Chinese Investors Driving Up Metro Housing Prices

[logan5]

My last post on this topic, because I'm pissing people off.

Just to clarify. When I say "we" or "the local market" or "the taxpaying public", I'm referring to Chinese-Canadians who may have just immigrated or have been here for generations. Or Indo-Canadians, whose story is the same. Or aboriginal Canadians, who graciously share their land with us. And so on.

I think there may be some miscommunication here.

Sorry about the hyphens.

[Zassk]

Originally Posted by logan5

To clarify, I think the people of Vancouver are owed the right to housing prices determined by the local market. The local market that built this city.

The city is only a little over 100 years old. Hardly any of us have deep family roots here. Almost all of our families bought our way into this "local market" in roughly the same way that the latest immigrants do.

I was born here, 3rd generation, in 1972. Half of the people in Metro Vancouver (half of you on this board, most likely!) are immigrants who arrived after I was born.

Are all those newer people "local market who built this city"? No! But this is a city of immigrants. As long as immigration exists, the people who immigrate will cause inflation for those who were already here.

In the 1950's, when my dad immigrated as a boy, he was part of the problem. His family's arrival drove up everyone's cost of living a little bit, and - most dire of all - they eventually lived in a large house in Point Grey.

But because he immigrated from Europe, the consequences of his arrival are portrayed differently from those of my wife's family, who immigrated from Hong Kong 25 years later.

You can be sure there were plenty of speculators coming from both Europe and Asia in each of those immigration waves, buying up property while living elsewhere. And you can be sure that both waves caused similar effects on the cost of living here.

The problem of speculation and real estate inflation is as old as the city. You don't like how attractive Vancouver is to immigrants? Then do something about it - find a different place to live that's less attractive.

Unless your family predated the city, your family's immigration contributed to the problem (no matter when or where they came from). You are not a victim of others - you are part of the problem. So whining about it is, to me, hypocritical.

[trofirhen]

Originally Posted by WBC

I don't really see investing in individual houses on the top of the real estate peak as savvy investing but to each his own I guess. Why not simply buy gold? Silver? Or blue chip dividend paying stocks? Much easier, less messy and far less costly and can be liquidated in time of need immediately. In fact this is reminding me more of a Ponzi scheme then anything else.

How so? I'm genuinely (and impartially) interested. Could you elaborate on that a bit. Other people might like to know, too. Thanks.

[trofirhen]

Originally Posted by logan5

My last post on this topic, because I'm pissing people off.

Just to clarify. When I say "we" or "the local market" or "the taxpaying public", I'm referring to Chinese-Canadians who may have just immigrated or have been here for generations. Or Indo-Canadians, whose story is the same. Or aboriginal Canadians, who graciously share their land with us. And so on.

I think there may be some miscommunication here.

Sorry about the hyphens.

Don't apologize. It was good of you to clarify that, and you seem to have a broad and unbiased view on things.

[WarrenC12]

A good way to compare the "cost of living" vs. the "price of real estate" is to look at rental prices. Rent represents the cost people are willing to pay for shelter, and it also represents the rate of return owners can expect on their asset/investment.

Rents have drifted up slowly with the median incomes in the city, as there is a limit that people are willing to pay, and landlords have to adjust, as there is a huge market, and once a rental agreement starts, the pricing increases are strictly controlled.

Based on those factors, I think it's clear that real estate is in a bubble situation here in Vancouver. It's not the first time it's happened, check out the early 80s. Is it as severe? Will it end with a pop or many flat years? Who knows. I know that i'm in a position to afford to buy, but currently enjoy renting. We could purchase the place we live in now, but we'd be paying approx 50-60% more per month in costs for the next 30 years for the "privilege" of doing so. How does that make any sense?

I hope my landlord isn't reading this...

[whatnext]

Originally Posted by Zassk

^^^ I don't know what to say... most people immigrating to Vancouver are from China, so we should expect most people buying properties in Vancovuer to be from the same place.

