Canada's 'housing bubble' deemed close to bursting

[whatnext]

Originally Posted by Innsertnamehere

It didn't work before, but surely it will work this time!

True to a degree. The policies need to be directed against foreign money, not just foreign buyers.

[CivicBlues]

Should a remote Software Developer living in Canada working for a US company being paid in USD be considered "foreign money"?

[FarmerHaight]

Originally Posted by CivicBlues

Should a remote Software Developer living in Canada working for a US company being paid in USD be considered "foreign money"?

Probably not since they are a resident in Canada and are therefore taxed on world-wide income.

[whatnext]

It's pretty clear what foreign money is. Some just choose to ignore it for whatever the ulterior motives are. Here's a perfect example that I posted before. Even the densest of forumers knows none of this money was earned (or taxed) in Canada:


Ex-student aims for near-record Vancouver mansion deal
HANYING CHEN RUNS A BOUTIQUE THEATRE PRODUCTION COMPANY AND COULD SET A RECORD SALE FOR A SINGLE RESIDENTIAL LOT SALE IN VANCOUVER SHOULD NEGOTIATIONS EXCEED EXPECTATIONS
By Graeme Wood | August 20, 2021

A Vancouver mansion listed for a near-record price is not being sold by a student, according to the listing’s realtor.

The $39.9 million listing for 4868 Drummond Drive raised eyebrows on social media this month not just because of the price but because the owner’s stated occupation is a “student.”

However, Hanying Chen was only a student in 2012, when she paid $14.68 million cash for the seven-bedroom home in West Point Grey. While she continued to be a student in 2015, according to the most recent land title record, Chen is no longer in school, says her realtor Vivian Li of Sutton Group-West Coast Realty.

Rather, the title was never updated and Chen now works as the founder and director of Circle Bright Productions, a live theatre and arts company that launched in 2018...

....The top residential deal in Vancouver continues to be the $51.8 million sale of 4787 Drummond Drive in 2015 to Chinese tycoon Mailin Chen, a developer and hotelier who is also a member of a member of the Chinese People’s Political Consultative Conference (CPPCC), which directs the United Front Work Department, a foreign propaganda and influence network of the Chinese Communist Party.

However, Mailin Chen’s property on Drummond (In 2015 he owned 13 Vancouver-area properties) is situated on three lots, so realtors do not consider it a record price for one single lot, as is the case for the one on Belmont.

Mailin Chen’s home is kitty corner to Chen’s home, which Li said is a “family holding.”

Asked if the two Chens are related, Li said she could not disclose personal information.

Li said she does not expect a bidding war on the property but rather negotiations among those interested.

The 58,632 square-foot lot comes with an annual tax bill of $101,897.

A realtor’s commission on a $40 million sale would be $653,255.(bold mine)

https://biv.com/article/2021/08/ex-student-aims-near-record-vancouver-mansion-deal

[CivicBlues]

So friends of mine who come back after a stint in Silicon Valley to purchase a house in Vancouver are exempted right? Where are all the articles written about them? Do you want to see a list of their surnames first so you can make a value judgement and gatekeep on them?

[JHikka]

Originally Posted by CivicBlues

So friends of mine who come back after a stint in Silicon Valley to purchase a house in Vancouver are exempted right? Where are all the articles written about them? Do you want to see a list of their surnames first so you can make a value judgement and gatekeep on them?

Ah yes, what foreign means to some is different from what foreign means to others...

[whatnext]

Originally Posted by JHikka

Ah yes, what foreign means to some is different from what foreign means to others...

Being a member of United Front (as in article above) would definitely be one differentiator:

How China uses shadowy United Front as 'magic weapon' to try to extend its influence in Canada
Its activities include influencing the Chinese diaspora to back China, co-opting foreign political and economic elites and promoting Beijing’s agenda worldwide
Author of the article: Tom Blackwell
Publishing date: Jan 28, 2019 • December 31, 2019

It was October 2014, and the board was planning to vote on a contract with the Confucius Institute, a Chinese-government affiliated organization that had offered to teach Mandarin to the city’s schoolchildren.

Critics decried the arrangement, calling the institute a propaganda or espionage arm of the Chinese state. But its supporters were out in force, scores of them, rallying noisily and waving Chinese flags in the heart of Canada’s biggest city.

“You are a damn traitor to China,” one of them shouted to an institute opponent of Chinese descent. “Down with traitors!”

