
Chinese Buy One-Third of Vancouver Homes: National Bank Estimate - saeranv
http://www.bloomberg.com/news/articles/2016-03-23/chinese-buy-one-third-of-vancouver-homes-national-bank-estimate
======
jhou2
Sigh, smh. The statistical flaws in this "back of the envelope" calculation
are something else.

This was a study based on "a Financial Times multiple choice survey of 77 high
net worth and affluent mainland Chinese individuals, 'admittedly not a
statistically significant sample size,'” According to this survey, 9
individuals out of these 77 Chinese bought property in Vancouver. After some
more mathematical shenanigans, this is extrapolated to imply that Chinese
mainlanders buy 33% of the Vancouver real estate market. Really?!? And this
statistically baseless extrapolation becomes newsworthy?

[http://www.vancouversun.com/business/chinese+investors+third...](http://www.vancouversun.com/business/chinese+investors+third+vancouver+homes+national+bank+estimate/11804486/story.html)

~~~
cherioo
I find it believable, since 30% of population in Vancouver is Chinese
[http://worldpopulationreview.com/world-cities/vancouver-
popu...](http://worldpopulationreview.com/world-cities/vancouver-population/)
This figure is also from 2011 so it's probably higher by now.

Seeing this touted feel like reading: Breaking news, a city with 100%
Caucasian population does not see a single Chinese buyer!

~~~
jacalata
When they say "Chinese" these discussions about real estate usually mean
Chinese citizens, not ethnically Chinese locals. It doesn't seem to be
explicitly said here but I'm pretty sure that's what he means, see the other
paragraphs talking about government investigation into offshore buyers.

~~~
mcnamaratw
Yeah. Would it still be click bait if the headline were "30% of the people in
Vancouver are ethnically Chinese, and people often live in houses"?

------
hoodoof
The only thing that counts is money...... keep selling. Sell it all. Sell sell
sell.

Who gives a toss for community or society or cohesion. Sell everything.

As long as property sellers can take all that lovely cash and buy more and
bigger homes then what else matters?

Ordinary middle class people and the young - make em rent! Why the sense of
entitlement that people should be able to afford to buy a home, what are you a
communist? Whose country do you think this is?

In fact put one giant price on the whole of Vancouver and sell it ALL in one
big job lot.

~~~
meric
Not a bad idea...When the bubble pops buy it all back. Meanwhile, rent. That's
equivalent to shorting the bubble.

~~~
hoodoof
Do you think the people buying these houses are so poorly off that they will
sell when times get tough or do you think they incredibly rich and will laugh
off market fluctuations?

~~~
meric
Yes, they will sell. These people don't care about the price when they buy.
They won't care about the price when they sell either.

The last time a property bubble in a developed economy fueled by Chinese
speculators crashed, it crashed by 70%. [1]

People never see a property price crash coming.

Credit Suisse First Boston – 15 July 1997: [2]

 _We believe the supply demand imbalance will continue to drive residential
prices during 4Q 1997 and into 1Q 1998. The two extremes will perform best;
luxury residential prices should fare particularly well as we see flows of
capital into the top end of this sector. Luxury property is also much less
sensitive to affordability levels and much more geared to supply and price
expectations. The smallest units (below 40 square metres) will also fare well
as there is very limited supply at this level, yet they are the most
affordable private sector flats._

[1] [http://www.macrobusiness.com.au/wp-
content/uploads/2013/04/H...](http://www.macrobusiness.com.au/wp-
content/uploads/2013/04/HK.png)

[2] [http://www.businessinsider.com/hong-kong-property-did-you-
se...](http://www.businessinsider.com/hong-kong-property-did-you-see-the-
crash-coming-in-1997-2011-6/?r=AU&IR=T)

The overheated property markets Vancouver & Sydney are fuelled by Chinese
speculators. Why are they buying overseas when there's a perfectly sound
economy right on their border, Hong Kong?

There's a property bubble in Hong Kong too, and it was getting expensive
there, the Chinese went overseas to other well-off cities that are full of
Chinese, Vancouver and Sydney. If Hong Kong was leading the price rise amongst
the three cities, it might lead the price fall too.

At this very moment, Hong Kong's property prices are slumping:

[http://www.bloomberg.com/news/articles/2016-02-01/hong-
kong-...](http://www.bloomberg.com/news/articles/2016-02-01/hong-kong-
property-sentiment-turns-as-sales-slump-to-25-year-low)

One could argue, for all the many rich people buying in Vancouver who could
shrug off market fluctuation, there are even more millionaires and
billionaires in Hong Kong, which has the 4th highest billionaires per capita,
who could shrug off even bigger market fluctuations. Yet it's property price
is falling anyway.

