Real estate isn’t really a race issue

Nice response from Sandy Garossino to last weeks Allen Garr column “Blaming Chinese For High House Prices in Vancouver Is Racist”.

When I raised concerns over the impact of international transactions during the civic election campaign, the response was overwhelming and full-spectrum from across our entire community, because the problem is universal.

It was notable how concerned Canadian Chinese Vancouverites are about this difficult issue, and how optimistic and imaginative some of their solutions are. Many in this community, such as Susie Joe Dooner, expressed grave concern about the exodus of gifted young people they have seen—their own friends and family leaving their home city and province in despair of having a future here.

And it was this community which also expressed concern that our local real estate and development industry bears some responsibility for its aggressive marketing to foreign investors. Some cautioned that the scale of the potential market poses real hazards to a small city like Vancouver.

It is profoundly inaccurate to represent the public reservation about unregulated international capital in our housing market as having a racial bias, when the concern is universal.

Read the full letter over at the Courier.

I wonder why we don’t have a foreign owner property tax structure like Florida and other places that charge a premium to non-resident owners (regardless of what their race or country of residence is).  It would raise more money to pay for city expenses, take some of the tax burden off residents and best of all the only people who would complain about it can’t vote!

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jumpin in
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jumpin in

http://www.rew.ca/articles/240

Can We Combat Uncontrolled Offshore Ownership?

Recent conversation around the Kitsilano dinner table turned to — as it almost always seems to do — real estate and the role of foreign buyers in Vancouver.

The older guests decried the run-up in prices that makes it almost impossible for their children to buy on the West Side, while the kids (also at the table), looked to their parents as the lender of first resort to help them get into the market.

— more —

Joe_Blown_Away_By_High_Housing_Costs
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Joe_Blown_Away_By_High_Housing_Costs

Canada’s real estate market is “red hot” due to jobs in the natural resources sector.

http://www.vancouversun.com/business/Resources+fuelling+economy+housing+demand+economist/6444360/story.html

patriotz
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@Joe_Blown_Away_By_High_Housing_Costs:
“Canada’s real estate market is “red hot” due to jobs in the natural resources sector.”

Then how come RE prices in Calgary and Edmonton are lower than in 2007?

And haven’t resource company HQ’s been moving out of Vancouver?

Bailing in BC
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Bailing in BC

We need “lifetime lows in interest rates” to keep the market “red hot”? Sounds healthy.

N
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N

I am probably just being cynical, but it is at least an unfortunate coincidence that, just as the bubble is bursting, the Sun is running an article urging people to make impulse decisions, take riskis and ignore good reason when it comes to buying real estate.

http://www.vancouversun.com/business/Vancouver+real+estate+moguls+share+trade+secrets/6444344/story.html

JB
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JB

Any kind of racism is stupid. Especially the one that is connected with fear that some strange Chinese capitalists are spending insane money in the real estate market in Vancouver.
Is there any relevant statistics that can prove that? It is obvious, that there is a strong Chinese community, but does it mean that those people are the reason why the prices of the houses grow?
We can find many real estate analysis claiming one or another reason why the market is behaving the way it does. Some are quite optimistic and some are not (good points are made in Real Estate Trends).
But not a single analysis speaks directly about the Chinese investing on the housing market in Vancouver. Or am I wrong?

UnagiDon
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UnagiDon
@JB: “But not a single analysis speaks directly about the Chinese investing on the housing market in Vancouver.” You are right, there is no reliable analysis on Chinese investing because there is no reliable data. Promeninent figures (e.g., Somerville and Garossino) have also made this point: “we can’t make sound policy decisions about foreign ownership because we don’t have reliable statistics”. I agree with them: the available statistics are laughable, because they look at useless metrics like the address of the property tax bill. However, so far there have been no policy changes mandating the collection of relevant statistics. If Garossino were elected, perhaps she could have pushed for this on city council. So, at this point, all we have is anecdotes of Chinese “investors”. I think anyone who has lived on the west side or visited open houses there… Read more »
Ridiculous
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Ridiculous
@N: I believe it was in either Freakonomics or the Black Swan where it was observed that human perception is flooded by images of improbable winners. For example, society has no problem putting lottery winners on TV for 30 seconds when they win. This happens once a month and makes people feel like they too can win. However, if each loser got a 30 second spot, we’d be looking at one winner on TV every 9.5 years or something. How would that make you feel about your chances? Much more realistically, I think. There is a veritable wasteland of high risk investment losers out there for every winner. Remember: investment creates no value – it is a zero sum game. For every gazillionaire, there are thousands if not millions who now have to spend more of their lives working to… Read more »
jumpin in
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jumpin in
“Canada’s real estate market is “red hot” due to jobs in the natural resources sector.” After scaring us with an invasion of rich foreign buyers, now the industry is trying to make us believe the next factor that will keep RE afloat is the commodity market. What is next? The growth of the massage parlors network? China is forecast by some analyst to decrease its demand in commodities. Forestry is not doing good. The RE market in Northern BC is not doing good either, apart from some tiny pockets. How does this relate to Vancouver anyway? Do they want us to believe that loggers and miners are buying 2.5 million mansions in Vancouver West? ————————- The racist card is used as a shield by anyone in this city wanting to burry their head in the sand, and/or protect the appreciation… Read more »
Facts
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Facts
Any kind of racism is stupid. Especially the one that is connected with fear that some strange Chinese capitalists are spending insane money in the real estate market in Vancouver. Is there any relevant statistics that can prove that? It is obvious, that there is a strong Chinese community, but does it mean that those people are the reason why the prices of the houses grow? _________________ All one has to do is look at when house prices in Vancouver started to diverge from the 1:3 price/income ratio and when we started to pay a “premium” for RE to see that there is “statistical evidence” that “Chinese capitalists” influence prices in Vancouver. In was in the mid-1980s when this divergence took place – at the exact time we started to see the massive influx from Hong Kong and the capital… Read more »
Itootill
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Itootill

