7 ms·

Analyst who exposed Vancouver's real estate disaster

97 points by surfallday 8y ago

nikanj 8y ago
This was not a surprise exposure to anyone. Vancouver is a peculiar place, where mobsters haul around duffel bags full of cash and various authorities pretend everything is fine. Lately gossip has mostly focused on the motivations of the various auditors and authorities, who refuse to do their jobs. Leading theories include fear of racism accusations, corruption, laziness, and of course gross incompetence.
- Consultant32452 8y ago
  I suspect fear of winding up in one of those mobster duffle bags plays a part too.
xvf22 8y ago
The mess has spread from Vancouver to Toronto and is now hitting Montreal hard as well. Article is from February 2018.
- hi5eyes 8y ago
  its been getting CRAZY in toronto the past couple years https://globalnews.ca/video/5091538/ontario-police-search-for-kidnapped-chinese-national https://globalnews.ca/video/5091538/ontario-police-search-fo... just the past week international students/people have been involved in some very frightening crimes, this sort of stuff rarely happens much less to students.. i mean its toronto/golden horseshoe for the most part its very safe ??? uhhh why am i getting downvoted?
- Jemm 8y ago
  You can now buy a private island in the Bahamas for about the same price as a 2 bedroom condo in the Toronto core and housing prices here just keep going up.
- selimthegrim 8y ago
  How’s Edmonton?
kitcar 8y ago
It is frustrating as there are straightforward, cost-effective approaches the government could take to better understand the problem and they have chosen not to pursue in an expedited fashion either because of lack of effort or an active desire to stay ignorant (due to upcoming election, impact on big donors, etc...). Instead they just keep telling Canadians they will "allocate funds to better research the issue", i.e. kick the can. For example, a simple, 80/20 analysis they could perform: list at all real estate held by holding companies in GVA and GTA and generate a list of their corporate directors. Find people who are directors on a large number of those holding companies, and check if they are related somehow to law firms, banks/wealth managers, Real estate agents or immigration businesses. If so, you now have a short list of potential properties being used for money laundering that maybe merit further investigation. Calling the top 25 people on that list should reveal some interesting findings... Re-organize by property value if you want to catch bigger fish first.
propter_hoc 8y ago
(2018) - this does not provide a complete picture of the current state of the market.
gerbilly 8y ago
> Yan says there may be some solution—a mix of remedies, new laws, purpose-built rental housing, tax adjustments and so on—that does not mean a collapse in Metro Vancouver’s real estate prices. There never will be a solution because no one will vote for a government that will bring down the value of their home.
- arcturus17 8y ago
  Well, unless you exclude most voters from home ownership...
  - cheez 8y ago
    Never thought of it this way
- ArchD 8y ago
  I never understood the point of having a 'high-value' home that you can't sell anyway because you need a place to live. Sure, you can say you can move somewhere cheaper and pocket the difference. The problem is that until you actually do that, the cost of living will likely follow the property price increase and hurt your wallet. Unless most of the homeowners own more than one property.
  - vpribish 8y ago
    home prices have appreciated far faster than the cost of living during most of people's lives.
    - pascalxus 8y ago
      don't expect this to continue. In the very very long term, price appreciation of housing will always match inflation.
      - mistermann 8y ago
        In the long run, and in the aggregate (planet earth), but in a globalized world with capital from external economies (China) flowing into specific, highly desirable local economies, this old rule of thumb doesn't rule hold up anymore.
14 8y ago
I wish they just did not sell to foreign investors. And yes I would be fine if other countries did the same, why do I need to own a place in 'x' country? This is, again, capitalism at the expense of the people who actually live in the region. I am not against immigration and owning property but a person or organization who are simply buying up property just to make a profit and have no intention of ever living there should be stopped. Or at the least heavily taxed to discourage the practice.
- AlexTWithBeard 8y ago
  Foreign investors buy US property because (a) they get a lot of dollars in exchange for all the TVs, cellphones and underpants we somehow cannot manufacture ourselves and (b) US doesn't have much else to offer. US cars? They're "okay" at best. US electronics? Come on, when have you seen a piece of electronic made in the USA last time? We should fight the cause, not the effect.
  - bobthepanda 8y ago
    Chinese people invest in property because they don’t have good experiences with their home financial markets, know-your-customer is a burden, and because it is hard to invest internationally. Everyone else is fine with stocks and bonds and funds and such. The rest of the world has been asking China to free capital markets for a long time, but there’s not much we can do if the Party doesn’t want to.
    - anthony_barker 8y ago
      Also in Canada there is 0% capital gains tax on your primary residence.
- pascalxus 8y ago
  I don't understand, why can't we simply build more cities? If people are so willing to pay for it, I'm sure there's people who want the jobs. It just seems like such a waste of opportunity
viburnum 8y ago
There are a handful of vibrant cities in the world that haven't been given over to freeways and parking, and they're so rare and desirable that they've become luxury goods that are speculated on, like they're paintings by Vincent van Gogh. How sad is it that so far it's been impossible to simply make more nice places for people instead of for cars?
- cheez 8y ago
  It's not sad at all. It's what people want. If society just thought paying interest on your house was another form of feudalism and refused to play along, I expect you'd see more of your type of city and less of what we currently have.
  - alephu5 8y ago
    Not just paying interest, actually paying whole mortgages for other people. Since the financial crisis of 2007 it's unrealistic for most young people to save to pay a deposit on their own mortgage. Where I live they want about 5 years of gross minimum wage just to take out a mortgage.
  - closeparen 8y ago
    The difference in price tells you what people want. Dense urban environments are vastly more desired than freeway sprawl. The group participating in local politics and writing the policies that entrench freeway sprawl are not representative of housing seekers as a whole.
- pascalxus 8y ago
  Not just Sad but also self-imposed. If outside investors and outside countries were buying up all our jeans, cars, tvs and junk foods, we'd be celebrating it all day long. in fact, we even blame other countries for not buying enough of our stuff (balance of trade debate). And yet, when it comes to real estate we act like we can't make more of it. The vast majority of land out there is still unbuilt. Simply start another city, say 50 miles away or more if need be and then create incentives for companies to move there. We'll have more jobs, much cheaper housing, an opportunity to build a brand new city with the latest technologies, parks, outdoor gyms, libraries, etc, not to mention it'll bring housing costs down in prior city too.
bitxbit 8y ago
What I find most interesting about the influx of Chinese money is that many Chinese communities across North America were built by people who fled China and its communist regime. One can argue that the beginning of the current Vancouver housing boom was the Hong Kong transfer in 1997. And they built tight-knit communities in Vancouver/Richmond area (not mention some of the best Chinese restaurants in the world). Now just one or two generations removed, these communities are facing the consequences of the same communist regime they thought they left behind.
not_that_noob 8y ago
Real estate remains one of last few asset classes where ownership can be obfuscated reliably. This makes it ideal to park money of dubious provenance. If you bring transparency to the system - much like know-your-customer did to banking - this phenomenon will largely disappear. The local residents have reached a point I think for this to happen in Vancouver - and it could spread to other similar cities.

