Chinese Investors Driving Up Metro Housing Prices

[geotag277]

Using incomes as a measure of affordability, Vancouver hasn't been affordable since at least the 80s, where average selling prices were still 6+ times median incomes.

Even the hardest hit real estate crashes in the US, such as Phoenix and Nevada, only lost a few years of their gains (3-4 years of appriciation). Vancouver real estate will never be "affordable".

[Vin]

Originally Posted by Pinion

People still say "free market" seriously?

Vancouver 2040 under the glorious free market


womennewsnetwork.net

Hope you're lucky enough to be born into a wealthy family because there isn't anything free about it.

This is more like a dictatorship in an ultra-corrupted regime. Unless some Pinochet takes over the helms of Ottawa, this will not be so.

[queetz@home]

Originally Posted by Vin

This is more like a dictatorship in an ultra-corrupted regime. Unless some Pinochet takes over the helms of Ottawa, this will not be so.

It doesn't necessarily take a Pinochet like figure in Ottawa to produce those kinds of results, even so called democratic countries have similar images. As long as the gap between the rich and the poor keep rising and no meaningful intervention to help those less fortunate, such an image will likely happen anywhere, even in Canada.

[Pinion]

Originally Posted by geotag277

Using incomes as a measure of affordability, Vancouver hasn't been affordable since at least the 80s, where average selling prices were still 6+ times median incomes.

Even the hardest hit real estate crashes in the US, such as Phoenix and Nevada, only lost a few years of their gains (3-4 years of appriciation). Vancouver real estate will never be "affordable".

Yeah, my mom, who's been in Vancouver since the 40s, says people have always complained about seemingly illogical Vancouver prices relative to everywhere else. Immigrant investor program exacerbated it, but it wasn't the only factor.

[whatnext]

Originally Posted by spm2013

You shouldn't reference stupid little surveys from the real estate board with dumb questions to prove a simple fact that people prefer larger residences than smaller residences.

Realtors (and hence REW) also make tons of money peddling condos, I don't see a bias. I do see an unappealing, selfrighteous sanctimoniousness in the attitudes of many downtown dwellers when others don't buy into their choices, The Gordon Price Syndrome, if you will.

[s211]

Originally Posted by whatnext

Realtors (and hence REW) also make tons of money peddling condos, I don't see a bias. I do see an unappealing, selfrighteous sanctimoniousness in the attitudes of many downtown dwellers when others don't buy into their choices, The Gordon Price Syndrome, if you will.

You're too kind. Sanctimonious? I'd say evangelical.

[twoNeurons]

I don't get it. You guys are all intelligent. Do you really buy the "Wealthy Asian Immigrant" propaganda that the real estate industry likes to toss around to scare the locals?

Don't you guys think that lending rates near historic lows, super easy cheap-to-get money, 35-year mortgages and a generation of post-boomer people who think debt is normal has anything to do with the ramp up in prices? The fact that the city's inhabitants feel the world wants to live here makes them easier to persuade.

Real estate is purely our own doing. The only way a few thousand wealthy Asians are going to make a dent in the hundreds of thousands of houses of houses is by giving the media and real estate moguls fuel to drive the fear of locals.

I've always wondered why accurate numbers on foreign ownership aren't published. You honestly can't say that these don't exist in one form or another. I'm sure they do. However, you will only get anecdotal evidence out of realtors.

Rich Asians may affect the $1 million + homes prices, which is a much smaller market, but they don't affect prices way out in Abbotsford and Chilliwack. Yet, prices in Abbotsford, Chilliwack are also sky high. In fact prices across the entire country are really out of whack from fundamentals and historic levels. Real estate is cyclical. We're in an upswing.

[casper]

Originally Posted by SFUVancouver

Here's a question, Whatnext: what would it take to make detached houses in the City of Vancouver affordable to moderate income households?

The median Metro Vancouver household income is $63,347 (2011, Metro Vancouver stats) and the current Canadian standard for shelter affordability is no more than 1/3rd of a household's pre-tax income going to the cost of housing. Of course there are variables: down payment; interest rate; home insurance; utilities; etc.; however we can take a stab at the basics. If the median household managed to save $25,000 for a down payment and has good enough credit to qualify for a low mortgage rate, say 3.5%, then they can afford about $1,700 a month in mortgage costs and may purchase a home worth about $260,000 while still falling into the 'affordable' housing cost range. I can't think of a scenario where detached homes in the City of Vancouver, being finite in number and geographically well located within the region, will ever come down to even double that figure, much less within reach of median income households.

How does it work out if you also build a lane-way suit above your garage. That adds what another $1k per month in rent? Rent out a basement suit, that is another $1k.

[WarrenC12]

Originally Posted by casper

How does it work out if you also build a lane-way suit above your garage. That adds what another $1k per month in rent? Rent out a basement suit, that is another $1k.

Yes.. by buying a 2000+ sf home in the city of Vancouver, you are effectively buying 3 living spaces. Whether or not you choose to live in all 3 with your own single family is up to you. Maybe that's a better way to think about it.

