11 ms·

The City That Had Too Much Money

132 points by prostoalex 8y ago

tomcam 8y ago
> It’s not the business capital of western Canada—that’s Calgary Can someone explain what this means? It seems like Vancouver is most definitely the de facto business capital of Western Canada but I base this solely on my observations as a tourist from Seattle and friendship with Chinese real estate broker.
- forkLding 8y ago
  The article is a bit weird in general, I would say both Calgary and Vancouver have "businesses" from financial to tech companies. But Calgary usually has a lot more energy and mining companies headquartered there so I guess in general it would have more corporations? Basically none of these cities are near the scale of Toronto. Never thought of Calgary as the de facto business capital of Western Canada (it could also be Edmonton) but could be because I'm mainly in Vancouver.
- fbelzile 8y ago
  Western Canada is most known for it's energy sector and most energy companies are based out of Calgary, AB.
- deleted 8y ago
  [deleted]
- ttul 8y ago
  Vancouver has many branch offices but few headquarters of large businesses.
- refurb 8y ago
  A few of my business school classmates fell in love with Vancouver and wanted to move their after graduation. They found out pretty quickly there aren’t as many jobs in Vancouver as one would expect. As others have mentioned, lots of regional office, but not many headquarters. You’d have a much easier time finding a job in Calgary or Toronto than Vancouver. It’s a big, well known city, but has fewer professional jobs than you’d expect.
  - Latteland 8y ago
    Almost every big software company in Seattle has a largish office in Vancouver because of the challenge of getting visas to the us.
  - sonnyblarney 8y ago
    "lots of regional office, but not many headquarters." You could say this about Canada in it's entirety.
    - refurb 8y ago
      True! I was speaking more around Canadian companies. I believe Calgary has the highest number of corporate HQs in Canada.
      - sonnyblarney 8y ago
        Toronto has the highest number of HQs. Calgary may have a higher number per capita - or - they may 'technically' have more HQs because of the vast number of shell companies that exist for complex resource extraction events. Kind of like Delaware in the US.
        refurb 8y ago
        Half as many as Toronto, but twice as much on a per capita basis.[1] [1]https://www.calgaryeconomicdevelopment.com/dmsdocument/133 https://www.calgaryeconomicdevelopment.com/dmsdocument/133
- kitcar 8y ago
  People generally don't build weallth in Vancouver. Cost of living is too high and salaries too low. Outside of real estate and film production, there dosen't seem to be sufficient scale / diveristy of business activity in Vancouver to make it a place Canadians relocate to work/start companies. Hence it's not a business center even though it's a big city. My feeling is Vancouver is more like Monaco then New York City. Already rich people move to Vancouver.
- sonnyblarney 8y ago
  Alberta has an Oil based economy, they are wealthy. BC doesn't have much of a real industrial basis in anything.
tomcam 8y ago
tl;dr Vancouver is undergoing wrenching changes due to unfathomable amounts of Chinese money. This is inflamed by British Columbia's surprisingly lax approach to financial transparency in foreign investment and liberal immigration laws. It has priced locals right out of the market, though recent changes in tax structure are cooling down real estate investment. Article doesn't do a good job of covering "little thirds", mistresses who are settled there with an apartment and allowance, or of unaccompanied "college students" who spend way more time vlogging than studying. Anecdotally a shitload of people following those descriptions have been shipped in, an influx that has slowed drastically with real estate taxes meant to punish this behavior. The city of Richmond just south of Vancouver is mentioned but its import is arguably understated by the article. It's a fascinating place, and Richomond's "night market" (sort of a combination fair midway/flea market) is an electric experience soon to be imported to Silicon Valley, where it will be a huge hit. Westerners generally speaking have absolutely no clue about the importance of a stable currency, which implies a stable political system, a nation that respects rule of law, and a notion of property rights. This leaves only a few countries, namely the US, the UK, and a couple of Western European nations. Wealthy Chinese absolutely do, and they are scared out of their minds that the tyrannical regime there will separate them from their assets. These people remember the Cultural Revolution. So the West is the first resort for relatively safe storage of their often questionably-gotten cash. (More adventurous/volatile places to invest, like Africa, are riskier but often have a higher upside.) Because I apparently hate good karma I will observe that we used to love going to Vancouver, especially the weeklong jazz festival, but we don't any longer. Like Seattle, the fun places to walk have largely been overrun by street people who use hard drugs and leave needles around. None appear to be Asian.
- CPLX 8y ago
  Having never heard the term, a quick google search for “little third” led to this fascinating article: http://www.newyorker.com/magazine/2017/06/26/chinas-mistress-dispellers http://www.newyorker.com/magazine/2017/06/26/chinas-mistress...
- psergeant 8y ago
  > the UK Probably not for much longer, given the rather interesting https://en.wikipedia.org/wiki/Unexplained_wealth_order https://en.wikipedia.org/wiki/Unexplained_wealth_order
