However, money laundering isn’t the only driver of that vibe. I just got the sense it was a lot of money from Hong Kong that flooded Vancouver. So no industry was needed to support the high housing prices, it was being supported from foreign money.
But again, that’s different than laundering money.
First lesson my tax attorney taught me. ;)
Very attractive for certain kind of wealthy people.
So even if a price rises for normal reasons that people tend to always mingle and drive prices even more.
It does not sound implausible that housing prices are soaring.
Also perhaps a lot of government regulation that make it difficult to build more housing.
And there are other sources of money besides "money laundering" - why assume of all sources, "money laundering" is the driving force?
Like lets say newly rich Chinese people appreciate the investment in Vancouver. Is that then "money laundering"? Do they just equate "foreign investors" with "money laundering"?
> next to the sea and the mountains
Next to the US is probably another big reason but I'm not sure how much that matters with planes.
Maybe the money comes from abroad, has this occurred to you?
> This article may offer little evidence, but it rings very true for people who live there.
It's a boogeyman used by politicians to have a set of "bad guys" to point to. The truth is most of those wealthy foreigners buying up Vancouver real estate are not money launderers, they're just wealthy foreigners.
Elsewhere. It can be surprising only when you look at it through an industrial, 20-century world view. Now, even middle class people are free to move and work wherever they like, so it's only natural that people who made a fortune would seek the most comfortable cities in first world countries and bring their wealth with them. Is there any specific reason to suspect that this wealth is laundered and not simply imported?
https://www.sfgate.com/hawaii/article/Hawaii-real-estate-mar...
Aside from that concrete claim, they offer a plausible explanation for why something that may make up a small proportion of sales could cause an outsized increase in prices. And they do draw comparisons to known cases in stock markets. So I think it's still an interesting article.
Sort of like how people are walking into BC casinos with half a million dollars in $20 bills and authorities are being told not to ask questions? Yeah, we don't "know" there's money laundering, but reasonable people ask questions...
https://www.msn.com/en-ca/news/canada/rcmp-detachment-head-w...
https://www.msn.com/en-ca/news/canada/virtually-no-controls-...
But we can't have vast sums of capital, of unknown origin, flooding our country and pricing out our own citizens.
I'm sure it's both, and it's really hard to determine in advance.
I'm guessing regulation is the real problem, as it is so often.
Even if foreign investors let houses sit empty, the rising prices should be an incentive to build more houses, leading to more supply of housing eventually.
Speculation is after all a bet on future demand, and useful for anticipating future demand.
From a policy point of view, it's easy to see why the picture is a bit trickier. Allowed to proceed unchecked, the underlying mechanism you describe will displace a pretty large fraction of the current population, especially as the offshore money fundamentally doesn't bring in much local economic activity after the new construction. These are the people you represent as a government, not the putative future immigrants and speculators.
"Surely it would be wasteful for a while" here represents a multigenerational disruption to a large fraction of your voting public, the majority of whom will see little or no benefit from the incoming money, and the overwhelming majority of whom will see negative impacts.
That an influx of money doesn't benefit the economy would also be interesting for most Western governments. "Stimulus" by monetary means seems to be a very popular approach currently. (I don't know, but it seems debatable).
I also don't think prices are going up only because of Chinese investor. I also live in a city with the problem of steeply rising prices (Berlin, Germany), but the fact is simply, it is a very popular city with many people wanting to live here.
I think your last point is clearly true also, but the balance isn't obvious.
As for b), if a Chinese investor buys some house from a Canadian, why is the money parked?
Trickle down or not, it seems in general if you can sell something (in this case houses to Chinese people), it is good.
If you build houses to sell to Chinese people, you also employ people from the building industry, for example. I'm not convinced that "trickle down theory" is the correct theory to apply there.
Special issues presumably arises with land and housing as a good - you shouldn't simply sell all your land to some foreign powers, presumably. Still, in general it holds.
If you worry about land area, you could build a huge skyscraper in a corner of the town that doesn't disturb too many people, and sell the flats to Chinese investors. Very little land use, huge margins.