The problem in Vancouver is the house prices are not driven by economic activity in the city itself. Bay area and Manhattan prices are a product of the local economies. Vancouver prices are a product of speculation and wealthy people who live/have property there but don't work there.
Exactly this. A significant portion of the housing is being bought by foreign investors who don't even live here. Not only is it raising the pricing of the housing, but you don't get the economic benefit of said wealthy individuals living in the city.
I recall reading an article about a local coffee shop. A number of new buildings were built around it, all residential condo's. The condo's in the buildings were completely sold out, hundreds of units, yet it was a ghost town around there. The coffee shop, and I believe a local pub as well, ended up going out of business because despite all the units being purchased, nobody actually lived in them.
Similar experience, my office is in the heart of downtown, right on the water. A beautiful building went up beside us, all condo's for sale, starting at $1.5 million. They got bought up instantly. However, once the building opened, I looked out my window and into a building where 90% of the units remained completely empty (no curtains) for well over a year until I switched desks. Foreign investors buy up all this property and it just sits there...empty. Meanwhile everyone that lives and works here is being priced out.
When the market tips all those foreign investors are going to try to unload their investment property at the same time. If I lived in a market like that I probably wouldn't buy anything even assuming I had the money. There's a big hangover at the end of this party.
This is all the dollars we blew out the trade deficit over the last 30 years coming home to roost. Those houses are essentially physical alternatives to treasury bills that pay zero interest or less with inflation.
A significant portion of the housing is being bought by foreign investors who don't even live here
What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!". Don't forget there is a ton of speculation going on by Canadian citizens as well.
Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1].
From the OP >> ...absentee foreign ownership and empty condos, which are said to account for nearly 25 per cent of units in certain neighbourhoods.
There are parts of Vancouver that are just dead. Rush hour now sees more carpenters and real estate agents commuting into these residential areas each morning than commute out. Places like the North Shore are essentially industrial zones manufacturing real estate prices. The people who live there (me) talk of empty neighborhoods populated only by retirees, every other house either under construction or sitting empty.
In the west end, it really is "yellow peril". I am asian myself, but I contribute to the economy as a job provider. Speculators are the reason for the impending ghost town that is Vancouver.
That is the worst "research" I think I've ever seen....
Chinese name? Foreigner!!! Despite Vancouver being almost 50% Asian.
Canada does not collect data on foreign ownership, and the citizenship of buyers in Yan’s study is not clear. But Yan established that 66 per cent of all buyers had “non-anglicized” Mainland China names.
Our full name analysis methodology follows accepted practices in the fields of epidemiology, demography, and political science. This study wanted to see if any distinct patterns occurring when non-Anglicized Chinese names are isolated from the rest of the data set. It is a primary assumption of this study that a non-Anglicized Chinese names may be an indication that an owner may be an recent immigrant to Canada and that an Anglicized Chinese name is an indication of a long time immigrant or non-immigrant and/or multigenerational Canadian of sole or mixed ethnic Chinese ancestry. As a course of experimentation, there may be names missed for new immigrants who have Anglicized Chinese names and long time immigrants or multi-generational Canadian with non-Anglicized Chinese name to may be in the wrong catagory, but, with external reviews, this risk is minimal.
Within this data set, the name patterns were exceptionally and surprisingly distinct as they lacked ambiguous names like “Scott Low” which could be a Chinese or Scottish name or “John Li” which could be Chinese, Vietnamese, or Korean name. These names did not exist within this data set. Non-Anglicized Chinese names in the study were either in a three or two name sequences that our literature survey suggested were Chinese with no ambiguous names. Without direct measures of immigration or citizenship status and property ownership that are publicly available in Canada, this is an indirect measure of how globalization, non-localized wealth, and immigration, particularly from China, Hong Kong, and Taiwan or Chinese global diaspora are entering one portion of the real estate market in Vancouver.
I guess the question is, have they run this methodology against a known sample?
It's anecdotal, but I know a number of US and Canadian citizens who have non-anglicized Chinese names. I would say most people who immigrate to Canada keep their original name. I also know a number of 1st generation Canadian who have Chinese names, but also English nicknames.
The west end is the west part of downtown. You are talking about the west side, and in fact, not even the west side, but west of Alma, which is waaaay out there. Super west side.
