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Comment by kareemm | Hacker News Reader

I lived in Vancouver from 2009-2018 and saw the insane price appreciation from money laundering.

The main question people asked about the appreciation was: "is appreciation really being driven up by foreign buyers".

Many came to the answer "no", because foreign home ownership was "only" in the 5-10% range depending on the neighbourhood.

This article lays out the case why foreign ownership % isn't the right thing to be looking at:

1. The goal of a money launderer is to launder as much as possible

2. The goal of a home seller is to sell for as much as possible

3. If the asset being purchased is a home, incentives between buyer and seller are aligned and prices are higher than the non-laundering market would support (esp if there's another launderer who's interested).

4. Since the market for home prices is based on comps, a few launderers can raise market prices substantially

5. Lather, rinse, repeat

The foreigner question was the wrong one to ask, though certainly a large part of the market was driven by foreign investment. The right question to ask -- and the problem to guard against -- was: "what's the impact of laundered money on the market".

BC added the foreign buyer's tax of 15% in 2016[1]. But beneficial ownership laws come into effect on November 30 of this year[2]. The former created a slight disincentive for foreigners laundering $$ to buy. But turns out what was really needed to slow the tide of illegal money flowing into housing was more transparency and disclosure rules.

[1] - https://financialpost.com/personal-finance/mortgages-real-es...

[2] - https://www.mondaq.com/canada/real-estate/988830/bc-real-est...

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From what I heard that and having a investment from which the money might shrink but but randomly disappear lead to super unrealistic inflated prices in NY (not all areas) where it's not uncommon that store spaces are left empty for years (even before covid) because they are to expensive but still don't lower the rent. (Because they don't want to rent it out, they only want to pretend that intend to do so.)

That sort of investment is 'parking' money. It is parked somewhere to either act a conduit moving from owner to owner (which can be laundering). Or just to park it and not lose much value until better opportunities arise as a good hedge against inflation. Renting can be a pain as anyone who has got a bad tenant will tell you. That the Chinese are/were speculating in this way is not too big of a stretch (but is an assumption) as they have whole cities are that are basically big empty apartment cities.

> (Because they don't want to rent it out, they only want to pretend that intend to do so.)

Louis Rossmann has a semi-recent YT video exploring one hypothesis: landlords have mortgages that contain clauses in then which specify that if rents have to be a certain amount, and if they drop too much then that means the property value must have dropped.

* https://www.youtube.com/watch?v=NdfmMB1E_qk

And if the property value has dropped, perhaps bringing the mortgage closer to being underwater, then the bank may want the landowner to put more equity in it so that adds to the bank's cushion.

And landowners don't want to put more of their own money into a leveraged investment, so they'd rather just deal with the carrying costs rather than trigger an 'equity event'.

The hypothesis was originally put forward in a Reddit comment:

* https://www.reddit.com/r/nyc/comments/innhah/nearly_twothird...

I think these kinds of terms typically only apply to commercial real estate, or large, multi-tenant properties, which is what your reddit comment was addressing. But perhaps things are different in Canada?

Yes, I think you are correct. I have never heard of a residential mortgage having a clause like that. It could definitely apply to store-fronts in NYC though

At the time of origination, residential mortgages will have limits on the equity-debt ratio. If you fall below a certain threshold (e.g. sub-20% downpayment) your lender may require you to carry private mortgage insurance (PMI). If your home's value were to fall substantially, your equity-debt ratio could be pushed below the threshold -- e.g. if tax assessments were updated.

I've never heard of situations that have re-triggered PMI... but it doesn't seem outside the realm of possibility.

This makes sense. Something similar has likely happened with some apartment landlords as COVID hit big cities. Rather than lowering rents and triggering a re-valuation, they let occupancy slide but could argue that potential rent was still the same. Both of these cases do require that the debt has the valuation terms in it, which not all do.

apartments in my area are fairly expensive, but often come with special concessions for the first year of occupancy, often equivalent to a 15-20% discount. I notice that the lease is always very specific about stating the "actual rent" and the concession amount. I sometimes wonder what fraction of tenants is really paying the "actual rent", especially now that the offered me the first year concession again when I renewed my lease. is this a variant of the same finance strategy?

People that work in finance aren’t stupid, they look at cash flow to determine rents and property value.

The discounts are there for the same reasons as the grocery store. It’s better for sellers as a negotiating tool and for price discrimination.

it seems like unnecessary complexity. why not just advertise a market-clearing price for the units you need to move? they already have a different quote for each individual unit, which fluctuates a lot based on market conditions. they don't post a price for a currently occupied unit until the tenant has confirmed they will not be renewing, so quotes can't really be used for haggling. there are no rules about max yearly rent increases here either.

