        2) They can’t stop the capital outflows any time soon: –
        “China Seeks Help from UK on Its Plans to Create Financial Super-Regulator”
        http://tinyurl.com/jdmwdp7
        3) As for the locals holding the bag, Layla Yang has said in her open letter:
        “Population growth, the rise in immigration, limited resources, it will definitely lead to higher prices.”

  28. US housing markets with the biggest increase in million dollar homes
    “San Francisco has seen the largest increase in the share of million dollar homes in the country, growing to 57.4% in 2016 from 19.6% of homes in 2012. ”

  29. Singtao citing Xinhua News Agency: the C$31 million PG mansion owned by a Chinese student, possibly for international money laundering.
    http://tinyurl.com/h4cc9xd

    It won’t be easy to identity the individuals, as the pinyin names in alphabets may have several variations in Chinese characters. Furthermore, one can many different aliases and IDs Take this billionaire who owns No 23 Wall Street in NYC that has been left empty since he bought it in 2008 for US$150 million, some of his names used are Sam Pa, Sampa, Samo, Sam King, Sa Muxu, Xu Songhua, Xu Jinghua, Ghui Ka Leung…… His spouse is reportedly a certain YuenKwan FUNG, but it could well be a FENG, given FUNG and FENG has the same Chinese character.

  30. Ian Young ~
    Vancouver is Canada’s hotspot for secret tax haven firms, with hundreds of addresses in leaked (Panama) papers
    http://tinyurl.com/ztzx42s

  31. http://vancouversun.com/business/real-estate/it-takes-23-years-to-save-for-a-down-payment-in-metro-vancouver-report

    Families are putting off having kids due to housing costs. Just one of the many socio-cultural-econonomic distortions created by this bubble, the effects of which will be felt for generations.

    On another note, I love the reporter’s description of the couple’s condo as a “toehold” in the market. This is another example of bubble linguistics (vreaa has documented many others).

    “Toehold” is wonderful on so many levels. First, desirability is inherent to the word. Never mind that property ownership may or may not actually be desirable at a given time or place. Second, it implies a trend that is upward, and sharply so. No one thinks of the term “toehold” in the context of a descent, nor do they think of it in relation to any slope other than a steep one (in this case, the property “ladder”). Third, and most beautifully, it is implied that those who *don’t* have a toehold are incapable market “climbers”, who will either fall to their death, or remain losers at the bottom of the ladder. Love it!

    • its part of vancouver’s shallow culture and RE media

      I don’t see this kind of subtle RE pumping on every story where I live in Southern California…..probably because we actually have an economy down here

  32. It rhymes ….

    Condos selling at Manhattan prices, yet HK developers’ subprime mortgage tactics go unchecked
    “In a letter to his wife Jiang Qing in 1966, Mao Zedong wrote: “Great chaos achieves great order.” Unfortunately in Hong Kong, an oppressive order among our property developers has resulted in great chaos for the rest of the population.

    Complaints about property prices and rents are being countered by claims of falling prices in recent property sales. But decades of distorted government policies favouring developers, ceaseless ramping and sales manipulation have created affordability levels so high that they are unassailable.”
    http://tinyurl.com/hn4paum

  33. Billionaire at the heart of the McAuliffe FBI investigation, is also known to have given $2 million to the Clinton Foundation and signed a trade agreement with the last Virginia Governor convicted of taking bribes.
    http://tinyurl.com/zf57pl8

    • “Voicd of America” (voachinese.com) today, gives an insight into the “deep water” connection between the said billionaire and his city of origin, Dandong. The ex-Mayor of Dandong was dismissed on July 24,201 and expelled from the Communist Party on October 28, 2014 for corruptions related to the real estate.

      Wang’s nemesis who reported his bribery to the authorities, and his two lawyers and half a dozen others were either caught or kidnapped before being thrown into jail on charges of obstruction of justice or defamation, etc.

  34. Astronaut family???

    US$6.5 million mansion in Hillsborough, San Mateo CA

    • Described as a “princeling”, with powerful and rich parents in Beijing real estate business, 30-year-old Tiffany Li is married to her second husband who still lives in China. Now comes the confusing part. She and her murdered ex-boyfriend have two little girls, age 2 and 4; she and her current boyfriend(s) are on murder charge.
      http://tinyurl.com/jdysorj

      • Man, that’s way better than the story we get on Ultra Rich Asian Girls of Vancouver.


    • Tiffany Li’s mother, JiHong Li, according to the media is a “Red 2nd generation”, while Tiffany Li is dubbed a “Red 3rd generation”. JiHong Li’s parents are said to be high-ranking officials of PRC, very powerful in the military district of Beijing.

      Strange twist: has JiHong Li had a name change to Juong Li?
      “Juong Li and her lawyers went to the courthouse in Redwood City to fight for custody of her grandchildren – a 2-year-old girl and a 4-year-old girl.”
      “Tiffany’s mother, who resides most of the year in Beijing, has been caring for them in the Hillsborough home since her daughter was arrested last Saturday during a SWAT team raid at the house.”
      http://tinyurl.com/zs79w7u

  35. More astronaut families from Asia ???

    Nu Stream Realty and Sutton West Coast Realty join Christy Clark on trade mission to Asia
    http://tinyurl.com/jalq49a

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