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Comment by refurb | Hacker News Reader

Also, the real problem is foreign ownership.

What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!".

Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1].

[1]http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c...

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There actually is data.

Ian Young, who writes the Hongkouver blog for the South China Morning Post, said this in a recent interview with Vancouver Magazine:

> We’ve got peer-reviewed academic data from David Ley at UBC, who found what he called ‘an unusually decisive link’ between immigration and property prices in Vancouver, and this is going back over 25 years. We had Markus Moos and Andrejs Skaburskis who did another peer-reviewed piece of academic research that found that prices in Vancouver had become decoupled from local incomes by virtue of the fact that the home buying behavior of many recent immigrants was not tied to their local income. That cuts directly to the issue of foreign money.[1]

A quick google for those authors will turn up their studies.

1- http://vanmag.com/city/the-van-mag-qa-ian-young/

Those studies are seriously flawed imo as their methodology is to filter on non-anglicized Chinese names and use that as a proxy for foreign money. That would describe a lot of people that aren't recent immigrants, like me.

If anything, those studies show that ethinic-Chinese people are more predisposed to buying a house than renting, even when renting is much cheaper.

seriously flawed is an overstatement; there have been two studies done so far and while the researchers acknowledge the limitations of the method, in aggregate it is considered mostly sound by their peers.

But I agree - we should have something a bit more conclusive than 'Chinese names'. But the whole point is that the current provincial government is actively hostile to requiring real estate agents to collect this information. So last names are all we have.

One of the studies looked at the names of people purchasing in a pricy small neighbourhood. That hardly generalizes to all of vancouver.

Just looking at that neighbourhood on MLS, it really doesn't look any different than the rest of Vancouver-proper.

The non-anglicized Chinese names study that you're referring to is by Andy Yan, an architect in Vancouver.

His data is interesting and adds to the conversation, but is not peer reviewed or an academic study[1].

The studies I refer to above are more rigorous in their approach and thus their results are, imho, more reliable.

http://www.vancourier.com/news/controversial-foreign-ownersh...

Unfortunately, the provincial/foreign governments refuse to even study the problem. So all we get is anecdotes and investigatory journalism[1], which do not make for good data points.

http://www.theglobeandmail.com/news/investigations/the-real-...

I have a lot of love for Vancouver, but the strange insistence on low salaries in an expensive housing market, with serious traffic and physical natural barriers to transportation, is a real problem.

I know of several developers, whose advice and preference is to move out of the city (closer to skiing/biking/etc) and work remotely for a US company.

There is plenty of evidence of the foreign property issue, and the willful ignorance of the government. Besides everything else posted, here's an academic case study:

http://news.nationalpost.com/news/canada/in-a-six-month-peri...

http://www.slideshare.net/ayan604/ownership-patterns-of-sing...

work remotely? TN visa effectively lets you earn US wages.

Vancouver (area) is still a wonderful place to live. Working remotely lets you do that while earning enough to enjoy it. :)

It's pretty easy to find them. Google 'Andy Yan'; he's an economist at UBC who did the most recent study.

Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher.

Vancouverites are going into unsustainable debt, but at this point mostly for condos, which remain expensive but affordable. The detached house market is long past being affected by CHMC policy and borrowing rules; not even doctors and lawyers can afford the $5-6 million dollar homes that are such a big part of the market here, not even with leverage.

This is part of what I try to tell people when they say that the Vancouver housing market is a 'bubble' - it isn't a bubble because it isn't being driven by leverage; it's being driven by regulatory differences in Canada and China; China has a punishing inheritance tax, and Canada has the most lax rules in the OECD for importing money and buying real estate. There simply is no 'bubble' here to burst. That's not to say that the situation isn't extremely unstable, but without leverage this simply isn't a 'bubble'.

China has a punishing inheritance tax, really? China has no inheritance tax, it also lacks a property tax or even a capital gains tax. Libertarians would love it here if it weren't for the police state...

Why Chinese buy abroad: to park money outside of China, to participate in real estate markets leased screwed up than their own (say what you want about Vancouver, it isn't anywhere near as bad as Beijing Shanghai Shenzhen), and to have an exit plan when they fall out of favor or things go to hell in China.

China has a punishing inheritance tax, really? China has no inheritance tax

Sorry; proposed inheritance tax.

http://www.ibtimes.com/chinas-proposed-inheritance-tax-meets...

My point stands; Canadian interest rates could double and Vancouver house prices wouldn't budge; some Canadians would have their homes foreclosed on, but there's so much money in the market from China that homes here would still be unaffordable to people working in Canada and paying Canadian taxes.

This just isn't a 'bubble'.

China has no inheritance tax, it also lacks a property tax or even a capital gains tax. Libertarians would love it here if it weren't for the police state...

Nice! This sounds like a pretty good way to game the system; earn all your money in a tax-less free-wheeling libertarian wonderland, cash out, then bring your millions to a place with no wealth tax! The new place will have lots of social services and lots of burdensome income taxes for the locals to pay for them, but you made your money and you don't have income to tax! Win!

I should figure out how to get in on this.

That is quite old. Anyways, taxes are not a problem in China yet.

Anyways we've seen is before with the Japanese in the 80s, and it eventually all crashed down, leaving the Vancouver/Seattle/California real estate markets in a rut for more than a decade! I'm guessing when the Chinese economy comes back down to earth, the exact same thing is going to happen again.

Japan had 120 million people in the 80's. China is currently at 1.35 billion. There were a million new millionaires created in China in 2014. I'm not sure that the Japan situation compares to China very well.

The way things are going right now, it seems to be playing out exactly the same, just the scale is much larger given the increase in population (million of new millionaires were created in Japan also, of course, with a much smaller population base than China!).

I think the point is that if housing prices in Vancouver peak around $2M, the dust settles, and housing prices fall and equilibriate down to $1M, living in Vancouver doesn't really get any more realistic.

I too am skeptical of the Japan comparison. China is both a very densely populated but also an extremely populous country and I think its just natural that a lot of Chinese will want to leave for less-densely populated places. Just the number of people involved makes this a problem unlike any other we've seen in history; how many tens of millions of Chinese millionaires now have the option of picking up and leaving their homeland? The scale of the migration is larger but the size of west coast cities isn't; certainly not by a factor of 10.

It depends on how much is speculation vs. how much it is Chinese from the mainland actually moving to Vancouver. How many Chinese can actually emigrate to Vancouver, or why would they go there when they can go elsewhere? I'm old enough to have seen Vancouver real estate go through boom and bust before, and I'm just a Seattleite.

Anyways, we've all heard "its different this time" before, and it never is.

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