Comment by bentlegen | Hacker News Reader

Comment by bentlegen | Hacker News Reader

Parent Full thread

I’m going to share my own personal anecdote because I think “it’s China’s fault” is both wrong and leads to the anti-Asian sentiment that is going around North America right now.

I viewed many properties during the pandemic, and when we saw other potential buyers (e.g. had the appointment before or after us), they were all white couples in their 30s or 40s.

After a couple tries, we bid on a home and won (I am white citizen). We have since moved in, and I’ve observed that the other homes that sold on our street all now have white families living in them.

This is obviously inconclusive, but I believe “it’s all foreign money” is mostly a convenient scapegoat and doesn’t really capture what’s going on.

(Also I find it strange that in your story, the homeowner would break a contractual agreement to sell and go with someone else. I’m not a lawyer, but that seems like obvious grounds for a lawsuit. Note that in 2017 in Ontario a buyer broke an agreement to buy and was ordered to pay hundreds of thousands of dollars in the ensuing lawsuit.)

https://www.thestar.com/news/gta/2018/04/11/couple-ordered-t...

Population of Canada: 38,000,000

Population of China : 1,427,647,786

Shanghai alone has 27,000,000 people. There are 12,500,000 households in Canada.

It would take less than 1% of the Chinese population purchasing a home in Canada to double demand.

https://en.wikipedia.org/wiki/Population_of_Canada

https://en.wikipedia.org/wiki/Demographics_of_China

https://en.wikipedia.org/wiki/List_of_cities_in_China_by_pop...

https://www150.statcan.gc.ca/n1/daily-quotidien/170913/t001a...

> I’m going to share my own personal anecdote because I think “it’s China’s fault” is both wrong and leads to the anti-Asian sentiment that is going around North America right now.

The root cause of the anti-Asian sentiment (and most anti-other tribe sentiment) is the loss of relative socioeconomic status.

For example, in previous decades, almost everyone in China was socioeconomically lower than everyone in Canada. You can insert any undeveloped country and developed country here, but you frequently saw Americans/Canadians/Europeans vacationing in developing countries, buying vacation homes, real estate to diversify, businesses, etc.

Now the populations in those developing countries has caught up, and they’ve caught up by taking some of the economic value that used to be provided by populations in the developed countries. See income/wealth gap widening over the previous decades.

So now you have people in developed countries having to compete with people from previously developing countries, and more competition means life is not as easy. And people get tribal when looking for who to blame. But really, the only tribes that matter are those who are able to capture economic value and those who are not.

In the defense of the narrative, they've spoken about Chinese money stashing in real estate in Toronto LOONNNGGG before Covid was even thought of.

I understand it has been a popular narrative for a long time. Most studies have shown it’s a tiny percentage of home sales. There are also now significant taxes on foreign ownership, and statistics show this is having the effect of deterring buyers.

“CBC's analysis suggests foreign buyers account for about 1.8 per cent of total home purchases in the GTA (Toronto plus the regions of York, Peel, Durham and Halton) since the tax was imposed in April 2017.”

A common rebuttal to this is “well they use corporations to shield the true origin of the money”. Why not just park your money in the US where no such taxes exist and is overall less hostile to foreign ownership?

https://www.cbc.ca/news/canada/toronto/ontario-foreign-buyer...

> since the tax was imposed in April 2017

Base rate matters here. They are measuring `Sales subject to foreign buyers tax`, not the impact of foreign buyers.

This percentage of foreign buyers THAT ALSO pay their taxes. The foreign capital that flows into residential real estate mostly held in numbered corporations which are not captured in the above data.

> Why not just park your money in the US where no such taxes exist and is overall less hostile to foreign ownership?

After 9/11 the USA (relative to Canada) got very serious about prosecuting money launderers. Tax rates are less important than getting dirty money clean.

> government inaction is putting Canadian banks in an awkward position as they seek more growth south of the border. Americans are keenly aware that criminals exploit [Canada's] weaker laws.

https://www.theglobeandmail.com/business/commentary/article-...

Why is everyone so eager to blame this on China? Of course there are some Chinese buyers here in Canada but if you’ve actually been in the market or know any builders you know that explanation doesn’t add up.

Both of our comments appear to have been downvoted a lot, so it seems we’ve struck a real nerve here challenging this narrative.

Folks should note that New Zealand literally banned foreign ownership and is similarly going through a property bubble.

https://www.theguardian.com/world/2021/mar/23/new-zealand-mo...

I’m sorry if my comment offended you. The goal of my comment was not to put the blame on China but rather share a real life story of a close relative and correlate his experience with the current state of real estate in Canada (Toronto specifically).

To add value to this discussion, it would help others and myself if you could elaborate on why it “does not add up”. Just stating that without providing details is a disservice to those who you claim are trying to shape the narrative.

FYI: I did not downvote any comments on this topic. I'm looking to hear everyone's thoughts.

Reply on news.ycombinator.com