Sellers will advertise the lowest price they are willing to accept once they get desperate enough. But generally, for low volume, high value transactions, haggling is almost always worth it for the seller.

Hence car sales, land sales, leases, company mergers etc all have a bit of back and forth as opposed to produce at a store. However, in poorer countries, I’ve seen haggling over vegetables too, but that doesn’t happen in developed countries since it’s not worth anyone’s time.

Because a low sophistication customer is better than a high sophistication one.

If you're in New York City, this may be related to rules on rent stabilization. Rent stabilized apartments can only raise their rent by a small percentage each year. These landlords likely want to be able to raise rents quickly if the rental market heats up, so they raise the "actual rent" by the maximum percentage each year but then give a concession so that they can actually find a renter.

That’s just a silly premise. Vacancies are because landlords are seeking long term tenants, and the discounting is done in negotiations behind the scene.

Just because you don’t want Ed’s Thrift shop in your retail space on a cut rate month to month lease, doesn’t mean you fight desperately want a tenant. A multimillion dollar investment yielding negative cash flow over years is a disaster, be ye investor or launderer.

There's a youtube channel by a guy who ran/runs an Apple-affiliate repair shop. He has definitely seen storefronts remain idle for multiple years. I see this happen in my local area as well and don't understand it.

Louis Rossmann - He's done some good analysis around rents in NYC.

I know Louis Rossman has posited that landlords are handcuffed by mortgages that require additional capital calls when rental rates decline.

That may be a factor but it’s not the primary cause. This has been going on forever because commercial leases are usually 5-20 year commitments.

I’ve danced the dance with many landlords where they act interested in having you lease, but clearly your business isn’t what they consider a “good tenant” so they draw things out while they continue to look for a “better” tenant.

I worked with a commercial broker in NYC up till the pandemic broke out.

The empty spots in the city do speak with prospective tenants but often have unrealistic requirements for small companies and unrealistic pricing. Beyond the rent you may be required to have seven figures liquid to be in a position to secure a lease. Especially for a restaurant. Especially if there is a buildout.

Of course you do. Would you spend a hundred thousand on a custom buildout for a $1M lease if there was a significant risk the tenant would stop paying only a fraction of the way into the lease?

Things get a lot easier if you can take the space as is. But even then, if the landlord thinks your business is at a high risk of closing within a year, what’s the point? Why not spend most of that year finding a secure tenant likely to last for a decade or more.

There are very few small companies with liquid cash reserves in the seven figures. This makes Manhattan commercial real estate unaffordable for them.

This leaves many empty stores in Manhattan.

> 3. If the asset being purchased is a home, incentives between buyer and seller are aligned and prices are higher than the non-laundering market would support (esp if there's another launderer who's interested).

This is true but misleading. The money launderer doesn't want to throw away money. They want to launder money as cheaply as possible. That said, they are willing to pay far more than an asset is "worth" if they expect to be able to resell it for a price equal to or even slightly lower than they paid. The loss is the "price" of laundering. This supports higher prices for real estate, but not arbitrarily high prices, because if the launderer pays too much, they will simply have to resell for less, leaving money on the table that they could have kept.

That’s true but not super relevant. The important point is that prices become dissociated from local incomes if a laundering buyer agrees to a price that’s much higher than what a local would pay.

Prices are still associated with the prices that a local will pay. Money launderers don't want to lose dirty money any more than anyone else wants to lose clean money. They depend on there being a buyer at a price near what they paid. I suppose you could have a market that was so full of money launderers that they simply depend on flipping it to the next money launderer, but ordinarily, they depend on there being at least some proportion of locals who will pay the new, higher price, or they aren't guaranteed a buyer.

A local who sold a home at an inflated price can often afford to buy another one at an inflated price.

And it also attracts other generally wealthy investors looking to get in on a hot market.

The xenophobia is a useful tool to distract from the real problem: investors.

I think I’m the Vancouver case foreign buyer is highly correlated with money launderer (capital control kind rather than illicit gains)

Who has determined they are evading vs avoiding capital controls? Canada doesn't have the laws they are presumed to be breaking.

They're avoiding the capital controls of China, because China has a history of executing it's wealthy on whim as the political weather changes.

There are several reasons local communities may wish to restrict home purchases by outsiders. Xenophobia is one, but likely not a large contributor. Concerns over unsustainable realty prices may be another, or simply wishing to preserve a locked down community.

