Canada’s next wave of immigration set to add more fuel to overheated housing market

About time for greater focus on the links between levels and housing prices. Federal and provincial governments need to consider such externalities rather than just push for more:

After a frenetic 18 months when Canadians pushed up home prices in a quest to ride out the pandemic in comfort, another influx of buyers is set to provide more fuel to the overheated real estate market.

The federal government has increased its annual immigration targets to the highest levels on record, creating the conditions for a surge of new permanent residents, which Canada needs to fill job vacancies. These new immigrants will add to the country’s population and immediately boost the need for housing in major job centres and nearby cities.

This will ramp up competition for homes at a time when national real estate prices have jumped 40 per cent in the past two years.

“Canada’s strong population growth is a factor driving our home prices upward at a faster pace than in many other economies,” said Bank of Montreal chief economist Douglas Porter, who analyzed the relationship between population growth and home prices in 18 developed countries.

He found that countries with faster population growth have had greater home price inflation than those whose populations have remained stable, or decreased.

Between 2010 and 2020, New Zealand and Canada both saw their populations climb by an average of more than 1 per cent each year. In Canada’s case, much of that growth was attributable to immigration.

Over that same decade, home prices rose an average of 7.9 per cent each year in New Zealand and 7 per cent each year in Canada.

Meanwhile, countries with shrinking populations have experienced stagnant or falling home values. Japan’s population declined by an average of 0.2 per cent each year, and home prices there rose an average of 0.2 per cent annually.

One reason immigration may be pushing up Canadian home prices is that Canada’s policies cater to newcomers with wealth and job skills. Many new permanent residents arrive with hefty bank accounts, or with enough professional expertise to make money quickly. And, like anyone else with means, they buy real estate.

Parisa Mahboubi, a senior policy analyst with the C.D. Howe Institute and an immigration labour expert, said integration is a challenge for all newcomers. But, she said: “Economic immigrants, especially those with Canadian experience or with education, are able to integrate into the labour market quickly. This means they are able to purchase a property sooner than other immigrants.”

New research from Statistics Canada suggests that in many cases it’s pre-existing wealth, not Canadian income, that is behind pricey real estate purchases by immigrants.

For example, in Richmond, B.C., a typical immigrant buyer in the lowest wage quintile, with median annual income of just $11,100, spent a median of $763,000 on a home in 2018, according to data from Statscan’s Canadian Housing Statistics Program (CHSP).

In contrast, a typical Canadian-born buyer in British Columbia in the lowest income quintile, with median annual income of $32,300, spent a median of $396,000 on a home in 2018, according to CHSP, which analyzed land registry information, property assessments and tax filings.

The disparity in the amounts spent by low-income immigrants and Canadian-born buyers suggests that the newcomers were relying on money not earned in Canada. The actual sources of the funds are unknown. CHSP has said the immigrant wealth could have been income earned previously in Canada or abroad, or income that was earned by others or underreported.

CHSP observed that in 2018 the majority of immigrant buyers across B.C. had moved to Canada prior to 2009 and had been admitted through the country’s various economic immigrant programs, which are designed to attract skilled workers and those with wealth.

“If you are an economic immigrant and you don’t have other opportunities, real estate becomes one of the fastest wealth generators,” said Andy Yan, director of the city program at B.C.’s Simon Fraser University. “They are wealthy. But when they try finding a job, it goes south.”

Other factors that have contributed to high home prices in Canada include low mortgage rates, a flood of domestic investors looking for high investment returns, and millennials increasingly forming families and seeking properties.

In the Toronto region, the country’s largest job centre, the average price of a home is above $1-million and many of the surrounding cities are nearing or above that price.

That has pushed Canadians and newcomers out of Toronto and into smaller regions in Southern Ontario. Some have left the province altogether for more affordable areas such as Regina, Saskatoon, Winnipeg and Halifax.

Canada’s six largest metropolitan areas – Toronto, Vancouver, Montreal, Edmonton, Calgary and Ottawa – used to be the top destinations for immigrants. But that has been changing.

In 2002, Canada’s largest cities took in 88 per cent of the country’s immigrants and non-permanent residents. In 2019, the proportion was just 68 per cent, according to Canada Mortgage and Housing Corp.

Over that same period, net international migration to those cities grew by 43 per cent. But in the rest of Canada it soared by 370 per cent, with particularly strong growth in Ontario locations such as Niagara, London, Kitchener-Waterloo and Cambridge.

Today, there is an acute shortage of housing in those smaller cities.