One third of property buyers in Vancouver are Chinese. How many percent
Chinese do you think are buying the property in Hong Kong?

~~~
hkmurakami
Wasn't the Vancouver property also fueled by some kind of citizenship granting
process from purchasing property in excess of some price?

~~~
tostitos1979
Not anymore as far as I know. And not for a few years.

~~~
Tiktaalik
The Fed investor immigration program was canned, but there's still a backdoor
in Quebec letting in millionaire immigrants, as Quebec manages their own
investor immigrant scheme.

Nearly all of these millionaire immigrants to Quebec move to BC.

[http://www.scmp.com/comment/blogs/article/1929324/study-
reve...](http://www.scmp.com/comment/blogs/article/1929324/study-reveals-
awfulness-canadian-investor-immigration-income-tax)

~~~
throwaway6969
That is unfortunate. There's been a long history of provinces just screwing
each other (Sask just recently put two homeless men on a bus to vancouver).I
wonder why the federal govt doesnt have full jurisdiction on immigrant visas.

------
moonshinefe
Young professionals trying to create careers/long term lives here are
completely priced out of the market. I'll be leaving soon. San Fransisco like
property prices, with far, far less compensation.

You simply can't own a house unless you're a millionaire, and a small condo
will be upwards of $200k for a mortgage when you don't own the property. It's
just insane.

[http://www.payscale.com/research/CA/Location=Vancouver-
Briti...](http://www.payscale.com/research/CA/Location=Vancouver-British-
Columbia/Salary)

Even if I'm pulling in a quality $80k (high-ish by here standards), I'm
nowhere near affording a $2mil property. I'll be lucky to have a small condo
with 2 bedrooms. What's the incentive to stay?

~~~
mistermann
> and a small condo will be upwards of $200k for a mortgage when you don't own
> the property

Ha!

[https://www.reddit.com/r/vancouver/comments/4bo9wz/were_buyi...](https://www.reddit.com/r/vancouver/comments/4bo9wz/were_buying_a_2_bedroom_in_west_end_with_this/)

 _" We have 540k as a down payment and we are going to take a 160k mortgage.
Adding strata fees for the place we want its going to be 1200$ a month for the
next 30 years, and we end up with a 950sq 2 bedroom in a decent condo off
Davie."_

$1200 / month (this is mortgage + condo fees) for 950 sq ft, and this is
_after_ putting down $540k - and it's not even a brand new building. And
compared to SFH, condos are actually realatively reasonable priced, by
Canadian standards at least.

Beyond insane.

~~~
vkou
To be fair, Davie is about as downtown as you can get. It's like an apartment
overlooking New York's Central Park, except in a provincial backwater, instead
of a world-class city.

Otherwise, condos within easy reach of downtown are somewhat affordable.
Single-family homes in Vancouver are very much a 1% luxury item at this point.

~~~
mistermann
Davie is a good neighborhood, but far from "an apartment overlooking New
York's Central Park". Regardless, the question to me is, does the local
economy (wages) justify these prices or is society continuously putting a
larger and larger portion of their net worth into real estate, well beyond
historical norms?

You can look at a very long term chart of real estate vs GDP growth and see
something has recently gone askew, do low interest rates completely explain
that? And if so, what would happen if interest rates normalized in a
relatively short period of time?

------
OSButler
This funny website lets you see what's available in the $1M range in
Vancouver:
[http://www.crackshackormansion.com](http://www.crackshackormansion.com)

~~~
smcl
Oh my word - some of those properties are insane! Even some of the $2m ones
are basically just wooden sheds!

~~~
branchless
It's the land. I'm not sure why people don't understand this. Without the
location context this isn't a useful site.

Suitable land is artificially constrained, fiat money issuance is
unconstrained, ergo prices are rocketing as rent seeker banks shift resources
from wealth producers to themselves.

------
adamt
There is a similar story appearing in UK in places like London and in my home
town of Cambridge. This isn't yet not he same scale, but it is affecting the
property market.

In Cambridge 1 in 20 new-build properties is purchased by non-resident Chinese
buyers, which has been one of the contributing factors that has seen prices
rise by 50% since 2010 [1] and are 47% above 2007 pre-GFC peak [2]. Note -
unlike Vancouver that has a a big (30%) local Chinese population, only about
1.4% of the Cambridge population is Chinese or of Chinese ethnic origin [3]

To some extent this is just about free markets and a movement of capital. But
it is starting to price out many local people out of the property market that
does have a social impact.

There are other factors at play including a booming tech & biotech sectors,
restrictive planning, stock-piling of building plots etc, but the foreign
buyers issue is a major contributor.

[1] [http://www.theguardian.com/cities/2016/mar/22/china-
cambridg...](http://www.theguardian.com/cities/2016/mar/22/china-cambridge-
university-poet-xu-zhimo-farewell-property)

[2]
[http://www.thisismoney.co.uk/money/mortgageshome/article-328...](http://www.thisismoney.co.uk/money/mortgageshome/article-3285913/House-
price-growth-Britain-s-20-major-cities-peaked-prices-Cambridge-12-year.html)

[3] Guardian data - available in a Google doc
[https://docs.google.com/spreadsheets/d/1yc8W1SiCbWd9V4I9KmTl...](https://docs.google.com/spreadsheets/d/1yc8W1SiCbWd9V4I9KmTlY_Rk_qullL828Qxbsvth93w/edit?hl=en#gid=0)