tw1010 8y ago
Has this happened before? How can we learn more about this phenomenon by looking at history? To me this is an entirely new phenomenon.
- Alex3917 8y ago
  Well you've got cities like Miami and Providence which were built with cocaine money, cities like Havana and pretty much all of the Netherlands that were built with money from the slave trade, etc. Not really new. And then you've got places like New York where a large percentage of the money coming in has always been from illicit or semi-licit activities, but never so much that it was the overwhelming majority of the economy at any given point.
  - selimthegrim 8y ago
    Miami I get but Providence? I thought the Italian mob wasn’t into cocaine?
    - Alex3917 8y ago
      Not sure, here is a NYT article on it though: https://www.nytimes.com/1985/08/25/us/rhode-island-a-crossroads-for-cocaine.html https://www.nytimes.com/1985/08/25/us/rhode-island-a-crossro...
projectramo 8y ago
I just assumed that the tales of “Chinese money” in Vancouver was part exaggeration and part fear of change and foreigners. Real estate everywhere is booming in nice cities. However, I may have been hasty in that assessment because this single number — the first estimate I have seen — is mind numbingly large: “of their country’s capital controls. Since mid-2014, capital flight from China may have totaled as much as $800 billion, according to estimates from the Institute of International Finance.”
- tomcam 8y ago
  Those tales are not exaggerated. The $800 billion feels very right, and possibly even conservative, to me. Source of anecdata: many investments in China, Asian family, frequent visitor to Vancouver. Few high net worth Chinese nationals expect to be able to keep their money from the government in the long haul. Racism/fear of change aren't factors. Locals would fear "these people" moving in and jacking up real estate prices if they were German, Swedish, or Danish. The problems are quite practical: as with older property owners in Silicon Valley, locals love seeing their own house values skyrocket, but no one thinks about the fact that once they sell they won't be able to remain.
  - johnchristopher 8y ago
    > but no one thinks about the fact that once they sell they won't be able to remain Wouldn't it be hard to stay anyway once real estate price go up for the sheer fact that rich people are coming and so prices for everything will go up anyway ? Is my simplistic reasoning flawed ?
    - techsupporter 8y ago
      I've asked this question to a person I know who is an academic in economics (not a world-renowned economist, just someone who does economics at university), for what it's worth, and what she told me is--in my paraphrased understanding--that if a market goes up "naturally," or by the usual forces people regularly expect (usually around jobs), then wages tend to also go up so housing and other goods remain mostly affordable relative to local wages being paid. The issue in cities and areas like Vancouver and Seattle and San Francisco--ones that aren't just hubs for high-paying technology jobs but also ones where overseas capital has made inrushes--is that wages haven't been able to keep up with the outside capital. So property of all types (it's just that most people only directly care about residential property, but commercial property also goes up and that increases the cost of other things in the local economy) rises in price while wages don't, so a major disconnect starts to happen. This is a two-paragraph summary of a nearly three-hour conversation we had, so there's a lot of nuance I've left out. Zoning, development, density, and all of the rest around property use also affect prices and, according to her, probably more than inbound foreign money, but the added money has an influence.
stuxnet79 8y ago
Now that BC is cracking down on the money laundering in Vancouver, the exact same story is playing out in Toronto and to a smaller extent, Montreal. Canadian cities have been hard hit generally speaking, because it's a lot harder to do this kind of shady stuff in American cities. Also Canadian dollar is cheap.
- superseeplus 8y ago
  It does happen in American cities too. Many of the very expensive apartments on Billionaires Row were bought by rich foreigners trying to park or launder money.
- pm24601 8y ago
  Not true (sadly). NYC, Miami, SF, etc. have a big problem with shell corporations using real estate to do money laundering.
rb808 8y ago
The interesting thing to me is - do the Chinese politicians and business leaders see the money laundering as a problem that needs fixing. Or is it those same people that are doing it? IE are all powerful Chinese people doing this or a minority.
- Latteland 8y ago
  I think it's probably both. Many of them are doing it, and they have to make filial piety towards the government rules. Since China has been trying to kidnap ex-pats who complain about the government, it's becoming harder and harder for people to have the guts to come forward.
- Tsubasachan 8y ago
  Chinese have invested money abroad for centuries. Its actually something that serves China well. You can find Chinese enclaves from Singapore to Lagos.
mcny 8y ago
Once again, I think it absolutely is racism and bigotry when they talk about Chinese money. Canada knows the solution to this "problem": higher property taxes for everyone. No, not just got absent owners. Use this money to fund infrastructure spending. Help increase supply of housing. The Chinese don't have unlimited monies. They can't print the US dollar... Of course, home owners don't want to pay higher taxes. They don't want property process to fall. A bunch of hypocrites if you ask me.