The demonstration was no spontaneous occurrence. Three days earlier, as the Confederation of Toronto Chinese Canadian Organizations hosted a farewell banquet for a departing Chinese diplomat, Consul General Fang Li had urged locals to come out in support of the institute....

Charles Burton, a political scientist at Ontario’s Brock University who closely monitors China-related rights issues, says one of the United Front’s key goals is to soften opinions around issues like Chinese companies’ acquisition of Canadian natural resources and technology, or the looming decision Canada must make about Huawei’s involvement in building the country’s 5G telecom network. The company, considered to have close links to the Chinese state and having for years faced accusations of corporate espionage, was barred from taking part in 5G trials in the U.S., Great Britain, Australia and New Zealand — the four countries that with Canada comprise the Five Eyes intelligence-sharing alliance....

https://nationalpost.com/news/how-china-...to-try-to-extend-its-influence-in-canada

But perhaps there is some similar, shadowy organization that lobbies on behalf of Facebook, Google etc.

[whatnext]

Originally Posted by JHikka

Ah yes, what foreign means to some is different from what foreign means to others...

If the OP's hypothetical friends returned from the USA to Canada they would have had to declare income pay tax in one of those countries on their income under the terms of the Canada-United States Convention with Respect to Taxes on Income and on Capital.

[CivicBlues]

And all your hypothetical Chinese boogeymen are somehow agents of the CCP tasked with bringing glory to the party yet at the same time are also trying to hide their money in foreign markets and being exposed by news reporters?

Sounds like the worst. spies. ever.

[whatnext]

Originally Posted by CivicBlues

And all your hypothetical Chinese boogeymen are somehow agents of the CCP tasked with bringing glory to the party yet at the same time are also trying to hide their money in foreign markets and being exposed by news reporters?

Sounds like the worst. spies. ever.

Except they're not hypothetical. Business in Vancouver, a reputable publication, has named them and given their background story.

The worst spies ever? Maybe, or perhaps just arrogant. It was also a few years ago, even the Huawei princess stashed some of her money in Vancouver back then.

[lio45]

Originally Posted by FarmerHaight

Probably not since they are a resident in Canada and are therefore taxed on world-wide income.

Agreed. That’s the best practical definition of “foreign money”: if the CRA, looking at their files on the buyer, finds it plausible that that individual can afford that property, it’s local money.

Example of foreign money according to that definition: student with zero income puts multi-million dollar property to his name, regardless of citizenship status of the student in question.

[casper]

Originally Posted by CivicBlues

Should a remote Software Developer living in Canada working for a US company being paid in USD be considered "foreign money"?

You have to look at mechanics of how this is done.

To be on the "payroll" in the US, they would need legal rights to work in the US, be taxed in the US and need to file a US tax return. Pay into various US social benefits programs. Not likely.

If they are paid as a contractor. The software developer is a one-person company, likely incorporated. He would be paid by his little company. His little company would invoice the company in the US.

If the company in the US choses to do this regularly they are employment services that act as "Employer of record". The software developer is paid by the employment service as a domestic employee in Canada. That company invoices the company in the US.

[rofina]

Originally Posted by CivicBlues

And all your hypothetical Chinese boogeymen are somehow agents of the CCP tasked with bringing glory to the party yet at the same time are also trying to hide their money in foreign markets and being exposed by news reporters?

Sounds like the worst. spies. ever.

Were not in 2011 here. Nothing hypothetical about illegal capital flows from China distorting the market.

Simple example and question; why would someone like Meng Wanzhou own multiple properties in Vancouver? Surely you recognize what a random circumstance that is on the surface.

[FarmerHaight]

Originally Posted by whatnext

If the OP's hypothetical friends returned from the USA to Canada they would have had to declare income pay tax in one of those countries on their income under the terms of the Canada-United States Convention with Respect to Taxes on Income and on Capital.

Yeah, but China and Canada have an income tax treaty as well. What is your point?

[casper]

Originally Posted by rofina

Were not in 2011 here. Nothing hypothetical about illegal capital flows from China distorting the market.

Simple example and question; why would someone like Meng Wanzhou own multiple properties in Vancouver? Surely you recognize what a random circumstance that is on the surface.

This is all about perspective. Canada does not have laws against money coming into the country. They are not braking Canadian laws they are breaking the laws of China that unreasonably restrict money leaving the country.

Why would we ever help China go after people doing thing that are legal in Canada.

