Chinese Investors Driving Up Metro Housing Prices

[Pinion]

Originally Posted by st7860

People like to say its investors driving up prices while others say its the 5% down payment mortgages that Canadian's can get driving things up..

"Others" are wrong, otherwise the problem would not be contained to Vancouver and to some extent Toronto.

[st7860]

So you mean there actually is a lot of non resident ownership in Canada?

[Pinion]

Originally Posted by st7860

So you mean there actually is a lot of non resident ownership in Canada?

It's more complicated than just that but basically we let too many ultra rich people buy Canadian property and now Canadians can't afford it in some cities. Where those people came from and what their citizenship status is is not important. The tragedy is that our government valued making a quick buck over the people it is supposed to be protecting.

[red-paladin]

This is a serious question, Are there any western democracies that have strict laws that prevent foreigners from buying real estate? It was my impression that only less than desirable countries had policies like that. I believe that Mexico has policies that limit foreign ownership.

[st7860]

Originally Posted by red-paladin

This is a serious question, Are there any western democracies that have strict laws that prevent foreigners from buying real estate? It was my impression that only less than desirable countries had policies like that. I believe that Mexico has policies that limit foreign ownership.

Australia is known for that.

With regards to Canada. although the word is that there's lots of foreigners buying up Vancouver, the (land title?0 data doesn't support that. In other words most buyers are Permanent Residents.

[Pinion]

Originally Posted by red-paladin

This is a serious question, Are there any western democracies that have strict laws that prevent foreigners from buying real estate? It was my impression that only less than desirable countries had policies like that. I believe that Mexico has policies that limit foreign ownership.

Australia, Switzerland, Denmark, France, Japan, Singapore, Turkey, Mexico, China, Thailand, even the USA heavily discourages it. (I know these are not all western democracies but I don't know why that should matter)

And of course most countries don't do this because they're more interested in making maximum short term profit than actually creating a nice place to live.

Originally Posted by st7860

With regards to Canada. although the word is that there's lots of foreigners buying up Vancouver, the (land title?0 data doesn't support that. In other words most buyers are Permanent Residents.

There is no accurate data, and any reasonable person can understand why. But again it doesn't really matter where they're from, it matters that only multi-millionaires can afford a house now.

[st7860]

Australia is one of the most infamous for making non residents sell their home when they leave.

Also Australia is also known among long term visitors(not tourist) as the place to go if
a) You prefer a very hot climate since Canada is "cold"
or
b) either couldn't get a visa to Canada or can't afford Vancouver tuition

[Spork]

I attended an SFU Philosopher's Cafe in early January where we had an interesting discussion about the housing market and the effects of out of reach housing on communities (not NIMBY-version of communities, but actual social collective well-being). The group was in agreement that there are 3 challenges in question rather than one, those being: 1) Vacant homes (Meena Wong perspective), 2) Investor-owned residential properties, and 3) Foreign ownership. Each is a distinct issue, and without specific data on the extent of each one, it is difficult to have a grounded discussion as to which one would best receive action in order to bring the market within reach of, let's say, the middle class (if that is at all an objective). Beyond data, I think that deeper philosophical discussion is needed - it isn't a simple issue.

The UK has taxes on either vacant or foreign owned properties (I cannot recall), as do some Australian provinces.

[Metro-One]

Most foreigners in Japan have to have any land / houses they purchase generally placed in their Japanese spouses name.

Frustrating but true, the Japanese government / banks dont trust foreigners, even if you are a perminant resident.

There are exceptions, of course, such as if you can purchase the entire property cash down without any loans and you have a very high level job within a trusted Japanese company...

[st7860]

Originally Posted by Spork

I attended an SFU Philosopher's Cafe in early January where we had an interesting discussion about the housing market and the effects of out of reach housing on communities (not NIMBY-version of communities, but actual social collective well-being). The group was in agreement that there are 3 challenges in question rather than one, those being: 1) Vacant homes (Meena Wong perspective), 2) Investor-owned residential properties, and 3) Foreign ownership. Each is a distinct issue, and without specific data on the extent of each one, it is difficult to have a grounded discussion as to which one would best receive action in order to bring the market within reach of, let's say, the middle class (if that is at all an objective). Beyond data, I think that deeper philosophical discussion is needed - it isn't a simple issue.

