8 ms·

Vancouver is an extra special case because of all the Chinese/HK money parked there. A planeful of middle-aged Asian gentlemen in suits would land in the mornin

Vancouver is an extra special case because of all the Chinese/HK money parked there. A planeful of middle-aged Asian gentlemen in suits would land in the morning, take a private bus tour around open properties, pay the asking, board the plane and leave. Developers were literally building high-rises to give foreign "investors" something valuable to buy. This all but priced every normal family the fuck out of the market. It was completely insanely bananas. Not "a little money laundering" by any measure. Lovely city though, beautiful nature, excellent restaurants.

CountSessine 6y ago
Developers were literally building high-rises to give foreign "investors" something valuable to buy. ...and yet with all of this development, the rental vacancy rate still hovers around 0... ...and it’s not like we have a huge number of empty homes because we have 2 layers of empty home taxes at this point and we’ve precisely quantified how many there are (~6000 private residences out of a total of ~900000 in the metro area) and there aren’t that many... ...and the population keeps exploding at 2%/year... ...and most of the residential land in the metro area is still restrictively zoned for only single family homes. I don’t think that we need money-laundering to explain the crazy real estate market here. We just need plain-old NIMBYism, break-neck population growth, and historically-low interest rates.
- Kalium 6y ago
  People like having one factor to blame. It means they can avoid all the cognitive overhead of engaging with a complex reality. It means never having to evaluate if policies you support and goals you desire might be at odds. When everything is the fault of those foreigners, a truly remarkable amount of cognitive work just doesn't have to happen.
  - mistermann 6y ago
    Similarly, the same often goes for classification of people as racist without the burden of evidence or thinking.
- 0xffff2 6y ago
  I haven't heard this side of the story before. How do they count empty houses? Is it done in a way that makes it difficult to game the system?
  - CountSessine 6y ago
    It's based on an affirmative declaration - every property gets a letter sent to its owner or listed representative annually, containing the declaration. You return the declaration (or submit it on the British Columbia website) before the deadline affirmatively declaring that the property isn't empty. If you (or no one else) don't make the declaration, the property is taxed. If the province and/or city can't find you, a lien is put on the property (which can eventually be used to force a sale). If you falsify the declaration, this is legally equivalent to a false affidavit, and you can be prosecuted. The tax is fairly small, to encourage compliance.
TrackerFF 6y ago
Seems like an interesting strategy - because the only people that can buy those properties, are other rich people. It's like with high culture and art; Lots of art is simply being passed around multi-millionaires and billionaires. Since there's such a limited pool of buyers, the price is essentially whatever the next buyer is willing to pay for it. Same goes for buildings - If I decide to pay $5MM for a $1MM house, just to park my money in it, I better find some buyer whose willing to pay in the same price-range, or else it's gonna be a substantial loss. Driving up prices, and keeping them artificially high, is not sustainable - unless the area happens to see some major influx of people, and the demand starts to grow organically. Bonus points if it's a very difficult area to develop in, which limits new buildings / real-estate development. But as for the reasons, who knows - could be: - Tax evasion in their native country - Ill-gotten gains they want to hide, or money laundering - Alternative investments
- mrtron 6y ago
  Folks rent these condos at a high price, and folks working in that area buy condos at these market prices. It is not like high priced art.
valuearb 6y ago
Wealthy Chinese fleeing oppression aren’t money launderers.
- mtnGoat 6y ago
  They are if they don't follow rules. Your political issues do not free you from following tax law.
  - dirtyid 6y ago
    Evading Chinese capital outflow restrictions occurs on the Chinese side. Vast majority of real estate in Vancouver adhere to Canadian law, the industry is very well developed, agents and lawyers cross their T's and dot their I's. The issue is there are just too many wealthy Chinese people. Essentially any Chinese citizen who owns property in tier1 Chinese cities, many snatched up 20 years ago for nothing, can afford to buy 1M+ homes in Vancouver or Toronto if sold. None of it involves black money, just being lucky at the right place at the right time and having a desire to live in Canada. The TL;DR: is there's like more legitimate Chinese millionaires by wealth than there are Canadians.
  - valuearb 6y ago
    What Canadian tax laws are they violating?
- pessimizer 6y ago
  Would you say the same thing if I embezzled a bunch of money in the US and moved to China?
  - valuearb 6y ago
    That’s illegal in both countries. Are these money launderers being extradited back to China for transferring their own funds to Canada, like an embezzler would? No, because that’s not illegal in free countries.
- jbay808 6y ago
  If they continue to live, work, and do business in China, then it doesn't count as fleeing.
chansiky 6y ago
In effect, you're saying that Vancouver has become the laundromat of converting illegitimate capital produced under a shadow banking system into real valuable assets. This is bad for everyone else in our global economic system. It would be akin to someone in a game of monopoly accepting counterfeit money. The rest of the players have to play the game with actual monopoly rules while one player is allowed to make up whatever they want. Guess who's going to win that game? Of course its a shadow banking system for a reason, because keeping everything hidden gives them a cheaters advantage. Revealing what happens there would be admitting to cheat and fraud. China is seriously going full force with deception, passive aggression, claiming innocence, claiming moral high ground, while doing everything that is in the book of machiavellian/art-of-war tactics, and the rest of the world is doing nothing about it. (hardly surprising given their cultural mythologies and inclinations which differ vastly from for example a "liberty, justice, and freedom-for-all" mantra that is the foundation and aspiration of a different nation)
- novok 6y ago
  It's not only china that does this, and it's not only Vancouver that is the destination for this, it's just Vancouver is a popular destination for pacific rim countries for this AND has no superstar industry to speak of like London & NYC to help balance this. In SF, NYC & London you can also partly blame their superstar industries and economic growth on the RE market, but NYC/London also has their empty Condo buildings too, and their equivalent of 'wealthy chinese' is 'wealthy russian'. Ex: https://www.nytimes.com/2017/07/21/upshot/when-the-empty-apartment-next-door-is-owned-by-an-oligarch.html https://www.nytimes.com/2017/07/21/upshot/when-the-empty-apa... https://theweek.com/articles/736313/how-foreign-investors-launder-money-new-york-real-estate https://theweek.com/articles/736313/how-foreign-investors-la...
  - chansiky 6y ago
    Yes, there are a lot of bad actors are in the system, which is why punitive measures need to be enforced. We can't pretend that they aren't being sneaky about their finances. China in particular has been notorious in their two-facedness presenting their economies as safe havens while covering up their underhandedness. If they aren't put on the spot and faced directly for what they are under their mask, they'll continue to shapeshift and avert transparency into a system that disproportionately benefits them. Economists have long predicted their economy is in a bubble, but because of the way they prop it up, they are able to inflate far longer than they would in a more transparent world, thus drawing investors into their falsely good looking economy while acquiring foreign assets that have real value with that extra purchasing power.
mrtron 6y ago
Why is that all considered "money laundering" rather than investing? There was a forcing function on getting money out of HK prior to China taking over, but that seems more diversifying than "laundering". Similarly, many Canadians own rental properties (often bought without viewing them) in Florida and Phoenix. Planes full of these folks used to head to those regions for a few weeks or a month in winter months.