In Kitchener-Waterloo, Cambridge, London and the Niagara-St. Catharines region, the typical price of a home is 60 per cent higher than it was two years ago, according to the Canadian Real Estate Association home price index, which adjusts for higher-priced homes.

The flow of new permanent residents will put even more pressure on those places. If prices continue to rise, the higher cost of living could discourage newcomers.

“We need the immigration for the labour market. But if we don’t get the immigration for the labour market because they can’t afford to live in the community, that’s a significant challenge,” St. Catharines Mayor Walter Sendzik said.

The federal immigration target for 2021 was 401,000 new permanent residents. The goal for 2022 is 411,000. For 2023, it’s 421,000. By comparison, the number of new permanent residents admitted to the country in 2019 was 341,180.

Anthony Passarelli, a CMHC senior analyst, said that if immigration reaches these record-high levels and Canada doesn’t respond by increasing its housing supply, the effects on the housing market could be noticeable. “We will likely go through a similar situation, where you see another price surge and the ripple effects of people getting priced out of the larger population centres and moving further out,” he added.

Asked whether Canada should slow the pace of immigration until the country has enough affordable housing, BMO’s Mr. Porter said: “I suspect policy will be little swayed by housing market concerns. Having said that, at the very least the impact on housing should be taken into consideration when determining immigration targets.”

25-year-old internal memo to Canada Revenue Agency predicted foreign money distorting housing market

Pretty outrageous, both the initial non-release and the five-year ATIP battle. Kudos to Ian Young of the SCMP for persisting. David Anderson and Jane Stewart were ministers at the time:

An internal Canada Revenue Agency audit concluded 25 years ago that wealthy new immigrants were buying up most of the priciest houses taken from a sample in and around Vancouver while declaring poverty on their tax returns. But the report was not made public until a five-year access-to-information battle concluded recently.

Housing and immigration academics say the study could have warned the public about the scale of foreign money being parked in Metro Vancouver’s residential real estate – decades before the provincial government began taking meaningful action to slow this trend.

During the federal election campaign, all three major parties have proposed various policies to curb international demand for real estate, which has contributed to rising unaffordability in a number of urban centres.

The Liberals and Conservatives are promising to ban foreign home buyers for at least two years. The New Democrats have pledged to tax those who aren’t Canadian citizens or permanent residents with a 20-per-cent levy – the same penalty imposed in British Columbia’s biggest cities for the past three years.

But critics say the parties need to follow B.C.’s lead to capture even more information about property owners so that they can be taxed more equitably and governments can tamp down international real estate speculation.

The CRA’s analysis from October, 1996, was shared with The Globe and Mail this week after its release to Ian Young, the South China Morning Post’s Vancouver correspondent who first requested the information in 2016 after being leaked portions of the internal memo explaining its findings.

The audit focused on 328 higher-end sales in the suburbs Burnaby and Coquitlam, but the study also analyzed a random sample of 6,060 sales from Vancouver and neighbouring Richmond and discovered “similar demographic results.”

Of the 46 houses bought in Burnaby, staff found 72 per cent were purchased by new arrivals to Vancouver who reported an average total family income of just $16,000. In contrast, the CRA’s chart from the audit showed four buyers who were long-term residents reported average family incomes that were tens of thousands of dollars higher.

This income gap between new immigrants and neighbours who had lived there longer was also observed in Coquitlam, according to the CRA’s chart released in the package of documents.

“It should be noted that an obvious large discrepancy exists between the average total family incomes for long-term Canadian residents and newer Canadian residents,” the author of the memo wrote to his CRA boss. “Furthermore, based on lifestyle and average age of these taxpayers, it is likely that many of these new Canadians still have active business activities, but are not reporting all their sources of income.”

Vancouver lawyer Richard Kurland, who has been helping international clients immigrate to B.C. for 25 years, said the analysis proves the CRA failed to catch those hiding their global income while competing for homes on Canada’s West Coast.

“They knew it was happening and did nothing, so the bleeding continued, taxes were not paid, property was subject to speculation and the end result [is] people in Vancouver are paying many more times than they have to for residential property because the CRA did nothing when it was warned by its own employees about what was going on,” he said.

David Ley, a geography professor at the University of B.C. who studies housing bubbles, said the 1996 report could have spurred politicians to address the anomaly of “apparently poor people buying very rich properties” decades earlier. He said the CRA had long maintained that they it would take too many resources to crack down on home buyers hiding wealth abroad, in large part because other countries they lived in were unlikely to release the pertinent tax information.

“It’s very difficult to pursue foreign sources of income – so they didn’t,” Dr. Ley said.