[Vin]

Originally Posted by twoNeurons

I don't get it. You guys are all intelligent. Do you really buy the "Wealthy Asian Immigrant" propaganda that the real estate industry likes to toss around to scare the locals?

Don't you guys think that lending rates near historic lows, super easy cheap-to-get money, 35-year mortgages and a generation of post-boomer people who think debt is normal has anything to do with the ramp up in prices? The fact that the city's inhabitants feel the world wants to live here makes them easier to persuade.

Real estate is purely our own doing. The only way a few thousand wealthy Asians are going to make a dent in the hundreds of thousands of houses of houses is by giving the media and real estate moguls fuel to drive the fear of locals.

I've always wondered why accurate numbers on foreign ownership aren't published. You honestly can't say that these don't exist in one form or another. I'm sure they do. However, you will only get anecdotal evidence out of realtors.

Rich Asians may affect the $1 million + homes prices, which is a much smaller market, but they don't affect prices way out in Abbotsford and Chilliwack. Yet, prices in Abbotsford, Chilliwack are also sky high. In fact prices across the entire country are really out of whack from fundamentals and historic levels. Real estate is cyclical. We're in an upswing.

Well said, this will certainly shut up a lot of those giving bias comments here. Everyone with a property or dealing with real estate here stands to gain on the upswing. But instead, blame the new wealthy Chinese as the bogeyman.

[Cypherus]

Originally Posted by Vin

Well said, this will certainly shut up a lot of those giving bias comments here. Everyone with a property or dealing with real estate here stands to gain on the upswing. But instead, blame the new wealthy Chinese as the bogeyman.

Middle income earner wages have only increased 1.7% per annum over 15 years ending in 2007, and middle income earners are paying more taxes in Canada than corporations. As such, it is easy to see that the middle income earners are not the key drivers for the ballooning property values in Vancouver.

What we see is a select few mainland Chinese investors purchasing property at over-inflated values since the late 80s that has caused owners and real estate agents in Vancouver to engage in a 'revaluation surplus' of other property to "cash in" on those deals. The market is responding to greed, which the middle class does not have unto themselves to take privy. This is not picking on mainland Chinese millionaires - but it is the desires of this group to irrationally purchase Vancouver property at above average values in that continues to be the catalyst for the Vancouver market to "up" the value of remaining properties beyond what the middle class can reasonably afford.

[Alex Mackinnon]

Originally Posted by Vin

Well said, this will certainly shut up a lot of those giving bias comments here. Everyone with a property or dealing with real estate here stands to gain on the upswing. But instead, blame the new wealthy Chinese as the bogeyman.

Not really, if you make important assets such as real estate overly expensive as it is now it slows down all other aspects of the economy. The overall cost of living gets increased and all aspects of the economy which compete in the global market become less competitive. Just look at how well forestry and manufacturing have done in Canada in the least two decades.

With a reduced real income, it becomes much harder for debts supporting property to be serviced and for reduces overall expendable incomes. On average unless your income is tied to property development, real estate bubbles as with most asset bubbles are likely to generally bad in the long term.

You may be better off relative to your peers, but are likely to be worse off overall. Real estate is only one aspect of wealth, and having it be prohibitively expensive reduces the ability of everyone to acquire all other forms of wealth.


PS - The Abbotsford and Mission arguements can explained at least partially by displaced demand.

[whatnext]

Further evidence of the knock-on effect on real estate prices throughout the city in yesterday's Fianncial Post. Glad to see we're a magnet for folks fleeing anti-corruption programs. Just the kind of citizen one wants to attract! Give us your tired, your corrupt, your wealthy masses yearning to hide cash, that's on a statue somewhere, right?

Chinese investors’ global hunt for prime real estate is helping drive Vancouver home prices to record highs and the city, long among top destinations for wealthy mainland buyers, is feeling the bonanza’s unwelcome side-effects.

The latest wave of Chinese money, linked in part to Beijing’s anti-graft crackdown, is flowing into luxury hot spots. But it has also started driving up housing costs elsewhere in a city which already ranks as North America’s least affordable urban market...
(bold mine)

http://business.financialpost.com/2014/09/11/china-buyers-vancouver-housing/

[twoNeurons]

Originally Posted by whatnext

Further evidence of the knock-on effect on real estate prices throughout the city in yesterday's Fianncial Post. Glad to see we're a magnet for folks fleeing anti-corruption programs. Just the kind of citizen one wants to attract! Give us your tired, your corrupt, your wealthy masses yearning to hide cash, that's on a statue somewhere, right?

Chinese investors’ global hunt for prime real estate is helping drive Vancouver home prices to record highs and the city, long among top destinations for wealthy mainland buyers, is feeling the bonanza’s unwelcome side-effects.

The latest wave of Chinese money, linked in part to Beijing’s anti-graft crackdown, is flowing into luxury hot spots. But it has also started driving up housing costs elsewhere in a city which already ranks as North America’s least affordable urban market...
(bold mine)

http://business.financialpost.com/2014/09/11/china-buyers-vancouver-housing/

Where's the hard evidence? They keep stats on this kind of thing... but curiously never release the information, like they do in other markets like Halifax.

