Chinese Investors Driving Up Metro Housing Prices

[cornholio]

Originally Posted by Chadillaccc

Has anyone pulled the "this is racist" 🞵🞵🞵🞵🞵🞵🞵🞵 cop-out yet?

Hope not because it has nothing to do with race, it has to do with 3rd world/developing economies, globalization and our immigration system. Wealthy Russians, Brazilians, Mexicans, Kenyans, Egyptians, Chinese, Malaysian, etc. are all equal when we talk about wealthy people coming here only to get a residency card, western services and I am sure to often speculate on our markets in the same ways they learned to speculate on the markets in their rapidly developing home countries, and probably many became wealthy because of that very rampant speculation if not because of corruption or actual success. Nothing to do with race. Just audit new immigrants and if they are wealthy enough tax them on all their capital assets, everything. They can stay where they are if they don't like it. If they hide stuff, strip them of their residency permit or citizenship and confiscate their Canadian assets. Also find and tax offshore income, keep track of offshore capital gains, etc. Not racist one bit.

[whatnext]

Originally Posted by Porfiry

Uh, they already do. The "home owner grant" system means that local residents get a discount and therefore pay less in municipal property tax. Non-residents and investors get no such discount and therefore pay substantially more.

http://vancouver.ca/home-property-development/are-you-eligible.aspx

Yeah, I'm sure someone who pays $2 million cash for a teardown is totally dissuaded by that extra few hundred bucks they'll have to shell out with the homeowners grant. BTW, who actually monitors that? Does the province have a squad of inspectors checking to see if the grants claims are legit. I think not.

Better for the Feds to bring in a plan to tax worldwide income of Canadian citizens.

[djmk]

A foreign investor would not be a primary resident of Canada and therefore would be taxed much differently than canadian investors or homeowners when they collect rent and when they sell their investment.

Also, the money that the investor is spending is going to developers who employ people or the money is going to Canadian residents selling their home. Both parties are profiting.

Btw, you should see how many canadians have vacation rentals or investments in palm springs, bellingham, hawaii or anywhere else in the US and world. Should they not allowed to be able to do that?

[djmk]

Originally Posted by whatnext

Better for the Feds to bring in a plan to tax worldwide income of Canadian citizens.

Trust me when I say that the Feds are and they are starting to be real aggressive in forcing Canadians to report this income.

CRA has access to banks around the world which report back to CRA on Canadians. There are new tax treaties with countries (most recently Hong Kong) designed to catch Canadian residence not reporting their income. And there are forms (T1135) that Canadians must fill out if they have foreign investments of over $100,000. And the penalties for non-compliance is STEEP!

[whatnext]

Originally Posted by Chadillaccc

Has anyone pulled the "this is racist" 🞵🞵🞵🞵🞵🞵🞵🞵 cop-out yet?

Yeah, usually someone would have shown up and set their hair on fire about the article by now.

I guess they were shortcircuited because the article clearly shows how legitimate immigrants who come to Canada to build a new life are being negatively impacted by rampant, uncontrolled foreign buying as well.

[Hourglass]

^^

This indeed has nothing to do with race, but I can't help but notice a certain irony about posting such comments in a thread specifically titled **Chinese** investors driving up house prices in Metro Vancouver, hmm?

As a Canadian resident, by all means tax my Canadian income. But if I derive income overseas, why should I pay tax on that income to Canadian tax authorities? It's bad policy (I'm currently a non-resident, btw, so I don't have any self interest either way).

High net worth individuals have a plethora of competing choices of where to live. They don't have to come to Canada (now cue the inevitable 'then let them go somewhere else' comment). But as someone mentioned, the tax on their Canadian income/property and the services they buy still benefit the economy -- more so than if they went somewhere else.

[Pinion]

Saying "Chinese" is factual not racist. No other country is having a significant effect on our market.

[mrjauk]

Originally Posted by s211

You do realize that an investor would just push their higher tax cost onto their tenants.

How would this work? It is my understanding that an investor can only charge what a prospective tenant is willing to pay. Given that the CMHC does not backstop tenants' rent, the willingness of tenants to pay is based strictly on income. How does an investor tax raise tenants' ability to pay rent?

[Hourglass]

Originally Posted by Pinion

Saying "Chinese" is factual not racist. No other country is having a significant effect on our market.

Good to know you have inside information, since from what I understand, BC doesn't track where home buyers come from -- unlike Australia or Switzerland. Maybe you can give me stock tips too.

A Sotheby's property report from earlier in the year reported a surge in Metro Vancouver house sales to buyers from the US and Iran, so it would seem that it's not just the Mainland Chinese having an effect on the real estate market.

[Cypherus]

Originally Posted by Hourglass

^^

This indeed has nothing to do with race, but I can't help but notice a certain irony about posting such comments in a thread specifically titled **Chinese** investors driving up house prices in Metro Vancouver, hmm?

