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Canadian Real Estate Ep:1 The Chinese Menace (self.badeconomics)

saltytorontoOld enough to rember Stagflation having no answer が 投稿

https://np.reddit.com/r/canada/comments/4jo0op/dear_trudeau_please_tax_the_shit_out_of_foreign/

So as my name suggests, I feel I have an obligation to address such obvious bad economics when they concern the city which I have been a resident in for approaching 5 decades now (yes I am an old bastard), and well my late 60s economics training may be out of date; I can at least employ some basic research and google skills that so many seem to be lacking. So with this prologue out of the way we can begin with this R1.

This is just a rant. But I am frustrated as all hell right now.

Beginning with this I believe at least we should extend some leeway, he does go on to describes what appears to be a good middle class income and seems to be rightfully frustrated at his current condition. However peddling ignorance should never be tolerated and his little rant is ignorant of the facts if nothing else.

Our wages combined, barely make enough to put a down payment on a house in the southern Ontario and make mortgage payments until at least 5 more years. ...The fact that someone who has spent their life contributing and building themselves honestly can't access an essential part of life.

Here we get the cause of the issue, he cannot afford a house and feels that he has a right to own a house. I would just like to point out here that while currently 67.6% Nationally and 68.3 in Ontario currently own their home1 (includes both those with and without mortgage), historically those in his those in their late 20-30s have far lower rates of ownership and those who do tend to be in the top income groups with children2, neither of which the poster seems to be.

So now to the main issue, his claim that it is foreign buyers that are to blame for the rising prices and barriers to entry for native residents of Canada. Well it is at this time there no data, or it is hidden from me, for the entire Canadian real estate market. The CMHC (Canadian Mortgage and housing Corporation) reports that for condos there has been an increase in foreign ownership from 2.4 to 3.3 percent for the Toronto CMA and 2.3 to 3.5 percent in Vancouver3, the two areas most cited for the idea of a torrent of foreign money that is pricing out Candian residents in these two areas. Looking to Hamilton-Burlington which are in the GTA and experienced with a 14.9% Y/Y increase in prices according to CREA data with statistically negligible foreign ownership4 to see at least anecdotally that there is a domestic demand boom that is fueling this anger that we see on r/canada.Overall it is rather the case that in Canada, its major cities and metro areas are experiencing a rise in housing prices as there has been a shift back into the city reversing the suburban trend.

To digress a bit further (my apologies) but the fact that the GTA is the area that the author seems to be ranting about does contain some additional problems as it contain both a limited supply area due to the green belt5 and the some of the fastest growing cities in Canada6 7 8 serve to show that there is a demand boom for property in the city and that the further that one radiates out from Toronto the lower the Y/Y increase in price is.

Finally one can look to the Nobel prize winning economist Robert Shiller who made this graph(the second one) using the Case-Shiller methodology as well as the additional graph the same CMHC, CREA average sales data used earlier in this R1 to show that there has been a sharp rise in housing prices over the past decade. In looking to an international comparison this Bank of Canada article provides vastly better data showing that Canada is not some exceptional case and many similar countries have followed similar trends in the past few years in addition to pointing out the many regulatory safeguards that lower the risk of a housing debt crisis as well as pointing out that mortgage credit has plateaued out in the past few years and further price increases are likely to be far slower.

Finally the whole tax idea is stupid as one does not/can not fix something that does not exist, or if it does is highly specific and marginal in its effects and not needing of special Taxes. OK, that's enough for this R1 I hope, first one so ill change if necessary in the future. If one wants more data use StatsCan, CMHC or BOC for more as they are far more in depth and specific than a R1 ever can or would be.

TLDR: Post is badecon as the phenomena of foreign buyers pricing out Canadians in general is an illusion, any foreign buyer price increases are in highly specific areas and their possible effects minuscule and are drowned out by domestic demand. Poster should look to buy in Kitchener or Grimsby if they want cheap housing and they are willing to commute, if not one will need to rent.

