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-9 out of 77 Chinese were asked if they have Vancouver property -BS extrapolation leads to 33% figure I believe it Ladies and gentlemen, just remember that eco

-9 out of 77 Chinese were asked if they have Vancouver property -BS extrapolation leads to 33% figure I believe it Ladies and gentlemen, just remember that economic bubbles aren't only bubbles in assets, finance, and the structure of the economy, but also the psychology of the people. The number is actually closer to 1-2%.

tostitos1979 11y ago
You are underestimating. In Markham, ON, we recent found out that our offers on these million dollar homes (stretching us near the limits of good financial sense) were getting discarded because we had a condition of 5 days needed to confirm mortgage (the so called financing condition). People are apparently buying homes with "clean" offers. I call BS on this. The average buyer doesn't have a million dollars lying around their checking account. If I was an "upgrade" buyer (improving my existing home), I'd need time to sell my existing home. Btw ... I am the child of immigrants so have no problems if these homes are being bought up by Chinese Canadians. I do have a very big problem if these homes are being bought by illicit funds or funds that have not been taxed correctly. I pay my share (and it is a big share .. every professional couple in Canada is essentially in the 1% and paying for it despite all the student loans we incurred). We have all these financial controls that apply to us about reporting foreign income and paying taxes, etc. This needs to be applied fairly and across the board. One other datapoint: the listing agents in the area have websites in Chinese and with prices in Yuan. Any delusion I had that the money is coming from incomes earned in Canada is firmly gone. People have talked about ideas such as taxing second homes and requiring residency or citizenship to buy a home. Both seem good ideas that will never be implemented. How about mortgage income tax relief for Canadians (like the US or even more aggressive than that)? Allow full borrowing against RRSPs and prevent buyers from discriminating against offers based on financing conditions. The freaking MLS data is regulated anyways so might as well.
- jpollock 11y ago
  They aren't holding cash. What they are doing is accepting the risk of not being able to finance the property. They're risking the 1% earnest money, but feel it's low risk because they have a good relationship with a bank or know they have good credit. As for people selling and moving into a new house? Again, they're accepting the risk that they will be able to get bridge financing and sell their existing house. Conditions have monetary value to both the purchaser and the seller. If you are losing out to people with clean offers, bump your offer by 5% and you'll find that sellers will wait another 2-4 weeks for their money. That's what I had to do to get a house in San Jose (just moved in!). It's the same as the "discount for debit cards and cash" you can get in electronics stores. Get a good real-estate agent that _knows_ the area, and listen to what they say the house will sell for. Ours was spot-on 100% of the time. Next, you need to realize at what points in the sale the power in the relationship changes. Up to offer acceptance? The seller has the power, so offer more money to keep contingencies on the sale. After acceptance power starts to shift to the buyer. Here in California building reports are attached to the house, so a bad foundation is information everyone gets. This means the seller is likely to negotiate the price down or fix things if a bad report comes in. Of course, you have to spend $$ to find that out, and your mortgage application fees are then throw-away, so... Finally, be honest about what you can afford. If you're not at the tippy-top of your price range, you will be able to stretch just a little bit to get that really sweet house you want.
  - tostitos1979 11y ago
    Thanks for you thoughts. The challenge we're facing is whether the Mrs will do stay-at-home while the baby is young or not. If it is just my income, I know we'll have to stretch for a house we want. If we have both incomes, net of childcare, we should be okay. Canada has 5 year mortgage terms. That is distressing me to no end. If interest rates go to 5% in 5 years, we might have huge isues. If I had a 3.75%, 25 year US mortgage, I'd take it in a heart beat. I don't think a US lender will be willing to lend against Canadian property due to exchange rate risks (among other reasons).
    - jpollock 11y ago
      It sort of depends on how long you intend to live in a house. For mortgages that are on 5yr terms, look at longer term averages. For example, New Zealand (another market I'm familiar with) is currently running at 4%/yr for a 2yr mortgage and 5.5% for a 5yr. However, for budgeting purposes, most people will budget at 8%/yr, since that's the long-term average. Just to completely freak you out, during the GFC, I hit 12% annual interest. My parents hit 20% during the Canadian inflation crisis of '81. :) Go for the high end, don't be afraid of a smaller house, build up the equity and then move. However, be aware that closing costs are significant, so it's best to amortize them over several years - that's why housing calculators ask how long you will live in a house. Frankly? If you're afraid of 5%, you probably don't want to own a house, or at least, you don't want to own _that_ house.
- vkou 11y ago
  Mortgage income tax relief strongly punishes renters - my commercial landlord doesn't get any tax breaks, while you do. It also increases property prices, by reducing the cost of borrowing money.