As a Canadian resident, by all means tax my Canadian income. But if I derive income overseas, why should I pay tax on that income to Canadian tax authorities? It's bad policy (I'm currently a non-resident, btw, so I don't have any self interest either way).

With the streamline process of allocating money overseas, no Canadian resident would report any Canadian income, as they would just park their income in other countries to exploit use of lower income tax policies. You would have the same process that multinational corporations utilize to barely pay any taxes in North America. That's why Section 3 of the Income Tax Act says each Canadian resident is taxed on their world income, which it should be, to ensure an equal playing field for all Canadian residents.

High net worth individuals have a plethora of competing choices of where to live. They don't have to come to Canada (now cue the inevitable 'then let them go somewhere else' comment). But as someone mentioned, the tax on their Canadian income/property and the services they buy still benefit the economy -- more so than if they went somewhere else.

That is if they pay their taxes. In my experience, I have seen a lot of mainland Chinese investors flipping properties in Canada for capital gains, and not paying the government the capital gains withholding taxes of 25% as is required by law. This makes the prospective Canadian buyer's responsible for paying 25% of the non-residents taxes and lawyers do not know the rules to decrease 25% from the selling price to make up for the buyers loss. The CRA goes after the buyer in this case because the non-resident jumps ship. Hardly fair. See normal tax procedures for Chinese investors selling Canadian real property here. Note I say Chinese because that has been a large proportion of these flippers although there are other non-resident flippers.

[Vin]

How about changing the article's name to:

Greedy and lazy Canadians seduce Chinese investors to drive up prices in the Lower Mainland.


Definitely sounds less racist.

[jlousa]

How about era of cheap borrowing and rental suite income allows Canadians to bid up local real estate.

[cornholio]

http://socialsciences.uottawa.ca/grei-rg...in_Paradis_Canada_IIP_Report_English.pdf

So about 3,000 investor class immigrants come to Canada every year, they bring along a average of 3 family members. A investor class immigrant must have a net value of 1.6million or more and 0.8mill cash on hand to borrow to the federal government that then borrows it to the province which then uses it and returns it to the investor immigrant in 5 years time.

Vancouver gets 49% of all the investor class immigrants to Canada, that is roughly 4 new immigrants with a net worth of 1.6 million + coming in through YVR every singe day, and bringing 12 family members along. Every day. 74% of investor class immigrants are Chinese, South Koreans represent the second largest group.

After investor class immigrants arrive there is a net inflow from other parts of Canada to BC, so BC actually ends up with more than 49%.

A online study was done but only 107 investor class immigrants responded and/or were able to be tracked down, the rest no one know where they are.
1) 59% were from BC, Chinese were under represented overall
2) 86% live in Canada 10-12 months of the year
3)77.6% landed within 5 years of the study
4)90.4% own a house or apartment
5)63.3% own a house valued 100k-999k
6)24.5% own a house valued between 1-5mill
7)3.1% own a house valued at 5+ mill
8)66.7% investment zero dollars in Canada
9)70.4% do no business in Canada or with Canadian companies

*This study is not very accurate, it looked at only a few investor immigrants, it was a voluntary survey, no verification of the data, etc.

So my question is how much of a impact do you think this has on our housing prices? Specifically in BC? This means that 5-10% of Vancouver's population growth over the past 10 years has been through investor class immigrants. There is also a backlog of some 80,000 applications, many withdraw and I can only assume that many of those that do withdraw come here another way, which is not particularly difficult with money and a immigration lawyer.

So imagine this 1,500 individuals and 4,500 family members with a net worth of 1.6million + come in to BC every year. There is a back log of 80,000 applications so we can assume that 40,000 of those want to come to BC and have a net-worth of 1.6million +.

Now remember that Richmond has the lowest reported income in Vancouver, I assume many of these investor class immigrants end up there. Do they pay any taxes on their offshore income even though they seem to be mostly living in Canada 6+ months of the year? Year probably zero!
I suggest everyone reads this study, it really is rather interesting.
http://socialsciences.uottawa.ca/grei-rg...in_Paradis_Canada_IIP_Report_English.pdf

***I wrote this summary really quick, the facts should be mostly accurate but verify for your self and find more information. The linked study is from 2010. No one seem to want to study this further, unfortunately. I can only guess why, especially when say BC gets some 200 mill per year now through the program, borrowed, which help keep the budget look better than it really is since the money goes back to the investor class immigrants in 5 years. Its like a fake little bubble within the budget that does not really exist.

[SFUVancouver]

Originally Posted by cornholio

A investor class immigrant must have a net value of 1.6million or more and 0.8mill cash on hand to borrow to the federal government that then borrows it to the province which then uses it and returns it to the investor immigrant in 5 years time.

It's unsettling that a university student is uncertain how to use lend and borrow correctly. None the less, it is a good topic for a term paper.

