
For Chinese Home Buyers, Seattle Is the New Vancouver - e15ctr0n
http://www.mansionglobal.com/articles/53402-for-chinese-home-buyers-seattle-is-the-new-vancouver
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thegayngler
Maybe there needs to be tighter controls over who is allowed to purchase real
estate and under what circumstances they can purchase real estate....ie you
must be a citizen of the US to purchase real estate in the US. I know this is
going to be down voted but I think its perfectly reasonable.

People are living on the streets yet there are empty homes available that
aren't for sale and artificially propping up home values in the area because
someone from overseas needed somewhere to hide their cash.

~~~
sytelus
When I first learned that land in US and many other countries can be purchased
by anyone in the world, it was mind boggling for me from pure theoretical
perspective (actually many government even encourages that). Currently, you
need about 3-5 million votes to swing US elections in the desired direction.
Now median house price in US is just under $200K. So in theory you can
purchase roughly 5 million houses in swing counties for total cost of less
than $1T and either leave them vacant or rent out to only people who aligns
with your agenda. That's actually not a very large amount to spend over few
years when your ROI is literally the ability to control US politics and trade
policies almost indefinitely.

In theory, foreign power with deep pockets can buy up large swaths of
important land and establish local governments and population that eventually
can tilt national politics and policies in desired way. This becomes more and
more easier as elections in lot of developed countries often decided by thin
margins from very predictable geographical locations. I am not saying this is
happening but at least in theory it's possible to design full on economic
attack on any country with such laws. Imagine what kind of havoke a foreign
government can create if they buy up all aggreculture land and control food
prices in peace times and famines in war times. Or buy up key commercial
estates critical to producing energy or real estate for even just simple daily
needs like gas stations or grocery stores.

~~~
eigenvector
This was an actual thing that existed in the UK before the secret ballot and
other democratic reforms, when you could effectively own an entire electoral
district. They were called "pocket boroughs", i.e. they were in a patron's
pocket.

[https://en.wikipedia.org/wiki/Rotten_and_pocket_boroughs](https://en.wikipedia.org/wiki/Rotten_and_pocket_boroughs)

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partycoder
Real state seems to be a preferred way to stash money overseas. Vancouver is
full of homes without occupants in them because of this reason. They're now
trying to mitigate the problem by applying a high tax penalty for home owners
that keep their house without occupants, making it inefficient to buy houses
to keep them vacant.

They also do it domestically, but leading to ghost towns.

~~~
spoonie
I wonder if this is because you can get around money laundering/financial
control laws when buying a house for cash? Do the sellers have to check where
your money is from when you buy a house?

~~~
toomuchtodo
It's because it's a safe value/wealth store. And the checks are superficial.

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pfarnsworth
Hong Kong and China has a similar restrictions or tax on non-citizens who
attempt to buy property in China. China in fact disallows non-residents from
purchasing real estate until they've lived there for a certain period of time.

I'll be curious as to see how this affects Vancouver real estate prices. Right
now it doesn't seem to have had a huge effect, but if the market crashes, it
will be very interesting to watch to see how it ends up. Real estate there has
been going straight up for so long, it's a way of life for 2 generations who
have never seen a major crash. I wonder if the market does crash, it will
shake out the way the dotcom bust did, where people kept buying because they
thought "it's on sale" but it never reached a bottom until so many people lost
so much money.

~~~
eigenvector
The Chinese consul in Vancouver actually criticized the Canadian government
for doing too little to regulate the housing market. She even suggested a tax
on foreign buyers to quell some of the public outrage about housing prices.

[http://www.theglobeandmail.com/real-estate/the-
market/chines...](http://www.theglobeandmail.com/real-estate/the-
market/chinese-envoy-says-lack-of-oversight-behind-vancouvers-house-price-
crisis/article25085285/)

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jpatokal
Actually, Sydney has been the new Vancouver for quite some time now.

[http://www.abc.net.au/news/2017-03-24/why-chinese-
investors-...](http://www.abc.net.au/news/2017-03-24/why-chinese-investors-
keep-buying-australian-property/8385174)

~~~
leemailll
It is the other round. Sydney is a hot place for chinese migration years
before Vancouver

~~~
bryanlarsen
Significant Chinese immigration to Sydney started in the 1840s and to
Vancouver in the 1850s. While you're technically correct, I would call that
contemporaneous. :)

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sytelus
So how does this work and why does it make sense at all? I am assuming Chinese
investors aren't getting citizenship just because of their real estate
purchase. At least US laws require at least $1M investment ($500K for special
projects) and most houses in Seattle are below that mark.

So now you as Chinese investor have an expensive property in a foreign country
where you can't live permanently and very likely you have little information
on purchase itself. Sure you can rent out using some management company and
bet on appreciation but it's still a lot of risk considering you have little
control and information over property management, local events and economics.
Plus real estate markets have long history of downturns and non-liquidity in
times when you need the most. Wouldn't buying S&P500 index or something for
long term would be a far better investment choice? Or just REIT funds if you
just want to bet on real estate? Or is there some hidden economics involved
that we don't know of?

~~~
eigenvector
Can't speak to the US situation, but here in Canada there are anti-money
laundering "know your client" rules for securities brokers - and securities
are far more regulated in the US than Canada (Canada has no equivalent of the
SEC). You can't just buy millions of dollars of publicly-traded securities
through an anonymous shell corporation.

