Mish’s foreword to a piece at Bloomberg –
Breaking news from February just released!
Realtors say Chinese buyers drive the Vancouver market.
“I hope the government can do something to control the price” so younger generations can buy, said Huang, who paid almost C$1 million for a condo in the Westside’s Kitsilano neighborhood two months ago so her daughter, now aged 6, could attend school nearby. She couldn’t afford a house and prefers apartment living because she doesn’t like yard maintenance. She also likes the views from her sixth-floor condo.
This piece is hardly a revelation to anyone familiar with a calculator, but it’s refreshing to see such title on Business Insider: Why I Would Rather Shoot Myself In the Head Than Own a Home.
How do banks make money? Very simple. They borrow from you at cheap interest rates and then lend to you at higher interest rates. What? How do they do that? Well, when they pay you 0.5% on your checking account its as if they are borrowing from you at a very cheap interest rate. When they then turn around and give you a 6% mortgage loan, they are lending to you. They make money on the difference between the 6% and the 0.5%. It’s a great business and I often advise people to become the bank when they have that opportunity.
It’s such a great business, in fact, that banks have spent 200 years drilling it into us with billions in advertising that the “American Dream” is to own the white picket fence, the paved driveway, maybe borrow more to make an extension to the house. Put in a swimming pool. Tear down some walls. Nobody can ever kick you out. You’re not flushing your rent down the toilet. You’re owning! You’re keeping up with the Joneses (the most successful, yet mysterious, family in American mythology, that we all have to keep up with. What happens behind closed doors when the beatings occur, when little Bobby Jones cries himself to sleep, the Joneses will never tell us) At least, in 30 years you will own. But at least you’ve fixed in a mortgage rate so inflation won’t kill you. And having your own home means you now have “roots”.
Read the full article over at Business Insider.
Among the more controversial findings of the study is that 27% of the more than 20,000 Chinese multimillionaires with more than US dollar (USD) 15,000,000 in individual assets have already emigrated abroad, and around 60% of those with more than USD 1,500,000 in assets, 960,000 people, have already or are planning to do so. Reportedly, this ‘rich exodus’ began in 2009.
If even 10% of these people land in Vancouver, will it have any effect on our bubble?
Starting this June, property not lived in by the owner and sold within two years of purchase will be taxed 10-15%.
Real estate agents and the property sector have opposed the tax. They fear it could hurt sales. But surveys show most Taiwanese people favour the move.
[ Comment: 10-15% feels laughably low. Make it 30% here – and BC will be a livable place again. ]
Article in the BBC