~~~
nextos
In Cambridge, it's sadly a pretty artificial bubble. With all land there is in
the surroundings, it looks like an artificial limit in the demand.

~~~
pjc50
That's prime agricultural land, though. And Cambridge is _really_ not suited
transportwise to becoming a big city.

~~~
guard-of-terra
> That's prime agricultural land

Let's grow some cabbage on the most expensive land on the planet?

Because forget money - it's cabbage that counts.

> And Cambridge is really not suited transportwise to becoming a big city.

We have this recurring thing that people only want to move to a very very
small subset of cities. There are multiple solutions to be proposed, but just
turning blind on this doesn't sound feasible.

~~~
pjc50
It's hardly the most expensive land on the planet, it isn't even all that near
to London let alone somewhere like Manhattan or Hong Kong.

Food security is not something that should be _entirely_ handwaved away,
although I agree that plenty of places manage to live entirely on imports.

I agree with the idea of not limiting ourselves to a few cities: that's why it
makes little sense to try to turn Cambridge into a London suburb. It's a
market town of historic buildings that was spared bombing. The tech industry
growth there is great but somewhat accidental. I doubt you've been there, but
there's very little that can be done about the traffic problems without
demolishing a college. The building of a new railway station north of the
river should help greatly though.

I'd suggest trying to build up tech industry in one of the 'post-industrial'
cities instead. Maybe we could buy up the £1 houses in Stoke-on-Trent and
market those to China at huge markups instead.

------
leonroy
Many causes behind this - saying the Chinese are to blame is glossing over the
issue IMO and is very much akin to saying tech workers are behind the property
issues in SFO. There are more sides to this...

One of major contributors to rising property prices is the gutting of trust in
the stock market or any speculative market for that matter, over the past two
decades. Super low interest rates haven't helped either with people looking to
park their cash left with property as the only safe place which provides a
rate of return.

With regards to Chinese buyers, there is some truth (again stressing that it's
only a part of the picture). For the past 20 years nearly every trading
partner with China has incurred a massive balance of payments deficit. That
money's coming home to roost (literally). The same thing happened in the 80s
when Japan was an exporting powerhouse - they bought real estate and companies
across the US and Europe, pushing up the price of real estate.

There was actually an excellent piece in the Prospect by Andy Grove (former
Intel CEO) which lamented the loss of manufacturing in the US and the effects
it would cause: [http://prospect.org/article/andy-grove-trade-
globalization-a...](http://prospect.org/article/andy-grove-trade-
globalization-and-defending-america’s-economy)

Again just a facet to the picture, but you put all these pieces together and
you can see the problem a lot more clearly.

~~~
antoniuschan99
Interesting comment on the parallels with the Japanese a few decades back.

The Japanese were like the Chinese at one point too, selling crappy
electronics in the 60s and being seen as extremely wealthy in the early 90s.

------
runamok
Correct me if I'm wrong but this just seems like the next wave of
gentrification. If you make a place nice and safe, people with the most
disposable income buy it all up.

Everybody feels this way about the next wave. I'm not unsympathetic and am
similarly unable (and/or unwilling) to buy a house in this overheated bay area
market.

Reminds me of an article I recently read:
[http://www.atlantamagazine.com/homeandgarden/the-
gentrifier/](http://www.atlantamagazine.com/homeandgarden/the-gentrifier/)

~~~
beachstartup
middle class white people displacing brown and black people is called
gentrification.

rich chinese people displacing middle class white people is called "this is
totally unfair, why isn't this illegal?".

of course, guess who's making all the money selling these units? the rich
white people (developers, bankers, politicians, contractors, lobbyists,
lawyers) who decide what's legal and illegal. as per usual, they are the
winners in this whole charade, while the middle and lower classes just blame
the dirty foreigners. it's even better when they're chinese -- who doesn't
hate the chinese??? so convenient. shhh, let's not mention the other 2/3rds of
buyers.

the aforementioned elites are playing and winning a game as old as time, as
they do.