I'm making no judgment calls here, just pointing out that an easy, pat answer is not sufficient.

> wishing to preserve a locked down community

How do you differentiate it from xenophobia?

I'm just confused. I thought they're the same thing.

One is proactive assessment by a community, the other is blind bigotry against outsiders. The inclusion of bigotry as a deciding component is the key, IMHO.

One wants to proactively stop outsiders from joining their community. The other stops outsiders from joining their community using bigotry? Can you see why I'm confused?

No. I may be seeing an argument of semantic similarity, but the inclusion of bigotry is the defining factor of xenophobia. Closing down a community can be due to other drivers beyond fear of outsiders.

Depends on the community culture and what they perceive as outsider behaviour. e.g. A protestant might not be welcomed in a catholic neighborhood.

But isn't "outgroup members are not welcome" the definition of (mild) xenophobia? Indeed, religious disagreements are a major source of it.

In Vancouver's case, I don't think there's a strong desire to maintain a locked down community -- at least, not among the voices who complain about run-away real estate prices.

What there are complaints about are foreign investors who bid up property prices but don't move to the city, at least not before retirement age.

This causes a huge disconnect between the price of land in an area, and the earning potential in that area. For people who hope to own land but don't already, it's always out of reach, because they aren't competing with their peers, and the wealthy pockets that are buying homes aren't customers of other local businesses. It's not quite the same as a cluster of unicorns driving up tech salaries to the point where teachers and nurses can't compete on the market. There are no unicorns based in Vancouver. It's hard to identify any career path, even doctor, rockstar engineer, or lawyer, that a high school graduate today could expect to follow while working in this city and be on track for home ownership when time comes to start a family. Assuming that the trend continues, that is. And if it corrects, then it's a question of who was unlucky enough to catch the knife -- because any young locals in the ownership market are going to be highly leveraged, there's no other way.

That might read like xenophobia, but actual immigrants who intend to live, work, and raise families here are generally warmly welcomed and appreciated no matter where they come from. There are some people who get their signals crossed but it's a small minority.

Also if your an immigrant who is resident in Canada, your not subject to these taxes! It's a 'you gotta live here' tax.

Not subject to the foreign buyer tax, yes; it's unclear that these taxes have actually solved the above issue though. For money laundering it's an acceptable cost of doing business; for others there are ways around it (hence the 20-year-old undergrads prepared to pay $1.4 million in cash that another commenter mentioned).

Placing the interests of your homeland and neighbors first over foreigners is not xenophobia.

Comment is getting downvotes but agree. If you do not band together with like-minded individuals for your common good you will be outcompeted by other people who do.

Right, and the people that banded together to profit from this are the existing homeowners and landlords in Vancouver. The foreign investors are tiny in both numbers and political power compared to Vancouver landowners as a whole, and it really was existing landowners who profited, while flying a "preserve our great culture" flag by trying to not let new buildings be built.

The investors are the like-minded people who banded together to raise property values and benefit from it directly, while also exerting their will to keep new people out, or at least keep out everyone except the very wealthiest.

Calling this behavior "protective" of the city is tantamount to saying that the city is only for the investors.

> The foreign investors are tiny in both numbers and political power

The exact topic of this article: Small quantities of investors with different economic incentives can result in big effects.

> The investors are the like-minded people who banded together

I rather doubt that it was a concerted effort to band together. It's more akin to "curse of the commons": Each individual actor acting in their best interest results in emergent behavior.

The solution being pursued is to change the rules to dissuade certain behaviors that negatively impact the populace as a whole.

The effects of those small number of extra investors isn't huge however. In London it was 20% of the rise, but not most of it. It does fan flames, but there's got to be a spark to be fanned.

I see this repeated elsewhere, and I don't understand it. I don't want to suggest that you're bigoted as this is getting alarmingly close to a culture war topic, and I recognize the difficulty in conveying that in person, much less over the internet, where "I don't mean to offend but..." is usually followed by something offensive. But I do want to understand your analysis of the game-theoretic conditions that you believe lead to smaller groups outcompeting larger groups.

Why would the most beneficial group of people that we want to band with be optimal when limited to a subset of the population, whether that's simply a random selection, or a potentially bigoted selection/identification mechanism like skin color, wealth, religious sect, family name, etc.?