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[–]jerothattallguy 35 ポイント36 ポイント  (3子コメント)

Nice R1! The reason Vancouver is expensive is because supply is limited by a whole host of policies. Geographically their is plenty of land in the lower mainland for housing and apartments that goes undeveloped. Much of Richmond (and the lower Fraser) for example is farmland when it really should be suburb or urban city. It's a general phenomenon though as evidenced by this article

[–]saltytorontoOld enough to rember Stagflation having no answer[S] 13 ポイント14 ポイント  (1子コメント)

Yes that is correct in part, supply is always both a question of land and zoning rules. However politics one can never account for on such a micro level so it is better to just look at the physical/market factors. In addtion Vancouver is expensive as there is increasing demand as it is a desriable city to live in , mercer ranks it 5th in the world http://www.mercer.com/newsroom/western-european-cities-top-quality-of-living-ranking-mercer.html

[–]beguiledfoil 6 ポイント7 ポイント  (0子コメント)

The reason Vancouver is expensive

Vancouver is expensive to own in. Rent is cheap compared to every other city on the west coast. Ergo housing in Vancouver is cheap.

[–]jsmooth7High Priest of Neoliberalism 14 ポイント15 ポイント  (6子コメント)

I was wondering about this post earlier today. I'm glad someone addressed it. It seems that /r/canada has really latched on to this idea in the last month despite the general lack of data to back it up.

[–]thesublieutenantBasically a Psychologist 18 ポイント19 ポイント  (0子コメント)

It seems that /r/canada has really latched on to this idea in the last month despite the general lack of data to back it up.

Welcome to /r/canada. Its been like this for a while.

[–]Tehdasi 4 ポイント5 ポイント  (4子コメント)

You could cut and paste it and it would apply to r/Australia too.

[–]redditthrowaway1995Paid shill for the R foundation 4 ポイント5 ポイント  (0子コメント)

ken oath

[–]tcw_sgsGive us this day our daily prax 0 ポイント1 ポイント  (0子コメント)

/r/canada and roz are mirror images.

[–]Toddsci 0 ポイント1 ポイント  (0子コメント)

Try /r/sydney , the people there are divorced from reality, right now there's a thread where people are circlejerking about how good NIMBYism is.

[–]NikolajuThank 0 ポイント1 ポイント  (0子コメント)

And /r/newzealand.

[–]Risay117 4 ポイント5 ポイント  (2子コメント)

Is there per chance a discussion to be made when housing is being converted into investment over residential. And this investment focus may be the driver to a sudden acceleration in the price of housing.

Foreign ownership although small could the purchase over the market value cause an inflation on the worth of the housing overall. As one could say the demand for a house in this neighbourhood is now $x due to a house being bought there for $x dollars when before it was $z.

Another discussion that could be made in the investment place is that domestic investors are able to act more aggressive knowing they can sell these houses at a higher price until it is pulled bought from a family either trying to move in to the city for work or by a foreign owner who will overpay for its value.

Although their house prices are overvalued. Is it able to maintain such value because the price has an easier time going up in comparison of going down (not sure if saying inelastic on the downward slope is correct.).

Honestly I personally feel there is an issue with the housing prices especially when similar houses in America are going for alot less than they are in Canada. As to why, demand does seem to be high but is the increase in price out pacing it's true value due to investments on the hope of selling it higher and foreign ownership, or is it just demand. Personally I lean toward people using it as investments and hope to cash out with some gullible foreigners. If not maybe just a little less and throw it to a family, though still overvalued.

[–]TheLoveBoat 6 ポイント7 ポイント  (1子コメント)

This is a bad R1 OP. Couple points:

  • It's easy to hide foreign ownership. All you need is a kid who attends college at UBC or UofT, or some relatives in either Vancouver or Toronto (which is especially easy since up until recently you could literally buy Canadian citizenship), and you buy the property in their names. Or as another user mentioned, domestic shell companies and money laundering. It's actually very difficult to accurately assess how much foreign ownership there is in the housing market. Assuming some foreigners shield their real estate investments using the above means, this partially explains why Vancouver house prices are growing faster than Toronto (larger relative Chinese population which is more centrally located). OP tried to do a good thing by bringing in some data but neglected to mention how that data is massively flawed. There wouldn't be a whole strand of research trying to assess the true value of foreign ownership in Canada (statcan, bank of canada, etc.) if the data was perfect.

