“Watch The Money Go Round, Watch The Money Go Round, Got It Wrapped Up Tight, Got It Safe And Sound….”

money go round
Watch The Money Go Round

“Given the rogue nature of the industry in this province, I’m not surprised someone calling for more transparency and professionalism would be considered a threat. In a sector that often seems unregulated, it has never been easier to make gobs of cash – legally or illegally. Few want to jeopardize the dynamics that are allowing many to get filthy rich very quickly.”
– from ‘Oversight of British Columbia’s housing market is a sham’, Gary Mason, G&M, 31 May 2016

“Representatives of two real estate companies are traveling with the B.C. Premier on a trade mission to Asia, raising questions about the optics of the perceived partnership at a time when many are calling for an end to foreign real estate investment.
The B.C. government lists more than 60 companies taking part in the trade mission to Korea, Japan and the Philippines as part of the province’s strategy to create more international trading partners.
Listed among those companies are two real estate brokerages Nu Stream Realty and Sutton West Coast Realty.”
“It’s bad optics,” said University of British Columbia business professor Tsur Somerville.
“At a time when people in the Lower Mainland are very concerned about the extent to which foreign capital is driving up prices here and contributing to affordability options, it seems a little bit politically dicey to take [brokerage] firms … along on a trip to Asia.”

– from ‘B.C. real estate companies join Christy Clark on trade mission to Asia’, CBC, 28 May 2016 [hat-tip 3rdRock]

62 responses to ““Watch The Money Go Round, Watch The Money Go Round, Got It Wrapped Up Tight, Got It Safe And Sound….”

  1. This whole trade mission thing has me very annoyed. So the idea is that businesses can come and promote themselves as long as they pay for it themselves. So what we are saying is that legit bc businesses cannot come on trade missions even if they are paying their own fare?

    Also, this trip doesn’t even go to China. So why is all this fuss? Media seriously has to get their facts straight first. This is not a tax payer funded trip for these two companies to go and promote residential real estate in China. How it got warped to that I am not sure.

    • Not taxpayer funded? YOU need to get your facts straight.

      • http://bc.ctvnews.ca/premier-on-the-defensive-as-asia-trip-criticism-grows-1.2925741

        Read that, especially the line that says the realtors are paying their own way. So tell me again, how is taxpayers paying for the two real estate companies going on this trip?

      • Oh, they are paying. Let me explain how these trade missions work, having been involved personally in years past. Meetings, events, and other logistics are arranged by consultants on behalf of participating companies at a reduced, taxpayer-funded cost. The cost of the locations at which meetings are held is subsidized by taxpayers. And then there are government officials who, by accompanying participating firms, elevate their perceived status and open doors that would not otherwise be opened. Who is paying the government officials’ way? Taxpayers!

      • Ok, fair enough, if you say that the locations and other things are subsidized by the taxpayers I can see that we are paying for at least part of it. But, I can’t buy the argument that officials are going so we are paying for it, that means we shouldn’t have real estate companies go to any government sponsored events if that is the case. Because they are technically all tax payer funded.

      • Well, isn’t the whole point of trade mission is to generate business from which the gov’t will derive additional tax revenues? So, having taxpayers fund part of the trip is fine with me as long as trade mission actually does what it sets to do.

        As for “exporting” real estate, especially overpriced real estate, I’m fine with that too. I would rather we sell tons of over priced real estate, generate local jobs, and tax revenues for locals than cut that off and having massive unemployment.

        As for the price argument, that problem would persist with or without the foreign investments. Tiny condos at $500+ / sq ft is simply not sustainable given local income, unless there are massive unreported black/gray market incomes. If people want lower prices then they either have to stop NIMBisym, stop having kids and moving out, or switch from earned income taxation to a passive income & capital taxation scheme. Have a graduated property tax rate on real estate that caps out at say 15% on residential homes. Slap on a 50% surcharge for those that are held in a trust/corp or non-primary residence and not rented out to a tax filing resident, and a 100% surcharge where owners are foreigners. Use that money and reduce/eliminate provincial income tax starting from the lower tier, encourage people to go out and work, start biz, etc. Pay down provincial debt, invest in healthcare, infrastructure, transit.

        If rich Chinese people want to put ridiculous amount of cash here, I say tax, tax, tax, tax this good fortune and use it to put the province on a better path.

      • No one measures the ROI of these trade missions and, in my experience, they do not always live up to expectations. Better for the government to butt out and stop picking winners with other people’s money.

