China's Millionaire Migration

[CroFlames]

Originally Posted by EldrickOnIce

The only problem is, when the market corrects or the bubble breaks, every market is affected, including ones that didn't see prices rise 2-300% in the last little while. So Calgary home owners could get hit way harder than Vancouver or Toronto, for example.
Or so is the theory anyway

Or maybe the poor man's foreign millionaires start buying up real estate in Calgary because even they can't afford Vancouver anymore.

[Zarley]

Originally Posted by CroFlames

Or maybe the poor man's foreign millionaires start buying up real estate in Calgary because even they can't afford Vancouver anymore.

There are a number of residential developers here in Calgary working to make this happen.

[Flash Walken]

Originally Posted by squiggs96

A big problem with the rental market here is airbnb. Units that could go towards long term rentals, are being used as short term rental, further diluting the supply from the open market. Airbnb is basically illegal in Vancouver, unless you have a hotel and/or bed and breakfast license. Many stratas are redundantly prohibiting short term rentals in their bylaws. Unfortunately, these aren't being policed very well.

Another problem is the NIMBY crowd. The solution to cheaper housing and rentals, is to increase density, and thus the supply of both. Too many times in Vancouver people are crying over the prices of houses. These are the same people that don't want to live in a condo/townhome, and don't want towers in their neighborhood. There have been many towers that have been delayed, or outright cancelled, because residents in the neighbourhoods stop them. Then they go to the papers and say how they can't afford to live here. You can't have it both ways, people.

I would like to see more houses both up, and replaced with increased density. When this happens, there will also need to be increased infrastructure and transit to get the people around. People need to travel on transit, cycle, or walk more than they drive. This will reduce traffic, and make it more efficient.

I don't agree about density though, I don't believe this is a supply issue. If there were more supply there would simply be more turnover.

This is honestly like first year economics, and this hot market is obvious for the corruption that is between private developers and government regulators and policy makers.

Take this article for example:

A debate about supply and demand is not something people typically worry about. In the debate about housing affordability in Toronto and Vancouver, though, you should. If we misdiagnose the cause of the surge in prices, policy action may not only fail to fix the problem – it may make it worse.

Influential voices in the real estate industry in both cities have adopted the position that sharply rising prices are the result of housing supply constraints. In Vancouver, that position is expressed most loudly by Bob Rennie, a prominent condo marketer. In the lead-up to his annual address to the Urban Development Institute, a developer-funded group, Mr. Rennie repeatedly stated that the problem was “all about supply” and that he opposed any actions to curtail or regulate foreign demand for Vancouver housing.

This is the same line taken by the British Columbia government (perhaps not coincidentally, some say – Mr. Rennie is the provincial Liberals’ lead fundraiser). When the Toronto debate reaches the same intensity as Vancouver’s, this will be a tempting position for the Ontario government to adopt, too. So it’s important to understand the weaknesses of these arguments in the Vancouver context.

Consider the claim that it’s “all about supply.” This claim suggests that we are not building enough new housing to meet the demand from a growing population. But is there any evidence of that? No. In fact, the ratio of population to housing units in Greater Vancouver has been falling for the past 20 years or so. Even the UDI said in a late 2015 report that housing starts were in the “healthy range” given population growth, and had been for several years. And housing starts have surged recently, to their highest point in over 25 years, even while net migration (international and domestic) into Vancouver has declined somewhat in recent years.

So how can a spike in housing prices, including condo prices, be explained by supply? As anyone with a basic familiarity of Economics will tell you, they can’t. It has to be a surge of demand.

In industry-oriented publications, the UDI recognizes it’s not mainly a supply problem, but with the general public, in order to press the developer agenda, the problem is suddenly “all about supply.”

This is why almost anyone without a vested interest in the supply story isn’t buying it. Leading national columnists and academics have dismissed this view, recognizing the central role of foreign demand. Canada’s big banks, which might have money at stake if they get the diagnosis wrong, are also being clear that foreign demand is a major issue and urging policy action to regulate it.