The UK has taxes on either vacant or foreign owned properties (I cannot recall), as do some Australian provinces.

If someone wants to buy a house and leave it empty while hopefully maintaining the lawn, I wouldn't lose sleep over it. The municipal Government still gets their sewage, water, and property taxes.

If a non residents buys a home its usually a cash transaction. Thats's good for the people here.

I've also heard people with level 5 whining about 'others' crowding out spaces at UBC and SFU. So? Guess where the money would come from if there weren't thousands of international students paying 4 times the domestic tuition rate. ---- Bingo!!! domestic tuition will increase.

It would be easy to solve the affordability problem - Allow developers to build higher and smaller suites!

[st7860]

Originally Posted by Metro-One

Most foreigners in Japan have to have any land / houses they purchase generally placed in their Japanese spouses name.

Frustrating but true, the Japanese government / banks dont trust foreigners, even if you are a perminant resident.

There are exceptions, of course, such as if you can purchase the entire property cash down without any loans and you have a very high level job within a trusted Japanese company...

Yeah I heard even if you learn the language perfectly, you will never be fully accepted in to Japanese society, and also I think their economy isn't doing too well either.

[nds88]

Originally Posted by Pinion

Australia, Switzerland, Denmark, France, Japan, Singapore, Turkey, Mexico, China, Thailand, even the USA heavily discourages it. (I know these are not all western democracies but I don't know why that should matter)

And of course most countries don't do this because they're more interested in making maximum short term profit than actually creating a nice place to live.



There is no accurate data, and any reasonable person can understand why. But again it doesn't really matter where they're from, it matters that only multi-millionaires can afford a house now.

Those countries you mention have some of the most expensive real estate price per square foot in the world. Australia (Sydney), Switzerland (Geneva), France (Paris, South of France - Nice and Cannes, Monaco), Japan (Tokyo), Singapore, China (Shanghai, Hong Kong), and USA (New York, San Francisco). All these cities cost more per square foot than Vancouver.

There are many more cities (even non-western countries) that are much more expensive than Vancouver. London, Berlin, Barcelona, Rome and many Nordic cities too. In the east, Mumbai and Moscow is even quite pricey. In Vancouver you can get a single family home for $1m that is a 15 minute drive (East Van) into downtown. I don't think that is even possible in many of these above cities.

Vancouver might be expensive per square feet compared to other North American cities, with only a handful that are close (Manhattan, San Fran), but on a global scale it doesn't even come close to many other international cities.

http://www.cnbc.com/id/101468652#

http://www.telegraph.co.uk/property/....html?image=19

http://www.globalpropertyguide.com/m...pensive-cities

http://www.telegraph.co.uk/property/...?frame=2841563

[trofirhen]

Originally Posted by Pinion

There is no accurate data, and any reasonable person can understand why. But again it doesn't really matter where they're from, it matters that only multi-millionaires can afford a house now.

Given this situation, and extrapolating that the majority will be obliged to rent,
does this not bring up the need for rent control of some sort, particularly for low-income earners?

[st7860]

Originally Posted by trofirhen

Given this situation, and extrapolating that the majority will be obliged to rent,
does this not bring up the need for rent control of some sort, particularly for low-income earners?

He's lying, you don't need to be a multi millionaire to buy a house here. Also, there are already rental controls.

[GMasterAres]

Originally Posted by Pinion

It's more complicated than just that but basically we let too many ultra rich people buy Canadian property and now Canadians can't afford it in some cities. Where those people came from and what their citizenship status is is not important. The tragedy is that our government valued making a quick buck over the people it is supposed to be protecting.