- rtkwe 8y ago
  There's a big difference between a housing market that's exploding because of a lot of people moving to the area and one that's being largely propped up by outside purchases that don't get occupied. In a normal housing boom when a property is bought someone comes along with the money and spends money in other areas which boost the rest of the economy too. In the case of properties bought for investment/capital control dodging it all flows into a single area with less of the add on benefits.
- api 8y ago
  It has nothing to do with racism. If this were a flood of German or British money distorting the market it would be the same.
  - mcny 8y ago
    But if they're buying houses and paying property taxes but not using any of the services their taxes pay for, aren't they doing us a service? It sounds like property taxes are unsustainably low the more I hear arguments against the Chinese money. Disclaimer: I'm not of Chinese descent and I'm definitely poor so none of this benefits me. I'm just trying to understand what people are saying because it all sounds like a bunch of dog whistling where people say something but mean something else. I just want us to be open and honest with our bigotry if it is bigotry or greed if it is greed.
    - Latteland 8y ago
      The expense of housing comes from the people outside buying up all the open supply at high prices, so it's hard to afford a house. Also the supply of houses is lower, making apartments even more dear. Next many of the houses aren't lived in, so local area businesses don't have enough customers and close (grocery, clothing, restaurants).
dqpb 8y ago
> Much of the money coming in has been legitimately earned, if sometimes extricated by gray-market means. But officials say that a substantial proportion is the proceeds of corruption or crime, including the illegal sale of opiates such as fentanyl. This is how you gently and quietly wage war against a society. Sell drugs to the youth and then buy up all their property with the proceeds.
- msie 8y ago
  This is an awfully untrue and xenophobic narrative that the press is promoting. A lot of people not in the drug trade are buying real estate. And the illicit drug trade has been with us forever.
  - dqpb 8y ago
    > the illicit drug trade has been with us forever. Indeed. Century of Humiliation: https://en.m.wikipedia.org/wiki/Century_of_humiliation https://en.m.wikipedia.org/wiki/Century_of_humiliation
    - Latteland 8y ago
      And even before westerners like my ancestors intervened in China, people were taking drugs. It was just that they punished only the lower classes. http://www.victorianweb.org/victorian/science/addiction/addiction2.html http://www.victorianweb.org/victorian/science/addiction/addi..., https://www.bl.uk/romantics-and-victorians/articles/representations-of-drugs-in-19th-century-literature https://www.bl.uk/romantics-and-victorians/articles/represen.... Also don't forget Edgar Allen Poe in the US. Anyway, after the good white people of the world (/s, ie probably my ancestors in the us) decided that black people were still a real threat, we got the 1920s anti-pot laws (http://origins.osu.edu/article/illegalization-marijuana-brief-history http://origins.osu.edu/article/illegalization-marijuana-brie...) and it continued even until Nixon tried his successful early "make harsh drug laws to hurt minorities" strategy https://www.cnn.com/2016/03/23/politics/john-ehrlichman-richard-nixon-drug-war-blacks-hippie/index.html https://www.cnn.com/2016/03/23/politics/john-ehrlichman-rich....
sonnyblarney 8y ago
Canada generally exports natural resources, and not much else besides assembled cars that we don't design. (We don't have a lot of high valued exports - highlighted by the odd trading relationship Canada has with China: they buy natural resources, and we buy finished goods from them, which is the opposite of most 'wealthy v. upcoming' trading relationships. Of course China overall is wealthy but per capita it's not) But what Canada does maybe the best in the world is 'boring, stable governance' - which is what so many people want. If the environmentalists would have it ... and I was King ... I would carve out an area on Vancouver Island and make it basically like Singapore - an open city state, that Canada manages, but basically for expats from anywhere. Anybody can come, keep their homeland citizenships, and live in a super above bar and stable regime. There'd be a few extra rules here and there, and they wouldn't be citizens - but they'd get what they want. This way you avoid the massively disruptive socioeconomic issues, and you can actually possibly create industry and a new kind of financial sector, and maybe a few added taxes to boot. Win Win Win all around. All complexities aside, BC residents would protest it to death merely on environmental grounds.
- oh_sigh 8y ago
  Paul Romer was supporting a similar idea to this a few years ago, but more as an engine for smaller, less developed countries to attract international talent: https://en.wikipedia.org/wiki/Paul_Romer#Charter_cities https://en.wikipedia.org/wiki/Paul_Romer#Charter_cities
- woolvalley 8y ago
  So these people in Victoria #2 wouldn't be able to participate in the economy of the rest of Canada? They couldn't start corporations that could buy real estate, sell products and so on? What if they wanted to drive to Victoria #1 and go shopping?
  - sonnyblarney 8y ago
