Chinese Investors Driving Up Metro Housing Prices

[JamesOwnz]

So hey guys, what's going on with the market now? Everything I read now is that it is slowing to a crawl, is a huge fall right before us? I've noticed a few new mega complexes spring up overnight at some ridiculous prices (Lougheed, Concord Brentwood) a last hurrah so to speak?

Rent is a little out of control now too.. now I haven't needed to look for a place in a while and just doing a brief glace at my neighborhood on Craigslist right now, not too pretty.

[CanSpice]

Originally Posted by JamesOwnz

So hey guys, what's going on with the market now? Everything I read now is that it is slowing to a crawl, is a huge fall right before us? I've noticed a few new mega complexes spring up overnight at some ridiculous prices (Lougheed, Concord Brentwood) a last hurrah so to speak?

Rent is a little out of control now too.. now I haven't needed to look for a place in a while and just doing a brief glace at my neighborhood on Craigslist right now, not too pretty.

Metro Vancouver home sales return to typical August levels

Basic synopsis:
- detached houses YoY decreased in sales by 45% and increased in benchmark price by 36%
- apartments dropped by 10% in sales and increased 27% in benchmark price from August 2015 to 2016
- attached properties dropped 25% in sales and increased 31% in benchmark price from August 2015 to 2016
- overall sales were 3.5% below the 10-year average for August

[whatnext]

Originally Posted by CanSpice

Metro Vancouver home sales return to typical August levels

Basic synopsis:
- detached houses YoY decreased in sales by 45% and increased in benchmark price by 36%
- apartments dropped by 10% in sales and increased 27% in benchmark price from August 2015 to 2016
- attached properties dropped 25% in sales and increased 31% in benchmark price from August 2015 to 2016
- overall sales were 3.5% below the 10-year average for August

Perhaps typical sales levels, but the ridiculous level of price increases indicate stronger action needs to be taken against those buying homes with offshore incomes.

[whatnext]

I guess this makes it a bit easier to understand how you can just plunk down a few million cash for a house, from today's Sun:

Lawyers in Vancouver say they are seeing a substantial increase in B.C. court cases filed by Chinese companies seeking to seize real estate assets from Chinese immigrants in B.C.

The Chinese plaintiffs are asking B.C. judges to enforce monetary judgments awarded in Chinese courts. These Chinese rulings typically involve people found in China to have defrauded Chinese banks or business partners and then fled to Canada with the money and invested in real estate here....

....Such cases have been trickling into B.C. courts for several years, including a 2015 B.C. Supreme Court award of $670 million to the Bank of China against money allegedly laundered through buying multiple homes and setting up bank accounts in Richmond.

But, according to Vancouver lawyer Christine Duhaime, a precedent-setting case in June appears to have opened the flood gates.

Duhaime says that after her client, China Citic Bank, won a so-called Mareva injunction from B.C. Supreme Court, prohibiting the sale of four Vancouver-area homes worth $7.2 million, calls from China poured in. The homes belong to a couple who were alleged to have “fled China” with an unpaid $10-million loan.....
http://vancouversun.com/news/local-news/...cases-target-property-in-b-c-say-lawyers

[VBC]

Good investigation from The Globe and Mail:

“They say, ‘I just want to pay around $5,000 in tax. How much does that work out to be in income?’ he says.
“And then they say, ‘I have this much interest income from money I deposit with the Canadian bank or the company or whatever.’ That’s it.”

http://www.theglobeandmail.com/real-estate/vancouver/out-of-the-shadows/article31802994/

[retro_orange]

Originally Posted by VBC

Good investigation from The Globe and Mail:

“They say, ‘I just want to pay around $5,000 in tax. How much does that work out to be in income?’ he says.
“And then they say, ‘I have this much interest income from money I deposit with the Canadian bank or the company or whatever.’ That’s it.”

http://www.theglobeandmail.com/real-estate/vancouver/out-of-the-shadows/article31802994/

Makes my blood boil.

[retro_orange]

NDP calls on B.C. government to crack down on tax-dodging real estate speculators
NDP MLA David Eby calls on government to link real estate transaction data with the income tax system

Eby said the NDP is calling on the province to link real estate transaction data with the income tax system in order to determine whether buyers spending large amounts of cash have a legitimate source of income.

"How are they paying for the house? That's a very basic question."

http://www.cbc.ca/news/canada/british-co...odging-real-estate-speculators-1.3758580

[Sheba]

CRA launches review of B.C. real estate speculators

The Canada Revenue Agency has launched a review into the actions of B.C. real estate speculators in light of a Globe and Mail report that uncovered possible tax evasion and fraud.