~~~
mthoms
I agree wholeheartedly with the rest of your comment but I don't think this
qualifies as "gentrification":

"the process of renewal and rebuilding accompanying the influx of middle-class
or affluent people into deteriorating areas that often displaces poorer
residents." (Merriam-Webster)

There's no particular area in Vancouver that fits this description with
regards to foreign buyers. They seem to have interest almost exclusively in
established areas. Not so much "deteriorating" ones in need of "renewal and
rebuilding".

~~~
beachstartup
i used the implication for dramatic and rhetorical effect, but i didn't call
it gentrification either. ;) i agree that it isn't, since for the most part
the new owners don't even live there and the previous owners were (basically)
rich to begin with. it's basically just monopoly money being swapped around by
rich people on two sides of the same ocean.

------
throwawy32416
It's also true in Boston, which like SF has a housing stock constrained by
geography. Doing a quick search on Craigslist the prices are also a good deal
lower in Vancouver than Boston. I'm looking at you, $3500/mo 1-br rental in
Boston with peeling paint leaky windows, and $2500/mo basement studio in the
'burbs. It's not uncommon to see (grotesquely) wealthy foreign (and some old-
money domestic) students buy property here, at whatever the cost, further
driving up the unattainability for those who actually intend to stay and
integrate with the local community.

I have a tech salary in the low six figures and I'm considering a commute from
Providence because I'm priced out of Boston. I don't want roommates any more
in my thirties, and I'd like to actually have a place for my car (long-
distance work and personal trips). I'd love to buy in Boston (or Cambridge,
Somerville, Brookline, or other places served by mass transit), but I'm simply
priced out of the market. In what world can anyone afford to buy the $1-2MM
1-br condos here and the $2-3MM houses? Local financiers, sure, working
physicians, and some corporate execs, but they're a minority of the
population.

Paying rent in Boston, you know you're being exploited, but you don't have a
choice. My current place is owned by a Chinese "investor" who uses unlicensed
contractors to do unpermitted construction on an illegal third-floor apartment
above mine. The construction quality is abysmal (think toilets not attached to
the floor and fluorescent lights half-hidden behind drywall), but unless I
want to be homeless I have no recourse because all leases turn over on
September 1st. My place just has peeling paint and cabinets that fall off the
wall, and at least me and my roommates are only paying $5k/mo for it. _shrugs_

~~~
tostitos1979
Newsflash: young medical professionals can't afford this crap either. Most of
the people I know in that camp have monumental student loans. The climate of
aggressively taxing high income means professionals will always be at a
disadvantage since they pay half their income to taxes (in Canada at least).
350K student loan is equal to 700K in pretax earnings. Plus you gotta eat and
stuff.

~~~
throwawy32416
Here at least, there is a contingent of medical (and other) students with no
debt. Boston-Cambridge is a gravity center for old money. It's astonishing how
many >$100k cars you see. It's the PE folks making a killing here, not working
stiffs like doctors, but at least career physicians can afford to live here
(barely, but their pay must be high enough for them to be here, by necessity.
When you need a doctor you need one nearby.) Resident salaries are, of course,
terrible, and I have no idea how they live here without being independently
wealthy. School housing?

------
Gustomaximus
I am curious about the downstream effects of house prices becoming increasing
multiples of income in so many western countries. E.g. I suspect it will hit
entrepreneurship. Younger generations are buying houses later and taking out
massive loans when they do. For the boomers you'd often hear how they bought a
house soon after college and paid it off by their early thirties. This would
put people in a good place to leave their work for a couple of years to start
a business. Now people have these huge mortgages where your ability to start a
business is hampered by your ability to get a financial buffer to take a year
or 2 off. And lets not forget most businesses are created form people mid-
career, not the TV typical university dropout.

And small community business, how will they exist in the future. If someone
wants to set up a local 'physical presence' vet/daycare type business that are
typically mixed into residential areas the threshold is now so high ot exist
and especially set up a new business. How can a daycare buy a million+ dollar
house and expect to make money paying that back on having 30 local kids being
looked after.

Also what is going to happen with retirement and periods of unemployment. I
suspect society will be less stable as either the government has to foot high
rent costs (unlikely) or we will see increased population movements during
retirement, and now the government has to look after older people that before
a family who lived nearby could help out with. And during low employment
cycles society can absorb this downturn if people dont have large loans.
Historically people cant 'tighten belts' for a year while things improve,
harder when your neck deep in debt. So we will again see more movement of
people, debt default etc. It will serve to exacerbate recessions etc.

Also these higher prices skew the economy. When people are tied up in these
ever increasing loan/income ratios there will be less spending on dining,
holidays, hobbies etc. It will weaken the economy by concentrating the spend
in limited areas.

I believe we should look to ensure affordable housing for owner occupiers.
Residential investment need to be discouraged (note I'm not saying stopped) as
a speculative asset class. I've seen a few suggested methods to achieve this
but I feel the simplest is to place a yearly 'asset tax' on non-owner occupied
residential property (I would also include farms). Having a % tax would make
it easy to adjust to find the right balance given economic cycles change. Also
this would encourage property hoarders not in heavy debt to sell for lower
taxed asset classes. This I feel is important as most solutions focus on
controlling the investment lending side which is limiting in reach.