    Canada still has a lot of immigrants, if they wanted to be Canadian, they could go that route. But citizenship should be more than 'access to real estate and shopping malls'. I'd simply make it so that residences (and real estate ownership), and maybe some other things like their financial positions (even like regular current accounts) are within the 'New Singapore' but otherwise they can go where they want and do as they please in Canada without any kind of border or whatever. And try to make a deal with US so that residents also have 'Canadian-like' access to the US, meaning visa free travel etc.. People who wanted to live in Van or Vic could apply for citizenship.
Invictus0 8y ago
> About 500,000 people in greater Vancouver have Chinese heritage, representing roughly 20 percent of the population, according to Canada’s latest census. The proportion is highest in Richmond, just south of Vancouver proper, which is more than 50 percent Chinese. The suburb’s main commercial drag is No. 3 Road, a boulevard lined with big-box stores and shopping centers fronted by Chinese signage. The most elaborate is the Aberdeen Centre, a curvy mall sheathed in a colorful grid of translucent glass. It was built in 1989. > Over a lunch of steaming soup at Chef Hung Taiwanese Beef Noodle, a bustling second-floor restaurant, the mall’s developer, Thomas Fung, explains how he arrived at the idea. Fung, 67, is slim, with spiky black hair and delicate features. The son of a prominent Hong Kong financier, he arrived in Vancouver in the 1980s and did everything from running bakeries to film production. He soon grasped that the city was about to change dramatically. “I believed that in the coming 10 years, because of the 1997 issue in Hong Kong, there would be a lot of new immigrants coming over here,” Fung says. He knew they’d want the comforts of home, which led him to conceive of a shopping center that would stock the same goods as the megamalls of Hong Kong’s Causeway Bay. This capital influx problem has been decades in the making. I'm curious: what social problems are brewing today that we won't see the effects of until 10, 20 years down the line? How do you identify these trends? In Fung's case, it seems he identified the trend correctly by living directly in the midst of it. Is it possible for an observer to find these trends as well?
jorblumesea 8y ago
The same is true for most of the West coast to a certain extent. But with liberal Canadian immigration policies and lax financial restrictions, Vancouver is an easy target. Westerns have forgotten or do not understand how stable and safe the West is compared to most of the world. Chinese have never forgotten that they live under an authoritarian regime.
mthoms 8y ago
Sitting here in my (Chip Wilson owned) $2000/month one bedroom East Vancouver apartment, I'd say this article really hit close to home. Literally. While I support the conclusions drawn in the article, there is one important factor that wasn't emphasized - weather. People from all over Canada come here for the (relatively) mild temperatures and snow-free winters.Thus you have a market where demand already exceeds supply before even factoring in foreign ownership.
- msie 8y ago
  It seems many don’t realize that Vancouver is the only major Canadian city on the west coast whereas in the US you have several. In Canada there are three major cities: Vancouver, Toronto and Montreal. If you want to live on the west coast with great weather where are you going to go? Lots of migration in Canada alone.
  - woolvalley 8y ago
    All of BC is relatively expensive compared to the USA, with Vancouver as the epicenter.
  - deleted 8y ago
    [deleted]
- dawhizkid 8y ago
  Is $2000/mo a lot or a little? Sorry being in SF I seriously can't tell.
  - woolvalley 8y ago
    It is a lot. Especially considering the tech industry salary is under $90k for a sr engineer, and a normal professional person probably makes $40k-$60k/yr
    - dawhizkid 8y ago
      Ok got it. For a 1-bedroom in any western US metro (Seattle, SF, LA) that would be well below market.
bparsons 8y ago
One thing that gets overlooked by many when discussing Vancouver real estate- it is a very tiny municipality. Unlike most other North American urban centres, Vancouver resisted amalgamation with all of it's connecting cities. The result is a geographically constrained area (Vancouver proper) surrounded by cities that are effectively it's suburbs (greater Vancouver). Homes and rents are somewhat more affordable when you look at these suburbs, although they have increasingly gotten worse. The residential data from tiny Vancouver has increasingly become absurd, as people focus on this small handful of luxury neighborhoods in the centre of a large metropolitan area.
pm24601 8y ago
A follow on problem: If there is a problem at a property Vancouver needs to track the beneficial owner to handle liability and maintenance issues. Vancouver has a problem of determining responsibility for poorly maintained buildings, fire code violations, etc.
deleted 8y ago
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ygmelnikova 8y ago
Born in Vancouver, have lived here for nearly sixty years. The only thing that would make me want to leave? It's not immigration or housing costs... it's the rain. Try being cooped up in a 700 sq ft 1 bdrm apartment downtown ($700,000) for 6 months of the year. Did I mention the rain?
Tsubasachan 8y ago
Ah Canada. The Civilized State of America. Its not the Chinese you should fear, its the fifth columnists from your Southern neighbour. The Chinese immigrants don't vote and they don't really hate Canada.
daneyh 8y ago
Sydney and Melbourne, Australia have seen this exact same problem