It’s not racist to be concerned about Vancouver Real Estate. http://www.probono-publico.blogspot.com

Common Sense
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Common Sense
@Facts: All one has to do is look at when house prices in Vancouver started to diverge from the 1:3 price/income ratio and when we started to pay a “premium” for RE to see that there is “statistical evidence” that “Chinese capitalists” influence prices in Vancouver. In was in the mid-1980s when this divergence took place – at the exact time we started to see the massive influx from Hong Kong and the capital flight from that “colony.” Since the mid-1980s, Nice Facts. Lets ignore mortgage rates were 18% in 1980 and are now as low as 3%. Rates were around 12% for most of the 70s. If you use the 12% rate the interest is cut by 75% of what it used to be. Then add in lower down payments and longer amortizations. As an example a 500K mortgage… Read more »
2 Many Facts
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2 Many Facts
Common Sense “If we had the rates of the 70s prices would be similar regardless of foreign ownership. Real estate has had a tail wind of declining rates for 30 years which has fueled prices world wide.” _______ Yes, Vancouver enjoyed declining interest rates. Of course, ALL of Canada including Edmonton, Nova Scotia, Toronto all enjoyed those declining rates. Yet, our prices departed from the traditional 1:3 price/income ratios at the exact same time as we saw a huge influx from overseas. Odd how that happens. Even when accounting for all of Canada enjoying declining rates, I guess with just ignore changing immigration rates and changing demographics and chalk up the rise in RE and the shift to paying a premium to everyone realizing at the exact same time that Vancouver was the best place earth. It must have been… Read more »
registered
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registered

@9 jumpin:” Do they want us to believe that loggers and miners are buying 2.5 million mansions in Vancouver West?”

Of course they would. Those of us with enough years in the real estate bun fight easily recall when the claim was Vancouver is held aloft by Americans and resource-rich Calgararians. They’ll furiously maintain it’s subterranean lost civilizations if it keeps the party rolling.

registered
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registered

13 – 2 Many Facts Says:Of course, ALL of Canada including Edmonton, Nova Scotia, Toronto all enjoyed those declining rates. Yet, our prices departed from the traditional 1:3 price/income ratios at the exact same time as we saw a huge influx from overseas. Odd how that happens..”

While I still hold that the rapid change under Harper of immigration quotas must result in a temporary unmet demand for new housing, and therefore is a temporary price factor, almost ALL of Canada’s major centres are now traditionally unaffordable. The vast majority saw price doubles or more in real dollars over a decade. Vancouver is only different in degree, and beat by Calgary in bubble goodness.

Bailing in BC
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Bailing in BC

@N:

No it’s not just you. Assholes

b5baxter
Member

Latest inventory graph up at:

http://vancouverpeak.com/groups/inventory-graph/forum/topic/2012-april-graphs/?_wpnonce=18e5a313f8#post-2364

Over the last month the average daily increase was:
52
At this rate we will reach 17,000 in 7 days (Apr-19-12)
At this rate we will reach 20,000 in 65 days (Jun-16-12)
and 25,000 by September-20-12

Note that the average daily increase is for the last 30 days. It includes weekends and holidays. If one looks at just the business days so far in April the average daily increase is over 100! If that trend was to continue we would reach 20,000 by mid-May.

b5baxter
Member
I do not find Sandy’s article very helpful. There is no discussion of the fact that we are in a speculative bubble. In fact Sandy seems to deny that a bubble exists. She has stated that real estate is a good investment “over the long haul” and that it won’t loose more than 10-15% (see: http://thetyee.ca/News/2012/03/15/Vancouver-Foreign-Ownership/). Clearly she doesn’t understand how bubble markets work. I agree that the data about foreign ownership is spotty. But there have been some attempts to collect it. One study (also referenced in same Tyee article) found that the largest pool of foreign owners was American. In fact foreign ownership from the US was over double, almost triple, ownership from all Asian countries combined. Why does no one complain about American ownership? Another study looked at only downtown condo ownership (this study was referenced in… Read more »
Many Franks
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For those of us that have been watching Mark Carney huff and puff: the Montreal Gazette is covering an Equifax report that has non-mortgage Canadian household debt up 3.4% this quarter over the same period last year.

UnagiDon
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UnagiDon

@b5baxter: “One study (also referenced in same Tyee article) found that the largest pool of foreign owners was American. In fact foreign ownership from the US was over double, almost triple, ownership from all Asian countries combined.”

I have absolutely no confidence in that study because they do not describe their methodology. Did they also look at mailing addresses for property tax forms? It would not surprise me at all if, amongst all property tax bills being sent to foreign addresses, very few are being sent to China. Most likely all properties owned by non-resident, citizens of mainland China send their property tax bills to a local property manager. In which case that study is worthless.

Anonymous
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Anonymous

@Common Sense: You can even look further into changes with CMHC. Go back to the early ’90’s when the 5% down payment was introduced and the maximum price caps were removed.

Where would the housing market be in Vancouver if the maximum CHMC mortgage sat around $400-500k?

Many Franks
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jumpin in
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jumpin in

MLS® V937950 just went $30,000 below asking.
Time is ripe for low ball offers, I guess.

Anonymous
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Anonymous

MLS® V937950 just went $30,000 below asking.
Time is ripe for low ball offers, I guess.

___

What a useless contribution…

Yes, one below ask means the market has changed…

Come back in a few years after that is the norm..

What a us

Anonymous
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Anonymous

This was a little surprising. I thought for sure vancouver would be in there somewhere. maybe it’s just a crappy report.

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