I don't understand why a broader grouping (possibly global) of people wouldn't outcompete a smaller group, the larger group by definition has a larger capability...intra-group communication may be slightly more difficult with language barriers and cultural differences, and the relative contributions of sub-groups of members may differ based on their resources, but the sum total would still be greater.

> I don't understand why a broader grouping (possibly global) of people wouldn't outcompete a smaller group...

Ability to pool resources, ability and will to bend rules for the sake of promoting group's interests (ie. nepotism).

It's not about bigotry, its that foreigners are detached from what is good for the people in the areas they're buying property in. The closer someone is, the more emotionally attached they'll be and the more that other successes (from reducing exploitation of people) will benefit them.

> foreigners are detached from what is good for the people in the areas they're buying property in

As opposed to the domestic billionaires who have deep compassion for the interests of the working class?

There's certainly a lack of caring there too. But they do have some financial incentives to put thought about the people in. It can hurt a personal brand when dealing with backlash against investment properties (and that can go on to affect associated corporate brands). It can also affect the investors if they mess up the economy of an area that had been contributing to their revenue.

I'm not trying to boil this down to "foreigners bad. locals good." But there are various factors that play in to how much one cares about their impact on others, with physical and political distance being two of them.

In the end the "foreigners" angle doesn't matter. If it were NYC billionaires buying up Seattle property and leaving it vacant the result would be the same: locals suffering at the hands of remote money.

"Like-minded individuals" and people who share your citizenship are not the same.

By your logic, liberal silicon valley techies should band together to fire/cancel/censor conservatives who do not share their values. After all, like-minded people need to band together to out-compete the outsiders who think differently right?

>"Like-minded individuals" and people who share your citizenship are not the same.

Of all the people in the world the people geographically close to you and that share citizenship or nationality are the most likely to think like you or share goals that benefit both parties.

That is obviously categorically false, as evidenced by the political polarization within the US, as well as the large number of minority groups across the world (including in the US) who get persecuted by their own governments and fellow citizens.

Even if nationality is sometimes moderately correlated with the values you hold, when a stronger correlation exists, your alleged ideological commitment to forming in-groups and out-groups based on shared values should mean that people have the right (or even obligation) to discriminate based on non-nationality-based factors (e.g. liberals discriminating against conservatives in tech).

No, I said more likely to share, not will share. You can still disagree with your countrymen.

Nationality is correlated with the values you hold in the broadest sense. Easy example: a natural born citizen in the US is far less likely to believe in the validity of Sharia law than someone born in an Arab state.

In even more abstract terms, what is good for you is likely to be location dependent. People in Germany have different problems from people in the US or France, and those are different from African, Asian, and South American countries. There are of course common trends, but to pretend all of politics is some shared set of problems is ridiculous.

People discriminate based on traits all the time. Liberals in tech do discriminate against conservatives (or perceived conservatives) all the time. They are free to do so, most people don't see many things as something you can protect as a class.

Yes! Community is an important concept that we are losing during mass media, globalization, secularization, Covid, etc. This is sad since our direct community was what we evolved to interact with, some 20-100 people near us. I am hoping for the day we can have large gatherings again so we can re establish communities.

This attitude is exactly what destroys communities while letting investors profit.

"Protecting" communities by excluding people means that the only people that get in are the wealthiest, and because exclusion is the baseline, every new wealthy person kicks out a less wealthy person.

The exclusion is an excuse to enforce austerity, the classic means of squeezing the less wealthy to the benefit of the more wealthy.

I'm pretty sure OP just wants to know, and talk to, his neighbours; not smash the working classes.

> "Protecting" communities by excluding people means that the only people that get in are the wealthiest,

But the manner in which the community is "protected" in this case is by excluding wealthy foreigners who swoop in and pay huge sums over asking, sight unseen, for properties. Not sure how that could be detrimental to someone who isn't wealthy.

Why do you insist on defining community along citizenship lines?

I'm sorta getting "Deutschland, Deutschland über alles, über alles in der Welt" vibes

It depends. If the problem is rich investors, who may very well be local, accusing foreigners for a problem that they themselves created, then it's xenophobia.

I could understand this argument of putting neighbors first if Vancouver was as hostile to real estate investors from Toronto as they are towards real estate investors from China. Basing the level of hostility on the nationality of the investor seems wrong to me.

Investors from overseas can fuck off and buy something else. People who live in a city need housing, and it is completely within the rights of the city to restrict housing purchases to those who live there, or at least heavily dis incentivize it.

Seriously, "xenophobia towards investors" strikes me a bit like the Silicon Valley bit about comparing the plight of Billionaires to enemies of the third reich.