  2. AnneFrankOfGreenGables

    It is becoming clear that Vancouver is gearing up to be a “Monaco of Asia” where extreme secrecy, security, and long term stability create a compelling value proposition for those monied classes that want a place to park their assets and escape to if things become too “hot” politically or planetary.

    • It sure looks that way. In fact, the “Monaco” argument has been referenced on this blog many times in the past as a possible speculative outcome. With the tacit support of all levels of government, it seems increasingly to be the current reality.

      • The Philippines has some of the world’s strictest bank secrecy laws to protect account holders, while its casinos are exempt from rules altogether aimed at preventing money laundering.

    • Uhmm…last time I checked Vancouver is in North America which is an ocean away from Asia? Maybe you mean Monaco for Asians? But then there are lots of other places that qualify as well.

    • Whether it’s Madam Ten Percent (Ibu Tien) or Mrs. Top-Up-40 Percent, Vancuver is becoming an Asian State.

  3. Someone posted this pic online and generated discussions that a good chunk of the original New Coast Realty makes up the new Nu Stream.

    • Wasn’t there report that the New Coast owner treated a lot of his star employees like shit? Wouldn’t be surprised that the successful ones go out on their own. I don’t think Nu Stream has the same owner as New Coast?

      Who knows, maybe this one might curb some of the excesses and shady practices that New Coast owners expect from his employees.

      • Yes. I read that some of them left New Coast to join another real estate brokerage “Metro Edge”.

  4. Ian Young ~
    In Vancouver, house owners made more sitting on their assets than entire population did by actually working last year

  5. I’m annoyed that the likes of Mason are so unimaginative to think there is no irony in having the outgoing FICOM CEO recommend changes to realtor governance.

  6. The trade mission exemplifies to me how intractable the situation has become. The media are fixated on the wrong ball. I know it’s tough days for the mainstream media, but you have to splurge for some protein once and a while…

  7. Rennie the condo salesman presumes himself once again to be an economist. His latest insight: “forget thinking Vancouver can be affordable anymore”.


    • Given that he sells condos for a living, I’m a bit surprised he’s not saying we should have more density, and higher & bigger condo buildings. I totally think that’s probably the easiest & quickest way, aside from taxation, to provide affordable housing. Seriously, if Vancouverites are really worried about young people living and housing affordability, why are they protesting against densification? Especially along arterial & major routes like Broadway, Cambie, Oak, Granville, Main, Fraser, Arbutus, 41st Ave, Marine Drive, etc?

      We are building 10 stories wood frame condo buildings along the major roads, rather than 25 – 35 storey condo buildings. Why not? We aren’t running of sky and boosting supply is one of the quickest way to drive down prices.

      • Ralph Cramdown

        You don’t sell real estate by emphasizing ever increasing density, but by strongly implying that this week’s product is the last available, and that gorgeous view will be yours forever.

      • bobtheassetuilder

        This is a very good point. Every existing commercial area in the City of Vancouver should be lengthened, especially towards the south of the city and all single family homes zoned to be 3-5 story condo buildings. If that were done, and a few boulevards expanded, the supply problem would correct pretty rapidly. It would be hell for the market and make the whole city a construction site for a decade though (it already is is about a quarter the way there given that one or two houses per block on the west side seem to be being torn down and rebuilt at any given time.)

      • Yvrhousing

        boosting supply is one of the quickest way to drive down prices”

        Which isn’t that quick at all. By the time plans are approved and construction is completed it is years; for condos it’s longer still. Supply is incapable of reacting to demand in a timely manner. Worse, if and when it does, it can get it all wrong and produce overhang that ends up causing all sorts of unpleasantness. Better maybe to not start building too much. BTW construction is at record highs in metro right now…

    • In Vancouver, our problem appears to be limited to less than 5% of foreign buyers and a few shell companies, and mostly greedy locals.

      Whereas in China, it is not just the developers are investing in real estate and lands. Other players in the game are:
      – Securities brokers have invested humongous sum in the real estate and lands, since the stock market is seen as less secure and lucrative.
      – State-owned companies / conglomerates, each setting up their own real eatate arm.
      – Financial companies, seen “snatching” the real estate market, hence house prices will only go higher!
      – Irrational land prices as a money bag or money tree.
      – Government, of course

      “Kingly land” (di wáng), is a new term used to describe the development land sold at prices way higher than any historical deals in the same neighborhood, ever since the financial industry forcing their way into the real estate market with humongous capital funds.
      To draw an analogue, this cartoon depicts the players pushing residential devlopment land and real estate prices to sky high prices … 123 GRAB.