Monster houses aren't new. They predate the mainland China immigration wave.

Pre-sales speculation isn't new. It also predates the mainland China immigration wave.

Real estate inflation in Vancouver is as old as the post-war boom. Again, it didn't start with the Chinese.

They are just a convenient group to pick on currently.

If the Chinese stopped coming here and buying real estate, you can be sure that another group would take their place. The problem would not go away, it would just change demographic. Even if you shut the borders to investment, there would be people from other parts of Canada doing the same thing to Vancouver. Because it is the place where people want to live.

If you can't afford to live in the top-ranked city in the world that everyone else wants to live in ..... well, tough. Who gave you a fundamental right to afford the best place in the world? There are thousands of other places to live, and many of them are perfectly fine places to live.

"If you can't afford to live in the top-ranked city in the world that everyone else wants to live in ..... well, tough". Wow.

I used the example of Filipino immigrants as both my sisters-in-law are from the Phillipines. They came here to do those jobs nobody wants to, you know wipe your grandparents and your kids asses.

Are you honestly saying its just "tough" they can't afford something here, because some millionaire factory owner who isn't even going to live here more than a couple months a year wants another bauble for his real estate portfolio? Lets stop casting those buying million dollar plus homes and condos as the poor wretched immigrant of yore, yearning to breathe free. When your parents came to Canada, did they intend to work and live in the old country, and visit their "holdings" in Richmond for a a few weeks a year?

Sure, there are immigrants from mainland China who come here to live, work and make a better life. They don't have the funds to snap up a place or two at Three Harbour Green as their crash pad, or buy a $2 million dollar teardown in Mackenzie Heights.

[nova9]

Originally Posted by whatnext

"If you can't afford to live in the top-ranked city in the world that everyone else wants to live in ..... well, tough". Wow.

I used the example of Filipino immigrants as both my sisters-in-law are from the Phillipines. They came here to do those jobs nobody wants to, you know wipe your grandparents and your kids asses.

Are you honestly saying its just "tough" they can't afford something here, because some millionaire factory owner who isn't even going to live here more than a couple months a year wants another bauble for his real estate portfolio? Lets stop casting those buying million dollar plus homes and condos as the poor wretched immigrant of yore, yearning to breathe free. When your parents came to Canada, did they intend to work and live in the old country, and visit their "holdings" in Richmond for a a few weeks a year?

Sure, there are immigrants from mainland China who come here to live, work and make a better life. They don't have the funds to snap up a place or two at Three Harbour Green as their crash pad, or buy a $2 million dollar teardown in Mackenzie Heights.

So how about the proper, established caucasian families that have been here for generations that own many houses in the area and in other countries? I'd hope you feel that that is equally as bad.

[whatnext]

Originally Posted by nova9

So how about the proper, established caucasian families that have been here for generations that own many houses in the area and in other countries? I'd hope you feel that that is equally as bad.

When there are bus tours of speculative buyers from Oakville, I guess I'll worry about that too.

Please don't try the obvious tactic of trying to cast this as a racist issue, that only stifles debate. My friends whose grandparents came over to build the railway, and paid the head tax, are none too excited about having to compete with well-heeled investors to buy a home either.

[trofirhen]

What I sense here on this thread, where we have people from different generations, different racial backgrounds, different education and earning levels, is the dangerous FUTURE possibility of ( and I'm speaking in global terms, not just SSP Vancouver!) deep-rooted and longstanding resetments that may flare up into divisive hostility, perhaps not now, but in 10, 20, 30 years. Whatever.

Life is not fair. Fairness is an abstract concept created by human beings to give their environment a logic and construct.

Some people have, some don't have. Some are born handsome/beautiful/athletic/popular in school; others are born homely/thin/fat/outcast/ scarred by rejection. That's not fair either, but it is perhaps a more primal example of the total absence of fairness which we like to think should exist, but in fact does not.