I'm glad you said "ultra rich PEOPLE" because so many people in this thread keep blaming "Chinese" for the high prices when more high-end purchases in the past 10 years are by non-Chinese such as Persians in North/West Vancouver and other "rich" people.

It isn't a racial thing it is a wealth thing. Very wealthy people buying up property and often paying more than assessed value contributes to driving up prices in addition to what I say over and over and over and over again, the fact Vancouver has _NO_ more space. When a city in essence runs out of land that can be developed easily and cheaply, prices sky rocket.

A new townhouse complex gets built on Cambie Street near Oakridge, and the prices start at $950,000 for 1300 square feet. You go anywhere else in Metro Vancouver and buy the exact same townhouse, EXACT, and you'll pay between $350,000 and $450,000. I don't see "wealthy anyone investors" lining up to buy a 1300 square foot townhouse.

High prices are not just wealthy people driving up prices. There are many factors and that is just one of them. Another big contributor is a land-locked city with tight borders and very little land that can be developed. Heck even trying to re-develop next to downtown near gastown requires years of planning, months of protests, and a ridiculous amount of legal expense to first break ground. Vancouver is not easy to develop in and prices reflect that in addition to other things.

[GMasterAres]

There's lots of rental units available that are affordable. Want to rent for less than $500 a month, many many units outside of Vancouver available for that price. Heck even 2 bedrooms on your own for that price next to SkyTrain!

Nobody ever has the balls to blame un-realistic expectations on the part of low-income earners and their advocates. My family qualifies in the high-income bracket yet I wouldn't even imagine living downtown or in much of Vancouver and still have enough money left to live life. Yet I hear constantly by low-income advocates and earners that they should have "affordable" rents in False Creek or prime water-front areas next to $1.5 million yachts.

Do what high-school students need to do when they graduate and want to move out on their own. Move out to the suburbs where you can afford to live, start saving your pennies and earning some equity, and in 10 years move up the ladder. The days of $200,000 homes in Vancouver are gone and will NEVER come back ever. EVER. I hate the hand-out expectation society we seem to live in. Hell there are more blue-collar jobs and affordable housing availability out in the burbs especially South of Fraser.

A person earning around the poverty line shouldn't expect to live right in central London or have an apartment in Manhattan next to Central Park let alone be given cheap housing in False Creek. Hell there are affordable houses and rents in East Vancouver towards the Burnaby border and in every other metro-Vancouver city.

I happen to think a large issue in this discussion is focussing so much on Vancouver like it is an island in the middle of the Pacific Ocean. As much as we aren't a huge amalgamated city like Toronto or Montreal, Vancouver is really the sum of Metro-Vancouver and we are really a region not a single city. From a real-estate standpoint that is reflected.

So when people cut lines at the Vancouver border and look at stats exclusively within those borders, they are cutting out a huge piece of the puzzle that is the rest of the region. We talk about regional transportation this, and regional police that, and regional everything else, but when we hit the topic of real-estate, the blinders go on and the entire puzzle is out of sight.

Does Vancouver proper have affordable housing available? Yes though not much. Why? Because the surrounding cities are where the affordable houses are and that's because we are a region not a single island city. You want to afford your first home or get cheap rent? Time to move to Surrey, Langley, Coquitlam, Burnaby, anywhere else, save your pennies, and stop blaming the evil foreigners. And this coming from a white guy born and raised in metro-Vancouver.

[Vin]

Originally Posted by jhausner

I'm glad you said "ultra rich PEOPLE" because so many people in this thread keep blaming "Chinese" for the high prices when more high-end purchases in the past 10 years are by non-Chinese such as Persians in North/West Vancouver and other "rich" people.

It isn't a racial thing it is a wealth thing. Very wealthy people buying up property and often paying more than assessed value contributes to driving up prices in addition to what I say over and over and over and over again, the fact Vancouver has _NO_ more space. When a city in essence runs out of land that can be developed easily and cheaply, prices sky rocket.