No such rules exist for housing that is purchased outright and not financed.

These people don't want an investment, per se. They need to store the money,
but also to hide it. If the beneficial ownership of the assets purchased with
the money is obscured, they can't be clawed back if they are arrested in China
and charged with stealing that money in the first place.

~~~
jacquesm
It may be a bit different than outright stealing. Many Chinese businesses make
money in a foreign currency outside of China. Instead of bringing the money in
and then finding that they can't re-export it they leave it abroad and use it
to buy real estate and pretty much anything else they can get their hands on.

This makes for a fairly large but hidden component of the trade imbalance.

The only other way to get funds > $50K out of China is through getting
'permission' which equates giving the right people a cut, or maybe you'll find
your money confiscated.

Source: did some business with the Chinese well in excess of that $50k.

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vmarsy
> The tax applies to anyone who isn’t a citizen or permanent resident of
> Canada and purchases a home in metro Vancouver.

I feel they could simply apply the same tax to non US citizens/permanent
residents trying to purchase a home in the Seattle area.

The idea of a vacancy tax seems hard to apply while respecting people privacy.

If the owner is a non citizen who doesn't live in the US, you can use
immigration records to know of his presence, and they he/she can show rent
documents to prove if the house was occupied. But this looks like it would be
hard to enforce.

It's interesting to see how other cities are tackling the issue, Paris bumping
up the tax to 60% of the fair market value of rent for instance :
[http://www.zerohedge.com/news/2017-03-07/vacant-homes-are-
gl...](http://www.zerohedge.com/news/2017-03-07/vacant-homes-are-global-
epidemic-and-paris-fighting-it-60-tax)

This lost also shows that while Vancouver is high on the list, San Francisco
and NYC are higher.

~~~
uiri
_non US citizens /permanent residents_

Why not just apply to it to non-resident aliens (a federal income tax status)
rather than to people who aren't US citizens or permanent residents (which is
related to nationality/immigration status).

All US citizens are tax resident. All permanent residents are resident aliens.
However, by defining things this way, you are excluding people who are living
in the US on a temporary work visa (e.g. H-1B, TN, L-1, etc.) and other
temporary residents who are, nonetheless, very much _resident_ in the US, in
that they spend over 183 days in a year (or more than 4 months per year
averaged over 3 years; the rules are kind of complicated) in the US.

~~~
vmarsy
Yeah, it could make sense apply it to only "non resident for tax purposes"
(i.e. People filling a 1040NR)

As other comments mentioned, a tax like this should also affect rich citizens
who similarly contribute to vacant houses, so to actually solve the problem I
guess it should affect all property owners

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jroseattle
We have seen the effect of foreign investment in Seattle real estate, but this
has been happening a lot longer than the tax actions taken in Vancouver.

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RandyRanderson
This article couldn't be farther from the truth. The graph at the top shows
some ridiculous "searches" bar graph.

Once Seattle's had 25%+ _average_ growth in housing prices for several years
coupled with absolutely no economic basis to support such a trend, then we can
start a discussion.

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99_00
Not even close.

You can live in Vancouver and fully enjoy the city without ever having to
speak a word of English.

The signage and announcements at YVR are in Chinese.

[https://c1.staticflickr.com/4/3304/4556712750_a4470bfb56_z.j...](https://c1.staticflickr.com/4/3304/4556712750_a4470bfb56_z.jpg)

Chinese grocery stores are common in the city and many suburbs. You can easily
find mandarin speakers at most banks. Chinese signage and mandarin staff are
common in malls, especially luxury goods.

And if you get permanent residence healthcare is free. Just don't declare your
foreign income. Everyone's doing it.

[http://vancouversun.com/life/richmond-3-why-does-upscale-
nei...](http://vancouversun.com/life/richmond-3-why-does-upscale-
neighbourhood-appear-poor-to-tax-officials)

~~~
handedness
Capital flight has nothing to do with language, signage, announcements,
grocery stores, or mall clerks.

~~~
cylinder
Sure it does. They follow their friends and families and generally stick to
friendly enclaves. Why do you think they buy homes in Vancouver and not
Yellowknife?

~~~
handedness
Getting the money into a destination country is only the first part of capital
flight, the other half is making reasonably good and relatively liquid
investments with it. Therefore, housing in Yellowknife is probably out.
Generally speaking, the goods in which one invests in as capital flight tend
to be either a good investment (big city real estate), or easily concealed and
transported (jewelry, precious metals).

And if the English-speaking westernized kids and grandkids can get things like
tuition and medical care out of it, that's certainly a nice bonus.

I lived for many years in a city that saw a truly massive influx of
investments driven almost entirely by capital flight, predominantly from Iran
and China, and those buyers were all too happy to buy a house, never move into
it, eventually send their kids over for an education, bring the kids back
home, sell the housing in US Dollars and keep those funds there. (Or, rent it
out and deposit the funds into a US account.)

It's also worth noting that seasoning requirements for funds contributed to a
mortgage don't apply when the purchase happens in cash. The people who play at
the level required to make capital flight worthwhile aren't near the center of
the bell curve.

Immigration ≠ capital flight.

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scottmcdot
Anyone know where to get juwai.com search volume data?

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api
Seattle will have to follow suit after Vancouver.