The Bank of Nova Scotia has gone to the exceptional step of curtailing its mortgage lending in Vancouver (and Toronto) because it recognizes the market surge is not mostly based on local fundamentals, such as supply constraints, but rather on large flows of volatile international capital (and the bubble mentality it has generated). The Bank of Canada now seems to be intimating a similar view.

Vancouver does have a longstanding land supply issue, yes. But it can explain neither the recent surge in prices nor the extreme prices relative to the region’s incomes, as I documented in a recent report. The approximately $1-trillion (U.S.) flowing out of China can largely account for the past year’s surge, and a continuous flow of foreign money through the Business Immigration Program can mostly explain the “decoupling” of the housing market from local incomes before that.

Why does the diagnosis matter? Couldn’t rapidly expanding supply bring prices down, too?

Yes, expanding supply dramatically can help bring down prices. But the danger with that strategy is what will happen if all of the “excess” demand suddenly dries up, either because it’s based on a bubble mentality or due to an unsustainable credit bubble in China. In that case, then the housing correction will be even deeper and more damaging.

http://www.theglobeandmail.com/repor...ticle30380106/

Regulatory agencies are on the take as well in BC:

One of Vancouver’s top realtors has been voted out of what he calls the “insiders club” after speaking out about unethical practices and lax penalties in the city’s frenzied real estate market.

Re/Max realtor Keith Roy has been on the professional standards committee of the Real Estate Board of Greater Vancouver since 2014, helping with its private adjudication of complaints, primarily from realtors about realtors.

The Globe and Mail has learned the board voted not to renew Mr. Roy’s position on Thursday. One board member, upset over that decision, has resigned in protest.

“My removal comes at a time when I am publicly advocating for changes to improve ethics and consumer protection,” Mr. Roy said. “I’ve been told someone said: ‘Well, he kind of had it coming for talking.’”

It is another glimpse at unprecedented tensions and power struggles inside Vancouver’s real estate industry, which is under intense scrutiny. Bidding wars, out-of-control prices and flipping by speculators have led to an outcry from clients who suspect they are being ripped off. The practices of at least one brokerage firm, New Coast Realty, are under investigation by the provincial regulator. A government-initiated advisory group is expected to recommend an overhaul of industry rules and practices within weeks.

The board controls access to the MLS system and keeps its disciplinary decisions secret. Its rules also say members who criticize other realtors can be fined.

“It’s an insiders club that doesn’t serve home buyers and sellers. Discipline is too lenient. Secrecy is paramount. Change is far too slow to happen,” said Mr. Roy, who is among the top 10 per cent of Vancouver realtors in annual sales.

By contrast, the self-regulating Real Estate Council of B.C. is government-mandated to act in the public interest by investigating client complaints and publicizing sanctions against realtors.

Mr. Roy is one of a very few to challenge both bodies publicly, calling for tougher fines and licensing standards.

Royal LePage realtor Danny Gerbrandt, the board member who resigned on Monday, said he shares Mr. Roy’s views. He cited the board’s decision to remove Mr. Roy as a last straw.

http://www.theglobeandmail.com/real-...ticle30215834/

Interviews conducted by B.C. Securities Commission investigators and read into evidence in a Securities Commission fraud hearing against Ayaz Dhanani reveal a complex real estate transaction with connections to alleged fraud and organized crime players.

This raises big concerns about Vancouver’s property market and the B.C. Real Estate Act.

In late December 2014 Vancouver realtor Liang Ming Wei walked into the frenetic dining hall of Floata in Chinatown.

With hundreds of diners and waiters racing around with steaming plates of dim sum, the Keefer Street restaurant was perfect for an obscure transfer.

Wei had arranged for three million yuan to be deposited in a Chinese bank and transferred to a Richmond currency exchange. Exchange owner Tony Xu called Wei and told the realtor his client’s cash had arrived and it was converted to $521,470 Canadian.

It was 10 times the legal amount individuals are allowed to transfer from China. And it was 50 times over the $10,000 limit that must be reported under Canada’s anti-money-laundering laws.