132 points by prostoalex 8y ago

> It’s not the business capital of western Canada—that’s Calgary Can someone explain what this means? It seems like Vancouver is most definitely the de facto business capital of Western Canada but I base this solely on my observations as a tourist from Seattle and friendship with Chinese real estate broker.

forkLding 8y ago
The article is a bit weird in general, I would say both Calgary and Vancouver have "businesses" from financial to tech companies. But Calgary usually has a lot more energy and mining companies headquartered there so I guess in general it would have more corporations? Basically none of these cities are near the scale of Toronto. Never thought of Calgary as the de facto business capital of Western Canada (it could also be Edmonton) but could be because I'm mainly in Vancouver.
fbelzile 8y ago
Western Canada is most known for it's energy sector and most energy companies are based out of Calgary, AB.
deleted 8y ago
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ttul 8y ago
Vancouver has many branch offices but few headquarters of large businesses.
refurb 8y ago
A few of my business school classmates fell in love with Vancouver and wanted to move their after graduation. They found out pretty quickly there aren’t as many jobs in Vancouver as one would expect. As others have mentioned, lots of regional office, but not many headquarters. You’d have a much easier time finding a job in Calgary or Toronto than Vancouver. It’s a big, well known city, but has fewer professional jobs than you’d expect.
- Latteland 8y ago
  Almost every big software company in Seattle has a largish office in Vancouver because of the challenge of getting visas to the us.
- sonnyblarney 8y ago
  "lots of regional office, but not many headquarters." You could say this about Canada in it's entirety.
  - refurb 8y ago
    True! I was speaking more around Canadian companies. I believe Calgary has the highest number of corporate HQs in Canada.
    - sonnyblarney 8y ago
      Toronto has the highest number of HQs. Calgary may have a higher number per capita - or - they may 'technically' have more HQs because of the vast number of shell companies that exist for complex resource extraction events. Kind of like Delaware in the US.
      - refurb 8y ago
        Half as many as Toronto, but twice as much on a per capita basis.[1] [1]https://www.calgaryeconomicdevelopment.com/dmsdocument/133 https://www.calgaryeconomicdevelopment.com/dmsdocument/133
kitcar 8y ago
People generally don't build weallth in Vancouver. Cost of living is too high and salaries too low. Outside of real estate and film production, there dosen't seem to be sufficient scale / diveristy of business activity in Vancouver to make it a place Canadians relocate to work/start companies. Hence it's not a business center even though it's a big city. My feeling is Vancouver is more like Monaco then New York City. Already rich people move to Vancouver.
sonnyblarney 8y ago
Alberta has an Oil based economy, they are wealthy. BC doesn't have much of a real industrial basis in anything.

tomcam 8y ago

tl;dr Vancouver is undergoing wrenching changes due to unfathomable amounts of Chinese money. This is inflamed by British Columbia's surprisingly lax approach to financial transparency in foreign investment and liberal immigration laws. It has priced locals right out of the market, though recent changes in tax structure are cooling down real estate investment. Article doesn't do a good job of covering "little thirds", mistresses who are settled there with an apartment and allowance, or of unaccompanied "college students" who spend way more time vlogging than studying. Anecdotally a shitload of people following those descriptions have been shipped in, an influx that has slowed drastically with real estate taxes meant to punish this behavior. The city of Richmond just south of Vancouver is mentioned but its import is arguably understated by the article. It's a fascinating place, and Richomond's "night market" (sort of a combination fair midway/flea market) is an electric experience soon to be imported to Silicon Valley, where it will be a huge hit. Westerners generally speaking have absolutely no clue about the importance of a stable currency, which implies a stable political system, a nation that respects rule of law, and a notion of property rights. This leaves only a few countries, namely the US, the UK, and a couple of Western European nations. Wealthy Chinese absolutely do, and they are scared out of their minds that the tyrannical regime there will separate them from their assets. These people remember the Cultural Revolution. So the West is the first resort for relatively safe storage of their often questionably-gotten cash. (More adventurous/volatile places to invest, like Africa, are riskier but often have a higher upside.) Because I apparently hate good karma I will observe that we used to love going to Vancouver, especially the weeklong jazz festival, but we don't any longer. Like Seattle, the fun places to walk have largely been overrun by street people who use hard drugs and leave needles around. None appear to be Asian.

CPLX 8y ago
Having never heard the term, a quick google search for “little third” led to this fascinating article: http://www.newyorker.com/magazine/2017/06/26/chinas-mistress-dispellers http://www.newyorker.com/magazine/2017/06/26/chinas-mistress...
psergeant 8y ago
> the UK Probably not for much longer, given the rather interesting https://en.wikipedia.org/wiki/Unexplained_wealth_order https://en.wikipedia.org/wiki/Unexplained_wealth_order

tw1010 8y ago

Has this happened before? How can we learn more about this phenomenon by looking at history? To me this is an entirely new phenomenon.