What we can do, however - and this applies as much, possibly more - to those that HAVE as much to those that DO NOT HAVE is to become aware of the dangerous consequences of jealousy, envy, feeling shut out ..... and ARMED WITH AWARENESS OF SUCH ..... extend a hand of not only welcome, but of assistance and solidarity among neighbours.

This rather goes beyond the limits of this thread, and yet I felt the need to state it, because the very last thing I want to see, is a divided, ghettoed (rich and poor, race-against-race) Vancouver brewing in the present, only to explode in the future, tearing away our quality of life with it. That would be a social and civic tagedy in an ultimate form, and MUST be precluded at all costs.

What to do? How to do it?
Again, the pathetic answer is: I don't know. HOWEVER, there are proactive steps that can be taken starting now, such as community forums representing groups and individuals from different segments of the societal pie; to talk together, discuss their feelings, resentments, concerns, and equally to HEAR each other, thereby raising the level of awareness that would be transmitted within the family (everybody's family) and carried on through the generations.

Sorry if this has an element of "Aquarian-Age" stardust sprinkled on it, but with money and steep differences in income within a community, comes a certain obligation. And that obligation is to learn to understand the other guy, and live with as little friction and as much goodwill as possible, especially in a new and evolving community like Vancouver.

Thank you for your time.

[ckkelley]

Unless you're committed to some sacrifice, you're not going to be buying any Vancouver RE anytime soon. If you're not willing to do that then you should set your sights quite a bit lower.

I can't tell you how many 60 hours weeks I've put in over the years (I'm 45) to have what I have. This is the second time I've bought-up and now I have what I want. I've earned everything I have myself. I had help from no one. So rather than ask "what can the government do for me?", ask "what can I do to help myself?".

Sacrifice is the obvious answer. If you're not willing to sacrifice then kiss those dreams goodbye - you're being unrealistic.

[BCPhil]

Originally Posted by trofirhen

How so? I'm genuinely (and impartially) interested. Could you elaborate on that a bit. Other people might like to know, too. Thanks.

What he is saying is that if you look at historical prices of single family homes, investing in homes is a good bet against inflation, and nothing more.

Between 1900 and 2000, the increase in value of a house has risen to match inflation. If you put $10,000 into a house in 1900, the house would be worth what $10,000 in 1900 would be worth today (about $200,000). IE, if you put $10,000 under your mattress in 1900, which could buy a very nice house, today you would have $10,000, which can't even buy a car. If it was invested in a house, it would be worth today what it was back then. You buy a house for $10,000 in 1910 and in 2000 could sell it for $200,000. You break even adjusted for inflation. Cumulative inflation in 2008 was up about 2000% over 1913.

If you compare that to the DOW, if you put $10,000 in in 1900, it would INCREASE in value, generating about 5% more wealth per year. You come out with more. If you put it in a good index fund, you can come out with an average 10-15% increase per year. Even with the depression and various recessions, if you distributed your investing, you would be making money over inflation. If you distributed your investing on homes over the same time, you would break even.

Leading up to 2008, housing prices skyrocketed. There was high demand in the USA and easy money to be had by all. The increase in homes far outpaced inflation over this time. But just like all the other spikes before, it came crashing down as there is not money to maintain such a high rate of growth. This time the problem was compounded by very weak lending rules and practices.

Gold has seen a similar history. In the US, after the Great Depression, the US gov bought all the Gold in the USA and set the price at $35/ounce, it stayed at that price until 1971. In 1971, Nixon ended the Gold Standard and let the price of gold float on the market, while selling off excess government supply. The price of Gold slowly raised as the government kept selling gold. People were scared of inflation (it was up 300% over 1913 then) and losing money in owning money, and thought Gold would be a good bet. Then in the late 70's the US cut off their sales, and the price skyrocketed; there was a limited supply and people wanted it. There were wars in the middle east, and governments were being overthrown. People wanted a safe, hard, physical asset. But then in 1981, when many fears were not realized, the inflation rate started to decrease. Between 1980 and 2010, the price of gold dropped, and by a lot when adjusted for inflation. If you bought gold in 1980 because it was going up up up, you are still behind today, when you include inflation.

