Chinese Investors Driving Up Metro Housing Prices

[Alex Mackinnon]

Yup. Rent or get your PR.

Who buys a house for a job that's not sponsoring your permanent residency?

[csbvan]

New numbers for foreign buyers released today. 10% of all Metro Vancouver homes representing almost $1 billion in value went to foreign buyers between June 10-July 14. Given that the number was only 5% between June 10-29th, that is quite the jump for just over 2 weeks of additional data. In Burnaby and Richmond the number was about 20%.

Not that I am against massive construction in Burnaby, but these numbers really put the 'need' for demovictions there into question. What will new buildings in Burnaby look like when completed? How many empty suites?

[WarrenC12]

Could have collected a cool $150M to help offset the demovictions.

[Vin]

Originally Posted by csbvan

New numbers for foreign buyers released today. 10% of all Metro Vancouver homes representing almost $1 billion in value went to foreign buyers between June 10-July 14. Given that the number was only 5% between June 10-29th, that is quite the jump for just over 2 weeks of additional data. In Burnaby and Richmond the number was about 20%.

Not that I am against massive construction in Burnaby, but these numbers really put the 'need' for demovictions there into question. What will new buildings in Burnaby look like when completed? How many empty suites?

Don't forget, on top of this 15% surcharge on property transfer tax, each municipality can also now charge homeowners additional fees for leaving units vacant. Huge bonanza and win-win situation for Burnaby, don't you think? If more foreign buyers purchase properties, the City would collect more transfer taxes, and on the one hand, if they rent out their suites, vacancy rates will go up, or even if they don't rent out their suites, the City will still be able to collect more from vacant units to help offset subsidised housing and other community amenity costs. I call it a win-win-win situation. Burnaby is building a lot more units than Vancouver can achieve, so I am thinking it will remain the more affordable place to live in the long run.

[Jebby]

Originally Posted by csbvan

Not that I am against massive construction in Burnaby, but these numbers really put the 'need' for demovictions there into question. What will new buildings in Burnaby look like when completed? How many empty suites?

Why does everyone assume that a foreign owned unit will sit empty? The vast majority of these are investments and I'm sure are rented out.

Is there any reliable statistics on vacancy rates of foreign owned units and local investor units?

[Alex Mackinnon]

I'm surprised they didn't include Squamish, the Fraser Valley and the Capital Region in this tax now, although the precident has now been set and the government could amend this fairly quickly.

[Jebby]

Originally Posted by Vin

Huge bonanza and win-win situation for Burnaby, don't you think?

I don't see how it's a win for Burnaby. If the tax is high enough (15% does seem very high, we'll see if it's enough to dissuade) then foreigners are simply going to park their money in real estate outside of Metro Vancouver.

[csbvan]

Originally Posted by Jebby

Why does everyone assume that a foreign owned unit will sit empty? The vast majority of these are investments and I'm sure are rented out.

Is there any reliable statistics on vacancy rates of foreign owned units and local investor units?

I didn't say that they would all be empty suites, I questioned what the effect would be, and questioned how many empty suites there ultimately would be. There aren't statistics on vacancy rates of foreign owned units as you say, so that is why I was wondering about the ultimate outcome.

[whatnext]

So, first they claim it's "only 3%" and just a couple weeks later it has jumped to 10%?! What will it be in another two weeks?

[Vin]

Originally Posted by Jebby

I don't see how it's a win for Burnaby. If the tax is high enough (15% does seem very high, we'll see if it's enough to dissuade) then foreigners are simply going to park their money in real estate outside of Metro Vancouver.

The 200% increase in property prices for many Westside and many other Lower Mainland homes have not dissuaded these foreigners from being "ripped off" by continuing to purchase the properties here, so what makes you think that the 15% tax on property transfer is going to dampen interest?

[Jebby]

Originally Posted by csbvan

I didn't say that they would all be empty suites, I questioned what the effect would be, and questioned how many empty suites there ultimately would be. There aren't statistics on vacancy rates of foreign owned units as you say, so that is why I was wondering about the ultimate outcome.

Sorry, I didn´t mean to make it seem like I was replying directly to you with that, just using your post as context, I guess.

It seems like there´s some conception that if a unit is foreign owned it will sit empty, when the case is probably that they will be put on the market as a rental, just like local-owned investor property are.