tostitos1979 11y ago

You are underestimating. In Markham, ON, we recent found out that our offers on these million dollar homes (stretching us near the limits of good financial sense) were getting discarded because we had a condition of 5 days needed to confirm mortgage (the so called financing condition). People are apparently buying homes with "clean" offers. I call BS on this. The average buyer doesn't have a million dollars lying around their checking account. If I was an "upgrade" buyer (improving my existing home), I'd need time to sell my existing home. Btw ... I am the child of immigrants so have no problems if these homes are being bought up by Chinese Canadians. I do have a very big problem if these homes are being bought by illicit funds or funds that have not been taxed correctly. I pay my share (and it is a big share .. every professional couple in Canada is essentially in the 1% and paying for it despite all the student loans we incurred). We have all these financial controls that apply to us about reporting foreign income and paying taxes, etc. This needs to be applied fairly and across the board. One other datapoint: the listing agents in the area have websites in Chinese and with prices in Yuan. Any delusion I had that the money is coming from incomes earned in Canada is firmly gone. People have talked about ideas such as taxing second homes and requiring residency or citizenship to buy a home. Both seem good ideas that will never be implemented. How about mortgage income tax relief for Canadians (like the US or even more aggressive than that)? Allow full borrowing against RRSPs and prevent buyers from discriminating against offers based on financing conditions. The freaking MLS data is regulated anyways so might as well.

jpollock 11y ago
They aren't holding cash. What they are doing is accepting the risk of not being able to finance the property. They're risking the 1% earnest money, but feel it's low risk because they have a good relationship with a bank or know they have good credit. As for people selling and moving into a new house? Again, they're accepting the risk that they will be able to get bridge financing and sell their existing house. Conditions have monetary value to both the purchaser and the seller. If you are losing out to people with clean offers, bump your offer by 5% and you'll find that sellers will wait another 2-4 weeks for their money. That's what I had to do to get a house in San Jose (just moved in!). It's the same as the "discount for debit cards and cash" you can get in electronics stores. Get a good real-estate agent that _knows_ the area, and listen to what they say the house will sell for. Ours was spot-on 100% of the time. Next, you need to realize at what points in the sale the power in the relationship changes. Up to offer acceptance? The seller has the power, so offer more money to keep contingencies on the sale. After acceptance power starts to shift to the buyer. Here in California building reports are attached to the house, so a bad foundation is information everyone gets. This means the seller is likely to negotiate the price down or fix things if a bad report comes in. Of course, you have to spend $$ to find that out, and your mortgage application fees are then throw-away, so... Finally, be honest about what you can afford. If you're not at the tippy-top of your price range, you will be able to stretch just a little bit to get that really sweet house you want.
- tostitos1979 11y ago
  Thanks for you thoughts. The challenge we're facing is whether the Mrs will do stay-at-home while the baby is young or not. If it is just my income, I know we'll have to stretch for a house we want. If we have both incomes, net of childcare, we should be okay. Canada has 5 year mortgage terms. That is distressing me to no end. If interest rates go to 5% in 5 years, we might have huge isues. If I had a 3.75%, 25 year US mortgage, I'd take it in a heart beat. I don't think a US lender will be willing to lend against Canadian property due to exchange rate risks (among other reasons).
  - jpollock 11y ago
    It sort of depends on how long you intend to live in a house. For mortgages that are on 5yr terms, look at longer term averages. For example, New Zealand (another market I'm familiar with) is currently running at 4%/yr for a 2yr mortgage and 5.5% for a 5yr. However, for budgeting purposes, most people will budget at 8%/yr, since that's the long-term average. Just to completely freak you out, during the GFC, I hit 12% annual interest. My parents hit 20% during the Canadian inflation crisis of '81. :) Go for the high end, don't be afraid of a smaller house, build up the equity and then move. However, be aware that closing costs are significant, so it's best to amortize them over several years - that's why housing calculators ask how long you will live in a house. Frankly? If you're afraid of 5%, you probably don't want to own a house, or at least, you don't want to own _that_ house.
vkou 11y ago
Mortgage income tax relief strongly punishes renters - my commercial landlord doesn't get any tax breaks, while you do. It also increases property prices, by reducing the cost of borrowing money.