  • What's wrong with treating foreign speculators differently than domestic speculators? Foreign buyers buy property in Canada in order to extract cap gains, but they pay taxes on it elsewhere. At least domestic speculators pay taxes here.

  • Let's assume that there is a lot of foreign money in the housing market. Do we really want our real estate prices to be dependent on the stability/performance of a foreign (Chinese) economy? What if there's a recession that squeezes incomes and creates a fire sale of Canadian real estate assets? All the equity gains Canadian families have had in the last 10 years will evaporate.

A tax on foreign ownership is a perfectly legitimate way to cool a hot housing market and preserve affordability for Canadian taxpayers.

[–]dankmrbernke 5 ポイント6 ポイント  (0子コメント)

What's wrong with treating foreign speculators differently than domestic speculators? Foreign buyers buy property in Canada in order to extract cap gains, but they pay taxes on it elsewhere. At least domestic speculators pay taxes here.

Foreign speculators pay taxes on Canadian capital investments here too unless there are specific provisions of a bilateral tax treaty that say otherwise (usually these only serve to trade tax liabilities between states rather than eliminating them).

[–]TheManWhoPanders 5 ポイント6 ポイント  (83子コメント)

This is going to be unpopular here, but I'll say my piece anyhow. You've provided a good R1 here, but you've essentially forced the square peg into the circular hole. Chinese foreign investment is directly causing the housing spike.

I'm a life-long Toronto resident, and have close ties to the rich Chinese community. I listen to family talks about it. There has been an enormous flux of migrants since ~2011 or so, as China began its process to crack down on its markets. There are really clever ways they use to move their income (domestic shell companies, laundering through Hong Kong, routing through a close confidant to serve as an intermediary, etc).

Toronto's situation is not like anywhere else in the world. Look at comparable cities with similar housing costs -- their real wages are higher than ours. It's not simply increased domestic demand, the price of homes are going up faster than local wages. Torontonians are hitting record debt loads in order to compensate.

This isn't a case of Toronto being another San Francisco. Torontonians are being forced out of Toronto, or forced into renting because they can't compete with foreign rich people. That's a legitimate concern, and for you to dismiss them with a "just go to Kitchener" is rather insulting. Canada should be looking to take care of Canadians first.

[–][deleted] 16 ポイント17 ポイント  (53子コメント)

Don't reason from a price change. Don't prax it up. We need data on what is driving up prices before we jump to conclusions. Also, Canada fits into the larger, its government might have bigger fish to fry than relatively privileged people who feel they deserve a house in a in demand area just because.

[–]TheManWhoPanders 6 ポイント7 ポイント  (52子コメント)

I agree that we need the data, the problem is precisely that people are fighting against the idea of procuring the data.

This isn't a case of relatively privileged people feeling entitled. This is a case of the overwhelming majority of Torontonians being locked out of a market because the local economy isn't able to compete with the rich of a country of 1.3 billion. Torontonians are taking on enormous debt loads in order to compete. It's dangerous for the citizens here.

[–][deleted] 12 ポイント13 ポイント  (51子コメント)

The market is trying to tell you something. Perhaps growing up in Toronto doesn't imply you can afford to live there as adult.

[–]TheManWhoPanders 5 ポイント6 ポイント  (50子コメント)

You've completely missed my point if that's your takeaway. You're blinding yourself to any criticism by dismissing any legitimate arguments with that.

[–][deleted] 18 ポイント19 ポイント  (49子コメント)

My point is, you have no data to back up your assertion of foreign buyers "causing" this. Even if you did, it would not matter. This is how the market works. Toronto is not only open to 9th generation Canadians now. It is open to everyone.

[–]TheManWhoPanders -1 ポイント0 ポイント  (47子コメント)

It is open to everyone.

Do you not believe that a country has a duty to its own people before outsiders? If you don't then there's absolutely no point to this discussion.

[–]Homeboy_JesusOn average economists are pretty mean 18 ポイント19 ポイント  (8子コメント)

Buddy I think you've got it bass ackwards here.

