Category Archives: 05. Where do Buyers get the money?

First hand accounts of where buyers are getting the cash for their downpayments. Financed by Mom & Pop? Grow-ops? Four jobs? Offshore funds? Robbed a bank? Commodity trades? And so forth..

Skyrocketing housing prices in Canada’s cities threaten the cohesion of our society – Joseph Stiglitz

Skyrocketing housing prices in Canada’s cities, most dramatically in Vancouver, threaten the cohesion of our society, argues Nobel laureate and former World Bank chief economist Joseph Stiglitz. …
“It’s the same phenomenon happening in New York,” he said. “We attributed it maybe to Russian oligarchs buying multimillion-dollar apartments in huge buildings… driving up rents, making it unaffordable to live in the city.” …
“There are very significant benefits to creating communities with diversity, diverse incomes and other forms, that cannot exist if we price ordinary people out of our cities.”

Read the interview by The Tyee’s David Ball (26 Oct 2015)

Ratio of Vancouver Home Prices to National Average

vancouver ratio

In Greater Vancouver, the average residential sale price was about $947,000 in October, and for Greater Toronto it was roughly $631,000. Excluding both areas, the national average price was just over $339,000.
For Vancouver, it amounts to an average home price that is 2.79 times greater than the national average. The October ratio is Vancouver’s second-highest on record, eclipsed only by a peak of 2.91 reached in February of 1995. For 76 consecutive months, Vancouver’s price-gap ratio has run above its 35-year average.

G&M, 18 Nov 2015

For the CMHC, ‘Slowdown In Housing Market’ Means ‘Going Up At A Slightly Slower Pace’

The Canada Mortgage and Housing Corp. has finally determined that Vancouver’s real estate prices are “overvalued”. The housing corporation has consistently refused to peg the sky-high housing market on the west coast as excessively frothy or due for correction. It contends that underlying fundamentals justify and support Vancouver’s crazy housing prices, and earlier this week, CMHC officials asserted the region offers a range of affordability in its housing stock.  …

Interest rates, and thus mortgage rates, are expected to start rising in late 2016, “contributing to a modest slowdown in housing markets”.
Note the adjective “modest”. CMHC explains: “Underlying fundamentals suggest that the demand will be well supported going forward (with sales) likely to retreat slightly to still-elevated levels, while prices are expected to increase at a slower pace over the forecast horizon.”
So, housing prices that have grown by 9.2 per cent this year are expected to increase only by three per cent next year, and 2.1 per cent the year after.

Barabara Yaffe, Vancouver Sun, 3 Nov 2015

After 15 years of almost uninterrupted bull, few are ready for even the slightest pullback in housing prices in Vancouver. – ed.

Bank of Canada’s Wilkins says soft landing still likely for housing sector

Senior deputy governor Carolyn Wilkins tells the Globe that ‘housing market and household debt are going to evolve in a constructive way’

The Bank of Canada’s number-two policy maker said the central bank remains confident that Canada’s housing sector will achieve a soft landing, just days after a leading global economic body warned of rising risks in overheated pockets of the Canadian market.

Earlier this week, the Paris-based Organization for Economic Co-operation and Development warned in its twice-yearly global Economic Outlook that the risk of “a sharp market correction” is rising in Toronto, Canada’s biggest regional housing market. It pointed to a glut of new and unoccupied housing units in the city as a danger sign. It also noted that Canada’s new-home construction starts, which have been trending above a 200,000 annualized rate in recent months, “are running at the higher end of demographic requirements.”

“Our base case, and one that we outlined in the [October Monetary Policy Report], is that the housing market and household debt are going to evolve in a constructive way,” said Carolyn Wilkins, senior deputy governor at the Bank of Canada, in an exclusive interview with The Globe and Mail. “We don’t see the risk as part of our base case at al

The Globe and Mail, 13 Nov 2015

Bank mortgages, not bags of cash, behind mainland Chinese home buys: study

A new case study reinforces the significant role of mainland Chinese money in the city’s hottest west side residential real estate markets. It also finds that almost 70 per cent of all sales on the Multiple Listing Service in a recent six-month period, worth more than half a billion dollars, were bought with mortgages extended by just three Canadian banks: CIBC, BMO and HSBC Canada. [In total, 82% of sales involved mortgages.]

Source: Bank mortgages, not bags of cash, behind mainland Chinese home buys: study

Report on ‘global capital’ and soaring house prices prompts online debate – The Globe and Mail

Some accuse study of demonizing people with Chinese names, while Mayor Gregor Robertson objects to the ‘racist tones’ of the report

Source: Report on ‘global capital’ and soaring house prices prompts online debate – The Globe and Mail

“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.


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