The CRA told The Globe this week that the study intentionally focused on cases where the buyer may have been underreporting their income and, thus, “was not intended to, and should not be, extrapolated to the whole population.”

But large parts of the internal communications around the release of this document were redacted because the agency said federal access-to-information law allows consultations or deliberations between government employees, a minister of the Crown or their staff to remain confidential.

The federal agency said it takes cheating its system seriously and has stepped up audits in the hot housing markets of Toronto and Vancouver in recent years. Still, the CRA said its five-year battle with Mr. Young over the release of this document is “clearly not normal, nor is it acceptable; we are continuing to take steps to improve [our] performance.”

Andy Yan, a housing analyst and director of Simon Fraser University’s city program, said the federal government has a lot of tools – such as home loan data and analysis of social demographic changes in neighbourhoods – through which it can confirm or refute how widespread these investment patterns have been. But, ultimately, he said, the CRA has not effectively enforced the country’s tax rules, helping create an unfair system where foreign capital is stored in residential real estate.

“There shouldn’t be any free parking,” said Mr. Yan.

In 2015, a Globe and Mail investigation into public data – including land titles, tax reporting and court records – revealed a similar pattern to the 1996 CRA study that suggested the typical wealthy foreign family buying Vancouver real estate pays little or no income or capital gains tax. These family homes were priced out of reach for many locals whose taxes pay for public services.

The Globe discovered that one in three multimillion-dollar homes bought in Vancouver areas popular with foreign buyers was registered to a homemaker, student or corporation – one indicator of how the identity of the person who actually paid can be hidden.

When a spouse or child sells a property that is registered in their name, the real investor can avoid capital-gains taxes – because the relative in Canada can claim it was their primary residence, therefore not an investment.

This and other Globe investigations helped increase public pressure on the provincial Liberal government to enact Canada’s first tax on foreign homebuyers. After the New Democrats were elected in 2017, in part on their pledge to further crack down on expanding real estate speculation, B.C. implemented a host of new taxes and demand-side tools.

Mr. Kurland said more provinces need to follow B.C.’s lead in requiring that homebuyers declare their country of residence for tax purposes as well as create a registry for beneficial owners – which will come into full force at the end of this year to make it tougher for people to hide real estate investments behind corporations, trusts or partnerships.

He said the CRA’s current “whack-a-mole” approach to catching scofflaws in the housing market relies on auditors digging for specific information in individual cases, but it will soon be able to use algorithms to scour all its tax information and these twin data sets to better catch those hiding wealth in B.C.

“It’s equivalent of an abacus versus a spreadsheet,” said Mr. Kurland, who added that he saw a “massive selling spree” among foreign owners in B.C. before each of those two policies became law.

Rohana Rezel, a software engineer who advocates for more affordable housing by using software and data to uncover speculators in Metro Vancouver’s market, said the most effective federal policy on this issue would be to blanket the whole country with a speculation tax on all homes.

Then, owners could offset this two-per-cent penalty against what they pay to the CRA each year, said Mr. Rezel.

“If you’re paying income taxes of a certain amount it doesn’t apply to you,” said Mr. Rezel, who immigrated to Canada from Sri Lanka in 2008.

Source: https://www.theglobeandmail.com/canada/british-columbia/article-25-year-old-internal-memo-to-canada-revenue-agency-predicted-foreign/

Andy Yan, the analyst who exposed Vancouver’s real estate disaster: Terry Glavin

Nowadays he’s the director of the City Program at Simon Fraser University, and while he’s too modest to boast about it, along the way he’s picked up a couple of exceedingly rare civic distinctions.

The first is the enduring enmity of all the politicians, real estate speculators, white-collar currency pirates and money launderers who have turned Vancouver into a global swindler’s paradise for real estate racketeering, a city that is now also one of the world’s most hopelessly pathetic urban landscapes of housing affordability. The second thing Yan has earned is an unfettered and unimpeachable right to say “I told you so.”

Three years ago, Yan was anxious to get a handle on the role foreign capital was playing in Vancouver’s weirdly convulsing real estate market. At the time, Yan’s main gig was his work as an urban planner with Bing Thom Architects, on contract as an urban planner. When Yan published the results of his research in November, 2015, it came as a shock, for two main reasons. It seemed to conclusively prove what everybody knew but nobody was supposed to say out loud. And it broke a taboo that was enforced so absurdly that Vancouver mayor Gregor Robertson resorted to dismissing Yan’s research as racist.

