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Crusty Clark says no to taxing foreign real estate investors


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Is the property available to be used by someone else?

In the long run...either existing homeowners struggle with bankruptcy due to dropped home values balanced against their high mortgages (ie 2008), or those not in the market yet don't get their dream homes (first world problems), although it seems we all won't get our dream homes, even existing owners.
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Speaking of correlations...

206995d1387285408-how-did-you-buy-your-f

Since interest rates went nowhere in 4 years the chart is still current...

canada-money-supply-m3.png?s=canadamonsu

Axis on the left denotes million of millions of dollars...aka the top represents 2 trillion dollars.

chart.jpg

I don't think our real estates industry keeps track of whether our real estate properties are bought by locals or foreigners so you get a free reign with putting on obvious line graphs and get to blame the central bank again.

The fact that rural real estates are not building price bubbles, and the fact that foreign investors simply do not like buying or living in the country side, and anecdotes from real estates agents should give us a pretty good idea of what's going on.

No doubt easy money contributes to rising real estates prices but that's not the only story.

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Must have been living under a rock for the last while because I took too long to sign this petition.

In the long run...either existing homeowners struggle with bankruptcy due to dropped home values balanced against their high mortgages (ie 2008), or those not in the market yet don't get their dream homes (first world problems), although it seems we all won't get our dream homes, even existing owners.

At the rate things seem to be going I won't even be able to afford living in the Vancouver area in 10 years. Pretty sure i'm not the only one either. I already moved back in with my parents for the time being... screw independence.

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Err... what financial transaction tax?

The one where if you buy or sell financial instruments over an amount of whatever, say $1 million, they can tax you a very small percentage like 0.01%.

It's obviously easy to get around it. In this case, just buy $999,999 instead.

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That should be up to the discretion of the property owner...do you believe in private property rights?

That is not the problem of individual property owners.

Do you believe in private property rights?

And so the flipside is the property owners who are upset over their neighbourhoods being demolished and replaced by massive homes that creep right up onto their property also have property rights. People who like yards? There are all sorts of boundaries being pushed at the moment and that is now being reviewed. Growth is good and part of living in any community...but there are reasonable limits so that everyone can enjoy their property. Seems fair?

So when none of the local businesses can be sustained because, well, people aren't actually living in the community or supporting them, that will affect those who are. Our property rights mean we want to continue to enjoy the communities here and that relies on the homes having residents in them?

My property rights are that I want to live in a neighbourhood, not a ghost town. Security, block watch programs, and other things depend upon it.

People flipping property here for a buck don't care about my property rights....so why should I care about theirs? I don't. And it's not about families buying/living here...there is a welcome mat for those who do. It's people "using" this place for profit and not giving a rat's ass about it. Yes, that is an issue and it's becoming fairly prevalent.

In the long run...either existing homeowners struggle with bankruptcy due to dropped home values balanced against their high mortgages (ie 2008), or those not in the market yet don't get their dream homes (first world problems), although it seems we all won't get our dream homes, even existing owners.

I don't have a high mortgage...that's the point. Mine is almost paid off....and I didn't buy into an explosion of change that is happening. Neither did most I know who are upset over the rampant development and ridiculous prices. I have kids who planned on being here and it's driving them out. Young people don't stand a chance...that's something worthy thinking about.

If you don't like it, leave it. BC is a big beautiful province with tons of opportunity and prices in most places are less than half of that. Where I live it's about 1/5 to 1/6 of the price.

Well that's not how you address issues...by "leaving". By running away. And honestly....my Dad is here, it's not that easy or I would in a heartbeat. Many are, but perhaps that's not a great thing? A great "solution"? If you run any sort of business and people express concern, would you say "well leave then?". Why should this be different? Why shouldn't the power that be hear those concerns and perhaps try to address them? I also volunteer for an organization that counts on me, so I'd be abandoning that mission (about to go there now actually). So, no?

Here's the thing...there is property here that is ONLY being offered to foreign owners...advertised overseas (only) because they'll overpay/bid here. So that's fair? It becomes exclusive vs inclusive and that's very much the shift that's taking place. It's squeezing out children who did dream of being here....but it's not done on a fair and level playing field in some cases. And it warrants some review.

http://www.theglobeandmail.com/news/british-columbia/bc-property-developer-wanted-by-chinese-government-on-corruption-charges/article24179283/

Tell me why this is ok and not a concern...when property is being developed under this (shady) plan? So we shouldn't maybe monitor what is happening or tighten up a bit? A lot of money is being dumped here in property but it's not a given that it's all good. Real estate is being used as a way to hide/launder dirty money and the proceeds from criminal activity and development. But hey, move away and just let it happen?