~~~
wqnt
Micro-managing regulations that distort property market very often cause more
problems than they solve, especially if they become unremovable. The root
cause for rising property price is monetary loosing by central banks. Once you
create that much money you can't control where it flows.

~~~
esja
Of course you can control where it flows, if you want to. Just one example:
China doesn't allow Canadians to buy Chinese houses. I agree monetary
tightening would help but it's a long way off. In the meantime Western
governments are prioritising foreign speculators over their own citizens, at
significant social cost.

~~~
tostitos1979
I've also been thinking about the long-term effects of the current situation
and I don't see anything good. All this QE and low rates have caused people to
borrow like crazy. I'd say people are either max'ed out or near that after 5-8
years of "partying". Even people who tripled their home value are at the
trough taking out HELOCs (home equity line of credit). A debt is a claim on
future income. If most of my future income is already spent, who the heck is
going to spend in the future? The young (demographics in most developed
countries aren't too great)? The professionals have significant student loans.
Maybe the young who got cheap educations, earning great salaries able to live
in low cost of living areas?

I am surprised the baby boomers aren't downsizing in droves at this point.
They should be the ones getting out of homes, locking in their gains and
grabbing a condo where they don't have to spend too much effort doing
maintenance. I suspect some are holding onto their homes for their children's
sake?

~~~
ghaff
>I am surprised the baby boomers aren't downsizing in droves at this point.

Based on people I know, I think a lot of it is that if you own a typical
suburban/exurban house and you have the house like you want it, you like the
location, you have friends in the area, etc., for many, it's just not worth
the trouble/expense of moving even if they could potentially downsize. The
exceptions that come to mind are a few people who wanted to move to a warmer
climate and/or adopt an urban lifestyle with their kids out of the house.

------
landryraccoon
If this is indeed a problem, then raise property taxes on non-owner occupied
homes. From the perspective of the host country, it's free money - the taxes
are paid for by foreign residents, and can go towards supporting local
citizens and services.

~~~
x5n1
We should ban Chinese main landers from buying houses in Vancouver as it's
destroying the city in the process. Unless we are okay with the city being
basically unaffordable for the local population, and just enriching real
estate agents and property investors at the cost of the city.

~~~
landryraccoon
Is the city unable to build more housing? Why don't higher property taxes on
non-owner occupied buildings solve the exact problem you're talking about?

~~~
hoodoof
Build more, to will sell to........ the highest bidder!

And the highest bidder is not middle class people.

And when you raise taxes that are directly levied against overseas buyers,
then the government becomes addicted to those taxes and therefore addicted to
overseas buyers.

~~~
kspaans
Possibly you could circumvent that addiction by making the tax an LVT. Make
the effect on locals neutral by reducing property taxes and/or PST by about
the same amount as the revenues from LVT. Thus the only payers with an
increased tax bill are non-resident owners.

------
Dowwie
Here's the actual "study" (see page 3):
[https://nbf.bluematrix.com/sellside/EmailDocViewer?encrypt=5...](https://nbf.bluematrix.com/sellside/EmailDocViewer?encrypt=5ef50212-0fd5-41cb-9e7c-94ee145e6208&mime=pdf&co=nbf&id=peter.routledge@nbc.ca&source=mail)

Although this "study" was based on back of the envelope estimates, and the 1/3
estimate is probably inaccurate, there is anecdotal evidence of large-pursed
foreign investors from around the world -- not just China but Australia,
Russia, etc -- who are sustaining, if not increasing the demand for housing in
populous areas.

This foreign investment is great for people who are trying to sell a home in
one of these markets but horrible for buyers, who can't compete with all-cash
fast-close-best-price offers. Further, the few realtors who are boots-on-the-
ground for these investors have market insights -- they know what's
potentially about to go on the market but hasn't yet, get insider information,
etc -- and use this information asymmetry to their advantage by offering on
homes even before any real home buyers have a chance or offer on the first day
of listing! I have personally gone through losing multiple times to these
sorts of customers while trying to buy a new home (in the NYC metropolitan
area on the NJ side), not an investment property.

The experience of buying a home in a high-demand housing market where
institutional/major investors are participating really challenges my thinking
about whether free market practices _should_ be allowed to operate in housing
at all. Considering the rising cost of housing, it is tough to side with
capitalism on this subject.

I'd like to see a study about the "artificial growth" of housing prices by
investors. Interestingly to note is that such a study may conflict with the
agenda of at least some leading universities who tend to publish reports about
rising cost of housing after receiving generous funding from housing
investors. NYU Furman, for instance, has a long-lasting public relationship
with Capital One (and god knows who else in private).