  1. The whole Canadian housing market is in a bubble

  2. You're still not proving that the rise in house prices is caused by immigrants

  3. It's not like the country is giving immigrants money to buy houses in Toronto, they are buying them of their own volition

  4. Torontonians aren't competing with all of China's 1.3 billion to buy houses, they're competing with the subset of people that want to live in Toronto.

On top of that you've got options. Buy a house out of the downtown core. Rent if you want to stay downtown. Blaming immigrants is intellectually lazy.

[–]TheManWhoPanders -3 ポイント-2 ポイント  (7子コメント)

  1. Toronto and Vancouver's bubbles are significantly larger than the rest of Canada, even if they are also experiencing bubbles.

  2. Because Canadians are fighting to offset the collection of data. As I stated earlier, I have significant affiliation with rich Chinese; since 2011 they've been increasingly hiding their assets here, using methods that are hard to trace.

  3. Because they are using it to hide assets.

  4. They don't need to compete with all 1.3 billion Chinese. Just a tiny subset to force prices out of their hands. There are only 1 million detached homes in Toronto. There are 2 million Chinese millionaires. It doesn't take many of them to significantly distort this market.

On top of that you've got options. Buy a house out of the downtown core

Do you live in Toronto...? Homes in the suburbs start at $650,000. Anywhere in Toronto proper homes are in excess of $1 million. How is this reasonable in your opinion?

[–]Homeboy_JesusOn average economists are pretty mean 16 ポイント17 ポイント  (6子コメント)

  1. It shows that prices across the board are going up and in a bubble

  2. Prove it.

  3. Prove it.

  4. If a bunch of rich people want to move to Toronto we should let them. They bring their wealth with them.

Do you live in Toronto...?

I live just outside Toronto.

Homes in the suburbs start at $650,000.

This is demonstrably false.

Anywhere in Toronto proper homes are in excess of $1 million.

Define proper home.

How is this reasonable in your opinion?

Seems like straightforward supply/demand stuff. Do you want to inflict price controls on housing?

[–]kohatsootsich 9 ポイント10 ポイント  (37子コメント)

Do you not believe that a country has a duty to its own people before outsiders?

What are you suggesting? Housing in Toronto belongs to whoever owns it, not "the country". Restricting property rights means favoring some of Canada's "own people" over others.

Besides, "owning housing wherever they want" is not a realistic target for a country's "duty to its own people".

[–][削除されました]  (24子コメント)

[deleted]

    [–]TheManWhoPanders 2 ポイント3 ポイント  (23子コメント)

    Can you back this up?

    Look at this chart. We've gone through two recessions, and aside from a two-quarter dip the price of homes has not dropped. Median wages are not going up, yet housing prices are. Canadian household wealth and purchasing power dipped several times, but housing prices continually trended upwards. How is this possible?

    except for those Canadians who own homes and benefit from rising prices?

    With the exception of those that sell their Toronto homes and move elsewhere, no one is benefiting. You need a primary residence. You can't sell your home to collect the profits when you need to simply pay the inflated price for another home.

    [–]irondeepbicycleR1 submitter 11 ポイント12 ポイント  (19子コメント)

    Canadian sellers certainly benefit when they can sell their home to the highest bidder, right? But the government should privilege buyers over sellers? That hardly seems fair.

    [–]TheManWhoPanders 1 ポイント2 ポイント  (13子コメント)

    They benefit only the following directly:

    1) People who are moving away from Toronto
    2) People who bought the property as an investment

    People still need a primary residence. If the value of your home went up 10% but so did every other house, you're not really getting ahead.

    [–]irondeepbicycleR1 submitter 10 ポイント11 ポイント  (12子コメント)

    They benefit only the following directly:

    1) People who are moving away from Toronto
    2) People who bought the property as an investment

    So?

    People still need a primary residence. If the value of your home went up 10% but so did every other house, you're not really getting ahead.

    No, everybody just got 10% wealthier. If the cost of things you buy goes up also that's one thing, but we're not talking about inflation. Wealth isn't zero-sum.

    [–]TheManWhoPanders 0 ポイント1 ポイント  (11子コメント)

    No, everybody just got 10% wealthier

    Yes, technically speaking, just like if the going rate for a new kidney went up everyone is "wealthier". But it's not simple to actualize that wealth. You could sell your home in order to make those assets liquid...but then you have no home.