[Pinion]

Originally Posted by twoNeurons

Where's the hard evidence? They keep stats on this kind of thing... but curiously never release the information, like they do in other markets like Halifax.

People wouldn't be able to deny it if they had hard data. This way no one can suspect it without being accused of racism, which is just the way they want it.

[GMasterAres]

Here is the key phrase they use that people are missing:

The latest wave of Chinese money, linked in part to Beijing’s anti-graft crackdown, is flowing into luxury hot spots

Note how they slide in that linked in part phrase. Yet they don't define that. What part? 99% of the money part? or 1% of the money part? What that means is depending on your opinion of Chinese investment, the article backs your opinion. If you think all Chinese investors are corrupt bank robbers, you will think the article says it is linked a lot! If you think such a blanket assumption without facts is purely ignorant, you'll think only a small part.

These articles are just scare tactics. The truth is, Vancouver has been fairly un-affordable for decades, much longer than the current international influx of investment. I always laugh when people say the North Shore for example is being inflated in price due to Chinese investors yet I know several conveyancers that work exclusively in West Van and say 90% of the purchases are by Persian investors and barely any are purchased by Chinese.

The truth is, Vancouver is attractive for investors that are wealthy and not from North America. It's not just Chinese. It's not just corrupt business men. That happens in every attractive city. Try buying something in central-London or Manhattan. Good luck.

Overall Metro-Vancouver is actually fairly affordable still. If you are willing to live in the suburbs like most people do in other major cities, then you can afford to buy. I've already purchased several places without issue on my own dime saved up by simply working. I attribute that to not being stubborn and needing to buy my first home in Kits or Point Grey like many people who complain seem to expect.

Comparing Vancouver to Regina or Halifax is also a bit ridiculous. Completely different towns. It's like comparing London to Kamloops or Fort Nelson or Islamabad.

[Pinion]

Originally Posted by jhausner

I always laugh when people say the North Shore for example is being inflated in price due to Chinese investors yet I know several conveyancers that work exclusively in West Van and say 90% of the purchases are by Persian investors and barely any are purchased by Chinese.

I always laugh when people from say, Surrey, think they have any idea what's going on in a city that they never visit. I literally just took this photo, does that look like Farsi to you?

IMG_20140912_130156~2 by chrisjohann, on Flickr

Even English speaking realtors are dying to get in on the Chinese money. Chinese-only signs are everywhere in front of houses. The Persian wave is long over - they all got out before the religious nuts destroyed everything in the 70s.

Why are you so interested in denying what's going on around us? When I went to school in Coquitlam in the 80s, there were no Chinese kids. When I moved to the north shore in '88, we had one Chinese kid. It exploded halfway through high school in the mid 90s, even though most of the Chinese kids did not live in the catchment area. All their parents were extremely wealthy though, and willing to forge documents to get their kids into a top-rated high school.

Contrast that to yesterday when I went to the Keg in Brentwood and was the only non-Chinese person I could see.

Before the ultra-sensitive types jump on me, Chinese immigration on its own is not bad. But letting multi-millionaires buy citizenship and destroy the housing market for Canadians with zero benefit to almost everyone here was disastrous. Yes, it's not just Chinese millionaires doing it, but they are the vast majority and you'd have to ignore what your own eyes see to think otherwise.

There's a reason why lots of countries do not allow foreign ownership, and it's not just xenophobia.

[Klazu]

I remember reading in one of the local newspaper a statement that throughout all its years the Investor Program has brought in some 40 000 foreign millionaires in the Vancouver area. Now that has to have some impact on our affordability!

I do wonder how the 18 billion dollar lawsuit against Immigration Canada is going? One of the most absurd case I have ever heard of.

http://www.asianpacificpost.com/article/6230-mega-lawsuit-against-immigration-canada.html

[someone123]

Originally Posted by jhausner

Comparing Vancouver to Regina or Halifax is also a bit ridiculous. Completely different towns. It's like comparing London to Kamloops or Fort Nelson or Islamabad.

It is funny you say that because over the past few days a number of articles have been popping up about Chinese investment in real estate in Halifax and Nova Scotia (e.g. http://www.newswire.ca/en/story/1361721/...intends-major-investments-in-nova-scotia). Many other places are having to contend with the same pressures that Vancouver has or will need to in the future. I find there's a puzzling tendency in Vancouver to try to shut down the debate by arguing that this is a uniquely desirable place or that the debate is inherently racist. It would probably be better to have an open, more informed public debate and to consider the experiences of other places.

I live in Vancouver and travel back to Halifax on a semi-regular basis. My take is that, despite the difference in scale, the two cities are incredibly similar in a lot of ways even just from a national perspective, let alone an international one. The coastal parts of BC where most of the people live are also much more similar to Atlantic Canada than they are to Alberta even though it is only one province over.

[AudiA3]

Chinese from big cities like Beijing, Shanghai and HK think that our real estate prices are dirt cheap. Same thing goes for Japanese people from Tokyo..