      • Uhmm….di wang doesn’t really translated into Kingly Land. The meaning actually refers to the person – something like King of the Land, or more slang like “No 1 Boss”, he is the man type of thing. No really a good connotation either.

        Entry of financial industry or financialization has wrecked havoc in many places – just look at the commodities market. It went from having a useful function for the actually commodity producers & users into another financial casino with weak bearings to actual supply & demand now.

      • Thanks for the clarification.

        Cinda Real Estate (CRE) pays 303% over opening price to buy a piece of housing development land in Shanghai.
        CRE is a subsidiary of China Cinda Asset Management, set up by China’s Ministry of Finance for the state-owned China Construction Bank.

        It would not be long for the recently created BC Investment Management Corp’s subsidiary, QuadReal Property Group (BC Pension Fund’s multi-billion-dollar real estate arm) to jump in to our local real estate boom., would it?

  8. @Yvrhousing – What else do you propose would increase supply faster? Taxation, more regulations, even barring foreign $$ isn’t going to increase supply of homes for locals, nor likely to decrease the price to affordable levels. Not to mention deriving some potentially lucrative tax revenues & economic injection to local economy.

    yes, there is a long lag for supply to come to market with condo buildings. However, some or a lot of the delay is 100% bureaucratic and city induced. If the city is really concerned about housing supply then they have the power and ability to speed up things a lot.

    We may have highest construction level but it is obviously not sufficient to meet the increase in demand.

  9. @3rdRock – Actually, BCImc is already very heavily involved with RE. A few years ago when they had a big expansion, almost 1/3 to 1/2 of the job postings was RE related!! It felt more like REIT with a side business of regular (stock & bonds type) investment management.

    The new office building on Thurlow & Alberni beside Shangri-La is funded and owned by BCImc as well. They are very big into local RE for the size of the fund. I hope everything works out for them cuz I wouldn’t want to pay more tax $$$$ for gov’t employee’s already gold plated pensions, when I have none.

  10. “Every city wants to have a strong local economy, high quality of life and housing affordability for its residents. Unfortunately these three dimensions represent the Housing Trilemma. A city can achieve success on two but not all three at the same time. Underlying all of these tradeoffs are local policies as well.”

    “The reason these tradeoffs exist is mostly, but not entirely, due to market forces. People want to live in cities with a strong economy and high quality of life. Increased demand for housing leads to higher prices and lower affordability. Nice places to live get their housing costs bid up due to strong demand. The opposite is true as well. Regions with underperforming economies and a lower quality of life do have better affordability.”

  11. So, the middle class are trapped side-by-side the “dangerous class” now! @!@

    The Bilderberg 2016 Agenda: Trump, Riots, Migrants, Brexit
    The official list of “key topics” to be discussed is both broad quite vague and includes:
    #9 Precariat and middle class
    The world’s most elite conference this year will discuss something called “the precariat”

  12. Thiel: Real Bubble is in Government Bonds, Negative Rates
    Thiel, speaking in German on a panel at the Finance Ministry in Berlin on Wednesday, said he doesn’t see a bubble in technology companies and startups. Negative-rate policies by central banks indicate a lack of attractive investment options and “show us that we don’t have ideas for a better future.” “What’s needed is economic growth, in part because “politics only works when there’s growth,” he said.

  13. Fueled by an overheated land market, Shanghai average cost of existing homes hit record high at US$4,178 per square meter. Heck, no one even bother to mention it if the condos have a 20-year, 40-year or 70-year leasehold.

    Beijing Tongzhou sale restrictions became effective last April 22nd, after home sales jumped 1432% YoY.
    One month later, sales dropped to only 13 condos sold in May. Specuvestors have moved to Daxin.

    Despite the real estate market making up 15-25% of the GDP, China has no property tax. This tax is only applied to enterprises with foreign investment, foreign enterprises and foreigners

  14. Foreign farmland ownership a wildfire hazard in Northeast B.C.
    Issue raises parallels with foreign ownership debate in Vancouver
    “B.C. has no restrictions on out-of-country ownership of farmland, which has long led to speculation that foreign investment is driving up prices. The province does not track the country of origin of a land purchaser, so much of the information about the phenomena is anecdotal. ”

    Foreign ownership in Vancouver
    “In that way, there are parallels with the foreign ownership debate in Vancouver—where housing prices are skyrocketing amid a flood of largely-Chinese investment. According to the Real Estate Board of Greater Vancouver, the average price of a detached home in Metro Vancouver jumped 36.9% year-over-year last month.”