    The only people not facing this dilemma are people who can opt to sell their homes without consequence.

    [–]irondeepbicycleR1 submitter 9 ポイント10 ポイント  (9子コメント)

    Or I can just live in the home I own. If people were being forced out that's one thing, but you're talking about restrictions on who can voluntarily sell their home.

    If the value of my home goes up 10% I can sell (presumably to find somewhere cheaper) or I can keep living there. If I'm understanding you right, you're saying that I'm worse off for having this option.

    [–]besttrousers 7 ポイント8 ポイント  (2子コメント)

    They are forcing people to sell their homes by offering prices above their WTS.

    [–]irondeepbicycleR1 submitter 8 ポイント9 ポイント  (0子コメント)

    What monsters!

    [–]Homeboy_JesusOn average economists are pretty mean 8 ポイント9 ポイント  (0子コメント)

    The horror....

    [–]TheManWhoPanders -1 ポイント0 ポイント  (5子コメント)

    presumably to find somewhere cheaper

    You literally just repeated my assertion. "To live somewhere cheaper" would mean leaving one of the two major cities in Canada. Canada is not like the US -- most of us are clustered in just a handful of cities.

    [–]irondeepbicycleR1 submitter 7 ポイント8 ポイント  (4子コメント)

    The key is voluntarily. If somebody wants to sell their home at a high price and voluntarily move somewhere cheaper, they can. You're acting like they're being chased out because their land appreciated.

    [–][deleted] 0 ポイント1 ポイント  (0子コメント)

    But it's not simple to actualize that wealth. You could sell your home in order to make those assets liquid...but then you have no home.

    You can do a lot more than that. You can downsize. You can have a reverse mortgage. You can sell your house to someone with the condition that you have the right to remain in your house for a certain period of time (e.g. until you die).

    [–]LeonardoDaDuck -2 ポイント-1 ポイント  (4子コメント)

    Which is the "net benefit"? When free trade is the issue, the argument is that we shouldn't favour the minority of workers who are negatively impacted over the majority of consumers who benefit. Why are we so concerned with the minority of those who benefit by selling into an inflated market here?

    [–]neshalchanderman 10 ポイント11 ポイント  (3子コメント)

    This is the dumbest rule ever, If There was a lottery which cost $1 but paid out $10 to 3 of four players but costs the fourth guy $100 we wouldnt advocate for the gamble just because more people (3 of 4) benefit.

    There's a dwl to restricting trade, there's a dwl to restricting foreign ownership of houses.

    [–]LeonardoDaDuck -1 ポイント0 ポイント  (2子コメント)

    The government of Canada has no obligation to prioritize the interests of foreigners over that of citizens. If they came in and bought all the farmland in Ontario and destroyed the agricultural industry by letting the land lie fallow that would not be a benefit to Canadians. Driving up the cost of housing past the point at which Canadians can afford it doesn't help Canadians.

    [–]neshalchanderman 4 ポイント5 ポイント  (1子コメント)

    The government of Canada has no obligation to prioritize the interests of foreigners over that of citizens.

    Yo dumbfuck you've just gone back to your earlier discredited point.

    You haven't established harm.

    You've provided no reason why the government of Canada should priortise the interest of some Canadians over other Canadians. What foreigners have to do with this only your xenophobic ass knows. The situation would be the same if Toronto house prices where being driven up by buyers from Vancouver.

    /u/irondeepbicycle has it right, here:

    No, everybody just got 10% wealthier. If the cost of things you buy goes up also that's one thing, but we're not talking about inflation. Wealth isn't zero-sum.

    Net wealth has risen for Toronto residents (~8%p.a. per Statistics Canada from 1997-2015) The interest rate burden is not historically high due to historically low interest rates. This is either nothing at all -I'm not sure if there's any evidence, at all, that foreigners have reduced Toronto residents net wealth at all- or perhaps an income and distribution of wealth issue for some Toronto residents.

    [–]LeonardoDaDuck -3 ポイント-2 ポイント  (0子コメント)

    Xenophobic!? Those are fighting words! You probably think of yourself as some kind of moral hero on the march. I wonder how much of that you display outside of internet forums.

