6 ms·

I'd love to see some real data on just how much Chinese and other flight capital being dumped into RE is contributing to these price increases.

by api 9y ago

charlesdm 9y ago
Probably a lot more than you think.
deleted 9y ago
[deleted]
resolaibohp 9y ago
I would love to see some real data on this. I hear the blame for high real estate prices go to Chinese foreigners very frequently, yet I have never seen any real facts. This is what I see happening with real estate right now. I feel like the majority of people who are driving up the prices are the people who were lucky to buy property at the right time and right place in the past and are cashing in now and trading up to a much nicer property in a different less expensive city or even in the same city they live in. It can make sense to stay in the same city and trade up, the economy is better now, they most likely have higher paying jobs and their profits from their old property effectively reduces the cost of new properties to house prices many years ago assuming they use their profit as a down payment. It is the people who were not homeowners before who are suffering in this market. This is why house values have no attachment to wages. Wages are not what are determining prices. It is the profits from previously purchased property which is fueling this market.
- mistermann 9y ago
  When more income comes from RE appreciation (tax free, on top of it) than earned income, wages also have very little to do with standard of living.
refurb 9y ago
Rich Chinese we're blamed for the housing bubble in Vancouver and Toronto. They finally started tracking it and it was barely above 5% (all foreign purchases). And only if you focused on certain neighborhoods. 95% of purchasers were Canadian citizens or permanent residents. Low interest rates and willingness to take on a lot of debt is what drove the bubble in Canada.
- rsync 9y ago
  "They finally started tracking it and it was barely above 5% (all foreign purchases)." I don't closely follow that story and I haven't seen your sources, but in general a 5% marginal increase in buyers can completely transform a market.
  - refurb 9y ago
    What impact does the other 95% of Canadians who now hold record levels of real estate debt have? Do foreign purchases have an impact on the market? Sure. Would the market still be crazy overheated and ready to collapse without foreign purchases? I'd bet it would.
- soperj 9y ago
  In Vancouver it was over 5%. In some suburbs - Burnaby and Richmond - (not neighbourhoods) it was over 15% of purchases. When you consider that most of these purchasers aren't selling houses at the same time, then it becomes an even bigger % of actual demand. edit: just looked at the stats. Metro Vancouver was at about 12.5% of sales, and Richmond was at nearly 25% of sales before they put in the foreign buyers tax.
  - mistermann 9y ago
    And how many of the "domestic" buyers are fueled by capital originating in China?
  - ericd 9y ago
    This is a very good point - many normal purchasers will be selling a house at the same time that they're buying one, so there's a net zeroing in additional housing demand. Renters who are buying a house will leave a rental unit open, and cause a tiny decrease in rent prices. But investors frequently just take housing off the market, and contribute to a shortage. And as with most life necessities, housing is somewhat inelastic in terms of demand, so shortages cause skyrocketing prices.
- bluGill 9y ago
analyst74 9y ago
It'll be impossible to get such data, but it's probably a huge amount, coming in different sources: - direct purchase of RE by Chinese nationals - international trade disproportionately benefiting coastal cities and major metros, attracting more people to those regions and making them richer - money channeled from China into investment funds, which in turn invest in mortgages, and collectively with other hot money, drives down mortgage rates thus making it cheaper for people to invest in RE.
davidw 9y ago
There was a good article about that yesterday: http://www.sightline.org/2017/07/05/stop-blaming-foreign-home-buyers/ http://www.sightline.org/2017/07/05/stop-blaming-foreign-hom... tl;dr - that's not really the problem. It's a supply issue.
- mistermann 9y ago
  Well sure, it's a "supply issue" in that demand exceeds supply, but that avoids the important question, which is why does demand exceed supply? The author is quite frank that the exact nature of the excessive new demand is not known, but he presents several theories, each of which contributes to an unknown degree.
  - davidw 9y ago
    Supply is lagging because of zoning and NIMBYism, in large part. Demand has always moved around in the US, as industries and places come and go.
    - mistermann 9y ago
      There is an unknown amount of foreign demand that is amplifying the lack of supply to an unknown degree. Saying it is "just a lack of supply" is disingenuous. With a relatively small amount of effort the government could dramatically improve the amount and quality of data on the topic, but it is very clear their goal is to obfuscate what is really happening as much as possible while giving the appearance of transparency. See: the ridiculous 5% foreign transactions claim.
      - davidw 9y ago
        Did you actually read the article I posted?
        mistermann 9y ago
        I read the entire article, yes. Read it again yourself and pay attention for words like "may", and "might". Those words are used because it is inconclusive, and it is inconclusive because the government refuses to publish and often even collect the data that would be required to come to a reasonably accurate conclusion. This is crystal clear to anyone actually paying attention, but don't worry because almost no one is - the majority of Canadians are profiting from it. Here is one example: someone that buys citizenship in Quebec and then purchases a house in Vancouver is considered non-foreign. Here is another example: wife and kids get citizenship or permanent resident status, and the husband does not. This way, the wife can buy a house with overseas money and make tax free capital gains, plus the whole family gets free medical, dental, welfare cheques, GST rebates, and they don't even have to declare overseas income because the husband is not a citizen (not that the CRA would even check, because front line auditors have been told clearly that auditing certain people is not allowed.) To be fair, Canada does (I think) receive sales tax on the purchase of a few Mercedes, Ferraris, Porsches, etc. This second approach is a common strategy because it's easy and foolproof - there's actually a guy on reddit that posts the various different ways around the various laws that are supposedly intended to stop this sort of thing, there is always a gigantic easy to work around loophole. Whether that is accidental or deliberate, no one knows, and there's no way of knowing. So, any "stats" that anyone quotes might as well just be made up. They're not "wrong" or "lies", but the specific stats they quote are meaningless considering the exceptions I've noted.

