Canada's 'housing bubble' deemed close to bursting

[esquire]

^ You are a true man of mystery!

[Acajack]

Originally Posted by esquire

^ You are a true man of mystery!

It sounds way more exciting than it actually is!

[mistercorporate]

Originally Posted by Acajack

It sounds way more exciting than it actually is!

I knew it, you're a Klingon!!

[lio45]

Originally Posted by Acajack

That's my family's *cultural* background.

I do have probably some aboriginal blood as do most people whose roots go back to the original French colonies, but I also have a unique twist in my family tree that's recent enough, and my mother's maiden name is very obviously non-French (and non-European origin). It's rare enough in French-speaking Canada that even if I was to name just the origin it wouldn't be too hard to identify my family. Though my surname is totally French.

As for the "look" I only have a little bit of it but for some reason my siblings (one in particular) have it more and occasionally get accosted by strangers from Origin X who ask them if they are "of Origin X".

I have my doubts that merely knowing the origin of this "exotic branch" of your family tree would suffice to narrow it down to your family!

And yes, I'm beyond curious now!!! I accepted to forever stay in the dark about your federal vote last fall, so come on this time!

BTW, I think you know enough about me to be able to identify/locate me if you wanted to (not to mention several SSPers from Sherbrooke actually do know me in real life). Actually, I know for a fact you could locate me if you wanted, with the info I've given away over the years on this forum. I was just going to point out how, but I decided to stop slightly short of doing that. Anyone who cares enough about me can connect the dots

So... surely you can return the favor and unveil us SSPers an extra tiny bit of background!

[Acajack]

Originally Posted by lio45

I have my doubts that merely knowing the origin of this "exotic branch" of your family tree would suffice to narrow it down to your family!

And yes, I'm beyond curious now!!! I accepted to forever stay in the dark about your federal vote last fall, so come on this time!

BTW, I think you know enough about me to be able to identify/locate me if you wanted to (not to mention several SSPers from Sherbrooke actually do know me in real life). Actually, I know for a fact you could locate me if you wanted, with the info I've given away over the years on this forum. I was just going to point out how, but I decided to stop slightly short of doing that. Anyone who cares enough about me can connect the dots

So... surely you can return the favor and unveil us SSPers an extra tiny bit of background!

Hehehehe. Sorry!

My mom has a name like Claudette Shevardnadze and I have cousins with names like Jean-François Shevardnadze and Marie-Pier Shevardnadze... well these are not the real names and we're not of a Georgian origin, but you get the picture...

[geotag277]

Home prices are declining in Alberta, but I don't consider it a bubble bursting so much as an economy struggling and home prices reflecting job losses.

It is interesting to see mortgage arrears statistics and compare them with 2008/2009:



These are for the entire province of Alberta.

You can see the 2008 assent was immediate and dramatic as opposed to the 2015 change which has been relatively stable.

[whatnext]

Ever wonder how so many Chinese buyers are able to plonk down a couple million for a house in Vancouver, when their country's average wage is @$10,200 USD a year? Well, I guess here's one way:

A multimillionaire Chinese citizen residing in Vancouver has admitted that greed led him to team up with hackers in his homeland in a conspiracy to steal blueprints for Pentagon military jet components.

Su Bin, a 50-year-old aviation entrepreneur, pleaded guilty in a California court this month to U.S. spying charges, prosecutors revealed on Wednesday...

...In August, 2012, Mr. Su bought a $2-million house in Vancouver with his wife. A few months earlier, he was profiled in The Wall Street Journal as a frustrated Beijing businessman who had made $13-million in China but was keen to leave the country. “Regulations here mean that businessmen have to do a lot of illegal things,” Mr. Su said at the time.

According to a plea deal released on Wednesday, Mr. Su admitted he was part of a criminal hacking conspiracy that dates back to 2008 and continued to 2014....
http://www.theglobeandmail.com/news/nati...o-us-military-for-china/article29366478/

What exactly is an "aviation entrepeneur" and why does the government feel a burning need for immigrants with that, er, profession? Or is this one of those "cash for passports" cases?

[miketoronto]

I know this is probably a stupid idea, and I don't know if it would reduce costs.

But in areas of cities, like say Toronto's York Mills community, which are near high quality transit services and rapid transit.
Instead of a city allowing people to buy old single family homes to put up a monster home. Why not institute a bylaw that prohibits knocking down a single family home to put up another. Instead, mandate that if this is done, the replacement home has to be multiple units, like a group of semis or two three townhouses, etc.
I wonder if that would help limit the price growth, while providing additional housing in areas that can support it.

[Gresto]

^Not a bad idea, but I don't know if it's the solution. At all events, demolishing a perfectly sound WWII-era house to put up a plywood-and-stucco McCube for a yuppie family of four is morally indefensible in a city and country with so many living in penury. At least there are protests in Vancouver. Not a whisper here in Toronto, where this has been going on for 20+ years.

[ssiguy]

Yes but housing is a full 50% more expensive in Vancouver than Toronto.

One of the problems with density around new transit lines is that the housing is uniformly more expensive than the housing it replaced. The poor are thrown out of the house they are renting or their apt by "renovictions" and forced to move further out into areas with poor transit service yet they are the people that are most dependent upon it.