~~~
crdb
> it is tough to side with capitalism on this subject

Assuming you mean "with the philosophy of free markets and individual rights"
by the catch all "capitalism", it's not.

The foreign buyer is benefiting from state-provided services, such as the
police providing some degree of safety from robbery and damage, safety from
invasion and confiscation by the armed forces, and a sound legal framework and
justice system that protects their property right.

Citizen pay for this via income taxes and their employer's corporate tax, as
well as value-added taxes on products and services purchased (since there is
no modern country that generally allocates a certain type of tax income to a
certain type of spending). Non-resident owners do not. They get a free ride.

Thus, the free market, moral, individual rights protecting solution that might
be Barry Goldwater approved is to charge the non-resident owners a yearly tax
that covers the cost of services provided.

~~~
nshelly
> Citizen pay for this via income taxes and their employer's corporate tax

100% correct. The property tax rate in Vancouver is 0.35%, which is a small
fraction of what other cities across North America pay, while income taxes are
significantly higher on the middle class. NYC suburbs, for example Weschester,
charge 1.93% of assessment, and even in California, property tax is 1.25%.
Some Texas counties are 2+%.

In the absence of a reasonably high property tax, like in Vancouver, homes
become much more like an expensive savings account. This is especially the
case as interest rates falling below 0 in much of the Western world (some
banks in Switzerland charge you to put your money there). And day-to-day
services like police, schools and ambulatory are paid for by locals through
income and sales taxes. UCLA professor says CA could get rid of income taxes
through a 3% property tax. [http://www.latimes.com/opinion/op-ed/la-oe-adv-
welch-califor...](http://www.latimes.com/opinion/op-ed/la-oe-adv-welch-
california-tax-reform-20140530-story.html)

My suggestion to reduce property speculation is to reduce income taxes
drastically (1/2 to 1/3), raise property taxes to at least 1.5% (5x) and
provide basic tax assessment increase controls for owner-occupied dwellings,
up to say $1m in value.

~~~
crdb
> My suggestion to reduce property speculation is to reduce income taxes
> drastically (1/2 to 1/3), raise property taxes to at least 1.5% (5x) and
> provide basic tax assessment increase controls for owner-occupied dwellings,
> up to say $1m in value.

Exactly. Unfortunately, the short term effect in most countries would be a
brutal recession, probably some banks going under/being nationalised, a flight
of capital out of the country, and so on - enough to dissuade any
administration to try.

It does not help that most politicians are from the middle upper class and own
large amounts of property. Few will have the courage to devalue their own net
worth by double digit percent.

Thus I think it exceedingly unlikely that we will ever see a shift from
production taxes and consumption taxes to "dead" asset taxes. In fact, the
historical precedent is the other way round.

There are many others, but France's ISF (wealth tax, of 1.5% of the
government-assessed asset value per year) is one of the reasons you can buy a
large castle there for less than a studio in Sydney.

~~~
nugget
< It does not help that most politicians are from the middle upper class and
own large amounts of property. Few will have the courage to devalue their own
net worth by double digit percent. >

This is the real reason. As I've mentioned on other threads, California's main
business is and always has been real estate.

------
nonex
Sydney would be similar. Median house price is over $1M - and that is for
something that needs to be demolished.

~~~
cm3
Are they practically buying the land then, if the building is EOL?

~~~
jayhuang
In recent years Australia has had many of their large farms sold to the
Chinese, and often times, expensive homes are bought at high prices to only be
taken down and built anew.

~~~
cm3
The worst thing is companies buying water sources to build bottling companies.
How can politicians allow drinking water to be privatized in some places is
beyond any explanation.

------
SixSigma
Everyone was happy with low inflation from low prices from cheap Chinese
labour. Now they are crying into their iPhones about how they cannot afford to
live in the most desirable cities.