Instead of having Wei come to his Richmond location to pick up the cash, Tony Xu said it was better for the realtor to meet his brother Frank Xu in Vancouver. Wei’s client Zhongyun Zhang, a Chinese transportation professional, had come to Vancouver in August 2014 and set up a Bank of Montreal account with Wei’s help.

She had listed his Burnaby home address as her own. And on the title deed of Wei’s home she claimed to be a homemaker. Bank documents said she was a Canadian resident. None of it was true.

In Floata, Liang Ming Wei took three bank drafts totalling $470,000 and a cheque for $50,000 from Frank Xu, all made out to Zhongyun Zhang.

The money was supposed to come from Zhang’s account in China. But one of the bank drafts came from a Vancouver dentist who did not know Zhang, and was victim of an alleged fraud by a man named Ayaz Dhanani.

The other two bank drafts came from citizens who also did not know Zhang.

According to evidence tendered at a B.C. Securities Commission hearing, the financial instruments handed to Wei in Floata had passed through at least five sets of hands. These elaborate transactions occurred because Wei had told Zhang that “no matter what,” she must have $500,000 in Canada to buy a house.

The linchpin in the exchange was Edwin Shek-Yin Cheng, a Vancouver money launderer and loan shark who was well known to Western Canada organized and commercial crime investigators.

In June 2015, six months after the three bank drafts were deposited by Liang Ming Wei into Zhang’s bank account in West Vancouver, Edwin Cheng was found shot dead inside his car outside a Sikh temple in Richmond. Witnesses said assassins pulled up in a black SUV and blasted Cheng’s car with about 20 bullets.

Details of this disturbing case were revealed in the Securities Commission fraud hearing. But the offshore money transfer and real estate activities investigated by The Province were not the focus of the fraud proceedings. What’s more, the real estate activity that apparently drove these transactions is not being probed by B.C.’s Real Estate Council.

NDP MLA David Eby, B.C.’s opposition housing critic, said facts gathered by The Province provide perhaps unprecedented detail and corroboration of similar allegations reported to his office concerning offshore buyers and local realtors.

“I was really troubled by the facts in your case,” Eby said in an interview. “And I’m concerned this is not a one-off situation, and this could be a systemic, regular practice. There is enough information to raise red flags for investigations.”

http://www.theprovince.com/business/...456/story.html

Read that last article in full if you want to start going down the rabbit hole that is international corruption and money laundering in BC.

It's cauldron of #### out here.

[peter12]

The degree to which our governments' (read: plural) lackadaisical approach to regulation has placed the long-term health of not only the Lower Mainlaind's, but the entire country's, economy at stake is chilling.

It is so clear that this has been driven by a criminal element, and doing damage to the long-term cultural integrity of this city. By that I mean is that this bubble is not only driving out young families, crippling business, and causing severe tension between ethnic communities, but also driving crippling wedges within ethnic communities - the Chinese community being the prime example.

In the recording, a woman he said had identified herself as Ms. Yang warns him in Mandarin: “I’m telling you – people above me are from Harbin [China] gangs. Gangsters, right? You don’t ####ing 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.” The Globe had the recordings translated.

http://www.theglobeandmail.com/news/...ticle30024457/

[burn_this_city]

Calgary should be less susceptible to a crash because our median income should be capable of supporting our median home price. We aren't at the crazy 10x multipliers like Vancouver.

[peter12]

Oh Flash, great pick on the Globe piece by Josh Gordan. He rightfully calls out Bob Rennie - the leading propagandist for the developer interests. That guy is the worst. He has literally made millions of dollars on this bubble - not only through aggressive marketing of condos, but by using his position to promulgate sheer BS on behalf of developers, and foreign buyers. His bit in "The Province" a few weeks ago was so obviously a marketed piece. He is a lobbyist, pure and simple.

I loved this quote in particular:

Don’t blame China, and don’t tax foreign ownership. But a speculation tax? That’s OK. “China buys $6 billion a year in British Columbia exports. Are we going to tamper with those jobs and our economy? … A foreign ownership tax of 10 per cent on a $5-million home will not stop a sale or create affordability … It will only cause racially charged conversations to go beyond where they are now.” Rennie says he still believes a speculation tax aimed at buyers who flip a home would cool the market at the lower end.

