Real Estate

Vancouver housing bubble?

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  • Aug 19th, 2019 8:43 pm
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Deal Guru
Jan 27, 2006
11091 posts
4492 upvotes
Vancouver, BC
mkjr wrote:
Jun 13th, 2019 3:44 pm
What is somewhat ironic is that people still do not think there is the same issue with money laundering here in Toronto in the real estate market or yer worse, those who think Vancouver is leveling off.
In any market that 'suddenly' increases over historical norms with any 'one' thing that can account for it (ie like a major local development like LNG in Northern BC), there's probably some level of illegal activities going on... I suspect that money is being laundered in Montreal and Ottawa as well.
Deal Fanatic
Feb 29, 2008
8091 posts
3151 upvotes
mkjr wrote:
Jun 13th, 2019 3:44 pm
What is somewhat ironic is that people still do not think there is the same issue with money laundering here in Toronto in the real estate market or yer worse, those who think Vancouver is leveling off.
There is money laundering here but it’s not blown out of proportion with people acting like that is the biggest reason why prices have escalated.

Money laundering is nothing new not is illegal activity with regards to money but we all know why it’s being turned into such a huge issue now. We know.
Penalty Box
Mar 7, 2011
3463 posts
1607 upvotes
Vancouver
JayLove06 wrote:
Jun 13th, 2019 6:16 pm
Money laundering is nothing new not is illegal activity with regards to money
Huh ?!? Is the weed too strong for you?
JayLove06 wrote:
Jun 13th, 2019 6:16 pm
but we all know why it’s being turned into such a huge issue now. We know.
Who's "we" ?
Member
Jul 25, 2008
374 posts
252 upvotes
ottawa
I just don't see what the harm is in cracking down in money laundering in real estate is if the BC government is wrong? For the average buyer, it's just one or two more forms to fill out. Unless the BC government is right and there is lots of criminal activity in the housing market, there should be no effect on prices (and if we're lucky, a few crooks get caught).
Deal Fanatic
Feb 29, 2008
8091 posts
3151 upvotes
charlesd79 wrote:
Jun 14th, 2019 12:31 am
Huh ?!? Is the weed too strong for you?

Who's "we" ?
It's called shitty apple predictive text
Deal Addict
User avatar
Dec 14, 2007
3055 posts
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danishh wrote:
Jun 14th, 2019 2:37 am
I just don't see what the harm is in cracking down in money laundering in real estate is if the BC government is wrong? For the average buyer, it's just one or two more forms to fill out. Unless the BC government is right and there is lots of criminal activity in the housing market, there should be no effect on prices (and if we're lucky, a few crooks get caught).
I'm with you on this one. In my opinion, doing what you can to crack down on illegal activity is a good long term thing to do anyhow. Corruption starts small and over time... if you ignore the small stuff, it just gets bigger and bigger.

I KNOW that the current agenda is a lot of politics and I also am pretty sure that foreign speculation has had a nominal effect on real estate values... but the PERCEPTION of foreigners buying up the land in Vancouver is a STRONG force. If 1 in 20 homes are bought by foreigners, 19 in 20 are NOT. Those 19 people see crackdowns and they see a pullback in RE values. Much of the pullback in values actually happened before much of the crackdowns... it was just market forces that made houses overvalued, plain and simple... and people stopped buying... FOMO or no FOMO. Those 19/20 are what affected the market... but those 19 out of 20 people felt like there was a crackdown. If 5% of foreign bought property was corrupt and 5% of houses were bought by foreigners... then it's 0.25% which really is a rounding error apart for smaller segments like the really expensive mansions in West Vancouver.

It's the same how I also KNOW that the Olympics are generally a RAW deal, but it provides an impetus for a city to get motivated to enhance/build/create new infrastructure. Given how much opposition the RAV line (née Canada Line) had when it was being proposed, I'd be shocked if it got built without the Olympics. I KNOW that the officials were saying it's NOT an Olympics Line... and that's true on paper perhaps, but the Olympics SMOOTHed the path (ever so slightly) and MOTIVATED the government to do everything they could to just get it built.

It's the same with money laundering. It may be small potatoes, but it's still illegal and there IS corruption at play. If you don't cut out the rotten part of the fruit, it quickly spreads to the whole basket.
Money laundering also makes good news, it allow Vancouverites to point the finger at foreigners instead of blaming domestic lax lending policies, low interest rates, or local FOMO... and it gives politicians something to rally about during election campaigns.

Will these actions mean we'll get less legitimate foreign investment? Yes. It will mean that. Therefore, our economy will grow more slowly. THAT is a given. But in the process, you have the opportunity to make things more transparent... and daylight some of the opaque elements of real estate. IMO, real estate should be subject to the same kind of oversight as the stock market. Right now, it's nowhere near that. Some of that is changing.

