As "criminal super-rich" buy sweet security of Vancouver homes, outrage over rising prices, money laundering and accusations of racism
“We’re an immigrant nation. So to say that immigrants are somehow impacting the marketplace is beginning to sound suspiciously awkward to me,” Cameron Muir, chief economist with the BC Real Estate Association says. Others, like Hong Kong's Ian Young, of the South China Morning Post, beg to disagree.
“The fact these millionaires (buying real estate in Vancouver) are mainly Chinese is not relevant to the debate, and that is why I am a bit distressed that this is being characterized as a racist discussion,” says Ian Young, the Vancouver correspondent for the South China Morning Post.
Stating his opinion in The Vancouver Sun last week, former real estate developer Bob Ransford says any talk of who is buying what, where they are from and whether or not anyone is living in these homes is “innuendo” and “arm chair estimates”. Ransford says talk of restrictions on foreign ownership “begin to tread very close to past policies for which we are today apologizing. The head tax on Chinese immigrants is one that comes to mind.” Ransford says what’s really needed is reliable data.
But Young disagrees. He says that the fact that the issue is sensitive doesn't mean it shouldn't be openly debated. “It’s a very sensitive discussion, and for that reason I am perturbed that this discussion has been appropriated by people who profit from the industry. I think it’s ridiculous. Of all the people to leap to the defence of the huddled masses of Chinese millionaires, surprise, surprise: it’s rich property developers.”
Real estate is the obsession of Young's readers, especially the almost 150,000 Vancouverites in Hong Kong, virtually all of them ethnically Chinese. He says the subject of Vancouver’s real estate market is watched closely. But Young says not one of his readers or his circle of ethnic Chinese friends in Vancouver has ever raised the issue of racism when it comes to real estate.
“I have a lot of Chinese readers and friends,” says Young. “Why is it that only rich property developers are raising this issue of racism? Why doesn’t Sid Tan from the Head Tax Society issue warnings of racism? Why are the readers of the South China Morning Post not worried about this potential racism? It’s because Chinese readers see no racism in the contention that foreign money, specifically Chinese money, fuels the foreign market.”
Young isn’t the only person to raise the issue of racism accusations stifling debate over abnormally high housing prices in the city. Vancouver community activist Sandy Garossino has also raised the issue of unaffordable housing and was accused of racism for suggesting wealthy global buyers may have a lot to do with it. “There is a false veneer,” says Garossino. “All the Lamborghini and Maserati dealerships belie the fact that the average Vancouverite is struggling and choking over the cost of living. This erodes the local economy to a huge degree. We cannot attract new businesses here because they cannot transfer their employees. Existing businesses and faculties cannot attract excellent talent to the city because employees will not take what amounts to a cut in their standard of living to live here.”
Housing in Vancouver has become one of the most expensive in the world, outstripping international cities like New York, London and Paris. According to the Bank of Canada, the average selling price of a home in Vancouver is now nearly 11 times the average Vancouver family’s household income, a multiple similar to those seen in Hong Kong and Sydney.
Vancouver urban planner Andy Yan, with Bing Thom Architects, believes Vancouver has become a ‘hedge city” where wealthy foreigners park their cash in a politically stable and comfortable city where they feel safe to invest in homes they may use only sporadically.
As word spreads about the city, more of the global super-rich move in and gobble up properties from real estate developers who are more than willing to sell at highly inflated prices.
Chinese real estate ad for Vancouver property
Cashing in on this, Vancouver realtors use global real estate websites like juwai.com to market high end properties to wealthy investors in Asia.
Take, for example, 1328 W.15th Avenue in Shaughnessy. It's for sale on juwai.com for almost $4 million. The 3,100 square foot view home boasts of an elevator to luxurious ensuites, a wine cellar, and underground parking.
Young says homes like these cater to wealthy Chinese who may use the property for their families or, simply as an investment.
“Certainly the real estate board and some of the more official figures don’t really want to address it. They don’t want to talk about it loudly. However, privately they tell me that this is a very important sector of the high end market for detached homes. If you go to the open houses on the west side (of Vancouver), you see a lot of mainland Chinese buyers and they are being catered to, which is all well and proper for the real estate agents.”
There is little data to prove who is buying what in Vancouver and where they are from. In the US, the National Association of Realtors publishes an annual profile of residential real estate sales to foreigners. The 2013 survey of 3,300 US realtors reveals that foreign buyers spent $68.2 billion on residential properties in 2013. That adds up to 6.3 per cent of the total US home sales market of $1.08 trillion for 2013. The report also breaks down the top five buyers by country (Canada is number one, followed by China), types of properties and financing. The NAR publishes the report online, but similar data is simply not available in Canada.
“In terms of a planning tool and data as a whole, I think it would be beneficial to have this type of information available publicly,” says Brian Yu, an economist with Central 1 Credit Union in Vancouver. “Obviously on the real estate side, more data is better. There is a lack of data in terms of buyer profiles and the degree of how much off-shore purchases there are. It would definitely provide some clarity in the market.”
Cameron Muir, Chief Economist, BC Real Estate Association
“We would love to have additional data,” says Cameron Muir, chief economist with the BC Real Estate Association. “We would love to know exactly how many and from where. That would be very good information, particularly when we hear a lot of talk around making policy today around international investors in housing in Vancouver. It’s hard to make policy if you don’t have really good data to base your policy off of. But unfortunately we really don’t have very good data.”
Muir says evidence from BC realtors is that only a small number of sales are going to individuals from overseas. However, if these buyers are only looking at one particular neighbourhood then it’s natural that house prices in that area will rise.
“Certain areas of Vancouver have benefited from foreign investment in real estate,” says Muir. “Particularly when we look at Vancouver being a global gateway city, an international safe haven, a hedge city but saying that is driving up real estate so nobody can afford it is stretching the truth a little bit.”
“We’re an immigrant nation. So to say that immigrants are somehow impacting the marketplace is beginning to sound suspiciously awkward to me.”
The National Association of Realtors in the US says it collects and distributes data on foreign home buyers to help realtors better understand the marketplace and better serve domestic and foreign clients. A spokesperson with the association says providing as much information as possible about the niche foreign market is a vital part of the real estate industry.
Something the Canadian government and the Canadian Real Estate Association have yet to do.
And until that data is made available, Cameron Muir of the BC Real Estate Association says there is no need to develop any new policies that would thwart foreign investment in Vancouver.
“I see it as an important market segment in Vancouver, as it is in any kind of global gateway city, but I don’t see enough evidence to date to warrant any kind of significant policy direction, and I think that the vast majority of Vancouver is unaffected by it.”
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