You can draw similarities between houses in BC. There is a (created) limited supply. Because of limited supply, the price goes up. There is uncertainty and fear in the global economy (wars, governments being overthrown, deja vu eh?). Like the limited supply of gold, which is seeing another boom this financial downturn, housing in BC is seen as a safe investment because it is physical, located in a safe place, and in demand. This apparent safeness and continued demand and short supply makes it a place people want to put their money. Chinese buy homes here because they are safe from any possible turmoil in China and are keeping value better than the USA. If any one of the variables fluctuate too much, it could come crashing down, like Gold did in the 80's, and housing in the USA in 2008.

If the US recovers, their housing will be in demand again. The wise Investors will move their money out of a saturated market (here) and move it to a growing market (the USA). For the price of a small downtown condo here you can buy a McMansion in the USA. Right now, their value is not going up so no one wants to buy them, but as the USA comes out of recession, those places will skyrocket in value. On the other side, if demand goes down here (unaffordible prices, dip in the economy, raise in interest rates) then owning a house here is no longer an investment, it's a liability. Investors looking to make money will drop their properties in favor of other investments. This will increase the supply, lower prices. This already happened here during the financial crises, but didn't spiral out of control like it did in the USA. We still had people able to buy at slightly lower prices thanks to government intervention (insurance, tax rebates, low interest). If we had large scale unemployment or higher interest rates, or no government mortgage insurance, our market would have crashed. It still can.

[nova9]

Originally Posted by whatnext

When there are bus tours of speculative buyers from Oakville, I guess I'll worry about that too.

Please don't try the obvious tactic of trying to cast this as a racist issue, that only stifles debate. My friends whose grandparents came over to build the railway, and paid the head tax, are none too excited about having to compete with well-heeled investors to buy a home either.

I'm trying to ask HOW Westerners owning multiple homes is different from this invasion of yellow peril?

[cornholio]

Originally Posted by nova9

I'm trying to ask HOW Westerners owning multiple homes is different from this invasion of yellow peril?

your comparing apples to oranges and your bringing up the race issue again, which to be honest pisses me off.

The number of wealthy foreigners coming here and more importantly buying housing here has never happened close to this extent. On top of this the ability to buy from abroad has never been available like it is now.

It just so happens that China, and more importantly south east asia, is the fastest growing region in the world and its producing incredible amounts rich people. With the growing inequality and lack of long term security and stability in these regions these people all want to stash their money where it will be safe, unfortunately most stable western countries are shutting the doors(regrading realestate purchases) to protect their citizens, Canada not being one of them.

This has never hapend before, please dont compare this to a almost insignificant few rich Europeans coming here 50+ years. If today it was lets say tens of thousands of rich brits coming here every year and buying up properties and then on top thousands more every year simply buying properties while not even living here or having the right to legally immigrate. I would be calling for new policies to be implemented to protect the people who do live here, from the waves of wealthy brits.

Anyways I still dont see how people think its ok for foreigners who dont live here to be buying up properties, doesnt matter if their rich Russians, Chinese, Arabs, Brazilians what ever, all these countries have a crap loads of wealthy people.

[cornholio]

By the way I should remind all people here that as a foreigner I CANOT go to China and buy property.

Why?

Because China is protecting its citizens from foreign investors and speculators buying up all the real estate and inflating the prices.

[trofirhen]

Originally Posted by cornholio

By the way I should remind all people here that as a foreigner I CANOT go to China and buy property.

Why?

Because China is protecting its citizens from foreign investors and speculators buying up all the real estate and inflating the prices.

This begs the question: WHY isn't Canada doing the same? Tell me someone, please. I'm sure many would like to know.