Alex3917 8y ago
Well you've got cities like Miami and Providence which were built with cocaine money, cities like Havana and pretty much all of the Netherlands that were built with money from the slave trade, etc. Not really new. And then you've got places like New York where a large percentage of the money coming in has always been from illicit or semi-licit activities, but never so much that it was the overwhelming majority of the economy at any given point.
- selimthegrim 8y ago
  Miami I get but Providence? I thought the Italian mob wasn’t into cocaine?
  - Alex3917 8y ago
    Not sure, here is a NYT article on it though: https://www.nytimes.com/1985/08/25/us/rhode-island-a-crossroads-for-cocaine.html https://www.nytimes.com/1985/08/25/us/rhode-island-a-crossro...

projectramo 8y ago

I just assumed that the tales of “Chinese money” in Vancouver was part exaggeration and part fear of change and foreigners. Real estate everywhere is booming in nice cities. However, I may have been hasty in that assessment because this single number — the first estimate I have seen — is mind numbingly large: “of their country’s capital controls. Since mid-2014, capital flight from China may have totaled as much as $800 billion, according to estimates from the Institute of International Finance.”

tomcam 8y ago
Those tales are not exaggerated. The $800 billion feels very right, and possibly even conservative, to me. Source of anecdata: many investments in China, Asian family, frequent visitor to Vancouver. Few high net worth Chinese nationals expect to be able to keep their money from the government in the long haul. Racism/fear of change aren't factors. Locals would fear "these people" moving in and jacking up real estate prices if they were German, Swedish, or Danish. The problems are quite practical: as with older property owners in Silicon Valley, locals love seeing their own house values skyrocket, but no one thinks about the fact that once they sell they won't be able to remain.
- johnchristopher 8y ago
  > but no one thinks about the fact that once they sell they won't be able to remain Wouldn't it be hard to stay anyway once real estate price go up for the sheer fact that rich people are coming and so prices for everything will go up anyway ? Is my simplistic reasoning flawed ?
  - techsupporter 8y ago
    I've asked this question to a person I know who is an academic in economics (not a world-renowned economist, just someone who does economics at university), for what it's worth, and what she told me is--in my paraphrased understanding--that if a market goes up "naturally," or by the usual forces people regularly expect (usually around jobs), then wages tend to also go up so housing and other goods remain mostly affordable relative to local wages being paid. The issue in cities and areas like Vancouver and Seattle and San Francisco--ones that aren't just hubs for high-paying technology jobs but also ones where overseas capital has made inrushes--is that wages haven't been able to keep up with the outside capital. So property of all types (it's just that most people only directly care about residential property, but commercial property also goes up and that increases the cost of other things in the local economy) rises in price while wages don't, so a major disconnect starts to happen. This is a two-paragraph summary of a nearly three-hour conversation we had, so there's a lot of nuance I've left out. Zoning, development, density, and all of the rest around property use also affect prices and, according to her, probably more than inbound foreign money, but the added money has an influence.

stuxnet79 8y ago

Now that BC is cracking down on the money laundering in Vancouver, the exact same story is playing out in Toronto and to a smaller extent, Montreal. Canadian cities have been hard hit generally speaking, because it's a lot harder to do this kind of shady stuff in American cities. Also Canadian dollar is cheap.

superseeplus 8y ago
It does happen in American cities too. Many of the very expensive apartments on Billionaires Row were bought by rich foreigners trying to park or launder money.
pm24601 8y ago
Not true (sadly). NYC, Miami, SF, etc. have a big problem with shell corporations using real estate to do money laundering.

rb808 8y ago

The interesting thing to me is - do the Chinese politicians and business leaders see the money laundering as a problem that needs fixing. Or is it those same people that are doing it? IE are all powerful Chinese people doing this or a minority.

Latteland 8y ago
I think it's probably both. Many of them are doing it, and they have to make filial piety towards the government rules. Since China has been trying to kidnap ex-pats who complain about the government, it's becoming harder and harder for people to have the guts to come forward.
Tsubasachan 8y ago
Chinese have invested money abroad for centuries. Its actually something that serves China well. You can find Chinese enclaves from Singapore to Lagos.

mcny 8y ago

Once again, I think it absolutely is racism and bigotry when they talk about Chinese money. Canada knows the solution to this "problem": higher property taxes for everyone. No, not just got absent owners. Use this money to fund infrastructure spending. Help increase supply of housing. The Chinese don't have unlimited monies. They can't print the US dollar... Of course, home owners don't want to pay higher taxes. They don't want property process to fall. A bunch of hypocrites if you ask me.