------
johan_larson
The likely responses to this are a) a pied-a-terre tax on unoccupied
residential structures, and b) authorizing a LOT more construction, probably
by increasing permitted density, which will lead to a lot of single-family
structures and townhouses being replaced by condominium towers.

There are similar issues in Toronto, but here we are building new towers on
every corner, or near enough. Toronto, fortunately, has plenty of room to
spread in three directions.

~~~
drzaiusapelord
>which will lead to a lot of single-family structures and townhouses being
replaced by condominium towers.

This is what's happening in Chicago right now. Single family homes and two
story apartment buildings, which dominated Chicago and made it a pleasant
place to live (lowish density, lots of room, decent sized backyards, etc) have
been replaced in gentrying areas with super dense condos that are 3 to 6 units
large on the same tiny lot. No yard, no parking, no front yard, tiny bedrooms,
etc.

It really changes the character of the neighborhood and the system really
can't handle this kind of density. You would have 3-4 people in a SFH which is
now a lot with 6 condos with 18-24 people. This means not only higher pricing
but more traffic, no parking, higher load on utilities, local parks being
overfilled, etc.

No one talks about density it seems, but something very real happens when we
quadruple density like this.

~~~
jaredmck
What neighborhoods in Chicago are becoming more dense like this? I don't
recall seeing this being too common.

------
mrgreenfur
I have no idea if these stats are true, but I've never understood why any town
would allow foreigners to homes and leave them vacant. Is there any reason
(other than 'yay capitalism') to not put more restrictions on who can buy and
what they can do after it's owned? This wouldn't be a story if the homes were
full of new migrants being added to the towns and buying big houses.

------
msie
I was hoping that people here were more skeptical (EDIT: and less hysterical)
than users in the forums of the local rags...

Some are fond of perpetuating the narrative that the city will be hollowed out
with empty homes and locals fleeing the city. Yet a recent report to city hall
reports that detached homes are not as vacant as "popularly" believed:

"The vacancy rate in Vancouver for single-family homes, duplexes and row
houses is only about one per cent, and that rate has been static since 2002,
according to the report. Meanwhile, the combined vacancy rate for condominiums
and purpose-built rental apartments is 7.2 per cent. That number is in line
with the findings of a 2013 study by the Urban Futures Institute, which put
unoccupied apartments in Vancouver at 6.2 per cent on 2011 Census day."

Read more:
[http://www.vancouversun.com/business/affordability/more+than...](http://www.vancouversun.com/business/affordability/more+than+vancouver+condos+empty/11770403/story.html#ixzz43pviBP50)

~~~
caffodian
That study also had flaws, here is an article poking at it. Among other
issues, excluding pre-demolition homes from the city-sponsored study doesn't
make sense.
[http://www.scmp.com/comment/blogs/article/1926280/vancouvers...](http://www.scmp.com/comment/blogs/article/1926280/vancouvers-
vacancy-study-key-finding-it-didnt-find-and-vacant-homes-it)

As someone living here, one big problem is that there is far too much noise -
too many studies and bad articles (like the original one here.) There's
obviously problems but everyone is running around chasing the hot topic of the
day ("shadow flipping," for example) as the various governments either pretend
it's not a problem, or sponsor yet another flawed study on it.

------
im3w1l
For context, the Chinese themselves restricted foreign real estate ownership
until recently. The restrictions were relaxed last year.

------
3pt14159
I don't believe these numbers. I _highly_ suspect that Canadian permanent
residents or Chinese origin are included in these numbers. Ethnically Chinese
people make up a large portion of the Vancouver area, and they get help with
their down payments from their parents like most Canadians in urban areas.

------
c3t0
Reminded me of the shopping spree of the Chinese Insurer Anbang.

Waldorf Astoria in NY was one of their big purchases

They were bidding on Starwood Hotels [http://www.reuters.com/article/us-
starwood-hotels-m-a-anbang...](http://www.reuters.com/article/us-starwood-
hotels-m-a-anbang-idUSKCN0WK1I7)

Fidelity Life is also theirs
[http://www.bloomberg.com/news/articles/2015-11-09/anbang-
to-...](http://www.bloomberg.com/news/articles/2015-11-09/anbang-to-buy-hrg-s-
fidelity-guaranty-for-1-6-billion)

------
beedogs
Start restricting offshore "investment" property ownership. This is
essentially money laundering at this point.

~~~
markdown
I live in Fiji.

We stopped this last year. Non-citizens can't buy _residential_ properties
within town boundaries. Outside of town boundaries, they _can_ buy residential
property but must build a home within two years... and there's a minimum $
amount they have to spend building the home.