Why are developers ALLOWED to hold back 20% of a condo and then claim the building is sold out... it makes a mockery of the whole process. There should be required transparency there. Why are condos allowed to claim in marketing materials that a unit is a 2 bedroom unit when bedrooms must have a window. Why can they get away with including the balcony in the sq. footage of a unit in marketing materials... but officially the balcony is NOT considered part of the sq. footage of the unit? Why don't we have 3rd party detailed selling data like we do for the stock market?

Anyhow... the whole foreigner witch hunt is allowing the government to set more strict guidelines when it comes to real estate, so that's not a bad thing. Transparency is key when you're trying to root out corruption. And I'm all for that, despite the short term pain in real estate values.
I'd love to write history... in advance.
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Deal Guru
Jan 27, 2006
11091 posts
4492 upvotes
Vancouver, BC
danishh wrote:
Jun 14th, 2019 2:37 am
I just don't see what the harm is in cracking down in money laundering in real estate is if the BC government is wrong? For the average buyer, it's just one or two more forms to fill out. Unless the BC government is right and there is lots of criminal activity in the housing market, there should be no effect on prices (and if we're lucky, a few crooks get caught).
The government needs to use the data that they already have access to in order to do the first wave of investigations and crackdowns. By creating a system where more paperwork is required which may duplicate the information already on hand, just creates more government jobs without actually doing anything about catching a few crooks. IMHO, the extra money spent in administration of the additional paperwork would be better spent on managing the information we already have and actual enforcement of existing regulations so that we can catch those crooks sooner rather than later.
Deal Addict
Apr 10, 2011
1243 posts
737 upvotes
Vancouver
charlesd79 wrote:
Jun 14th, 2019 2:57 pm
Speculators, speculators everywhere...

https://vancouversun.com/news/local-new ... -vancouver

That's a good read...

"Not-owner-occupied property skyrockets in Vancouver"

Property in Metro Vancouver is often sold as an investment, not as a place to live.

In Metro Vancouver, 37 per cent of condos are not-owner occupied. The number drops to 15 per cent for single-detached houses.

Yan delved deeper into the new study to ascertain the numbers by city. He found that the highest number of not-owner occupied properties is at the University of B.C. and the endowment lands, where 49 per cent of condos and 47 per cent of detached homes are not-owner occupied.

What used to be a smouldering cigarette butt on the side of the road is now arguably a raging forest fire,” he said.
Deal Guru
Jan 27, 2006
11091 posts
4492 upvotes
Vancouver, BC
RxMills wrote:
Jun 17th, 2019 7:26 pm

Property in Metro Vancouver is often sold as an investment, not as a place to live.
That's something I have said on this thread a few times... It's good to know that someone may actually be reporting on that fact. Also, if we can get the local governments to understand this fact, maybe we can have some better policies to deal with the problem other than quoting the same old thing of 'hundreds of thousands of people will be moving into the Vancouver area in the next 50 years and we need to prepare accordingly...'
Deal Guru
Jan 27, 2006
11091 posts
4492 upvotes
Vancouver, BC
JayLove06 wrote:
Jun 17th, 2019 10:55 pm
What is wrong with that?
At the end of the day, as long as everything is done above board - ie all fees and taxes paid, nothing is wrong with that. In fact, that's where most if not all of the rental stock comes from.

However, politicians have been using population migration as the story behind the rising housing market as well as justification for other projects while ignoring any other possible reason which will lead to the wrong decisions and projects as they would be based on false information - ie what's the point of spending millions of dollars for hundreds of thousands of people who are 'supposed to be coming' but don't actually come? Those millions are better spent on the people who are already here...
Deal Addict
Dec 4, 2016
1262 posts
506 upvotes
RxMills wrote:
Jun 17th, 2019 7:26 pm
That's a good read...

"Not-owner-occupied property skyrockets in Vancouver"

Property in Metro Vancouver is often sold as an investment, not as a place to live.

In Metro Vancouver, 37 per cent of condos are not-owner occupied. The number drops to 15 per cent for single-detached houses.

Yan delved deeper into the new study to ascertain the numbers by city. He found that the highest number of not-owner occupied properties is at the University of B.C. and the endowment lands, where 49 per cent of condos and 47 per cent of detached homes are not-owner occupied.

What used to be a smouldering cigarette butt on the side of the road is now arguably a raging forest fire,” he said.
37% of condos and 15% for detached adds up to 30%-ish non-owner occupied rate. Add maybe 10% "non-market housing" (social housing, co-ops, group homes, etc), we have 40% of population not owner-occupier. That means 60% owner-occupier. For a metropolitan area, I don't see anything wrong with this number. Yan is really making a big deal out of nothing.

UBC and endowment lands are close to a university. For what it's worth, condos near McGill university of Montreal probably also have low owner-occupier rate. Vancouver just don't have a large stock of older rental apartment like Montreal.

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