rtkwe 8y ago
There's a big difference between a housing market that's exploding because of a lot of people moving to the area and one that's being largely propped up by outside purchases that don't get occupied. In a normal housing boom when a property is bought someone comes along with the money and spends money in other areas which boost the rest of the economy too. In the case of properties bought for investment/capital control dodging it all flows into a single area with less of the add on benefits.
api 8y ago
It has nothing to do with racism. If this were a flood of German or British money distorting the market it would be the same.
- mcny 8y ago
  But if they're buying houses and paying property taxes but not using any of the services their taxes pay for, aren't they doing us a service? It sounds like property taxes are unsustainably low the more I hear arguments against the Chinese money. Disclaimer: I'm not of Chinese descent and I'm definitely poor so none of this benefits me. I'm just trying to understand what people are saying because it all sounds like a bunch of dog whistling where people say something but mean something else. I just want us to be open and honest with our bigotry if it is bigotry or greed if it is greed.
  - Latteland 8y ago
    The expense of housing comes from the people outside buying up all the open supply at high prices, so it's hard to afford a house. Also the supply of houses is lower, making apartments even more dear. Next many of the houses aren't lived in, so local area businesses don't have enough customers and close (grocery, clothing, restaurants).

dqpb 8y ago

> Much of the money coming in has been legitimately earned, if sometimes extricated by gray-market means. But officials say that a substantial proportion is the proceeds of corruption or crime, including the illegal sale of opiates such as fentanyl. This is how you gently and quietly wage war against a society. Sell drugs to the youth and then buy up all their property with the proceeds.

msie 8y ago
This is an awfully untrue and xenophobic narrative that the press is promoting. A lot of people not in the drug trade are buying real estate. And the illicit drug trade has been with us forever.
- dqpb 8y ago
  > the illicit drug trade has been with us forever. Indeed. Century of Humiliation: https://en.m.wikipedia.org/wiki/Century_of_humiliation https://en.m.wikipedia.org/wiki/Century_of_humiliation
  - Latteland 8y ago
    And even before westerners like my ancestors intervened in China, people were taking drugs. It was just that they punished only the lower classes. http://www.victorianweb.org/victorian/science/addiction/addiction2.html http://www.victorianweb.org/victorian/science/addiction/addi..., https://www.bl.uk/romantics-and-victorians/articles/representations-of-drugs-in-19th-century-literature https://www.bl.uk/romantics-and-victorians/articles/represen.... Also don't forget Edgar Allen Poe in the US. Anyway, after the good white people of the world (/s, ie probably my ancestors in the us) decided that black people were still a real threat, we got the 1920s anti-pot laws (http://origins.osu.edu/article/illegalization-marijuana-brief-history http://origins.osu.edu/article/illegalization-marijuana-brie...) and it continued even until Nixon tried his successful early "make harsh drug laws to hurt minorities" strategy https://www.cnn.com/2016/03/23/politics/john-ehrlichman-richard-nixon-drug-war-blacks-hippie/index.html https://www.cnn.com/2016/03/23/politics/john-ehrlichman-rich....

sonnyblarney 8y ago

Canada generally exports natural resources, and not much else besides assembled cars that we don't design. (We don't have a lot of high valued exports - highlighted by the odd trading relationship Canada has with China: they buy natural resources, and we buy finished goods from them, which is the opposite of most 'wealthy v. upcoming' trading relationships. Of course China overall is wealthy but per capita it's not) But what Canada does maybe the best in the world is 'boring, stable governance' - which is what so many people want. If the environmentalists would have it ... and I was King ... I would carve out an area on Vancouver Island and make it basically like Singapore - an open city state, that Canada manages, but basically for expats from anywhere. Anybody can come, keep their homeland citizenships, and live in a super above bar and stable regime. There'd be a few extra rules here and there, and they wouldn't be citizens - but they'd get what they want. This way you avoid the massively disruptive socioeconomic issues, and you can actually possibly create industry and a new kind of financial sector, and maybe a few added taxes to boot. Win Win Win all around. All complexities aside, BC residents would protest it to death merely on environmental grounds.

oh_sigh 8y ago
Paul Romer was supporting a similar idea to this a few years ago, but more as an engine for smaller, less developed countries to attract international talent: https://en.wikipedia.org/wiki/Paul_Romer#Charter_cities https://en.wikipedia.org/wiki/Paul_Romer#Charter_cities
woolvalley 8y ago
So these people in Victoria #2 wouldn't be able to participate in the economy of the rest of Canada? They couldn't start corporations that could buy real estate, sell products and so on? What if they wanted to drive to Victoria #1 and go shopping?
- sonnyblarney 8y ago
  Canada still has a lot of immigrants, if they wanted to be Canadian, they could go that route. But citizenship should be more than 'access to real estate and shopping malls'. I'd simply make it so that residences (and real estate ownership), and maybe some other things like their financial positions (even like regular current accounts) are within the 'New Singapore' but otherwise they can go where they want and do as they please in Canada without any kind of border or whatever. And try to make a deal with US so that residents also have 'Canadian-like' access to the US, meaning visa free travel etc.. People who wanted to live in Van or Vic could apply for citizenship.