CountSessine 6y ago

Developers were literally building high-rises to give foreign "investors" something valuable to buy. ...and yet with all of this development, the rental vacancy rate still hovers around 0... ...and it’s not like we have a huge number of empty homes because we have 2 layers of empty home taxes at this point and we’ve precisely quantified how many there are (~6000 private residences out of a total of ~900000 in the metro area) and there aren’t that many... ...and the population keeps exploding at 2%/year... ...and most of the residential land in the metro area is still restrictively zoned for only single family homes. I don’t think that we need money-laundering to explain the crazy real estate market here. We just need plain-old NIMBYism, break-neck population growth, and historically-low interest rates.

Kalium 6y ago
People like having one factor to blame. It means they can avoid all the cognitive overhead of engaging with a complex reality. It means never having to evaluate if policies you support and goals you desire might be at odds. When everything is the fault of those foreigners, a truly remarkable amount of cognitive work just doesn't have to happen.
- mistermann 6y ago
  Similarly, the same often goes for classification of people as racist without the burden of evidence or thinking.
0xffff2 6y ago
I haven't heard this side of the story before. How do they count empty houses? Is it done in a way that makes it difficult to game the system?
- CountSessine 6y ago
  It's based on an affirmative declaration - every property gets a letter sent to its owner or listed representative annually, containing the declaration. You return the declaration (or submit it on the British Columbia website) before the deadline affirmatively declaring that the property isn't empty. If you (or no one else) don't make the declaration, the property is taxed. If the province and/or city can't find you, a lien is put on the property (which can eventually be used to force a sale). If you falsify the declaration, this is legally equivalent to a false affidavit, and you can be prosecuted. The tax is fairly small, to encourage compliance.

