
Vancouver Housing Tax Pushes Chinese to $1M Seattle Homes - dhirenb
https://www.bloomberg.com/news/articles/2016-12-04/vancouver-housing-tax-pushes-chinese-to-1-million-seattle-homes
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adrenalinelol
There should be similar laws all over. In a global economy, if "regular
people" have to compete with multi-millionaires and billionaires who can move
capital wherever, whenever they want, housing where any decent paying jobs are
located will continue to become more and more unaffordable.

Please note: I'm fully aware this isn't the ONLY reason for ridiculous housing
prices.

~~~
tomcam
So you should have the ability to force other people how to use the house they
paid for? Should I be able to tell you how to use your computer, phone, or
car?

~~~
goatsi
They should consider becoming citizens if they want to get the same treatment
as citizens in the country. Most countries have significant limitations on
what non-citizens can purchase, try buying land in China.

~~~
tomcam
My favorite counterargument! Duly upvoted. I did try buying real estate in
China. Just ended up giving money to my in-laws instead.

~~~
amazon_not
That counterargument kind of assumes you _can_ become a citizen wherever you
want. A lot of people can't, even if they could afford to buy a house.

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toodlebunions
Seattle should immediately enact a 25% foreign buyer tax and an extra annual
property tax assessment for vacant foreign owned homes.

Likewise, Midwest cities that are economically in the dumps could offer
incentives to attract foreign buyers.

~~~
ajmurmann
Why not just tax for vacant homes, regardless if foreign or not?

~~~
solatic
Because that would ultimately discourage new construction. If you're an
investor and you want to invest in a house to hopefully rent out (not keep
empty just-in-case for yourself), then you have to factor in the risk of not
being able to rent out the property. Having a tax if you fail to rent the
house only increases the risk of failing to rent, and thus, makes investing in
real estate more risky. Pro-development policies need investment to be less
risky, not more risky.

~~~
oakwhiz
The investment risk does not increase very much if the price is decreased
accordingly.

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taurath
From the article, 50% of homes sold in Seattle and its suburbs are foreign
investments. That's absolutely insane - totally disincentivising people from
actually living there from trying to buy a home. Guess it's time to find
another city.

~~~
curtis
> From the article, 50% of homes sold in Seattle and its suburbs are foreign
> investments.

The article does say that, but as a Seattle resident, that really does not
sound right to me. As a counterpoint, this article[1] in the Seattle Times
says:

 _Chinese money now accounts for about 55 percent of all homes purchased by
foreigners in Washington, the Realtors association says._

and

 _“It’s definitely helped in driving prices up,” Riley said. In some parts of
the Eastside, in particular, she said “we’ve had a large influx of
international buyers coming in. They’re the buyer about 50 percent of the time
right now.”_

That's 50 or 55% in some parts of the market, not the Seattle metro market as
a whole. That's a lot more believable.

[1] [http://www.seattletimes.com/business/real-estate/seattle-
bec...](http://www.seattletimes.com/business/real-estate/seattle-becomes-
no-1-us-market-for-chinese-homebuyers/)

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nsamuell
Well done, Vancouver city council! The housing market in Vancouver is totally
bananas

~~~
refurb
Foriegn ownership is only a small part of why Vancouver real estate is so
high. The last stats I saw said foriegn sales amounted to 10-15%. It's mostly
Canadian citizens, coupled with low interest rates that are causing this
bubble.

I saw a stat that said 40% of condos purchased in Toronto (another crazy
market) were bought by speculators. Foriegn sales are even lower (sub 10%)
than in Vancouver.

These laws focused on foriegners are good for scoring political points, but
they don't really address the issue.

~~~
kareemm
> It's mostly Canadian citizens, coupled with low interest rates that are
> causing this bubble.

If that's true, how do you explain that the median home price to household
income ratio is roughly 12x?[1] Affordable is defined as 3x.

1 - For house price I used the 900k avg house price from the parent article.
For median family income I used 76k from StatsCan's 2014 census.
[http://www.statcan.gc.ca/tables-tableaux/sum-
som/l01/cst01/f...](http://www.statcan.gc.ca/tables-tableaux/sum-
som/l01/cst01/famil107a-eng.htm)

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jaredklewis
It's strange that there is so much push back against foreign investment.

Rather than enact a bunch of projectionist policies, wouldn't it be better to
just adapt to the investment in a way that benefits natives? After all, when
foreign people want to buy something you have, that is called an export, and
most people agree those are good for the economy.

If foreigners are investing in housing, local governments will receive a huge
influx of tax income from property taxes. If there is no property tax, then
now is the perfect time to add it (or the similar but more progressive land
value tax) or increase it. The income from these taxes can be used to fund
infrastructure, education, and reduce other taxes like consumption taxes.