[madmigs]

Originally Posted by cornholio

By the way I should remind all people here that as a foreigner I CANOT go to China and buy property.

Why?

Because China is protecting its citizens from foreign investors and speculators buying up all the real estate and inflating the prices.

Actually you can. Courtesy of Google here are some of the basic rules(not sure how current they are)
http://news.at0086.com/House-rental-serv...Foreigner-Buying-a-House-in-Beijing.html

And the funny thing is, they are also blaming foreigners for their high housing prices...

The regulations are seen as an effort by the government to cool heating Chinese markets and tackle real estate speculation by overseas investors. According to China's Ministry of Commerce, foreign direct investment in Chinese real estate increased by 48% between January and October of this year.

http://english.cri.cn/7146/2010/11/23/2361s606537.htm

The Chinese government has feared that a real-estate-bubble is developing for some time now and has therefore introduced appropriate countermeasures.
During recent years Chinese properties have become more and more popular with foreign investors, thanks to high yields above average, which the market is still promising. Continuing deregulations for companies and loosening of restrictions for foreign companies make China a country that seems to guarantee long enduring growth in the property market.

However, the Chinese government has feared for some time now that the capital of foreign investors has a growing impact on increasing prices primarily in cities as Shenzhen, Beijing and Shanghai. As a result it would eventually make it more and more difficult for the growing middle class to acquire properties for themselves.

http://www.chinaorbit.com/china-economy/chinese-law-china/property-china-law.html


What a wonderful small world we live in. In any case, I'm pretty sure I've seen stuff implying that neither here in Canada nor in the US is it possible to have laws that can enforce that someone lives in house that they buy without it violating our Charter of Rights and Freedoms/Constitution. But this would also result in a bad juxtaposition with all the effort we here in Canada/US have undertaken to get foreign investment here, instead of just having our corporations invest in production there.

[nova9]

Well cornholio, it's good to read that if Europeans were to do the same that you would feel the same about limiting their purchasing power. That's all I wanted to hear.

Even if there were residency stipulations, what's to prevent someone from purchasing a house through a relative that lives here?

[cornholio]

^The thing is that its not a race issue and thats why it pisses me off when people try to make it one. But yeah there are wealthy people from other parts of the world also buying up properties here, they are also part of the problem, unfortunately they represent a minority at this point in time.

^^Im not even close to a legal expert but I would assume that people who are not citizens, are not residents, and are not living here dont have the same rights as people who do live here and who are residents and who are citizens. Infact our constitution shouldnt be too different from many others in western countries such as Australia, and most European countries.

At the very least they can charge a real estate tax premium on non residents and another one on owners who dont reside in the country. This will atleast reduce foreign speculators(good), give incentive for people who do not live here to sell the property(good), allow citizens to cash in on what they created(good).

Keep in mind the main issue is residential realestate. Commercial and industrial realestate also needs to be protected, but it is less vulnerable.

[ckkelley]

I am sure that 99% of federal politicians couldn't give a tinker's damn about the price of RE in Vancouver. Outside of the lower mainland it probably isn't even on their radars.

So barking up the wrong tree here.

How 'bout helping yourself instead of being a 'victim' here?

[trofirhen]

Originally Posted by ckkelley

I am sure that 99% of federal politicians couldn't give a tinker's damn about the price of RE in Vancouver. Outside of the lower mainland it probably isn't even on their radars.

So barking up the wrong tree here.

How 'bout helping yourself instead of being a 'victim' here?

Not intending any argument here, but I am curious as to how -- in this particular situation -- a person could "help" themselves. In this case we the public are more or less powerless (unless we're loaded with mega$$$$$$$ too), so how would a person 'help' themselves? What could /should they do? Can you provide some concrete examples?
*
Hey, I believe in "inner locus of control" very much, too, but what happens when the global situation is far too big to be addressed by the individual. Your response would really interest me. Thanks.