[Jebby]

Originally Posted by Vin

The 200% increase in property prices for many Westside and many other Lower Mainland homes have not dissuaded these foreigners from being "ripped off" by continuing to purchase the properties here, so what makes you think that the 15% tax on property transfer is going to dampen interest?

There's a huge difference between the two. One is 200% more in equity and the other is a 15% loss in payment of a tax...It's really not that hard to see the difference.

[twoNeurons]

FINALLY... some real numbers to play with.

Okay... let's do the math.

Main findings include:

• 10,148 residential real estate transactions in B.C., totalling more than $7.6 billion.

• 337 transactions (3.3%) involved foreign nationals, worth $390 million (5.1%).

• In Metro Vancouver, there were 5,118 transactions worth nearly $5.4 billion, of which 260 involved foreign nationals (5.1%), worth $351 million (6.5%)

• In the City of Vancouver, there were 1,139 transactions, totalling more than $1.6 billion. 47 of these involved foreign nationals (4.1%), worth $64 million (3.9%).

source: http://theprovince.com/news/local-ne...er-three-weeks

All of BC
7.6B ÷ 10,148 = $748,916 ( avg. price paid overall )
390M ÷ 337 = $1,157,270 ( avg. price paid by foreigners )

That difference doesn't mean a lot, because obviously foreigners concentrate their sales in higher priced locations where there is an established community speaking their language and more access to things like things common to their home, as well as less racism. Immigrants always tend to gravitate towards cities... they always have.

Metro Vancouver
5.4B ÷ 5118 = $1,055,099 ( avg. price overall )
351M ÷ 260 = $1,350,000 ( avg. price overall by foreigners )

On first glance, it looks like foreigners are paying WAY more for properties... but again, this includes everything from West Vancouver to Aldergrove, and most foreigners are going to be purchasing closer to city centres, where their communities are...

City of Vancouver
1.6B ÷ 1,139 = $1,404,741 ( avg. price overall )
$64M ÷ 47 = 1,361,702 ( avg. price overall by foreigners )

Yes... the average price paid by a foreign national is LOWER than that of a Canadian Citizen, according to those numbers. YES, foreigners are buying some properties. YES, they're mostly from China. But according to the data. NO, they aren't bidding for a huge number of expensive properties. Sure, there may be some buyers who are buying in the name of a relative but MOST of the real estate

AND as far as we know, SOME of those 47 foreign nationals may indeed have Canadian Permanent Residency and work and pay taxes in BC.

Anyway, for those that don't like looking at numbers, I made a pretty chart for you to look at.



If data was released for each community, I'd be interested in seeing it, especially if it included Richmond which appears to have the highest percent of foreign citizen sales. It's not clear whether foreign citizen means permanent resident in the report, as I believe you just had to state your citizenship. A Chinese person who has been living and working here for 20 years as a PR, for example, is still counted as a Chinese citizen, but they're essentially Canadian. I'd imagine there are quite a few of those in Richmond, especially if they were sponsored.

Also note that data for 1 month is not exactly a statistically good sample size to base tax legislation upon. This move was PURELY political.

EDIT:

Here's what the numbers looks like when you just plot the number of sales to foreigners. Gee, that small slice is doing a lot of damage to that big RED Canadian Maple piece of pie. And when you look at the average prices paid... they're not a whole lot different than what Vancouverites are paying... some higher, some lower!

Man, I'd LOVE to get access to all 5114 records.

[whatnext]

Originally Posted by twoNeurons

FINALLY... some real numbers to play with.

Okay... let's do the math.


source: http://theprovince.com/news/local-ne...er-three-weeks

All of BC
7.6B ÷ 10,148 = $748,916 ( avg. price paid overall )
390M ÷ 337 = $1,157,270 ( avg. price paid by foreigners )

That difference doesn't mean a lot, because obviously foreigners concentrate their sales in higher priced locations where there is an established community speaking their language and more access to things like things common to their home, as well as less racism. Immigrants always tend to gravitate towards cities... they always have.

Metro Vancouver
5.4B ÷ 5118 = $1,055,099 ( avg. price overall )
351M ÷ 260 = $1,350,000 ( avg. price overall by foreigners )

On first glance, it looks like foreigners are paying WAY more for properties... but again, this includes everything from West Vancouver to Aldergrove, and most foreigners are going to be purchasing closer to city centres, where their communities are...