[rofina]

Originally Posted by casper

This is all about perspective. Canada does not have laws against money coming into the country. They are not braking Canadian laws they are breaking the laws of China that unreasonably restrict money leaving the country.

Why would we ever help China go after people doing thing that are legal in Canada.

Apologies for not being clear, that was not my point.

My reply was aimed at a very narrow target; the denialists of Chinese capital flows distorting RE markets across the Western world. Disproportionately so in select Cities, Vancouver being top of the pile.

I think the denial stance was more plausible around 2010 when data was incomplete, fractured, and you only had a very small handful of individuals willing to speak about it.

Ian Young at South China Morning Post was a pioneer here. The only reason he was able to get away with it, is because he is Asian, playing the race card didn't apply to shut down conversation.

There is obviously a second conversation that can be had now about if anything should be done, etc.

[someone123]

Originally Posted by rofina

My reply was aimed at a very narrow target; the denialists of Chinese capital flows distorting RE markets across the Western world.

At this point I assume such people can't be reasoned with. I've had the experience of driving past dozens and dozens of Chinese-only real estate signs, coming home, and reading on SSP why the notion of Chinese people buying real estate is a myth, or why Meng Wanzhou, one-time permanent resident here who has since flown back and thanked the motherland, is 'as Canadian as any other Canadian', and so on. I think these notions would probably seem odd if described to a lot of China-born people who filled out their PR paperwork or sent their kids to school here without any intention to 'become Canadian'. There are others who do intend to resettle here permanently but that's not everybody, and the notion of immigration being a complete and permanent hop to another country is weakening. The typical Chinese visitor to Canada today is not like the person who went into indentured servitude in 1880 so they could buy their transatlantic steamship ticket.

In Western media there's simultaneously a loud message of Chinese triumphalism (soon to be #1!) and denial that they could have much of an impact or have much agency (do not criticize them for building new coal plants). I would not assert that there's anything really special about China or nefarious about what people there did. They just had a huge influx of cash and they used that to buy diversified investments, North American real estate being a part of that. The trend is also made stronger by their regime which has heavy visibility into and control over domestic assets without any real judicial oversight.

[rofina]

Originally Posted by someone123

At this point I assume such people can't be reasoned with. I've had the experience of driving past dozens and dozens of Chinese-only real estate signs, coming home, and reading on SSP why the notion of Chinese people buying real estate is a myth, or why Meng Wanzhou, one-time permanent resident here who has since flown back and thanked the motherland, is 'as Canadian as any other Canadian', and so on. I think these notions would probably seem odd if described to a lot of China-born people who filled out their PR paperwork or sent their kids to school here without any intention to 'become Canadian'. There are others who do intend to resettle here permanently but that's not everybody, and the notion of immigration being a complete and permanent hop to another country is weakening. The typical Chinese visitor to Canada today is not like the person who went into indentured servitude in 1880 so they could buy their transatlantic steamship ticket.

In Western media there's simultaneously a loud message of Chinese triumphalism (soon to be #1!) and denial that they could have much of an impact or have much agency (do not criticize them for building new coal plants). I would not assert that there's anything really special about China or nefarious about what people there did. They just had a huge influx of cash and they used that to buy diversified investments, North American real estate being a part of that. The trend is also made stronger by their regime which has heavy visibility into and control over domestic assets without any real judicial oversight.

Very well articulated, great post.

[casper]

Originally Posted by rofina

Apologies for not being clear, that was not my point.

My reply was aimed at a very narrow target; the denialists of Chinese capital flows distorting RE markets across the Western world. Disproportionately so in select Cities, Vancouver being top of the pile.

I think the denial stance was more plausible around 2010 when data was incomplete, fractured, and you only had a very small handful of individuals willing to speak about it.

Ian Young at South China Morning Post was a pioneer here. The only reason he was able to get away with it, is because he is Asian, playing the race card didn't apply to shut down conversation.

There is obviously a second conversation that can be had now about if anything should be done, etc.

It is clear money is flowing into Canada from Chinese immigrants. Are they long term immigrants or just passing through is hard to say.

The issue is how do we manage it. The biggest blame is with municipal governments that have restricted condo development. Had enough housing stock been created to meet demand we would not have an issue.

[rofina]

This is a painful chart to look at;





I lack the language to describe how egregious by any metric the housing situation has become in this country.

I'm not surprised, because I look at this from an asset perspective and not a housing one, but wow have we ever lost sight of anything resembling normality in this country.