A new townhouse complex gets built on Cambie Street near Oakridge, and the prices start at $950,000 for 1300 square feet. You go anywhere else in Metro Vancouver and buy the exact same townhouse, EXACT, and you'll pay between $350,000 and $450,000. I don't see "wealthy anyone investors" lining up to buy a 1300 square foot townhouse.

High prices are not just wealthy people driving up prices. There are many factors and that is just one of them. Another big contributor is a land-locked city with tight borders and very little land that can be developed. Heck even trying to re-develop next to downtown near gastown requires years of planning, months of protests, and a ridiculous amount of legal expense to first break ground. Vancouver is not easy to develop in and prices reflect that in addition to other things.

Amen to that! It's more of a Vancouver city planning problem than anything else.

[jlousa]

Yes Vancouver city planning is the problem, we know the surrounding cities are much more affordable due to their city's planning and nothing to due with less desirable location.

[nds88]

Originally Posted by jhausner

...Yet I hear constantly by low-income advocates and earners that they should have "affordable" rents in False Creek or prime water-front areas next to $1.5 million yachts...

...I hate the hand-out expectation society we seem to live in. Hell there are more blue-collar jobs and affordable housing availability out in the burbs especially South of Fraser...

Great post. I agree with so much of it.

What I do find unfair though is that blue collars or other lower income earners (heck, even high income earners too) can't afford to live in False Creek or other prime areas, yet the CoV is using their tax dollars to, imo, build a lot of these social housing units in prime areas (False Creek, Downtown etc) for non-contributing members of society to live in.

Its absurd how lower income earners (actually, all income earners) who pay taxes and contribute their productive services to society get shafted by having their tax dollars subsidize the housing of the non-productive who get to kick their feet up in some of the most prime areas in the City. It might be reasonable to provide housing to the most needy and vulnerable, but it's completely inappropriate and wasteful of resources (IMO) to put them in the most prime areas.

Some of these prime areas you either have to be ultra wealthy, a local higher income earner, someone who sacrificed over the years to climb the ladder, or a junkie on welfare

[Kisai]

Originally Posted by st7860

People like to say its investors driving up prices while others say its the 5% down payment mortgages that Canadian's can get driving things up..

There are worse problems than worrying about who is buying. Namely:
- Foreigners buying character homes here, demolishing them and replacing them with generic homes that maximize the use of the space, and then not renting out the extra space.
- Laneway Homes. Oh gee can't afford the property, let's build a second house on the backyard/frontyard and rent it out.
- Illegal Basement suites. Oh gee, can't afford the property, let's intentionally build/convert a basement suite.
- Micro-suites/micro-lofts. Oh the developer needs to make low-income housing available, let's build the smallest-thing-legally-acceptable, and cram it all in as few floors as possible. Don't forget the View cone!

All of these are solutions to a problem of not-enough-land, but not the correct solution to prevent large parts of the city from becoming a slum if the property prices ever crash, and all these people end up underwater on their mortgages. I'm quite honestly surprised that banks would even lend to any absentee owner wanting to buy in Vancouver.

What we have are unsustainable prices from developers being too conservative and not maximizing the use of the land they purchase in the transit-oriented areas, but at the same time trying to fit everyone who wants to live in the Metro Vancouver area in by cannibalizing the existing space.

It's a slippery slope where we keep moving the goal posts of how small a living space can be while still being functional. IMO any space less than 1000sq ft is unsuitable for a "family" to live in. Anything less than 500sq foot is only viable for student housing, and they can't afford it. Seniors on a pension can't afford them either. So just who is the target demographic for these? Unmarried people with no pets? Not really, when they can't have a vehicle.

The point is that we perceive that Vancouver is unaffordable, because it is unaffordable. The illegal basement suites(secondary suites) were the first indication of this, and such suites have been around at least since the 70's. Why did it take until 2004 to "allow" them? Is it more expensive to live in Vancouver, or is it more expensive to live out in the rural areas where the added transportation costs remove any cost savings of living in the city?

If the interests rates start rapidly climbing, you will certainly see a cooling off of the property market. That's why everyone is trying to build as much as they can now while the rates are low.