I'd love to see some real data on just how much Chinese and other flight capital being dumped into RE is contributing to these price increases.

by api 9y ago

I'd love to see some real data on just how much Chinese and other flight capital being dumped into RE is contributing to these price increases.

charlesdm 9y ago

Probably a lot more than you think.

deleted 9y ago

[deleted]

resolaibohp 9y ago

I would love to see some real data on this. I hear the blame for high real estate prices go to Chinese foreigners very frequently, yet I have never seen any real facts. This is what I see happening with real estate right now. I feel like the majority of people who are driving up the prices are the people who were lucky to buy property at the right time and right place in the past and are cashing in now and trading up to a much nicer property in a different less expensive city or even in the same city they live in. It can make sense to stay in the same city and trade up, the economy is better now, they most likely have higher paying jobs and their profits from their old property effectively reduces the cost of new properties to house prices many years ago assuming they use their profit as a down payment. It is the people who were not homeowners before who are suffering in this market. This is why house values have no attachment to wages. Wages are not what are determining prices. It is the profits from previously purchased property which is fueling this market.

mistermann 9y ago
When more income comes from RE appreciation (tax free, on top of it) than earned income, wages also have very little to do with standard of living.

refurb 9y ago

Rich Chinese we're blamed for the housing bubble in Vancouver and Toronto. They finally started tracking it and it was barely above 5% (all foreign purchases). And only if you focused on certain neighborhoods. 95% of purchasers were Canadian citizens or permanent residents. Low interest rates and willingness to take on a lot of debt is what drove the bubble in Canada.