    Of course any government prioritizes the interests of some of their citizens over others sometimes to level the playing field, sometimes to level the outcome. If that's the issue that's a separate debate.

    I agree that the evidence for harm here by foreigners is wanting, but in principle the obligation of the government is as I stated it, and the point is made in contention against this kind of reflexive, faggy, Kumbaya one-worldism militant libertarians love to fantasize about.

    [–]neshalchanderman 7 ポイント8 ポイント  (0子コメント)

    That graph just makes my head hurt. Wtf are we interested in multiples from a base year? And why on earth is there an inflation adjustment thrown in? What does that have to do with anything? It just distorts the trends.

    And for fucks sake the wage of the median house buyer <> the wage of the median worker.

    The best measure would be the interest burden, the ratio of interest rate payments (but not principal payments) to disposable income. That's low due to low real interest rates and low inflation (see http://www.statcan.gc.ca/daily-quotidien/160311/dq160311b-eng.htm).

    The problems with debt that You talk about have more to do with low income growth than high growth in the price of housing stock.

    With the exception of those that sell their Toronto homes and move elsewhere, no one is benefiting. You need a primary residence. You can't sell your home to collect the profits when you need to simply pay the inflated price for another home.

    City council, churches, schools. Any institution which is land rich would benefit by selling off land from which it derives low marginal benefit.

    Real estate trusts, letting agencies, commercial developers, flippers, landlords as well.

    Anyone who wishes to borrow against the equity value in their home to fund a more comfortable retirement or start a business or pay for uni for their kid would benefit.

    Anyone who owns a home that's been done up and enjoys higher quality of home benefits. Hell in general homeowners benefit from higher imputed rentals.

    [–]lanks1 2 ポイント3 ポイント  (1子コメント)

    How is this possible?

    How about mortgage rates?

    I just renewed my 5-year variable at 2.1%. Two-point-one percent! It is absolutely nuts that interests are this low.

    They are almost paying me to live here. I'm actually just about to start renting my place too when I move overseas, and the rent will easily cover all of my costs. I just get to sit back and watch my assets go up.

    I did the same sort of analysis for my friend buying a condo in Toronto and it came out the same. Even if she lost her job, she could rent it out to fully cover her costs in today;s mortgage rate environment.

    If rates go up significantly, then prices will start dropping.

    [–]TheManWhoPanders 1 ポイント2 ポイント  (0子コメント)

    While that seems like the obvious explanation, and is likely accounting for some of the increase, it's not the bulk of the cause. Interest rates have been dropping since the 80's. They went from ~13% in the mid 80's to about 8% at the turn of the century. Housing prices started going up in the early 2000's, and really skyrocketing in just the past 5 years.

    If it were interest rates alone you'd see a flatter curve.

    [–][削除されました]  (3子コメント)

    [removed]

      [–]fmn13How aboot that rate cut, eh? 10 ポイント11 ポイント  (2子コメント)

      Can you add something about the Chicago School? Your post hits on all my Bingo squares except for one.

      [–]LeonardoDaDuck -3 ポイント-2 ポイント  (1子コメント)

      Is "limp sarcasm" on your bingo board?

      [–]fmn13How aboot that rate cut, eh? 3 ポイント4 ポイント  (0子コメント)

      No but it's there on my academic shitposting license.

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      [–]Mortgagestar 0 ポイント1 ポイント  (0子コメント)

      What about foreign investors who are getting family members who are Canadian to buy for them? These statistics would not present themselves accurately under the minuscule percentage of foreign investors noted in CMHC data. This is happening quite frequently and it is under reported. Also, there are many buyers who are first-hand witnesses to Chinese/International Investors who are able to go in higher, firm or pay cash for a house, which of course, is more attractive to any home seller.

      [–]Sweetness27 -3 ポイント-2 ポイント  (12子コメント)

      Obviously there are plenty of domestic reasons why Vancouvers real estate industry is booming. However, foreign ownership is one that we may have some control over. Even if it's only 5% of total effect isn't that worth looking into?