When someone calls someone or oneself a "guru" of anything, you have to ask the question, "Who is benefiting from this perspective?"

http://www.theprovince.com/business/...028/story.html

[Flash Walken]

Originally Posted by burn_this_city

Calgary should be less susceptible to a crash because our median income should be capable of supporting our median home price. We aren't at the crazy 10x multipliers like Vancouver.

Whatever policies are put in place to either cool the markets or respond after they've popped will invariably be aimed primarily at the vancouver and toronto markets. What's good for them is likely not going to be good for Calgary, Ottawa, Montreal etc. I think of it like secondary impact. if Oil prices stay low and Alberta sees consistently stagnant or declining homestart numbers, there will be a knock-on impact of oversupply if home prices are corrected. That's a bit of a worse case scenario but it's what happened in the US with their sub-prime mess.

The BC interior has also seen fluctuating home prices as well being stuck in between Vancouver's outrageous market and Calgary's recent economic hardship. I think overall that's been good for Albertan's who owned secondary or recreation property in BC, but it's made it more difficult for those in Alberta who want to move from say Calgary to Cranbrook to lower cost of living expense. In turn, that has made it harder to buy and sell a house in Calgary which is hurting the overall economy there as a result.

[squiggs96]

Originally Posted by Flash Walken

I don't agree about density though, I don't believe this is a supply issue. If there were more supply there would simply be more turnover.

This is honestly like first year economics, and this hot market is obvious for the corruption that is between private developers and government regulators and policy makers.

I don't think we're going to agree on much, if you don't think increasing density is a solution. We need to look more like London, England, and less like Calgary, in order to get more people into the city. People want to live here, for a multitude of reasons. If you don't increase the density, and give them increased transit to get around town, the price continue to rise. You are right that it's like a first year economics situation, but you want to remove supply from that equation? That, and the terrible Globe article you quoted, assume the rising costs will disappear without increasing supply doesn't make sense. I read it when it came out, and it's been easily debunked.

Too many people are putting the blame on developers, Rennie, and Robertson. Let's suppose the NPA gets in power, and stifles developers from building condos. People still want to move here. How will this lower prices? SFHs continue to decrease, as they are converted to mult-unit dwellings. Since this decreases the amount of supply, the prices will continue to go up for land. That's, once again, first year economics.

I think the bigger problem in Vancouver is the median wage. London, England is expensive to live, but the wages are much higher. The vast majority of people there live in multi-unit housing. There is more density, and places are smaller. This is what Vancouver needs to strive for, both in terms of wages, and accommodations.

I'm not saying there isn't illegal foreign money coming to Vancouver. I am saying that the figures being portrayed in the media are vast hyperbole. There was a new building that was reported to have 85% foreign ownership. As someone who got to see the purchaser list, I can tell you it is false. It was about 7%. Many people are blaming the Chinese for buying up all the properties. It's inherently racist to say that. I could go on about that for pages on end, but the simple fact is just because someone is Chinese, doesn't mean they are bringing in illegal cash. Even the Andy Yan paper was taken by the media to mean all buyers are foreigners, when that wasn't what actually happened, or was said by Yan.

I do enjoy the bubble talk. People act like it's new and it's the first time Vancouver's had one. You can literally find over 30 years of articles on it, but yeah, you're definitely right about it this time, people.

[peter12]

Originally Posted by squiggs96

I don't think we're going to agree on much, if you don't think increasing density is a solution. We need to look more like London, England, and less like Calgary, in order to get more people into the city. People want to live here, for a multitude of reasons. If you don't increase the density, and give them increased transit to get around town, the price continue to rise. You are right that it's like a first year economics situation, but you want to remove supply from that equation? That, and the terrible Globe article you quoted, assume the rising costs will disappear without increasing supply doesn't make sense. I read it when it came out, and it's been easily debunked.

Too many people are putting the blame on developers, Rennie, and Robertson. Let's suppose the NPA gets in power, and stifles developers from building condos. People still want to move here. How will this lower prices? SFHs continue to decrease, as they are converted to mult-unit dwellings. Since this decreases the amount of supply, the prices will continue to go up for land. That's, once again, first year economics.