TrackerFF 6y ago

Seems like an interesting strategy - because the only people that can buy those properties, are other rich people. It's like with high culture and art; Lots of art is simply being passed around multi-millionaires and billionaires. Since there's such a limited pool of buyers, the price is essentially whatever the next buyer is willing to pay for it. Same goes for buildings - If I decide to pay $5MM for a $1MM house, just to park my money in it, I better find some buyer whose willing to pay in the same price-range, or else it's gonna be a substantial loss. Driving up prices, and keeping them artificially high, is not sustainable - unless the area happens to see some major influx of people, and the demand starts to grow organically. Bonus points if it's a very difficult area to develop in, which limits new buildings / real-estate development. But as for the reasons, who knows - could be: - Tax evasion in their native country - Ill-gotten gains they want to hide, or money laundering - Alternative investments

mrtron 6y ago
Folks rent these condos at a high price, and folks working in that area buy condos at these market prices. It is not like high priced art.

valuearb 6y ago

Wealthy Chinese fleeing oppression aren’t money launderers.

mtnGoat 6y ago
They are if they don't follow rules. Your political issues do not free you from following tax law.
- dirtyid 6y ago
  Evading Chinese capital outflow restrictions occurs on the Chinese side. Vast majority of real estate in Vancouver adhere to Canadian law, the industry is very well developed, agents and lawyers cross their T's and dot their I's. The issue is there are just too many wealthy Chinese people. Essentially any Chinese citizen who owns property in tier1 Chinese cities, many snatched up 20 years ago for nothing, can afford to buy 1M+ homes in Vancouver or Toronto if sold. None of it involves black money, just being lucky at the right place at the right time and having a desire to live in Canada. The TL;DR: is there's like more legitimate Chinese millionaires by wealth than there are Canadians.
- valuearb 6y ago
  What Canadian tax laws are they violating?
pessimizer 6y ago
Would you say the same thing if I embezzled a bunch of money in the US and moved to China?
- valuearb 6y ago
  That’s illegal in both countries. Are these money launderers being extradited back to China for transferring their own funds to Canada, like an embezzler would? No, because that’s not illegal in free countries.
jbay808 6y ago
If they continue to live, work, and do business in China, then it doesn't count as fleeing.

chansiky 6y ago

In effect, you're saying that Vancouver has become the laundromat of converting illegitimate capital produced under a shadow banking system into real valuable assets. This is bad for everyone else in our global economic system. It would be akin to someone in a game of monopoly accepting counterfeit money. The rest of the players have to play the game with actual monopoly rules while one player is allowed to make up whatever they want. Guess who's going to win that game? Of course its a shadow banking system for a reason, because keeping everything hidden gives them a cheaters advantage. Revealing what happens there would be admitting to cheat and fraud. China is seriously going full force with deception, passive aggression, claiming innocence, claiming moral high ground, while doing everything that is in the book of machiavellian/art-of-war tactics, and the rest of the world is doing nothing about it. (hardly surprising given their cultural mythologies and inclinations which differ vastly from for example a "liberty, justice, and freedom-for-all" mantra that is the foundation and aspiration of a different nation)

novok 6y ago
It's not only china that does this, and it's not only Vancouver that is the destination for this, it's just Vancouver is a popular destination for pacific rim countries for this AND has no superstar industry to speak of like London & NYC to help balance this. In SF, NYC & London you can also partly blame their superstar industries and economic growth on the RE market, but NYC/London also has their empty Condo buildings too, and their equivalent of 'wealthy chinese' is 'wealthy russian'. Ex: https://www.nytimes.com/2017/07/21/upshot/when-the-empty-apartment-next-door-is-owned-by-an-oligarch.html https://www.nytimes.com/2017/07/21/upshot/when-the-empty-apa... https://theweek.com/articles/736313/how-foreign-investors-launder-money-new-york-real-estate https://theweek.com/articles/736313/how-foreign-investors-la...
- chansiky 6y ago
  Yes, there are a lot of bad actors are in the system, which is why punitive measures need to be enforced. We can't pretend that they aren't being sneaky about their finances. China in particular has been notorious in their two-facedness presenting their economies as safe havens while covering up their underhandedness. If they aren't put on the spot and faced directly for what they are under their mask, they'll continue to shapeshift and avert transparency into a system that disproportionately benefits them. Economists have long predicted their economy is in a bubble, but because of the way they prop it up, they are able to inflate far longer than they would in a more transparent world, thus drawing investors into their falsely good looking economy while acquiring foreign assets that have real value with that extra purchasing power.

mrtron 6y ago

Why is that all considered "money laundering" rather than investing? There was a forcing function on getting money out of HK prior to China taking over, but that seems more diversifying than "laundering". Similarly, many Canadians own rental properties (often bought without viewing them) in Florida and Phoenix. Planes full of these folks used to head to those regions for a few weeks or a month in winter months.