[cornholio]

Originally Posted by SFUVancouver

It's unsettling that a university student is uncertain how to use lend and borrow correctly. None the less, it is a good topic for a term paper.

Here you go. If it bothers you so much I can proof read it tomorrow and make edits. I wrote this thing quickly while doing other things. Sorry that it is not up to your standards. I hope you can at-least get the gist of what I wrote. If not click on the link.

Originally Posted by cornholio

***I wrote this summary really quick, the facts should be mostly accurate but verify for your self and find more information.

Oh and I have plenty of education but actual university was never worth my time, sorry.

Cheers

[theKB]

I do think that our immigrant investor program should be transitioned to a more US style system instead of people showing up with cash and doing nothing with it.

In the US you must invest one million dollars into a commercial entity AND create ten full time jobs within five years of your arrival or your status is revoked (it's lower if the area is deemed to be economically depressed eg. Detroit). This would have more stimulus on the overall economy and would potentially keep a lot more of these underlying issues in check if money was forced into job creating avenues.

Canada is a land of immigrants and I think it's great that people want to come here but when people are coming here and not contributing to the tax base there is something wrong.

[Vin]

Originally Posted by theKB

I do think that our immigrant investor program should be transitioned to a more US style system instead of people showing up with cash and doing nothing with it.

In the US you must invest one million dollars into a commercial entity AND create ten full time jobs within five years of your arrival or your status is revoked (it's lower if the area is deemed to be economically depressed eg. Detroit). This would have more stimulus on the overall economy and would potentially keep a lot more of these underlying issues in check if money was forced into job creating avenues.

Canada is a land of immigrants and I think it's great that people want to come here but when people are coming here and not contributing to the tax base there is something wrong.

It used to be like this in Canada (not as much as million in investment though) until someone in charge got greedy after seeing what is glittering offshore, particularly in China.

Developers, realtors, banks and Cities are making a killing from increases in property prices and tax revenues. Go join them if you want a piece of the action.

[cornholio]

Houston, we have a problem.

http://www.scmp.com/news/world/article/1423370/vancouver-facing-influx-45000-more-rich-chinese

Immigration Department data obtained by the Post suggests there was a backlog of more than 45,000 rich Chinese waiting for approval of their applications to move to British Columbia as of January last year. They are estimated to have a minimum combined wealth of C$12.9 billion (HK$90 billion).

Previously released statistics on investor immigrant arrivals released by the British Columbia government give no hint of the sheer volume of Chinese millionaires seeking to move there. That data showed arrivals between 2005 and 2012 averaged about 4,600 per year.

Yet the Post's investigation shows the number of applications to migrate to the province has dwarfed arrivals in recent years. In 2010 alone, there were 27,535 such applications, with 92 per cent of them coming from Chinese applicants.

http://www.scmp.com/news/world/article/1423370/vancouver-facing-influx-45000-more-rich-chinese

I wonder who will be held responsible for the sheer disaster this is shaping up to be. What sort of idiot allows this to happen? Its like no control, paying only attention to short term gains and taking a total dump on our future.

[Cypherus]

Originally Posted by cornholio

Houston, we have a problem.

http://www.scmp.com/news/world/article/1423370/vancouver-facing-influx-45000-more-rich-chinese

Immigration Department data obtained by the Post suggests there was a backlog of more than 45,000 rich Chinese waiting for approval of their applications to move to British Columbia as of January last year. They are estimated to have a minimum combined wealth of C$12.9 billion (HK$90 billion).

Previously released statistics on investor immigrant arrivals released by the British Columbia government give no hint of the sheer volume of Chinese millionaires seeking to move there. That data showed arrivals between 2005 and 2012 averaged about 4,600 per year.

Yet the Post's investigation shows the number of applications to migrate to the province has dwarfed arrivals in recent years. In 2010 alone, there were 27,535 such applications, with 92 per cent of them coming from Chinese applicants.

http://www.scmp.com/news/world/article/1423370/vancouver-facing-influx-45000-more-rich-chinese

I wonder who will be held responsible for the sheer disaster this is shaping up to be. What sort of idiot allows this to happen? Its like no control, paying only attention to short term gains and taking a total dump on our future.

I don't know whether to be excited about millionaires moving to BC and possibly starting new businesses and ensuring the condo market thrives, or be frustrated that housing costs will displace the middle class in GVRD even further and result in disparate groups proliferating to the Fraser Valley due to better housing affordability and better access to menial jobs. It's a catch 22.

[whatnext]

Let me tell you about a little story about this house (crappy photo is mine). I looked at it last time it was listed (somewhere around 2001-2 I think). It was something like $650k which was a bit out of my price range given my resources which were above the average family income at the time ($57k). Flash forward to 2014 and this same house sold in under a week for over the listed price of $1.98 million! Avearge family income today $80k, so incomes may have gone up but prices have gone up way, way above the increase in local earnings. If you can't find the answer locally, look farther afield, it's not rocket science.

[IMG][/IMG]