On the weekend, the B.C. government urged the CRA to track down tax cheats and toughen up its rules after a Globe investigation showed a network of speculators flips homes for a profit and evades taxes by classifying them as principal residences even though they never lived there.

...

A CRA auditor who requested anonymity also told The Globe the agency’s auditors lack the experience needed to track down foreign income. The auditor said federal officials fear the agency could be seen as targeting the Chinese community if it cracks down on some activities.

“Management has known of this issue for at least three years but did not want to pursue the real-estate flips because most of the auditees were Chinese in descent. They were scared of being racist … I can confirm this fact, based on meetings held,” the auditor said.

[wrenegade]

great to see the CRA start to do their job only after an expose in the media. I've said it before and I'll say it again, the Federal Government and the CRA are the most to blame for the housing crisis here because of things like this.

[twoNeurons]

Originally Posted by whatnext

Perhaps typical sales levels, but the ridiculous level of price increases indicate stronger action needs to be taken against those buying homes with offshore incomes.

I love the spin. typical august levels = massive MoM decrease.

In July 2016 the average price for a Vancouver detached was recorded at $1,764,682. In less than a month (post Tax proclamation), the average price gain over the year of approximately $300,000 has been wiped out. August 2016`s average price for a detached home flat lined at $1,470,265 to settle below August 2015`s average price of $1,474,475.

While that price drop is worrisome more critical is that the number of sales has tanked to 44% below August 2015. Price is one thing but when there are no sales you don’t have a market. A certainty rests in this dramatic lack of sales. Should it continue future market predictions become more tenuous than ever. More curious will be the evolution that is about to take place. What will be the result from the multiplier effect of this drop in price and sales?

The chaos created by our government fiddle playing will I suspect, continue for the next months ahead. At some point it may become clear that elements beyond the currently perceived influence of foreign buyers could have played a greater part in determining the market place.

*emphasis mine.
source: http://www.yattermatters.com/2016/09/government-fiddle-burns-vancouver-real-estate/

Translation... One little announcement declaring a foreign buyer tax made all the locals wary. No one's buying right now. Uncertainty in the locals is what has caused this drop and the real estate industry is going to paint any numbers that come back in as positive a light as they can. Perhaps this is rightly so, as they are protecting their interests not the public. Remember, The REB is being stripped of their privilege to self-regulate by the provincial government.

Anecdotally, most of the locals feel prices haven't decreased that much because of statements like "typical august levels" which is a whole lot more palatable than saying if you bought a house in the last 18 months you likely owe more than your house is worth.

This is unusual, as real estate prices are stickier on the way down. They take longer as owners hold on until they're forced to concede for a lower price or they're forced to keep the place off the market.

The real test will be is next spring. By that time, of course, if prices continue to be at historically typical levels (O_o) those who have purchased a place in the last few years may have a rude awakening when they go to list their house.

If I was retiring in the next 5 years, I'd list my place pronto at a discount if I hadn't already.

[WarrenC12]

Two comments from me on this:

1. REB has completely lost the trust of the public and therefore lost the social license to self-regulate.

2. What happened to these weekly stats that DeJong was releasing? Why can't we get another report so we can see all of the casssssshhhh money they have pulled in from foreign buyers?

[twoNeurons]

Originally Posted by WarrenC12

Two comments from me on this:

1. REB has completely lost the trust of the public and therefore lost the social license to self-regulate.

2. What happened to these weekly stats that DeJong was releasing? Why can't we get another report so we can see all of the casssssshhhh money they have pulled in from foreign buyers?

I agree on #2. I suspect they'll release numbers closer to the election, if they're favorable or put the government in a good light.

It's tough... because there is almost NO activity on the market. ~30% of properties listed last month didn't sell. This market is illiquid. People will hold on to properties or tire and delist and wait for spring... at which point they may have to drop the price further anyhow.

To be honest they should have been doing a simple think like track who is buying houses years ago! YEARS ago! The fact that they didn't track who is buying what or that the RE industry didn't bother to collect/release those details speaks a lot to the state of the industry.

It's a dicey game they're playing though. How do you burst a bubble in an economy that has become a massive part of the economy? Real Estate is 13.2% of the Canadian GDP! That's a massively unbalanced weighting.

We're fortunate that RE bubbles slowly erode in Canada rather than pop like they did in the USA, but long-term the effect is the same, with pain over a longer period of time.

[retro_orange]

A homebuyer identified as a student in property documents bought a Point Grey property in April of 2015 for $7.19 million to sell it just a year later for $8.35 million, booking a $1.16-million profit, which NDP housing critic David Eby says is further evidence of speculation driving rapid inflation in Metro Vancouver’s housing market.