No. I value this place and will stay and be vocal in trying to preserve some of what this once was...a lot of really great communities have been so for years...with people from all over the globe happily living as neighbours and working together in that. This new trend is something different.

But we're veering off track. Yes, tax to the hilt and don't make it a cash cow and easy money for those looking to cash in here....if wealthy overseas owners who have no intention of making this "home" want to hold a piece of this paradise, they have to earn it like the rest of us. Support the economy and be a good neighbour....not a massive ATM machine that will spit out a quick buck. A recent property here sold for $900,000 more than it was valued at in 2011. That's ridiculous and way out of control.

So we should just trample on the young people here because, well, money? There are some things more valuable and investing in all of our future...not just those flipping things for a buck now. There's got to be a better "meet in the middle" plan that is a better, long term plan overall. This is "home" as well as an investment to some. Or should be.

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I don't think our real estates industry keeps track of whether our real estate properties are bought by locals or foreigners so you get a free reign with putting on obvious line graphs and get to blame the central bank again.

The fact that rural real estates are not building price bubbles, and the fact that foreign investors simply do not like buying or living in the country side, and anecdotes from real estates agents should give us a pretty good idea of what's going on.

No doubt easy money contributes to rising real estates prices but that's not the only story.

The middle graph keeps track of money supply. It might as well be a graph of total debt, as they are kind of the same thing. The top graph is the interest rate. Interest rates control the desire to borrow, or in other words, the total money suplly.

The first two graphs are Canada only. They match the house price chart.

I know it's much more fun to blame others. And heck, I support having a higher tax for people that are not living in the place they bought.

And while foreign investment increases the money supply, the largest source of increased $$$ for Canadians has been borroowing.

That's what's driving up house prices. Easy and cheap credit.

Exactly what happened everywhere else in the world. We just haven't popped yet.....

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And so the flipside is the property owners who are upset over their neighbourhoods being demolished and replaced by massive homes that creep right up onto their property also have property rights. There are all sorts of boundaries being pushed at the moment and that is now being reviewed. Growth is good and part of living in any community...but there are reasonable limits so that people can enjoy their property.

So when none of the local businesses can be sustained because, well, no one is living in the community or supporting them, that affects those who are. Our property rights in that we want to continue to enjoy the communities here.

My property rights are that I want to live in a neighbourhood, not a ghost town. Security, block watch programs, and other things depend upon it.

People flipping property here for a buck don't care about my property rights....so why should I care about theirs? I don't. And it's not about families buying/living here...there is a welcome mat for those who do. It's people "using" this place for profit and not giving a rat's ass about it. Yes, that is an issue and it's becoming fairly prevalent.

I don't have a high mortgage...that's the point. Mine is almost paid off....and I didn't buy into an explosion of change that is happening. Neither did most I know who are upset over the rampant development and ridiculous prices. I have kids who planned on being here and it's driving them out.

Well that's not how you address issues...by "leaving". By running away. And honestly....my Dad is here, it's not that easy or I would in a heartbeat. Many are, but perhaps that's not a great thing? I also volunteer for an organization that counts on me, so I'd be abandoning that mission (about to go there now actually). So, no?

Here's the thing...there is property here that is ONLY being offered to foreign owners...advertised overseas (only) because they'll overpay/bid here. So that's fair? It becomes exclusive vs inclusive and that's very much the shift that's taking place. It's squeezing out children who did dream of being here....but it's not done on a fair and level playing field in some cases. And it warrants some review.

http://www.theglobeandmail.com/news/british-columbia/bc-property-developer-wanted-by-chinese-government-on-corruption-charges/article24179283/

Tell me why this is ok and not a concern...when property is being developed under this (shady) plan? So we shouldn't maybe monitor what is happening or tighten up a bit? A lot of money is being dumped here in property but it's not a given that it's all good. Real estate is being used as a way to hide/launder dirty money and the proceeds from criminal activity and development. But hey, move away and just let it happen?

No. I value this place and will stay and be vocal in trying to preserve some of what this once was...a lot of really great communities have been so for years...with people from all over the globe happily living as neighbours and working together in that. This new trend is something different.

But we're veering off track. Yes, tax to the hilt and don't make it a cash cow and easy money for those looking to cash in here....if wealthy overseas owners who have no intention of making this "home" want to hold a piece of this paradise, they have to earn it like the rest of us. Support the economy and be a good neighbour....not a massive ATM machine that will spit out a quick buck. A recent property here sold for $900,000 more than it was valued at in 2011. That's ridiculous and way out of control.