>Investors from overseas can fuck off and buy something else. People who live in a city need housing, and it is completely within the rights of the city to restrict housing purchases to those who live there, or at least heavily dis incentivize it.

You completely ignored the point I made. How is an investor from China buying real estate in Vancouver purely for investment purposes with no intention of having anyone live there any different than someone from Toronto doing it? Why is the former punished harsher than the latter?

The farther away the investor, the less stake they have in local success. In-country folks will be paying more taxes in-country, which affects things like social programs, infrastructure, and defense that contribute to a region.

But those people in country would be paying national taxes either way. It isn't like if Vancouver stops a rich person from Toronto investing in real estate that this person will leave their millions of dollars in a checking account instead. They will find some other way to invest their money.

If you are solely worried about the tax base, wouldn't bringing in foreign investors into real estate investing while letting domestic investors focus on some other investment vehicles lead to more tax revenue?

Perhaps. It's not hard to imagine that having additional competitors to local real estate with the result of driving up prices is not in the interest of the locals, who need places to live.

That one group has less stake and can be discouraged through legislation while another has some constitutional-like protections is not a compelling problem compared to the one in the paragraph above.

What about the interests of the canadians that are selling their houses?

The term "xenophobia" is also a useful tool that is used by the government, the media, and individuals on social media to suppress the free discussion of very important matters.

The Government of Canada has the ability to published (anonymized) data (real estate sales correlated to the buyers historic income taxes/wealth, etc) that could eliminate most of the opaqueness of what is really going on in Canadian housing markets, but they do not, despite vowing to "get to the bottom of" the situation.

The media could point out that the Canadian Government has this ability but does not do it, but they do not, despite claiming to be trustworthy, unbiased reporters of the affairs that are important to the public.

As is often the case, what is actually true is unjustly (and "democratically") hidden from view of the public, coverage is provided (intentionally or not) by the media, and the end result is that the populace is split into various camps who then fight among themselves. Is this situation the actual "will of the people", as we are endlessly told is what Democracy (and nothing else) delivers? I believe there is a fairly substantial amount of evidence that it is not what people want, although that sort of topic seems a bit socially taboo, so all one can do is speculate.

there are plenty of sad places in this world who got rid of investors ...

One way to think about this is that cash is plentiful in China, but a strong social/legal system that ensures long-term, low-risk investments is "plentiful" in Canada or the US.

In this sense, these foreign investors are taking advantage of a functional social/legal system that lowers risk, but in the cases documented nearby, they aren't giving back to ensure the longevity of the system. Indeed, their remotely-executed purchases increase its instability.

Investors bring in fresh money. The real "mystery" is why people aren't building more housing to take advantage of the demand. When you are starting a company the hardest problem by far is finding people who buy your products. In real estate it's exactly the opposite.

The UK has Unexplained Wealth Orders, which can be used if a person cannot explain where they got the funds to purchase property. It's been in the news a few times but I'm not sure how effective it is:

Quote:

3)An unexplained wealth order is an order requiring the respondent to provide a statement—

(a)setting out the nature and extent of the respondent’s interest in the property in respect of which the order is made,

(b)explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met),

(c)where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order, and

(d)setting out such other information in connection with the property as may be so specified.

https://www.legislation.gov.uk/ukpga/2017/22/part/1/chapter/...

It's like how the market cap of a cryptoasset can be massive and yet a small amount of wash trading can pump the price because the market order books are thin

Momentarily only.

>Many came to the answer "no", because foreign home ownership was in the 5-10% range depending on the neighbourhood.

How many foreigners are able to obfuscate "true" ownership is also a huge question.

https://torontosun.com/2016/05/12/311-million-vancouver-mans...

This was linked further down... a student owns 99% of a $31mm property. A Chinese business person owns the other 1%. That sounds like trying to get around KYC / AML requirements and obfuscating things to me...

That was certainly happening. Ultimately the problem was non-local income was driving up the housing market. But laundered money (from Canadians or non-Canadians) was almost certainly the primary driver of inflated housing prices.

> How many foreigners are able to obfuscate "true" ownership is also a huge question.

For CA$200 you can set up your own Canada-resident corporation with obfuscated directorships:

* https://en.wikipedia.org/wiki/Snow_washing

You also have to pay a yearly maintenance fee of ~$400/yr plus whatever your paying to a firm to maintain the corp FYI.

For a $15,000,000,000 market annually that's pretty cheap for the participants...

Has been said by many in Australia that's it's easier to buy a house than get a library card.