City of Vancouver
1.6B ÷ 1,139 = $1,404,741 ( avg. price overall )
$64M ÷ 47 = 1,361,702 ( avg. price overall by foreigners )

Yes... the average price paid by a foreign national is LOWER than that of a Canadian Citizen, according to those numbers. YES, foreigners are buying some properties. YES, they're mostly from China. But according to the data. NO, they aren't bidding for a huge number of expensive properties. Sure, there may be some buyers who are buying in the name of a relative but MOST of the real estate

AND as far as we know, SOME of those 47 foreign nationals may indeed have Canadian Permanent Residency and work and pay taxes in BC.

Anyway, for those that don't like looking at numbers, I made a pretty chart for you to look at.



If data was released for each community, I'd be interested in seeing it, especially if it included Richmond which appears to have the highest percent of foreign citizen sales. It's not clear whether foreign citizen means permanent resident in the report, as I believe you just had to state your citizenship. A Chinese person who has been living and working here for 20 years as a PR, for example, is still counted as a Chinese citizen, but they're essentially Canadian. I'd imagine there are quite a few of those in Richmond, especially if they were sponsored.

Also note that data for 1 month is not exactly a statistically good sample size to base tax legislation upon. This move was PURELY political.

You seem to be using outdated data. As was reported today, the numbers now seem to be much higher:

A longer, five-week set of data on foreign investment in Metro Vancouver real estate released by the province shows the problem may be larger than the first numbers suggested.

Data collected between June 10th and July 14th shows 6.6 per cent of residential transactions in BC involved foreign buyers. The percentage in Metro Vancouver was 9.7.

The province also has figures for many municipalities. The City of Vancouver was close to average at 10.9 per cent. Surrey’s was 8.4 per cent. Two suburbs adjacent to Vancouver seem the most affected by foreign investment. About 18 per cent of buyers in Richmond and Burnaby were considered foreign...
http://www.news1130.com/2016/07/26/r...r-foreign/yers in Richmond and Burnaby were considered foreign.

As to a PR of 20 years being lumped in as foreign, well all I can say is piss or get off the pot. If you've been here 20 years make the citizenship commitment.

[logan5]

Doesn't that 9.7% represent the dollar amount that foreign buyers are responsible for, and not the % of transactions?

[retro_orange]

http://www.cbc.ca/news/canada/britis...tion-1.3696400

Am I the only one who finds it odd that not only our mayor is known for being too close with developers here but his own girlfriends mother is facing execution in China for something very similar...

[logicbomb]

Originally Posted by retro_orange

http://www.cbc.ca/news/canada/britis...tion-1.3696400

Am I the only one who finds it odd that not only our mayor is known for being too close with developers here but his own girlfriends mother is facing execution in China for something very similar...

China Daily says Zhang is "charged with three counts of corruption and abuse of power" in an alleged "land swindle" involving up to 350 million yuan — just over $69 million Cdn.

It's harsh but laws are laws. Feel bad for Wanting as no daughter should ever go through this, but the mother should have known the risks, especially when she begun selling of state assets at fire-sale prices.

[whatnext]

Unlike most other Metro mayors, Richmond's Mayor Brodie doesn't feel any need for a vacant home tax. I wonder why that would be....

http://www.richmond-news.com/news/va...odie-1.2308380

[Vin]

Originally Posted by Jebby

There's a huge difference between the two. One is 200% more in equity and the other is a 15% loss in payment of a tax...It's really not that hard to see the difference.

Nope, foreigners have been and are still purchasing properties that have ALREADY inflated over a few hundred percent, especially after 2008. Who's being ripped off for those rundown houses these days? Who's overbidding others for houses on the west side? Not you and me for sure. Foreigners are the ones still paying for the most expensive homes despite the hugely over-inflated price.

[trofirhen]

This bubble in Vancouver real estate prices is getting beyond unreal, even beyond alarming.
The only thing I could imagine correcting it would be a major implosion of the Chinese economy.
What effect this would have on the global economy I don't know, except that tough as it would be, it might be the only way out.
Anybody know the state of the Chinese economy? Any feedback on the topic? Thank you all for your consideration and time.