      Foreigners are buying properties way above market value before they even see the property. Are they even renting them out afterwards or are they just sitting on them? At the very minimum they should know who is buying these properties. What if China starts clamping down on these buyers? It seems like it is just adding to the bubble.

      [–]jerothattallguy 18 ポイント19 ポイント  (5子コメント)

      Why is Chinese investment in Vancouver real estate worse than Canadian investment in real estate in Vancouver. Do you think that rich Chinese people are the only ones to spectulate on real estate? Every home owner is effectively speculating in real estate (in effect betting that it will rise in price faster than bonds or equities).

      [–]Sweetness27 5 ポイント6 ポイント  (0子コメント)

      There is some concern that the Vancouver real estate is turning into the Chinese version of an offshore account. I don't know what they are hiding from but it definitely ups our foreign exposure risk

      [–]TheManWhoPanders 1 ポイント2 ポイント  (0子コメント)

      Why is Chinese investment in Vancouver real estate worse than Canadian investment in real estate in Vancouver

      Because Canadians are bound by the limitations of Canada's economy, and rich Chinese are not. Canadians can only reasonably expect to hit a certain cap in terms of wages, but those restraints do not exist for the Chinese. China's population is literally 30x ours. They have more millionaires than Vancouver has people.

      [–]saltytorontoOld enough to rember Stagflation having no answer[S] 10 ポイント11 ポイント  (5子コメント)

      I am never against more data, and i would love to see more data come out on the topic, specifically in regards to the freehold percentage of sales are to foreign buyers. However the idea of taxing "the hell outa" foreign buyers is not going fix the problem that the author of the post had. The point is that all data that we have points to foreign ownership is a scapegoat of supply shortage issues that are clashing with this demand boom. Ancedottaly the most expenisve house on Mls is in Vancouver at 45M and the most expensive in Toronto in at 22M, and yet more UHNW individuals live in toronto1. So i would spitball and guess that there may be a larger impact on the top 5% of the Vancouver real estate market from foreign buyers.

      [–]TheManWhoPanders 1 ポイント2 ポイント  (3子コメント)

      The point is that all data that we have points to foreign ownership is a scapegoat

      I don't think you can convincingly say that. I think the data simply doesn't exist. Foreign ownership is far larger than what the limited data currently suggests, as a lot of it is hidden by shell companies.

      [–]saltytorontoOld enough to rember Stagflation having no answer[S] 3 ポイント4 ポイント  (2子コメント)

      Ok then, take the argument then that it is hidden by shell companies and i will admit that there is limited data on this account,and acknowledged that earlier. However if you look at the BOC data as well as if you look more through the CMHC for Peterborough1 Barrie2 Kitchener 3 and the GTA in general4 you can see a radial price changes centering on the Toronto core itself. I understand how it does seem that it is foreign buyers are the ones pushing up the prices, but even with the limited data that we have it is enough to see that it at its core a domestic demand boom and not as you have argued a foreign inflow. However i would like to see myself disproved or at least out argued with more data as I would rather know if I am wrong instead of remaining in ignorance.

      [–]TheManWhoPanders 0 ポイント1 ポイント  (1子コメント)

      but even with the limited data that we have it is enough to see that it at its core a domestic demand boom

      The shell companies I speak of are Canadian, on paper. They don't appear to be Chinese. The reported number of domestic vs. foreign ownership is skewed, because the shell companies appear as domestic.

      The "known" Chinese ownership rate for Vancouver is 33 percent. Meaning some percentage higher than that is actually Chinese owned.

      [–]saltytorontoOld enough to rember Stagflation having no answer[S] 5 ポイント6 ポイント  (0子コメント)

      Ok that 33% "Known" Chinese ownership is bullshit, and they way they get to it is worse then that Princeton study reddit always goes on about. So first the "Study" can be found here and it comes to this number by taking