Eby said caucus researchers came across the case in follow up to its work looking at who was buying and selling homes in Point Grey, which showed a high proportion were purchased by students and homemakers, many with Chinese names.

And, according to Eby, the issue of where the money for the purchases is coming from has become increasingly important following the publication of an investigation by the Globe and Mail Wednesday that uncovered cases where two banks allowed offshore or newly landed residents to take out mortgages on homes without having to prove s source of income, provided they had substantial down payments.

“Is Canadian banking policy enabling foreign students to flip houses in Point Grey,” Eby said, by allowing offshore speculators to take out mortgages without having to show a source of income.

“I think this issue of bank lending is a huge part of the problem in terms of rapidly inflating house prices.”

Eby said the research that uncovered the case of the student flipper showed nine properties in Point Grey, worth $57.1 million, in total, that were owned by people listed as students. Some $40 million supported by mortgages, “which raises the question of how that happened.”

Land title documents should have given the province plenty of information to use in deducing that foreign capital has been influencing the property market, something the NDP opposition has been demanding for two years, Eby said.

Now, the province should be investigating to see whether the province’s property-gains-tax exemption is facilitating tax evasion in real estate.

“Knowing that students and homemakers are buying homes, at a minimum, identify where the money for down payments was coming from would have been a good start,” Eby said.

“Secondly, calling up the federal government and saying ‘ banks are lending to people with no source of income (which could cause problems for the economy), that would have been helpful.”

Eby is holding a press conference at his Point Grey constituency office this afternoon.

More to come.

http://vancouversun.com/news/local-news/...-research-for-ndp-critic-david-eby-shows

Uh... Hello?

[whatnext]

Shocking and disgusting. I hope he's been flagged for a CRA audit.

Where did that money come from. Well it turns out Canada's own big banks have harsher lending standards for Canadians than offshore money.

It has long been suspected that Canadian banks were playing a less-than-honorable role in the foreign investment rush taking place in the country’s real estate market. Now, questions about precisely how they have been helping fuel the obscene rise in house prices in places such as Vancouver and Toronto have been partly answered.

It would appear the Big Five banks (and likely others) have been doing this by giving foreign clients preferential treatment when it comes to qualifying for loans – a level of banking bias the likes of which Canadians have never witnessed...

...According to internal documents obtained by The Globe, loans officers at Bank of Nova Scotia, for instance, have been told they do not need to verify the incomes of new immigrants if they have a loan down payment of 35 per cent. For foreigners, the no-verification threshold jumps to 50 per cent. At the Bank of Montreal, it’s 35 per cent for both; the bank also requires that foreign clients have the equivalent of 12 mortgage payments on hand at the time the loan is issued.

So much is wrong about what is taking place one hardly knows where to begin. But let’s start with the now-evident role the banks have been playing in the vicious, inflationary upward spiral in house prices. Although a federal regulator has warned all of the banks that income verification for foreign clients has been lacking, the practice continues...

http://www.theglobeandmail.com/opinion/i...-different-set-of-rules/article31870554/

[whatnext]

Nine students with no apparent source of income bought $57-million worth of single-family homes in Vancouver’s tony Point Grey neighbourhood over the past two years, according to records compiled by British Columbia’s Opposition New Democrats...

..Four of the sales to student buyers were covered by mortgages from three major banks – a fact that underscores how Canada’s banks are inflating the region’s housing market, said NDP housing critic David Eby, who provided data from his provincial riding...

http://www.theglobeandmail.com/news/brit...homes-in-past-two-years/article31892652/

[retro_orange]

Originally Posted by whatnext

Nine students with no apparent source of income bought $57-million worth of single-family homes in Vancouver’s tony Point Grey neighbourhood over the past two years, according to records compiled by British Columbia’s Opposition New Democrats...

..Four of the sales to student buyers were covered by mortgages from three major banks – a fact that underscores how Canada’s banks are inflating the region’s housing market, said NDP housing critic David Eby, who provided data from his provincial riding...

http://www.theglobeandmail.com/news/brit...homes-in-past-two-years/article31892652/

Yeah, seems legitimate. I put a number of west side properties under my belt while going to BCIT with a part time job. NOT!

[whatnext]

A Seattle writer sees a cautionary tale in how Vancouver has been wrecked for Seattlites:

A City of Empty Towers
What Seattle Can Learn from Vancouver's Real-Estate Crisis

Amos Latteier, a tech worker in Vancouver, British Columbia, is talking about what everyone in Vancouver can't stop talking about: the city's skyrocketing property values and its seemingly endless construction boom, where one luxury condo after another has been built, is being built, will be built.

