Hacker News Reader

Comment by tomcam | Hacker News Reader

Those tales are not exaggerated. The $800 billion feels very right, and possibly even conservative, to me. Source of anecdata: many investments in China, Asian family, frequent visitor to Vancouver. Few high net worth Chinese nationals expect to be able to keep their money from the government in the long haul.

Racism/fear of change aren't factors. Locals would fear "these people" moving in and jacking up real estate prices if they were German, Swedish, or Danish. The problems are quite practical: as with older property owners in Silicon Valley, locals love seeing their own house values skyrocket, but no one thinks about the fact that once they sell they won't be able to remain.

View on HN

> but no one thinks about the fact that once they sell they won't be able to remain

Wouldn't it be hard to stay anyway once real estate price go up for the sheer fact that rich people are coming and so prices for everything will go up anyway ? Is my simplistic reasoning flawed ?

I've asked this question to a person I know who is an academic in economics (not a world-renowned economist, just someone who does economics at university), for what it's worth, and what she told me is--in my paraphrased understanding--that if a market goes up "naturally," or by the usual forces people regularly expect (usually around jobs), then wages tend to also go up so housing and other goods remain mostly affordable relative to local wages being paid.

The issue in cities and areas like Vancouver and Seattle and San Francisco--ones that aren't just hubs for high-paying technology jobs but also ones where overseas capital has made inrushes--is that wages haven't been able to keep up with the outside capital. So property of all types (it's just that most people only directly care about residential property, but commercial property also goes up and that increases the cost of other things in the local economy) rises in price while wages don't, so a major disconnect starts to happen.

This is a two-paragraph summary of a nearly three-hour conversation we had, so there's a lot of nuance I've left out. Zoning, development, density, and all of the rest around property use also affect prices and, according to her, probably more than inbound foreign money, but the added money has an influence.

To add on to that when there's a big inrush of capital into real estate usually there's people coming into the area along with that money which brings money into other areas of the economy. If the properties are just being bought as offshore cash dumps and investments there isn't the same influx of money into other areas of the economy.

Non-local residential property should be taxed at a significantly higher rate than owner occupied or locally owned properties. That would both solve the problem and provide much needed revenue.

How would you enforce that when people have "trusted" relatives all the world?

1. All real estate held by non-human persons ( i.e. corporations, LLC) gets taxed at a higher rate.

2. All real estate used for income production - i.e. AirBnB for significant percentage of the year

3. An owner can declare a single piece of property their primary residence, all others are taxed as commercial property.

4. etc....

Vancouver needs to define "residents" and tax property that is not being held by non-residents.

There a number floated at 57 million for 2018? value of Vancouver property purchased by local students with zero income - so this only tallied the ones not clever enough to use shell companies or lawyers as described as the other money laundering techniques to purchase homes, though the casino cash to chips to cash might be most brazen. I think just like the UK hsd recently done - stricter anti money laundering rules, income transparency are needed.

So at Vancouver prices, something like 20 houses? That seems like a number that could easily hit just with students from super wealthy families who legitimately live there. I don't see any reason to believe that involves money laundering.

Anecdotally it has become increasingly hard for me to function in my Brooklyn neighborhood, despite having paper wealth (equity) from being here early and a decent job.

Absolutely every little thing is so expensive. I can’t even really afford to go to the bar for a few pints.

So, yes, I agree with you completely. Even if real estate prices aren’t an issue, the influx of price insensitive residents can make an area infeasible to live in.

The opposite happened to me. I rented in a central location with high food prices, bought a house move west and prices are much lower but take-out choices are now limited.

The prices for other staples won't rise that much with an increase in rich people. After housing, the next major expenses for many people will be transportation and food. Rich people aren't going to raise the cost of a bus ticket or gas. There will be fancy restaurants and high end grocery stores that cater to wealthier customers but a typical store can't just double the price of a loaf of bread without losing many of their customers.

Racism and fear of change are always factors. They may not be the main factors here.

No, there is definitely a racist element here. Just read the comments on a lot of the local articles or letters published in papers. Lots of racism. People are too eager to point their fingers at asian foreigners but the situation is more complicated than that. The majority of real estate is not owned by foreigners. It’s not like Canadians have decided not to buy real estate, they are still fully involved in this market.

Please, have you ever been to Vancouver or Seattle? Anyone who has ever been to any of these cities would never hold those opinions. Huge vacant houses with no one living in them, an entire sub section of the real estate industry that speaks mandarin but won't bother talking to any of the locals, schools that cater entirely to wealthy Chinese. The speculation tax is going to raise hundreds of millions of dollars, precisely because of mass foreign home ownership.

You'd have to be living under a rock to miss the signs of the times. Willfully ignorant, perhaps.

I have lived in Vancouver most of my life and did live in Seattle for three years. I watch and read a lot of the local news. What you are describing sounds like a 30000 ft view of Vancouver as portrayed by many news articles.

Newspaper articles and people that live in the immediate neighborhoods report the same thing - entire neighborhoods empty with the yards growing weeds. Condo towers with dark windows all night every night, year round.

"entire neighborhoods empty with the yards growing weeds."

Maybe they can actually get some cash by growing weed there, now that it's legal and all. ;)

Where in Vancouver? My wife's parents live in Richmond and three houses in their block are vacant most of the year. I have a relative that lives near Oak and King Ed. and it's similar there too.

> Lots of racism.

What definition are you using for the word "racism"?

> The majority of real estate is not owned by foreigners.

There have been no published statistics on the amount of foreign owned real estate. Feel free to post evidence otherwise, and I will respond by pointing out it is not statistics on foreign ownership (or, you could just read the report yourself and discover the same thing).

Marginal demand matters greatly in real estate pricing. Reducing all analysis to "spot the racist" is a fun game to play to score points with your buddies, but not so useful for solving problems in the real world.

Reply on news.ycombinator.com