      The National Association of Realtors (NAR) in the U.S. produces an annual profile of international home buying activity . The NAR defines an
      international buyer as either (1) a non- resident foreigner, or (2) a resident foreigner – i.e., recent immigrants (in the country for less than two years) or temporary visa holders (residing in the country for at least six months). They collect this data from an online survey sent to randomly -selected U.S. realtors.
      In this profile, the NAR estimates foreign capital flows from foreigners including Canadians, Mexicans, Britons, and Chinese. Since anecdotal evidence suggests that the capital inflows most prominently influencing Toronto and Vancouver
      housing valuations come from mainland China, we will attempt to infer the capital flows into the Toronto and Vancouver residential real estate markets from China on the basis of the NAR research. As illustrated in Figure 1, the NAR estimates that buyers from China invested US$28.6 billion in U.S. -d omiciled residential real estate properties over the 12 months ending March 31, 2015

      So first we get the problem that it seems that it takes both US data, not Canadian (i understand there is no perfect Canadian data but this is still unacceptable), and it includes both VISA holders and new immigrants, which are not the problem that people are complaining about in these markets. Moving on then to how they proportion this out they then

      we depict the results of a multiple choice survey the
      Financial Times
      solicited from 77 high net worth and affluent individuals from China (admittedly not a statistically significant sample size) . Of those who had purchased residential real estate outside China, 33.5% had done so in the United States, 11.7% i n Vancouver, and 8.3% in Toronto. From this survey data, one could hypothesize that for every four high net
      worth investors from China who purchase a U.S. residence, one purchases a residence in Toronto; and for every three high net worth investors from
      Ch ina who purchase a U.S. residence, one purchases a residence in
      Vancouver. One can then apply these ratios to the NAR’s estimate of US$28. 6 billion in U.S. residential real estate investment made by buyers from China.

      Ok first, 77 individuals is way to small of a sample size for any inference and if i had a student presented something as a fact using this I would burn his paper in front of him, second using that portioning is sketchy at best and is highly misleading to use to generate any meaning full data.

      Moving on then to the 33% mark that you citied we see it has many issues and the author addresses them.

      From this, we hypothesize that, in 2015, homebuyers from China invested ~US$9.9

      billion / Cdn$12.7 billion in Vancouver residential real estate (on a total 2015
      residential real estate purchase volume in greater Vancouver of Cdn$38.5 billion, according to the Real Estate Board of Greater Vanc ouver) ; this amounts to 33% of total purchase volume. This estimate certainly corresponds to the findings in a
      recent study on the ownership patterns of single family home sales conducted in 2015 . Using the same methodology for Toronto, we hypothesize that, in 2015,
      homebuyers from China invested ~US$7.0 billion / Cdn$9.0 billion in Toronto residential real estate (on a total 2015 residential real estate purchase volume in greater Toronto of Cdn$63.0 billion, according to the Toronto Real Estate Board) ; this amounts to 14% of total purchase volume. The estimated share of purchase volume s eems high and we stress this
      methodology is truly a back -of-the- envelope attempt at gauging the significance of capital inflows from mainland China on the local residential real estate markets in Toronto and Vancouver. The surveys upon which we base our hypotheses could have built -in biases that overstate (or understate) the amount of capital inflows into Canadian and U.S. residential real estate markets.

      First issue is that well that Capital data is for the ENTIRE US market it only uses the capital portions for Toronto and Vancouver, thus overstating inflow to those cities as one can see in the CMHC report that while Vancouver and Toronto are the main centers of investment, others cities also receive inflows as well. Second the author even states that it is likely to have a wide margin of error and one should not take this at all as fact, but more as a reason to collect more data on the subject. Finally I do agree with the author in his statement that

      Ultimately, the issue of foreign capital flows into Canadian residential real estate markets is a local one, the responsibility for which lies with municipal and provincial governments.

      also on the idea of wage growth showing it impossible to that price increases are domestically driven please refer to the BOC paper linked above and here . Anecdotally I myself have lived in the Rosedale area of Toronto for >30 years and have watched the ebb and flow of prices and have realized more then a decade ago that my kids definitely would not be living anywhere near they grew up, and there is legitimate frustration of the housing price increase in large cities. But never the less one must still have actual facts,not anecdotes or some airy-fariy hypothesis, before arguing the case

      [–]Sweetness27 -1 ポイント0 ポイント  (0子コメント)

      I don't know what the solution would be. I don't even think they would blink at a tax. It just seems like they are buying property too hold their cash rather than them believing or wanting the properties. I worry that when they find a better way to stash their money Canada could be left with a disaster