I think the bigger problem in Vancouver is the median wage. London, England is expensive to live, but the wages are much higher. The vast majority of people there live in multi-unit housing. There is more density, and places are smaller. This is what Vancouver needs to strive for, both in terms of wages, and accommodations.

I'm not saying there isn't illegal foreign money coming to Vancouver. I am saying that the figures being portrayed in the media are vast hyperbole. There was a new building that was reported to have 85% foreign ownership. As someone who got to see the purchaser list, I can tell you it is false. It was about 7%. Many people are blaming the Chinese for buying up all the properties. It's inherently racist to say that. I could go on about that for pages on end, but the simple fact is just because someone is Chinese, doesn't mean they are bringing in illegal cash. Even the Andy Yan paper was taken by the media to mean all buyers are foreigners, when that wasn't what actually happened, or was said by Yan.

I do enjoy the bubble talk. People act like it's new and it's the first time Vancouver's had one. You can literally find over 30 years of articles on it, but yeah, you're definitely right about it this time, people.

This is ridiculous. Sorry, you dismiss reasonable positions taken by some of Canada's most respected economists, and replace it with this nonsense?

Please. Tell me. What would be a reasonable first step to take to increase the median wage for millennial families?

We need to look MORE like London, England? Don't we already? Similar factors are already pushing up prices in that market, as well. Oh, looks like it is already impossible to recoup housing costs by using it as a rental property. Like, as in, housing is actually a pretty volatile "investment."

http://ftalphaville.ft.com/2016/06/2...ed-i-tells-ya/

[squiggs96]

Originally Posted by peter12

This is ridiculous. Sorry, you dismiss reasonable positions taken by some of Canada's most respected economists, and replace it with this nonsense?

Please. Tell me. What would be a reasonable first step to take to increase the median wage for millennial families?

I haven't once rejected a reasonable positions. I also don't think it's an either/or scenario. I think both can be implemented. I think Vancouver should more tightly regulate short term rentals, crackdown on shadow flipping, bring in a vacancy tax, have foreign purchasers (from all countries) pay a high property transfer tax, decrease the amount available to be borrowed for mortgages on high valued homes, etc. I think all of these will help reduce housing costs.

A reasonable first step would be to reduce the corporate tax rate in BC. This allows the companies to pay more workers, or pay workers more. I would increase the SBD limit from $500,000 to $750,000. The tech industry is starting to grow in greater Vancouver. I'd like to see this continue to grow, as well as other industries brought in.

[AltaGuy]

Sorry, you got to see the purchaser list on a condo building in Vancouver... may I ask how? Sounds as if you have skin in this game.

[Winsor_Pilates]

Originally Posted by squiggs96

Another problem is the NIMBY crowd. The solution to cheaper housing and rentals, is to increase density, and thus the supply of both. Too many times in Vancouver people are crying over the prices of houses. These are the same people that don't want to live in a condo/townhome, and don't want towers in their neighborhood. There have been many towers that have been delayed, or outright cancelled, because residents in the neighbourhoods stop them. Then they go to the papers and say how they can't afford to live here. You can't have it both ways, people.

This is the thing that drives me crazy.

The same people who scream loudest about our affordability issues, are also the first to complain about every new development proposal and "more ugly towers".

People need to adjust their reality and face the hard facts that a detached Vancouver house will always be in diminishing supply and other property types may have to become their family home.
There's a sense of entitlement to own a detached home but it's not realistic given our land and growing population.

Hesitation from people to live in the burbs also contributes to this issue.
In my ideal world, all of Greater Vancouver would be "Vancouver" and downtown would be relocated to somewhere around where South Burnaby is now.

This would allow growth from the core in all directions and remove the stigma of living in Surrey or places like that.
We would have a much large proportion of the population living within 30 minutes of downtown and transit could support it from all directions.

Having downtown and UBC on the Western water's edge of Greater Vancouver, is a beautiful yet terribly inefficient design.

[Flash Walken]

This looks like an all-too-familiar loop from our local realtor posters.