Also in Vancouver developments by rapid transit are well know as being bought up by speculators and quickly flipped. Sometimes you can see condos for sale in Craigslist a week after the development is put on the market as the whole tall building will sell out in a day and then someone will sell theirs online at a higher price.

This is like Marine Gateway at the Canada Line where 200 units were sold to just 70 buyers.

[geotag277]

Originally Posted by ssiguy

Yes but housing is a full 50% more expensive in Vancouver than Toronto.

It's interesting to challenge this claim by looking into the actual statistics. Of course, Vancouver beats Toronto in terms of pricing on some key statistics like average selling price and median price, but you have to remember that Vancouver has dramatically less volume of housing types.

Some data from 2011:



Source: http://www.metrovancouver.org/services/r...ingPublications/Census2011-Dwellings.pdf

You'll notice that Toronto has 4x the total dwelling units as compared to Vancouver, for about 2.7x the population. Toronto has just been more sustain-ably developed. Of course partially owing to the fact that Toronto does not have the natural borders of Vancouver. Also note the % of single family detached housing between Vancouver and Toronto.

Still, even with dramatically more housing for their residents, Toronto is only very slightly behind Vancouver on price - which seems to me to imply that you'd have to go further away from the city core to be more affordable in Toronto.

Indeed, comparing the actual neighbourhoods is also revealing. Here are the latest real estate statistics for each place:

http://www.rebgv.org/sites/default/files/REBGV%20Stats%20Pkg%20February%202016.pdf

http://www.trebhome.com/market_news/market_watch/2016/mw1602.pdf

You'll notice a few things:

* Vancouver has 12 neighbourhood components whose single family detached prices exceed 1 million, one that exceeds 2 million, and one that exceeds three million

* Toronto has 14 neighbourhood components in Toronto Central alone that exceed 1 million, including 1 that exceeds 2 million and one that exceeds three million

* Vancouver has zero neighbourhood components that exceed one million for apartments, Toronto has two

Toronto also added almost 1/2 of the entire Metro Vancouver single family detached housing stock in the period from 1991 to 2001 - while some statistics show that Metro Vancouver has barely added any at all (and some show it is falling).



Source: https://www1.toronto.ca/city_of_toronto/...ration/files/pdf/profiletor_housing2.pdf

So yes, technically Toronto housing in aggregate is less expensive, but if you drew an outline of Vancouver around Toronto that wouldn't be the case, and furthermore a large chunk of that difference can be attributed to Toronto being able to provide sufficient housing stock to it's residents while Vancouver in comparison can be considered an urban planning failure and failing to rezone and build multifamily to keep pace with population. Toronto has supplied a level of 4x the dwellings as Vancouver with 2.7x the population.

I also imagine that Toronto residents are much more used to driving farther for longer, which is simply not an option for Vancouver residents, because there is no where left to build.

As a point of reference for Vancouver and Toronto residents, Squamish is about half distance away from Vancouver central as Brock is from Toronto.

[whatnext]

From today's G&M:

...This week, two economists from the National Bank produced a study showing as many as one-third of house purchasers in Metro Vancouver last year were from China. But perhaps the most interesting numbers to be revealed lately concern the impact that the immigrant-investor program – both the one run for years by Ottawa (and terminated in 2014) and another that still exists in Quebec – has had on the real estate madness we are witnessing.

Under the program, immigrants can come to Canada in exchange for $800,000, up front, that serves as a five-year loan to the government. The report, brought to light by Ian Young of the South China Morning Post, reveals how completely porous and unaccountable the immigrant-investor system has been. Truly awful might be another way to describe it.

For example, after 10 years the average annual income tax paid by these millionaire migrant investors is $1,400. That compares with $7,500 for the average Canadian. The report notes that after five years, many of these investors have secured Canadian citizenship and returned to their home country.

Quebec accepts about 1,750 such applications annually. After handing over their $800,000, most move to Vancouver and buy real estate. The vast majority of all who have taken advantage of these programs over the years have ended up in British Columbia (by one estimate, nearly 200,000)...
(bold mine)

http://www.theglobeandmail.com/opinion/p...d-in-real-estate-crisis/article29384402/

[someone123]

The investor immigrant program only makes sense from a cost-benefit perspective if the participants operate productive businesses in Canada or work there, contributing valuable skills, for a long period of time. The $800,000 interest-free loan requirement is worth almost nothing. As the article states, most of the participants don't have to pay much in the way of taxes because they report little or no income and real estate isn't taxed very heavily. But they qualify for major entitlements in the form of health care, subsidized post-secondary education, etc.

It seems like a strongly net negative trade-off for the province at large, but a positive one for certain more politically-connected groups. So here we are.

[dleung]

The Quebec immigrant investor program was already bringing more millionaires to BC than the Canadian program when it was still running, and when the Canadian version ended, the Quebec program saw record numbers, and there's nothing BC can do about it.

[lio45]

Originally Posted by someone123

The investor immigrant program only makes sense from a cost-benefit perspective if the participants operate productive businesses in Canada or work there, contributing valuable skills, for a long period of time.