So we should just trample on the young people here because, well, money? There are some things more valuable and investing in all of our future...not just those flipping things for a buck now, is a better long term plan overall. This is "home" as well as an investment to some. Or should be.

Your property rights end at the edge of your property. Also, FYI, in Canada, your property rights are kind of "meh".

People's say in what happens in their neighbourhood at the end of the day is kind of irrelevant.

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Speaking of correlations...

206995d1387285408-how-did-you-buy-your-f

Since interest rates went nowhere in 4 years the chart is still current...

canada-money-supply-m3.png?s=canadamonsu

Axis on the left denotes million of millions of dollars...aka the top represents 2 trillion dollars.

chart.jpg

I wouldn't bother trying to educate people. Just focus on using the knowlege to benefit yourself. There's really no point.

People beleive what they want to beleive, facts be damned.

Truthiness indeed.

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Of coarse she needs those 'multicultural' votes come next election. How else is she going back to get re-elected?

Multiculturalism has nothing to do with it. These foreign investors don't even live here, they can't even vote and they have no impact on our society or culture.

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I wouldn't bother trying to educate people. Just focus on using the knowlege to benefit yourself. There's really no point.

People beleive what they want to beleive, facts be damned.

Truthiness indeed.

The only lesson here is that correlation does not imply causation.

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The frustration of those priced out of the housing market is showing signs of boiling over.

The latest clue is the 20,000 or so who've signed an online petitioncalling for restrictions on foreign ownership of B.C. housing.

It's the latest in a series of pleas for the government to do something about some of the world's least affordable housing prices.

vancouver-real-estate-house.jpg

This house on East 60th in East Vancouver, which is listed at $899,000, had 31 offers according to the real estate agent. (rew.ca)

The argument this time is that offshore money is inflating the market and preventing locals from buying their first home.

The petition gathered enough attention that the idea of taxing foreigners who purchased B.C. homes was tossed at Premier Christy Clark.

She promptly axed the idea of a new tax saying it would hurt current homeowners.

"In terms of a tax on foreign buyers, people who already own homes are I think often a little bit concerned about that idea because it would probably mean a big reduction in the equity they own in the home," she said.

There are a number of problems both with Clark's answer and the question she was asked.

Clark: Big reduction in equity for homeowners

The first problem is the assumption that foreign money is driving up Vancouver property prices. There is plenty of anecdotal evidence to support this notion:

  • Realtors talk about the impact of money from China.
  • Residents in some neighbourhoods complain about houses bought and left to sit empty for years.
  • There is also frequent speculation that illicit money is being parked in the perceived safety of Vancouver real estate; a parachute for those worried about leaving all their wealth in potentially unstable home countries.
  • The laundering of drug money is also pointed to as a possible driver.

No data being collected

All of these are intriguing, but there's one big problem. No one is collecting data on any of this, despite the potential impact on the economy and the lives of Vancouverites.

david-ley.jpg

UBC geography professor David Ley says the government's hands-off position is unusual (UBC)

David Ley, a UBC geography professor weighed in on the subject last week, saying, "this is quite unusual for government to have a hands-off position to an important public need."

Ley has studied inflated housing markets including Hong Kong, Singapore, Sydney, London, and Vancouver.

In those other markets he says "We know the percentage of overseas buyers, we even know where they are coming from."

So, the question that housing enthusiasts should be asking our governments should be this: Why aren't you collecting data on who buys and owns housing in our city/province/country?

The reason for asking that question is blatantly obvious; if you want to confirm or refute any of the volatile issues around foreign ownership you need reliable data. No government would consider putting a toll on a road, for example, without first counting the cars on the existing route.

Every time housing is bought, sold or taxed it would be simple to start asking who owns the property and where does the owner reside. Those simple questions would separate the offshore investor with no stake in our city from newcomers and residents building a life here. We would then know if in fact there is a real problem that needs action.

Governments outside of B.C. are changing policies

Other countries, and even some Canadian provinces, aren't shy about asking those questions, and shaping policy around the answers.

It's astounding that given how long this issue has been around that the BC government, has chosen to ignore it. So why are they determined to keep their heads buried in the sands of ignorance?

The answer is most likely linked to a desire to maintain the status quo. If there's no data, you can't prove there's a problem, and if you can't prove there's a problem, no action needs to be taken.

As geographer Ley said, the federal and provincial governments are "missing in action."