It is a story that should now sound familiar to Seattleites..
...But how did the property market get so bad? Local market urbanists like Roger Valdez, the director of Smart Growth Seattle, and real-estate developers often place the blame on a lack of supply. Like San Francisco, the city is not building enough homes and apartments to meet demand. If the market becomes less restricted by rezoning certain sections of the city, it could meet this demand, prices would fall, and everyone (developers, the rich, the workers) would be happy.

The supply-and-demand model seems so reasonable, so logical, so rational. But the forces at work in Vancouver seem anything but that. Something totally insane and even monstrous is happening in this city.

In 2005, according to Yan's research, around the time Vancouver's housing market started heating up, just 19 percent of single-family homes were worth C$1 million or more in Greater Vancouver. Ten years later, 91 percent of single-family homes are worth more than that.(bold mine)

http://www.thestranger.com/features/2016...learn-from-vancouvers-real-estate-crisis

[Vin]

Originally Posted by whatnext

In 2005, according to Yan's research, around the time Vancouver's housing market started heating up, just 19 percent of single-family homes were worth C$1 million or more in Greater Vancouver. Ten years later, 91 percent of single-family homes are worth more than that.(bold mine)[/I]

http://www.thestranger.com/features/2016...learn-from-vancouvers-real-estate-crisis

From 1999 to 2008, before the Chinese came en-masse to invest, property prices had already spiked by 150-200%. Explain that? Fact is, the Chinese are not the only ones that cause property prices to go so high up, more like many people, including Canadians, wanting to move to and live in this town, a place that has limited supply of housing.

With the recent 15% tax surcharge, I doubt it will cause housing prices to collapse. Sales have stalled only because of the uncertainties, and that potential local buyers are all waiting in vain for prices to collapse overnight. Once this boils over and the situation stabilizes, prices will go up again.

[Vin]

Originally Posted by whatnext

I guess this makes it a bit easier to understand how you can just plunk down a few million cash for a house, from today's Sun:

Lawyers in Vancouver say they are seeing a substantial increase in B.C. court cases filed by Chinese companies seeking to seize real estate assets from Chinese immigrants in B.C.

The Chinese plaintiffs are asking B.C. judges to enforce monetary judgments awarded in Chinese courts. These Chinese rulings typically involve people found in China to have defrauded Chinese banks or business partners and then fled to Canada with the money and invested in real estate here....

....Such cases have been trickling into B.C. courts for several years, including a 2015 B.C. Supreme Court award of $670 million to the Bank of China against money allegedly laundered through buying multiple homes and setting up bank accounts in Richmond.

But, according to Vancouver lawyer Christine Duhaime, a precedent-setting case in June appears to have opened the flood gates.

Duhaime says that after her client, China Citic Bank, won a so-called Mareva injunction from B.C. Supreme Court, prohibiting the sale of four Vancouver-area homes worth $7.2 million, calls from China poured in. The homes belong to a couple who were alleged to have “fled China” with an unpaid $10-million loan.....
http://vancouversun.com/news/local-news/...cases-target-property-in-b-c-say-lawyers

They need to catch these people and put them away that's for sure. Seize their properties and auction them off like how they do it with drug-related seizures. The province and courts can retain part of the proceeds, and the rest return to the "victims" in the original places where the defrauding had taken place. Also it doesn't matter if the seized properties are in the names of family members or friends. Assets purchased through criminal means should all be hauled up.

[Vin]

Originally Posted by Jebby

That's because people are like you and equate density with 50 story towers. Paris has none in the city center, yet has about 5x the density of Vancouver.

Paris's tight and sometimes claustrophobic roads and alleys due to mid-rise apartments and buildings can be tolerated or even enhanced by the excellency in architecture, lots of shops and cafes, and occasionally little parks and historical squares. People actually enjoy looking up at the buildings when strolling down the streets. There are also no single family homes in the city as the entire place is built mid-rise. Hence they can achieve that kind of density, like you claimed, 5x that of Vancouver.

Vancouver is different: with mediocre architecture like what you see in OV and mass areas of SFH and industrial lands that the City isn't willing to give up, we will never achieve any sustainable densities for efficient public transit without going tall, like 50-70 storey tall. Also with our desire to see the ocean and mountains that Paris has none, living in that kind of claustrophobic Paris-style apartments just don't work...kapish amigo?

Having said that, Paris/ London are all establishing new neighbourhoods and going really tall. They have "moved on" from their traditional mid-rise city concept, and are still successful doing that. Vancouver wanting to do the old Parisian/London concept is nothing innovative, and this city would be a very very sad place to live in if it's built like OV everywhere, with dark streets and seafoam glass "in your face" everywhere you walk.