The biggest residential purchase was splashed across the front page of the biggest newspaper as some great event yet it took them years to determine it was illegal and that was from a falling out between the owner and government.

If a $30 million luxury house in Sydney with national news coverage can't be exposed as being illegally bought, what fucking hope does any average property have? They basically catch no one for this stuff and if they do it's always due to some other crime instead.

UK/Canada/Australia/NZ are some of the biggest real estate money laundering destinations on Earth and all of their governments know it.

> The goal of a money launderer is to launder as much as possible

When does that goal compete with the equally efficient method of just lighting the cash on fire?

The goal is also a place to store that laundered cash. When the time comes to take it out of storages, it's only worth 10 cents on the dollar, the whole the higher the price the better thesis falls apart.

Laundering assumes liquidity when the money is clean, otherwise it’s not laundering.

Funnily 10c on the dollar might be worth doing if there are no other laundering methods available. It’s like investing - laundered money seeks the beat returns. And in the case of Vancouver the assets purchased with laundered money actually went up YOY. Seems like a good place to launder, no?

But the point of the article is that by paying too much for the property, the launderer drives the price of the market higher.

"...because foreign home ownership was "only" in the 5-10% range..."

Such a weird rationalization.

Even very non-economist me "knows" that small changes in supply (<1%) leads to big changes in price. Either up or down. More so when factoring demand.

Some things add friction to efficient price discovery, like rent control and landlords servicing debts. But the first order factor is supply and demand.

Right?

I agree w/ you. Anecdotally but the most common argument I heard was "5-10% can't drive the huge price increases we're seeing". My counter was always that comps drive market pricing. It doesn't take very many sales well over asking to inflate a market, esp when the supply of capital is large, not local, and being laundered.

It’s more accurate to say it’s the huge supply of capital looking for somewhere to be parked that is driving prices higher.

Demand curve is number of houses available for sale, supply curve is people looking to purchase those homes. As the curves shift, if the price goes too high, then the lack of supply of people with sufficient money would cause prices to stall or come down. But it’s apparent that the supply of people with a lot of money (or credit) is a lot higher than the supply of houses.

Maybe it’s even more accurate to say that the supply of inflation protected assets in stable societies is in low supply compared to the supply of capital trying to buy those assets.

Except the reality is that local speculation is also wild and crazy. It's just easier to blame foreigners.

I've read stats that indicate that nearly 20% of home owners in the Toronto area own at least one additional "investment" property. This rings true with my own experience, as the cult of home ownership is ridiculously strong in Canada, and many have been betting on and fueling rampant speculation for the past decade -- buying boxes in the sky for hundreds of thousands of dollars under the assumption that real estate just keeps going up.

But the anecdotal stories about the occasional foreign buyer is somehow much more satisfying and comforting than the thought that Canadians are also responsible.

I'm also offended by the blame of foreigners.

Core problem is housing shortage. We need more. I don't care how we get there. So I support upzoning, MIL units, penalizing unused (vacant) units, and any other idea for increasing supply.

We just need to figure out what policy mix works. The blame game is just a distraction by the incumbent players.

The argument being made is that this wild speculation is enabled by the money laundering. If you know laundering will keep happening with impunity and that the whole thing is tacitly approved and backstopped by the Canadian government, then it becomes rational to participate too.

That may be true, but it doesn’t change the fact that locals share a large portion of responsibility. Money laundering is no doubt happening, but the activity is tiny as a fraction of the market.

To give an example of how exaggerated it is: before implementing the empty homes, the city of Vancouver estimated that 25,000 homes were empty. The final result: only 2,500, one tenth what everyone thought.

Has it been established what percentage of foreign buyers are money laundering, and by whose laws?

For Vancouver BC Canada, yes. The RCMP did up such a report in 2018. It was something around $6bn/year for amount. Majority seemed to be tax evasion (eg : US billionaire X wants to hide capital X, so hires company Y in China to purchase land in Canada for $X, transferring through hidden channels to reduce tracking). Apparently that's a pretty common model. Doing the same through Russia was also common. These transactions are illegal in their home countries. (it was a lot of countries). No real "legal" problem in Canada as yet. Legally problematic is because monetary sources are not checked (still), drug dealers can buy and sell property and all of a sudden their money is now "clean" and usable for legal purposes. As in yes, money laundering.

I never saw the report itself, just the interviews on multiple news agencies interviewing the RCMP representative. They did NOT do explicit numbers other than totals in the public, just the example above is my memory of one of their examples.

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