Yan found that buyers with “non-Anglicised Chinese names” had picked up two-thirds of 172 houses sold over a six-month period beginning in September 2014 in Vancouver’s posh west side neighbourhoods. Contrary to public perception, however, the buyers weren’t just showing up with “bags of cash” to make their buys. Some of Canada’s biggest banks were in on it. Roughly 80 per cent of the deals involved a mortgage, and half of the mortgages were held by two banks – CIBC and HSBC.

Canada’s banks have mastered the manipulation of clandestine back channels around China’s currency control regulations—the same routes that well-connected Chinese multi-millionaires have been using to shift up to a trillion dollars’ worth of yuan out of China every year. What wasn’t clear about what was happening on Vancouver’ s west side, however, was who the real buyers were, exactly. The new homeowners’ most commonly stated occupation: housewife or homemaker.

Fast forward three years. The weirdness that Yan documented in Point Grey, Dunbar, Kerrisdale and Shaughnessy has rapidly spread southward and eastward, decoupling the bonds linking incomes with housing values across Burnaby, Richmond, Coquitlam, all the way out to Surrey and White Rock on the Canada-U.S. border. Metro Vancouver’s real estate market is now a dystopian tableau of panic buying, tax fraud, property flipping, overseas pre-construction condominium sales, stone cold speculation and elaborate, multiple-account money transfer rigmaroles that are the conduit of choice for drug cartel tycoons. Not even the heaviest regulatory hands at the controls of the Chinese Communist Party’s surveillance state seem capable of shutting the networks down.

It’s not just about shady Chinese money—not by a long shot. Vancouver’s old establishment property developers and real-estate companies fed the frenzies and made a killing. Along the way, they greased the skids by pouring buckets of money into Gregor Robertson’s now-dying Vision Vancouver civic party and Christy Clark’s Liberal Party. Robertson is now a sad figure, his legacy a shambles, his term up in October, and even his celebrated relationship with his glamorous girlfriend, the Chinese pop star Wanting Qu, fell apart last year. Qu’s mother, a Communist Party official in Harbin, remains on trial on charges of embezzling $70 million in a land swindle. Christy Clark is history, too. Her government was toppled last year by John Horgan’s New Democrats. With at least 60,000 Chinese immigrant investors sloshing their money around Metro Vancouver real estate over the past few years, federal politicians, too—Liberals, mainly—have been more than happy to rake it in at cash-for-access soirees and in generous donations to election campaign war chests.

In these ways, in Vancouver’s political circles, and in polite company, one simply didn’t mention the way the city’s housing market was being restructured to serve as an offshore investment bolthole for billions of dollars’ worth of shadow currency being spirited out of China, Iran, Russia and other such kleptocracies. But back in 2015, when the profoundly caucasian Mayor Robertson attempted to dismiss Yan’s findings—“I’m very concerned with the racist tones that are implied here,” Robertson said—it was a smear too far.

Yan’s great-grandfather was allowed into Canada only after being obliged to pay the infamously racist head tax Ottawa put in effect to keep out working-class Chinese immigrants. Students, merchants and diplomats were exempt. The head tax was in place until 1923. Yan wasn’t going to put up with Robertson’s backchat, and by that time, Vancouver’s ethnic Chinese community leaders had similarly lost their patience. White real estate moguls and politicians like Robertson persisted in proclaiming their anti-racist bona fides and purporting to be the champions of Vancouver’s Chinese community by shutting down public debates about the region’s housing catastrophe. Brandon Yan, a civic activist and volunteer on Vancouver’s planning commission, put it best: “Let’s leave it to the rich white dudes to decide what’s racist, right?”

Vancouver’s “condo king” Bob Rennie—a primary financial backer of Robertson’s NDP-tilting Vision Vancouver team and also the chief fundraiser for the NDP’s adversaries in Christy Clark’s Liberals—had cultivated a particularly brazen habit of it. “So you had these whispers about racism being used to shut down a dialogue about affordability and the kind of city we want to build here,” Andy Yan explained. “It’s a kind of moral signalling to camouflage immoral actions. It’s opportunism, and it’s a cover for the tremendous injustices that are emerging in the City of Vancouver and across the region. It’s a weird Vancouver thing. It’s very annoying. It’s kale in the smoothies or something.”

While the politicians and their friends in the property industry were making speeches about diversity and the importance of having sensitive feelings, foreign ownership grew to account for more than $45 billion dollars’ worth of Metro Vancouver residential property. Within Vancouver city limits, 7.6 per cent of all residential properties are now owned directly by individuals “whose principal residence is outside of Canada,” by the definition of the Canada Mortgage and Housing Corporation. Roughly one in ten Vancouver condos are owned by non-residents. And that’s just the owners we know about.