Clark hinted at the real fear when she voiced her concerns about doing anything that might endanger the billions in paper real estate wealth that continues to pile up. High housing markets have made a lot of people wealthy and contribute to tax revenues.

But there are clear dangers to the economy, not to mention fuel for racism in continuing the present course.

A more responsible approach would be to carefully explore what's going on behind the currently closed real estate curtain and then decide if anything needs to be done.


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The only lesson here is that correlation does not imply causation.

No but it certainly doesn't disagree with the facts either.

Most real estate is bought by Canadians. Canadian home ownership is at an all time high. Canadian debt (whether in absolute or inflation adjusted or income adjusted terms) is at an all time high. House prices are at an all time high. The total value of Canadian mortgages are at an all time high. Credit has been cheap an easy to get for a long time now. A disproportionate amount of the economy is based of off real estate.

Same old story as everywhere else in the world.

It's not a matter of correlation implying causation.

It's a matter of history repeating itself. Yet again.

With the exact same warning signs, and the exact same conditions.

If you want to write that off as correlation imply causation, go right ahead. At your peril.

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The middle graph keeps track of money supply. It might as well be a graph of total debt, as they are kind of the same thing. The top graph is the interest rate. Interest rates control the desire to borrow, or in other words, the total money suplly.

The first two graphs are Canada only. They match the house price chart.

I know it's much more fun to blame others. And heck, I support having a higher tax for people that are not living in the place they bought.

And while foreign investment increases the money supply, the largest source of increased $$$ for Canadians has been borroowing.

That's what's driving up house prices. Easy and cheap credit.

Exactly what happened everywhere else in the world. We just haven't popped yet.....

Correlation is not same as cause and effect. Assigning causes is not same as blaming.

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No but it certainly doesn't disagree with the facts either.

Most real estate is bought by Canadians. Canadian home ownership is at an all time high. Canadian debt (whether in absolute or inflation adjusted or income adjusted terms) is at an all time high. House prices are at an all time high. The total value of Canadian mortgages are at an all time high. Credit has been cheap an easy to get for a long time now. A disproportionate amount of the economy is based of off real estate.

Same old story as everywhere else in the world.

It's not a matter of correlation implying causation.

It's a matter of history repeating itself. Yet again.

With the exact same warning signs, and the exact same conditions.

If you want to write that off as correlation imply causation, go right ahead. At your peril.

No, what's being written off are the three charts that, in unison, are supposed to mean cheap credit increases prices. There is no implication of causation to be taken from the charts. The point you're making may very well be right, but it's not even remotely supported in that post. You're welcome to support your point, so far I don't see anything to make me lean either way.

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No but it certainly doesn't disagree with the facts either.

Most real estate is bought by Canadians. Canadian home ownership is at an all time high. Canadian debt (whether in absolute or inflation adjusted or income adjusted terms) is at an all time high. House prices are at an all time high. The total value of Canadian mortgages are at an all time high. Credit has been cheap an easy to get for a long time now. A disproportionate amount of the economy is based of off real estate.

Foreign investments into Canadian Real Estates is also at an all time high (at least in recent history, and at least according to convincing anecdotal evidence). You have to acknowledge that it is at least part of the cause.

EDIT: Also, as an individual trying to buy a home, interest rates is a far lesser consideration than price and income. Just think about that and how the supply and demand is supposed to behave.

EDIT2: Also, you don't know who are buying all the RE properties. You have no official source. And we are not talking about Canada, we are only talking about Vancouver and Toronto, where so happens the majority of immigrants like to live.

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Good points. I wonder what the income tax would be from all that income. Somehow, I can't see it be a very substantial sum. Sure, you got drug dealers, convenient stores and small businesses, and waiters, but I doubt they combined make up 5% of the population (maybe waiters actually make up a bigger slice in this service economy). Again, I've never actually looked into this, so this is pure guessing.

Didn't really occur to me the whole grow equity thing. He's alright, his dad put down 90k on his downpayment. So he went from a 1BR renting to a house in one move. Can't really consider 72k low income though, I don't think. It's not lavish, but it's certainly middle class, and one would think a rancher should be right up this alley.

I don't know anything about mortgages, so... I should probably shut up.

In the calculation of who isn't paying their taxes, you also have to include people like tradesmen and anyone who is self-employed or a contractor ...Basically anyone who isn't being paid a fixed and easily trackable wage...and it's a lot more than 5% of the population. More like 50%.

And 72k a year is well above average for one person. But it's not great for a household income, which typically has two wage earners. It sounds like your friend is a little entitled. He gets a 90k downpayment from his rents and doesn't save any of his own? He should have at least 200k in equity before thinking about buying a detached home.That would make his mortgage payments easily manageable.