The law was enacted because locals just couldn't compete with the Chinese.

~~~
eps
You'll end up with one Chinese guy with a citizenship holding proxy ownership
for a hundred that are still in China. Just like it is in Vancouver. That's
unless there is a massive tax penalty for owning secondary residencies.

~~~
mistermann
That's simple enough to detect and outlaw if your government isn't bought and
paid for.

------
chermah
The problem is that those Chinese are pushing home prices to the sky, if they
continue like this Vancouver will be no more than an empty city used for
trading and no more...this is pathetic

------
antoniuschan99
I found it odd that the rent vs property prices to be drastically different.
Rent in Vancouver was really cheap compared to value of the property.

~~~
justinhj
Rent is much more closely tied to median income than purchase prices. I live
in Vancouver and people I know who own homes are either older people that got
into the market when it was affordable, or younger couples where both have
jobs and pay a significant amount of their salary to mortgage interest.
Usually they were only able to buy because their parents are sitting on
hundreds of thousands of equity in their homes and lend them a deposit.

People buying here are doing so because they feel like the prices will just
continue rising, so they sacrifice a lot now rather than a lot more later.

On the other hand renting feels like dead money so people won't stretch as
much.

------
jmspring
It really isn't surprising. It started with the wind up to the turn over of
Hong Kong and only continued after that. I wanted to move to Vancouver, but
lack of tech scene (Dick Hardt doesn't count) played a big role during the
late 90s/2000s.

I continued to visit for various reasons at lead a week a year until just a
few years ago. What started in the late 90s only continued.

------
cm3
I couldn't find anything authoritative on the matter so I hope I can ask this
here with Canadians reading. I'm curious if the only reason for the large
asian population in Vancouver is solely due to immigration from California
around the turn of the 20th century.

~~~
mistermann
The older population maybe, but the new immigration is typically a wife and
children living here (going to school, enjoying subsidized health care, etc)
while the husband stays in mainland China for work (paying no taxes in Canada
of course).

~~~
cm3
Well but the husband works and lives in China, so it's natural to pay taxes
there. I suppose wife and kids are supported financially by husband and she
doesn't work, so why would they pay taxes?

~~~
kspaans
They are paying property taxes and consumption taxes. Though I'm not sure how
much money you can receive, as a dependent, from outside of the country before
the CRA comes knocking.

~~~
cm3
Of course they are, but I assume they can easily circumvent income taxes by
just using a card backed by the husband in China. Like a prolonged vacation
where you rent the holiday home.

------
kzhahou
A lot of people say this is happening in Silicon Valley too, particularly on
the peninsula (I've heard Mtn View, etc). I don't understand the
ramifications, though.

------
aprdm
I am from London and currently moving to Vancouver.

It looks like salary / rent is still much more sane in Vancouver than in
London.

I would guess London is in a much advanced stage of this problem?

~~~
pfarnsworth
Try comparing salary / mortgage payment. If you want to get a house in a good
area like the West End, you can't afford it.

~~~
aprdm
Well, houses in London have been unaffordable since for ever... I would guess
it beats Vancouver easily on this subject as well.

But I like the salary / rent more as I am not planning to buy in either cities

------
throwaway6969
Hmmm, making up 1/3 of the total dollar amount spent on RE doesn't equal
buying 1/3 of the homes. There is some numerical illiteracy here.

------
kafkaesq
Screw these hand-wavy extrapolations.

Any estimates not based on actual property record searches is just reading tea
leaves, basically.

------
vskarine
That's kind of insane. I wonder what the numbers are for San Francisco...

~~~
msoad
Appearently some real estate agents have targeted ads in Facebook for
"Googlers in San Francisco". I clicked on an ad I saw the other day. This is
the listing:

[http://www.zillow.com/homes/for_sale/pmf,pf_pt/house,townhou...](http://www.zillow.com/homes/for_sale/pmf,pf_pt/house,townhouse_type/15085712_zpid/3-_beds/any_days/37.804393,-122.387395,37.756567,-122.477174_rect/13_zm/)

I could never afford it with my Google income but the real estate people who
put up the ad believe a Googler in SF should be able to afford it.

~~~
eni
$1,247,988 is the rough valuation. Their suggested EMI is around $6.8K/month.
Would it be in reach for people getting $200K/yr? Are there enough Googlers
getting that much?

~~~
msoad
I make $250k/yr but still can't afford that

~~~
vkou
Two married senior devs can easily afford that.

As for everybody else... Not so much.

~~~
ndesaulniers
Can't imagine too many of those...

~~~
kelukelugames
Can Facebook target on the condition that user and spouse both work at Google.
Or AGI bracket?

------
nickgrosvenor
This won't end well...

------
sandra_saltlake
Difficult rent vancouver!