The other thing to when demand for housing in your city is high, is to
increase supply. Seattle is not full. The Seattle metropolitan area is 15,000
sq. km with a population of 3.7 million. To compare, the Tokyo metropolitan
area is 13,500 sq km, with a population of 37 million. No idea about the
accuracy, but this site showed that rents were more reasonable in Tokyo (which
matches my own impressions): [https://www.numbeo.com/cost-of-
living/compare_cities.jsp?cou...](https://www.numbeo.com/cost-of-
living/compare_cities.jsp?country1=Japan&country2=United+States&city1=Tokyo&city2=Seattle%2C+WA)

If we are going to take legislative action anyway, instead of a bunch of
protectionist policies that will create long lasting opportunities for
arbitrage and market inefficiencies, why not just make taxes to help the
people benefit from the foreign investment and let development happen to help
reduce costs long term?

~~~
goatsi
It's funny that you think that they pay taxes.

>An unusually high number of Vancouver homeowners living in multi-million
dollar neighbourhoods but reporting poverty-level incomes is a red flag that
needs immediate government action, says NDP MLA David Eby.

>“The focus should be quite straightforward: are you paying your worldwide
taxes inside British Columbia, or not?” Eby, who represents Vancouver-Point
Grey, told reporters during a July 15 press conference.

>“If you’re not you should have to pay extra in order to pay for the public
services that make this real estate so valuable: the environmental controls,
the policing, the court system, the schools and the healthcare.”

[http://www.metronews.ca/news/vancouver/2016/07/15/number-
of-...](http://www.metronews.ca/news/vancouver/2016/07/15/number-of-poor-
million-dollar-homeowners-high-in-vancouver.html)

>Documents obtained by Eby also show 29 of those homeowners have also been
able to take out a mortgage. “There’s a waitress that bought a $2.3 million
property. And there was a casino dealer and a cashier who bought a $1.2
million property as well. Students, homemakers and waitresses, by definition,
have very low or no incomes. Is this why MacKenzie Heights and other
neighbourhoods throughout the Lower Mainland are reporting incredibly low
incomes, despite real estate values being so high? Are the people purchasing
these $1 million homes reporting poverty level incomes for tax purposes?”

[http://www.news1130.com/2016/09/27/homemakers-students-
own-1...](http://www.news1130.com/2016/09/27/homemakers-students-
own-107-million-in-one-vancouver-neighbourhood/)

~~~
matt_wulfeck
It still seems like a property tax assessment on the house, which doesn't take
into consideration the owners tax bracket, Would benefit the community the
local governments?

~~~
goatsi
Property tax on residences isn't they only place municipalities get revenue,
they also get taxes from commercial (shops & companies) property. If the
foreign owners never move into the house and don't rent[0] it there is no
additional revenue in the form of purchasing things or working at an employer
in the city.

[0][https://www.pressreader.com/canada/the-
province/20141127/281...](https://www.pressreader.com/canada/the-
province/20141127/281479274729254)

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rpedela
I am beginning to think there is another housing bubble, but this time I am
not exactly sure how it would play out if it burst assuming there is one
forming. Would it affect the Chinese economy? The economy in each US city? The
larger US economy? The global economy?

~~~
refurb
Google the Case-Shiller home index. Average prices in the US are as high as
they were during the 2007 bubble.

~~~
MagnumOpus
Not quite correct. The CS20 home price index is...

\- 7% lower than the 2006 peak in nominal terms.

\- 22.6% lower than the 2006 peak in inflation-adjusted terms (adjusted by the
BLS's US CPI-urban NSA)

\- 27.3% lower than the 2006 peak as a percentage of wages (adjusted by the
BLS's average hourly earnings paid to private-sector employees)

Together with massively lower mortgage rates (3.9% rather than 6.2% for a 30yr
fix), the situation is nowhere near as bubblicious as 2006. We are maybe
around 2003 levels - easily sustainable.

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TheSpiceIsLife
So what happens when foreign owners start voting in council elections?

At what point does foreign real estate ownership start affecting local
politics?

If imposing a tax has no affect on, or only slows, foreign real estate
investment, what do we suppose will be the long term outcomes?

~~~
goatsi
To vote in council elections they will have to become citizens and will
therefore no longer be foreign owners.

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bootload
_" The week that the government announced Vancouver’s foreign tax,"_

Which government? Fed, state, municipal?

~~~
Tiktaalik
The article is pretty lazy with describing the tax. The municipal government
of Vancouver doesn't have any of these taxing powers, and the tax comes from
the Provincial government. It only applies to the Metro Vancouver area
however, so some are already stating that there has been a spillover effect in
other areas of the Province, such as Victoria.

~~~
elchief
The foreigner tax is provincial (applying only to Metro Van). The vacancy tax
is municipal, applying to CoV. The city requested special taxing powers from
the province for this tax and received it.

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wenbert
Buy in Auckland New Zealand lol