Exactly.

Stingray started that convo in another thread already, but you're right that it might be a more appropriate topic for the SSP Canada "real estate thread".

It's pretty mindblowing to imagine that the following imaginary exchange could've been barely an exaggeration:

Canadian immigration official: "So you want to apply to come to Canada as an immigrant investor, right?"

Chinese investor: "Yep. I have a few million in cash that I'll be bringing with me and I am about to invest all of that into the Canadian economy."

Canadian immigration official: "Great! You're exactly the type of productive immigrant we want to favor! Out of curiosity, what kind of business are you planning to start?"

Chinese investor: "My business plan is to buy that rotting empty house at 4182 West 8th Avenue in Vancouver for a few million, and do nothing with it, ignoring the City of Vancouver's "Untidy Premises" letters, maybe paying a handful of pocket change in fines eventually, if it ever comes to that."

Canadian immigration official: "Okay! Welcome to Canada!"

[lio45]

Moving over the conversation about immigrant investors whose business is nothing more than real estate holding.

(I do think the QIIP seriously has to be changed/updated.)

Originally Posted by lio45

It wouldn't be illogical to introduce a residency obligation for the QIIP (without having to go as far as building a wall at the Ottawa river...) precisely due to that "problem".

I also find it interesting that most of these businessmen immigrants are in the real estate business.

Quite frankly, as someone who's been owning a bunch of real estate for a decade now, sure, I "employ people", but I don't think I create any new work. If I weren't there, then other people would be owning my lands and buildings and other people would be there to maintain them, improve them, collect rents, etc.

And I'd even go one step further: in Sherbrooke, I consider that I have improved my downtown pack of buildings less than plenty of other downtown owners over the last few years, so I could even be deemed a net negative force (i.e. if I had stepped out of the way, then there would likely have been more renovation).

I would say the same applies to absentee Chinese owners hugging West End properties. These "investors" don't create new businesses, they don't even create jobs -- in fact, any investor like the example above is a hindrance to employment in Van, as they're holding without doing anything.

It is ridiculous that real estate holding gets treated as any other job-creating business. It isn't.

[someone123]

Originally Posted by lio45

Canadian immigration official: "Okay! Welcome to Canada!"

"Also, enjoy paying domestic rates for your kids' post-secondary tuition ($30k/year discount). Make sure you apply for financial aid as a low-income $0/year family!"

BC's provincial health coverage also covers some traditional Chinese medicine treatments, like 10 acupuncturist visits per year. Sadly we have to pay monthly premiums but the poor $0/year labour income ($10M net worth) families don't.

I'm guessing they could get GST rebate cheques too?

[geotag277]

Originally Posted by whatnext

For example, after 10 years the average annual income tax paid by these millionaire migrant investors is $1,400. That compares with $7,500 for the average Canadian. The report notes that after five years, many of these investors have secured Canadian citizenship and returned to their home country.

At some level, it makes sense. If these people earned the majority of their money outside Canada, it stands to reason that the operations of these businesses are the primary vehicle for income for these individuals, and they are located outside Canada. Canada has agreements with several countries, including China, that avoids "double taxation" and limits taxable earnings to the location where those business interests operate.

http://www.fin.gc.ca/treaties-conventions/china_-eng.asp

1. The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to that permanent establishment.

Most likely income tax is not going to be the main vehicle for Canada's benefit to these individuals, but rather, consumption taxes, property taxes, and other taxes of that nature.

There isn't much surprising about the results of that particular study.

[ssiguy]

Funny. My brother put his 1980 3 bed/3 bath, 1800 sq feet rancher, no basement place in South Surrey which is 25km from downtown and at least 45 minutes in rush hour for $1.7 million on the market this week. A Chinese couple stopped and looked at it while they were walking around and were surprised it was that "affordable" . Another guy from London England took a look at it as well to see how easy it would be to tear down.

Funny thing is that it hasn't even hit the MLS listings yet.

[dleung]

Originally Posted by lio45

Exactly.

Stingray started that convo in another thread already, but you're right that it might be a more appropriate topic for the SSP Canada "real estate thread".

It's pretty mindblowing to imagine that the following imaginary exchange could've been barely an exaggeration:

Canadian immigration official: "So you want to apply to come to Canada as an immigrant investor, right?"

Chinese investor: "Yep. I have a few million in cash that I'll be bringing with me and I am about to invest all of that into the Canadian economy."

Canadian immigration official: "Great! You're exactly the type of productive immigrant we want to favor! Out of curiosity, what kind of business are you planning to start?"

Chinese investor: "My business plan is to buy that rotting empty house at 4182 West 8th Avenue in Vancouver for a few million, and do nothing with it, ignoring the City of Vancouver's "Untidy Premises" letters, maybe paying a handful of pocket change in fines eventually, if it ever comes to that."

Canadian immigration official: "Okay! Welcome to Canada!"

There should be binding contracts on how much money the immigrant must invest in the local market beyond real estate, or employment salaries given, etc. The government has a long ways to go on milking more out of these people before it comes remotely close to that sweet spot where it's just barely a good enough deal to keep them coming.