This 'academic case study' you linked to is cited over and over however, no one really looks at the actual data in it, namely where the homes are. It's literally a tiny pocket, which has the most expensive homes in the whole city, so yes, it's primarily Asian buyers. Not that surprising.
Don't get me wrong - there is a real problem here but that study is repurposed over and over to show the extent of the problem and it's very misleading.
Except it's been this way for 30 years. Vancouver house prices have always been higher than Ontario, even back in the 80s when I lived there. So speculation is one thing, but 30 years isn't speculation. And back then they were saying it was foreigners too, especially from Hong Kong. But it's 30 years later, and the house prices haven't abated at all. That isn't speculation, that's a permanently high prices.
When my parents bought their house there it was $275,000 it was almost 75% higher than our house in Toronto. And they sold it for $1,300,000 a few years ago. Crazy, but it's only annualized 6% over 25 years, less than the stock market (but higher than normal real estate I'm assuming). However it's prime Vancouver real estate with fantastic schools, a case could be made that it's worth it if you compare to San Francisco.
The only difference is that no one knows where the money is coming from for the last 30 years. There is no industry in Vancouver, except tourism and the average salary is ~60k.
I mean, there's tech, professional trades, doctors, finance sector, real estate agents (lol), luxury services, etc.? That accounts for part of the money. How much? How did you determine it was insignificant, if I infer correctly from your post?
You should look more closely at Manhattan and SF. There is a ton of speculation, luxury highrises, and out-of-town wealthy buying second-, third- or fifth homes.
Anecdotally I see a lot of empty apartments here in SF. Not as bad as London though. I basicslly had an entire massive luxury apartment complex to myself. I would walk around the halls drinking with friends carrying a prop ax pretending we were in the shining. Good times.
Bang on! At least if you made a reasonable wage it would be worth it, but everyone in Vancouver, including NHL superstars like the (Sedin) twins take a pay cut because they claim to love the opportunity to stay there. Every Vancouver employer I ever had gave me that line. "Sorry we can't pay you more, but you know, the rents! This is a great opportunity for you though". Later I found out that I made about 25-50% more than my colleagues, and I was vastly underpaid. It is a horrible work culture.
1. Now-defunct Canadian Immigrant Investor program allowed you to buy permanent resident status in Canada, thus avoiding any potential future tax discrimination against foreigners. Unlike the US Green Card, Canadian PR status is permanent, affords all the privileges of citizenship except voting, and can never be revoked, even if you join a foreign army to fight Canada. A similar incarnation of this program still exists in Quebec (and allows you to move to Vancouver on day 1).
So not only can you buy property in Vancouver, but you can send your family over without worrying about any immigration troubles and always know you will be able to come live here if you desire.
2. Canada allows unlimited cash to be brought into the country tax-free as a gift to a relative.
3. Any gains from property speculation will be tax-free if a spouse or child claims the property is their residence. See (1) about ease of getting immigration status for your family.
>Canadian PR status is permanent.... and can never be revoked
That is incorrect. It can be revoked if the PR does not remain in Canada for at least 2 years of a 5 year period after it was issued. After the 5 year mark, most PRs have already transitioned to citizenship.
http://www.cic.gc.ca/english/helpcentre/answer.asp?qnum=727&...
There's a large existing Chinese population and Canada has a stable legal system (e.g. no worry for property rights). Seattle has a similar phenomenon, though not as extensive because there is more local competition. NYC has one with Russia (though that is diminishing thanks to cheap oil).
I can't answer that, but I can add that it is quite common in London too. I can see the allure of the "park my millions in property in the world financial capital" investment strategy, but I don't get the Vancouver version. That's not meant as a slight on Vancouver.
What about an EB-5 visa? Isn't that somewhat similar? This doesn't directly buy a US passport, but it does allow for citizenship within a few years (and then, by extension, an American passport).
Wasn't there that guy convicted in NS recently convicted of facilitated PRs staying outside Canada? As a Bayesian, that makes me think it is pretty widespread.
because most of them are from china, and vancouver is on the west coast, has a large ethnic chinese population, and is for all social and economic intents and purposes the same as the US.
When HK was getting turned back over to China, there was a lot of concern and Canada (Vancouver, Toronto etc.) became destinations of choice for many people.
This obviously isn't the only contributing factor but I know lots of people that have gone through this migration pattern.