How is it possible that the same people who are denying residential condos (aka, homeowners) the same people complaining about lack of home affordability? This doesn't even pass the most basic logic.

People that complain about the lack of affordable housing in BC are people who can't afford the housing, not the people in single detached homes that have lived there for more than a decade (the time frame it would take for these communities to halt condo re-zoning and construction).

Who are these incredibly powerful people that block condo development and that also want cheaper homes?

[peter12]

It's not even that I feel the need to complain about not being able to afford a home in Vancouver. It's just not even on my radar, financially-speaking, and given some colossal collapse, it never will be. Of course, that collapse will also affect me adversely. So I am kind of left thinking that nothing will ever change.

Thankfully, I am fortunate and blessed in many ways. I can afford the crazy rental market, and still live a normal life. Most people can't. There are people in my office who commute everyday from Langley and Abbotsford.

[peter12]

Originally Posted by AltaGuy

Sorry, you got to see the purchaser list on a condo building in Vancouver... may I ask how? Sounds as if you have skin in this game.

Yeah, I picked out that weird little nugget too. Also, a purchaser list doesn't tell you anything about who actually bought the unit, especially in this market, where realtors, buyers, and sellers are all lying through their teeth.

[Winsor_Pilates]

Originally Posted by Flash Walken

This looks like an all-too-familiar loop from our local realtor posters.

Knew that way coming; how original of you.

I forgot that anyone in the industry isn't allowed to have comments on issues we see every single minute of every single day of our lives.

Take all real estate professionals out of the discussion, and let Flash Walken offer up the "facts" based on the experience of dinner table discussions and exaggerated news articles.

How is it possible that the same people who are denying residential condos (aka, homeowners) the same people complaining about lack of home affordability? This doesn't even pass the most basic logic.

Everyone is complaining about the lack of home affordability; that's a given and factual problem.
How about proposing some solutions?

There are many people who don't own property yet still complain at any proposed solutions (i.e, more new condo construction). I'm not talking about existing home owners; although many of them also complain for different reasons.

It's easier to complain about every greedy developer, every foreign buyer and every realtor (case and point in your post) than actually discuss fixing things.

[Flash Walken]

Looks like a touched a nerve.

[AltaGuy]

Nobody has said they don't want solutions to affordability. But supply - side solutions carry a very real risk of blowing the situation way out of control and also - conveniently - keep putting money in the pockets of the same people who are already making a ton of money.

[peter12]

Originally Posted by Winsor_Pilates

Knew that way coming; how original of you.

I forgot that anyone in the industry isn't allowed to have comments on issues we see every single minute of every single day of our lives.

Take all real estate professionals out of the discussion, and let Flash Walken offer up the "facts" based on the experience of dinner table discussions and exaggerated new articles.


Everyone is complaining about the lack of home affordability; that's a given and factual problem.
How about proposing some solutions?

There are many people who don't own property yet still complain at any proposed solutions (i.e, more new condo construction). I'm not talking about existing home owners; although many of them also complain for different reasons.

It's easier to complain about every greedy developer, every foreign buyer and every realtor (case and point in your post) than actually discuss fixing things.

Oh because Vancouver realtors have been so forthcoming with the facts...

The federal anti-money laundering agency received 337 compliance reports from roughly 1,000 companies in the real estate sector it surveyed — including brokers, sales representatives and developers — between Jan. 1, 2013, and Feb. 8, 2016.

http://globalnews.ca/news/2718172/do...undering-laws/

[EldrickOnIce]

Speaking of condo construction, this is Montreal. It's crazy, and getting worse not better°Still building at an even greater rate, it seems to me:

Montreal in particular has been grappling with a glut of unsold condos for the past two years as builders haven’t scaled back their plans in the wake of softening demand. The city had a backlog of nearly 3,000 unsold condos last year, yet condo starts in Montreal rose 19 per cent, defying analyst expectations for a slowdown in new construction.

There are now nearly 20 condo sellers for every one buyer in Quebec City and downtown Montreal, well above the long-term average, said Hélène Bégin, chief economist at Desjardins Group.