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The frustration of those priced out of the housing market is showing signs of boiling over.

The latest clue is the 20,000 or so who've signed an online petitioncalling for restrictions on foreign ownership of B.C. housing.

It's the latest in a series of pleas for the government to do something about some of the world's least affordable housing prices.

vancouver-real-estate-house.jpg

This house on East 60th in East Vancouver, which is listed at $899,000, had 31 offers according to the real estate agent. (rew.ca)

The argument this time is that offshore money is inflating the market and preventing locals from buying their first home.

The petition gathered enough attention that the idea of taxing foreigners who purchased B.C. homes was tossed at Premier Christy Clark.

She promptly axed the idea of a new tax saying it would hurt current homeowners.

"In terms of a tax on foreign buyers, people who already own homes are I think often a little bit concerned about that idea because it would probably mean a big reduction in the equity they own in the home," she said.

There are a number of problems both with Clark's answer and the question she was asked.

Clark: Big reduction in equity for homeowners

The first problem is the assumption that foreign money is driving up Vancouver property prices. There is plenty of anecdotal evidence to support this notion:

  • Realtors talk about the impact of money from China.
  • Residents in some neighbourhoods complain about houses bought and left to sit empty for years.
  • There is also frequent speculation that illicit money is being parked in the perceived safety of Vancouver real estate; a parachute for those worried about leaving all their wealth in potentially unstable home countries.
  • The laundering of drug money is also pointed to as a possible driver.

No data being collected

All of these are intriguing, but there's one big problem. No one is collecting data on any of this, despite the potential impact on the economy and the lives of Vancouverites.

david-ley.jpg

UBC geography professor David Ley says the government's hands-off position is unusual (UBC)

David Ley, a UBC geography professor weighed in on the subject last week, saying, "this is quite unusual for government to have a hands-off position to an important public need."

Ley has studied inflated housing markets including Hong Kong, Singapore, Sydney, London, and Vancouver.

In those other markets he says "We know the percentage of overseas buyers, we even know where they are coming from."

So, the question that housing enthusiasts should be asking our governments should be this: Why aren't you collecting data on who buys and owns housing in our city/province/country?

The reason for asking that question is blatantly obvious; if you want to confirm or refute any of the volatile issues around foreign ownership you need reliable data. No government would consider putting a toll on a road, for example, without first counting the cars on the existing route.

Every time housing is bought, sold or taxed it would be simple to start asking who owns the property and where does the owner reside. Those simple questions would separate the offshore investor with no stake in our city from newcomers and residents building a life here. We would then know if in fact there is a real problem that needs action.

Governments outside of B.C. are changing policies

Other countries, and even some Canadian provinces, aren't shy about asking those questions, and shaping policy around the answers.

It's astounding that given how long this issue has been around that the BC government, has chosen to ignore it. So why are they determined to keep their heads buried in the sands of ignorance?

The answer is most likely linked to a desire to maintain the status quo. If there's no data, you can't prove there's a problem, and if you can't prove there's a problem, no action needs to be taken.

As geographer Ley said, the federal and provincial governments are "missing in action."

Clark hinted at the real fear when she voiced her concerns about doing anything that might endanger the billions in paper real estate wealth that continues to pile up. High housing markets have made a lot of people wealthy and contribute to tax revenues.

But there are clear dangers to the economy, not to mention fuel for racism in continuing the present course.

A more responsible approach would be to carefully explore what's going on behind the currently closed real estate curtain and then decide if anything needs to be done.

I don't understand Clarke's position at all. The proper course should be to restrict foreign ownership so the market drops slightly and then levels out. No one is suggesting she should spur a massive crash, but putting restrictions in now is only going to help avoid that crash as prices are currently spiraling out of countrol. She's saying she won't put in restrictions because a crash would be bad for people, and is instead just pumping up the bubble as much as possible. It's total nonsense.

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That is until they go to renew their mortgages and find that their property isn't worth what they owe. Then things get a little more complicated....

Mortgage is independent of housing prices. You shouldn't borrow more than you can afford to maintain. Like I said before, a homeowner will always be able to ride out the wave. Housing prices always go up in the long term.

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Mortgage is independent of housing prices. You shouldn't borrow more than you can afford to maintain. Like I said before, a homeowner will always be able to ride out the wave. Housing prices always go up in the long term.

History disagrees.

Well, in the long LONG term yes. But say during the great depression things stayed low for 2+ decades.

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