97 points by surfallday 8y ago

This was not a surprise exposure to anyone. Vancouver is a peculiar place, where mobsters haul around duffel bags full of cash and various authorities pretend everything is fine. Lately gossip has mostly focused on the motivations of the various auditors and authorities, who refuse to do their jobs. Leading theories include fear of racism accusations, corruption, laziness, and of course gross incompetence.

Consultant32452 8y ago
I suspect fear of winding up in one of those mobster duffle bags plays a part too.

xvf22 8y ago

The mess has spread from Vancouver to Toronto and is now hitting Montreal hard as well. Article is from February 2018.

hi5eyes 8y ago
its been getting CRAZY in toronto the past couple years https://globalnews.ca/video/5091538/ontario-police-search-for-kidnapped-chinese-national https://globalnews.ca/video/5091538/ontario-police-search-fo... just the past week international students/people have been involved in some very frightening crimes, this sort of stuff rarely happens much less to students.. i mean its toronto/golden horseshoe for the most part its very safe ??? uhhh why am i getting downvoted?
Jemm 8y ago
You can now buy a private island in the Bahamas for about the same price as a 2 bedroom condo in the Toronto core and housing prices here just keep going up.
selimthegrim 8y ago
How’s Edmonton?

kitcar 8y ago

It is frustrating as there are straightforward, cost-effective approaches the government could take to better understand the problem and they have chosen not to pursue in an expedited fashion either because of lack of effort or an active desire to stay ignorant (due to upcoming election, impact on big donors, etc...). Instead they just keep telling Canadians they will "allocate funds to better research the issue", i.e. kick the can. For example, a simple, 80/20 analysis they could perform: list at all real estate held by holding companies in GVA and GTA and generate a list of their corporate directors. Find people who are directors on a large number of those holding companies, and check if they are related somehow to law firms, banks/wealth managers, Real estate agents or immigration businesses. If so, you now have a short list of potential properties being used for money laundering that maybe merit further investigation. Calling the top 25 people on that list should reveal some interesting findings... Re-organize by property value if you want to catch bigger fish first.

propter_hoc 8y ago

(2018) - this does not provide a complete picture of the current state of the market.