rsync 9y ago
"They finally started tracking it and it was barely above 5% (all foreign purchases)." I don't closely follow that story and I haven't seen your sources, but in general a 5% marginal increase in buyers can completely transform a market.
- refurb 9y ago
  What impact does the other 95% of Canadians who now hold record levels of real estate debt have? Do foreign purchases have an impact on the market? Sure. Would the market still be crazy overheated and ready to collapse without foreign purchases? I'd bet it would.
soperj 9y ago
In Vancouver it was over 5%. In some suburbs - Burnaby and Richmond - (not neighbourhoods) it was over 15% of purchases. When you consider that most of these purchasers aren't selling houses at the same time, then it becomes an even bigger % of actual demand. edit: just looked at the stats. Metro Vancouver was at about 12.5% of sales, and Richmond was at nearly 25% of sales before they put in the foreign buyers tax.
- mistermann 9y ago
  And how many of the "domestic" buyers are fueled by capital originating in China?
- ericd 9y ago
  This is a very good point - many normal purchasers will be selling a house at the same time that they're buying one, so there's a net zeroing in additional housing demand. Renters who are buying a house will leave a rental unit open, and cause a tiny decrease in rent prices. But investors frequently just take housing off the market, and contribute to a shortage. And as with most life necessities, housing is somewhat inelastic in terms of demand, so shortages cause skyrocketing prices.
bluGill 9y ago

analyst74 9y ago

It'll be impossible to get such data, but it's probably a huge amount, coming in different sources: - direct purchase of RE by Chinese nationals - international trade disproportionately benefiting coastal cities and major metros, attracting more people to those regions and making them richer - money channeled from China into investment funds, which in turn invest in mortgages, and collectively with other hot money, drives down mortgage rates thus making it cheaper for people to invest in RE.

davidw 9y ago

There was a good article about that yesterday: http://www.sightline.org/2017/07/05/stop-blaming-foreign-home-buyers/ http://www.sightline.org/2017/07/05/stop-blaming-foreign-hom... tl;dr - that's not really the problem. It's a supply issue.

mistermann 9y ago
Well sure, it's a "supply issue" in that demand exceeds supply, but that avoids the important question, which is why does demand exceed supply? The author is quite frank that the exact nature of the excessive new demand is not known, but he presents several theories, each of which contributes to an unknown degree.
- davidw 9y ago
  Supply is lagging because of zoning and NIMBYism, in large part. Demand has always moved around in the US, as industries and places come and go.
  - mistermann 9y ago
    There is an unknown amount of foreign demand that is amplifying the lack of supply to an unknown degree. Saying it is "just a lack of supply" is disingenuous. With a relatively small amount of effort the government could dramatically improve the amount and quality of data on the topic, but it is very clear their goal is to obfuscate what is really happening as much as possible while giving the appearance of transparency. See: the ridiculous 5% foreign transactions claim.
    - davidw 9y ago
      Did you actually read the article I posted?
      - mistermann 9y ago
        I read the entire article, yes. Read it again yourself and pay attention for words like "may", and "might". Those words are used because it is inconclusive, and it is inconclusive because the government refuses to publish and often even collect the data that would be required to come to a reasonably accurate conclusion. This is crystal clear to anyone actually paying attention, but don't worry because almost no one is - the majority of Canadians are profiting from it. Here is one example: someone that buys citizenship in Quebec and then purchases a house in Vancouver is considered non-foreign. Here is another example: wife and kids get citizenship or permanent resident status, and the husband does not. This way, the wife can buy a house with overseas money and make tax free capital gains, plus the whole family gets free medical, dental, welfare cheques, GST rebates, and they don't even have to declare overseas income because the husband is not a citizen (not that the CRA would even check, because front line auditors have been told clearly that auditing certain people is not allowed.) To be fair, Canada does (I think) receive sales tax on the purchase of a few Mercedes, Ferraris, Porsches, etc. This second approach is a common strategy because it's easy and foolproof - there's actually a guy on reddit that posts the various different ways around the various laws that are supposedly intended to stop this sort of thing, there is always a gigantic easy to work around loophole. Whether that is accidental or deliberate, no one knows, and there's no way of knowing. So, any "stats" that anyone quotes might as well just be made up. They're not "wrong" or "lies", but the specific stats they quote are meaningless considering the exceptions I've noted.