  15. There’s a 1912 house that I’ve admired for some time at 3377 E 27 on a 4,500′ lot. The side yard in particular is a gem – wide enough for the playset that was there, or for a huge south-facing garden. This 3,100′, 3 suite, highly renovated great house came up for sale just over a month ago for $1.8. To me, the price was worth it. A house like that in a more appreciative area would have sold quickly. Turkey nuts agent didn’t sell it, and another agent grabbed the listing. She has it listed for $160K less than the previous ask.

    Last year, in October, a house on the same street at 3254 – a very good house – was listed at $1M exactly – with only the words “Excellent building lot” in the description. Of course, it sold quickly. In no way is this house a tear down. The list should have been a quarter mil higher. If it is torn down for some spec builder to make a million, that would be a travesty.

    A pox on the turkey that couldn’t sell 3377; a pox on the agent that got the owners to drop the price by $160K; a pox on the queef that listed 3254 as a building lot.

  16. Queensland state government to impose a 3 per cent surcharge on home purchases by foreigners
    Foreigner buyers will pay the extra $10,962 on top of the existing $11,214 in transfer duty for a $365,000 house or apartment.

    In Victoria, foreign buyers will pay a 7 per cent surcharge on residential property purchases starting from next month, up from the 3 per cent introduced last May.

  17. What the unprecedented Chinese M&A scramble in America looks like
    “The raging need for Chinese oligarchs and corporations to park their cash offshore, and as far away as possible from the the mainland and the risk of sudden, sharp (10%-15%) devaluation, has resulted in not only an epic Vancouver housing bubble, ….”

    • [AllJazzEra] – Inside the world of China’s ultra rich: Kevin K Li, director of reality show Ultra Rich Asian Girls, speaks to Al Jazeera about China’s wealthiest 1 percent.

      Al Jazeera: Some say that wealthy Chinese are inflating house prices in cities such as Vancouver. Is this an accurate assessment or is this a form of Sinophobia?

      Li: I am not an economist, but as a Canadian, I believe that there are three factors increasing the prices of homes: historically low mortgage rates, the low Canadian dollar, and Vancouver is always rated as “the best place in the world to live”.


  18. Who controls the past controls the future; who controls the present controls the past.
    ~ George Orwell

  19. Loose lips sink ships in touchy times.

  20. We have heard it all from the financial bubble being 8 times bigger than the 2008 subprime crisis to
    China’s debt bomb. Sites such as iFeng give candid analysis with supporting numbers.
    Loans disguised as investments

    The last credit cycle is likely nearing the end. Lots of info out there. In Suzhou Hangzhou and the second-tier cities, hourse prices are starting to come down. Market watchers are noticing that the market is the playing field of three flower-drummers comprising the financial institutions, real estate developers and the investors.

    • Dalian Joins Real Estate Subsidy Train, as Land Sales Tumble
      “The city joins a growing list of others offering incentives to perk up local property sales, as part of a national effort to clear out big inventories.”

    • Buying multiple houses/condos is like owning a money-printing machine. Thieves cannot cart away your real assets because they are not portable, and safer than leaving your cash in a bank vault that imposes a levy in lieu of an interest.

      Beijing’s 4-month average house sale price in May 2016 was 35710 rmb/sqM
      @ C$ = 5.1 rmb, about C$7,002/sqM or C$650.50/sqF
      1,000 sqF apartment/condo = average price C$650,500

      Beijing’s average salary is around 7086 rmb per month.
      (35710 rmb x 100 sqM)/(7086 rmb x 12 months) = 42 years
      to save up the 20% down payment alone requires 8 years

      Forget the expensive neighborhoods where average prices range from 50,000 ~ 90985.sqM
      it will take >100 years to repay the mortgage loans for the salaried man

      10 years ago, housing in Beijing was affordable before prices climb out of reach of most people. In reflection, that is a mirror image of today’s Vancouver house prices. Let’s take a look at their numbers:
      2005 Beijing’s apartment was price at 800,000 rmb
      2016 price has climbed to 7,000,000 rmb
      10 years’ price increase by: 6.2 million yuan
      1-year price increase by:620,000 yuan
      1-month price increase by 51,700 yuan
      1-day price increase by 1,724 yuan
      1-hour price increase by 71.9 yuan
      1-minute price increase by 1.2 yuan

  21. .

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