gerbilly 8y ago

> Yan says there may be some solution—a mix of remedies, new laws, purpose-built rental housing, tax adjustments and so on—that does not mean a collapse in Metro Vancouver’s real estate prices. There never will be a solution because no one will vote for a government that will bring down the value of their home.

arcturus17 8y ago
Well, unless you exclude most voters from home ownership...
- cheez 8y ago
  Never thought of it this way
ArchD 8y ago
I never understood the point of having a 'high-value' home that you can't sell anyway because you need a place to live. Sure, you can say you can move somewhere cheaper and pocket the difference. The problem is that until you actually do that, the cost of living will likely follow the property price increase and hurt your wallet. Unless most of the homeowners own more than one property.
- vpribish 8y ago
  home prices have appreciated far faster than the cost of living during most of people's lives.
  - pascalxus 8y ago
    don't expect this to continue. In the very very long term, price appreciation of housing will always match inflation.
    - mistermann 8y ago
      In the long run, and in the aggregate (planet earth), but in a globalized world with capital from external economies (China) flowing into specific, highly desirable local economies, this old rule of thumb doesn't rule hold up anymore.

14 8y ago

I wish they just did not sell to foreign investors. And yes I would be fine if other countries did the same, why do I need to own a place in 'x' country? This is, again, capitalism at the expense of the people who actually live in the region. I am not against immigration and owning property but a person or organization who are simply buying up property just to make a profit and have no intention of ever living there should be stopped. Or at the least heavily taxed to discourage the practice.

AlexTWithBeard 8y ago
Foreign investors buy US property because (a) they get a lot of dollars in exchange for all the TVs, cellphones and underpants we somehow cannot manufacture ourselves and (b) US doesn't have much else to offer. US cars? They're "okay" at best. US electronics? Come on, when have you seen a piece of electronic made in the USA last time? We should fight the cause, not the effect.
- bobthepanda 8y ago
  Chinese people invest in property because they don’t have good experiences with their home financial markets, know-your-customer is a burden, and because it is hard to invest internationally. Everyone else is fine with stocks and bonds and funds and such. The rest of the world has been asking China to free capital markets for a long time, but there’s not much we can do if the Party doesn’t want to.
  - anthony_barker 8y ago
    Also in Canada there is 0% capital gains tax on your primary residence.
pascalxus 8y ago
I don't understand, why can't we simply build more cities? If people are so willing to pay for it, I'm sure there's people who want the jobs. It just seems like such a waste of opportunity

viburnum 8y ago

There are a handful of vibrant cities in the world that haven't been given over to freeways and parking, and they're so rare and desirable that they've become luxury goods that are speculated on, like they're paintings by Vincent van Gogh. How sad is it that so far it's been impossible to simply make more nice places for people instead of for cars?

cheez 8y ago
It's not sad at all. It's what people want. If society just thought paying interest on your house was another form of feudalism and refused to play along, I expect you'd see more of your type of city and less of what we currently have.
- alephu5 8y ago
  Not just paying interest, actually paying whole mortgages for other people. Since the financial crisis of 2007 it's unrealistic for most young people to save to pay a deposit on their own mortgage. Where I live they want about 5 years of gross minimum wage just to take out a mortgage.
- closeparen 8y ago
  The difference in price tells you what people want. Dense urban environments are vastly more desired than freeway sprawl. The group participating in local politics and writing the policies that entrench freeway sprawl are not representative of housing seekers as a whole.
pascalxus 8y ago
Not just Sad but also self-imposed. If outside investors and outside countries were buying up all our jeans, cars, tvs and junk foods, we'd be celebrating it all day long. in fact, we even blame other countries for not buying enough of our stuff (balance of trade debate). And yet, when it comes to real estate we act like we can't make more of it. The vast majority of land out there is still unbuilt. Simply start another city, say 50 miles away or more if need be and then create incentives for companies to move there. We'll have more jobs, much cheaper housing, an opportunity to build a brand new city with the latest technologies, parks, outdoor gyms, libraries, etc, not to mention it'll bring housing costs down in prior city too.

bitxbit 8y ago

What I find most interesting about the influx of Chinese money is that many Chinese communities across North America were built by people who fled China and its communist regime. One can argue that the beginning of the current Vancouver housing boom was the Hong Kong transfer in 1997. And they built tight-knit communities in Vancouver/Richmond area (not mention some of the best Chinese restaurants in the world). Now just one or two generations removed, these communities are facing the consequences of the same communist regime they thought they left behind.

not_that_noob 8y ago

Real estate remains one of last few asset classes where ownership can be obfuscated reliably. This makes it ideal to park money of dubious provenance. If you bring transparency to the system - much like know-your-customer did to banking - this phenomenon will largely disappear. The local residents have reached a point I think for this to happen in Vancouver - and it could spread to other similar cities.