Invictus0 8y ago

> About 500,000 people in greater Vancouver have Chinese heritage, representing roughly 20 percent of the population, according to Canada’s latest census. The proportion is highest in Richmond, just south of Vancouver proper, which is more than 50 percent Chinese. The suburb’s main commercial drag is No. 3 Road, a boulevard lined with big-box stores and shopping centers fronted by Chinese signage. The most elaborate is the Aberdeen Centre, a curvy mall sheathed in a colorful grid of translucent glass. It was built in 1989. > Over a lunch of steaming soup at Chef Hung Taiwanese Beef Noodle, a bustling second-floor restaurant, the mall’s developer, Thomas Fung, explains how he arrived at the idea. Fung, 67, is slim, with spiky black hair and delicate features. The son of a prominent Hong Kong financier, he arrived in Vancouver in the 1980s and did everything from running bakeries to film production. He soon grasped that the city was about to change dramatically. “I believed that in the coming 10 years, because of the 1997 issue in Hong Kong, there would be a lot of new immigrants coming over here,” Fung says. He knew they’d want the comforts of home, which led him to conceive of a shopping center that would stock the same goods as the megamalls of Hong Kong’s Causeway Bay. This capital influx problem has been decades in the making. I'm curious: what social problems are brewing today that we won't see the effects of until 10, 20 years down the line? How do you identify these trends? In Fung's case, it seems he identified the trend correctly by living directly in the midst of it. Is it possible for an observer to find these trends as well?

jorblumesea 8y ago

The same is true for most of the West coast to a certain extent. But with liberal Canadian immigration policies and lax financial restrictions, Vancouver is an easy target. Westerns have forgotten or do not understand how stable and safe the West is compared to most of the world. Chinese have never forgotten that they live under an authoritarian regime.

mthoms 8y ago

Sitting here in my (Chip Wilson owned) $2000/month one bedroom East Vancouver apartment, I'd say this article really hit close to home. Literally. While I support the conclusions drawn in the article, there is one important factor that wasn't emphasized - weather. People from all over Canada come here for the (relatively) mild temperatures and snow-free winters.Thus you have a market where demand already exceeds supply before even factoring in foreign ownership.

msie 8y ago
It seems many don’t realize that Vancouver is the only major Canadian city on the west coast whereas in the US you have several. In Canada there are three major cities: Vancouver, Toronto and Montreal. If you want to live on the west coast with great weather where are you going to go? Lots of migration in Canada alone.
- woolvalley 8y ago
  All of BC is relatively expensive compared to the USA, with Vancouver as the epicenter.
- deleted 8y ago
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dawhizkid 8y ago
Is $2000/mo a lot or a little? Sorry being in SF I seriously can't tell.
- woolvalley 8y ago
  It is a lot. Especially considering the tech industry salary is under $90k for a sr engineer, and a normal professional person probably makes $40k-$60k/yr
  - dawhizkid 8y ago
    Ok got it. For a 1-bedroom in any western US metro (Seattle, SF, LA) that would be well below market.

bparsons 8y ago

One thing that gets overlooked by many when discussing Vancouver real estate- it is a very tiny municipality. Unlike most other North American urban centres, Vancouver resisted amalgamation with all of it's connecting cities. The result is a geographically constrained area (Vancouver proper) surrounded by cities that are effectively it's suburbs (greater Vancouver). Homes and rents are somewhat more affordable when you look at these suburbs, although they have increasingly gotten worse. The residential data from tiny Vancouver has increasingly become absurd, as people focus on this small handful of luxury neighborhoods in the centre of a large metropolitan area.

pm24601 8y ago

A follow on problem: If there is a problem at a property Vancouver needs to track the beneficial owner to handle liability and maintenance issues. Vancouver has a problem of determining responsibility for poorly maintained buildings, fire code violations, etc.

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ygmelnikova 8y ago

Born in Vancouver, have lived here for nearly sixty years. The only thing that would make me want to leave? It's not immigration or housing costs... it's the rain. Try being cooped up in a 700 sq ft 1 bdrm apartment downtown ($700,000) for 6 months of the year. Did I mention the rain?

Tsubasachan 8y ago

Ah Canada. The Civilized State of America. Its not the Chinese you should fear, its the fifth columnists from your Southern neighbour. The Chinese immigrants don't vote and they don't really hate Canada.

daneyh 8y ago

Sydney and Melbourne, Australia have seen this exact same problem