Transparency International reckons that perhaps half of Vancouver’s most expensive properties are owned by shell companies or trusts, with the nominal owners commonly listed as student, housewife, or homemaker. Roughly 99 per cent of the single detached houses within Vancouver’s city limits are now valued in excess of $1 million. More than 20,000 Vancouver homes are vacant, year round. Vancouver’s rental vacancy rate is hovering just below one per cent.

“I’m always careful about using biomedical analogies,” Yan told me the other day, “but what was like a little skin ailment, if you will, over the last 10 or 15 years, has become a full fledged cancer.” Over just the past four years, throughout Metro Vancouver, homes worth $1 million or more have risen from 23 per cent of the housing market in 2014 to 73 per cent of the market now. Yan has been putting together a series of maps that show how the $1 million “red line” has been moving inexorably across the region, deep into the suburbs. “But what those maps don’t do is they don’t factor in transportation costs,” Yan said. “The top two expenditures of any Canadian household is shelter and transportation. God help you if you factor in child care. The whole map might as well be red. A number of factors have all come together to produce this catastrophic situation, but what was a small concentrated pattern in the west side of Vancouver has now metastasized to hit every single part of the region, and it’s similarly metastasized into the rest of the economy.”

As for where things are headed, Horgan’s NDP government has raised expectations, mainly because of Attorney-General David Eby’s avowed determination to chase dirty money out of Vancouver’s housing market and bust up the gangland playground B.C.’s provincially-licenced casinos have become—money laundered through casinos has also been pouring into residential property acquisitions. In Tuesday’s throne speech,  delivered by Lt.-Gov. Judith Guichon, Horgan’s government directly addressed tax fraud, tax evasion and money laundering in the real estate market, hinting that a speculation tax is in the works. Next week, the New Democrats release their first full budget. The housing file, however, falls mainly to the more timid Carole James, former NDP leader and now deputy premier and finance minister. Preliminary indications aren’t particularly promising.

With short-term AirBnB rentals swallowing up long-term rental inventory, Yan was less than impressed with James’ solution, announced last week: short-term rental outfits will now pay the eight per cent provincial sales tax, and two or three per cent in municipal taxes. “That’s like taxing cigarettes to pay for lung cancer treatments,” Yan said.

Developing appropriately punitive taxes to discourage property-flipping and offshore pre-construction sales – those are obvious fixes. But knowing how to fix things requires a clear understanding of what’s wrong, Yan says, and closing the “bare trust loophole” that allows property owners to hide their holdings is a must-do. Ontario closed the loophole back in the 1980s. Clark’s Liberals promised to close it, but they never did.

In the meantime, Yan is focusing on converting hidden-away data into publicly comprehensible information. Some key information Yan has drawn from a trove recently released by Statistics Canada’s Canadian Housing Statistics Program, for instance, shows that simply building more condominiums won’t do. A condo building boom in Metro Vancouver has kept the property developers happy, but there’s no evidence that the boost in supply has lessened demand or beaten back prices. Nearly one in five condos built in Vancouver since 2016 were snapped up by non-residents.

To a certain extent, there’s nothing new here,” Yan said, pointing to the Guinness family’s financing of the Lion’s Gate Bridge in the 1920s, and the opening up of the British Properties on Burrard Inlet’s north shore. “But what is new is the hyper-commodification of residential real estate, mixed in with an intensification of global flows of people and capital. It’s just a statement in fact. We’re talking about the globalization of the Chinese economy and its impacts.”

Yan says there may be some solution—a mix of remedies, new laws, purpose-built rental housing, tax adjustments and so on—that does not mean a collapse in Metro Vancouver’s real estate prices. Channelling foreign investment in such a way as to serve the public interest might be possible. “But whether this comes out as a bubble-popping isn’t the point. That’s a secondary concern to the kind of society we want to build. “We need to go back to civic virtues.

“We need to talk about the sacrifices we are willing and we need to make for the greater good of the community. We need to have a discussion about what the public good is, and what we are willing to sacrifice to make it happen.”

Source: Andy Yan, the analyst who exposed Vancouver’s real estate disaster

Douglas Todd: Vancouver’s ethnic Chinese irked by inequality, tax avoidance

More good reporting on under-reporting of income in Vancouver. Not surprising that Chinese Canadians, likely particularly second generation, are as concerned as any one:

When urban planner Andy Yan spent an hour last week on a Fairchild radio talk show, every Cantonese- and Mandarin-speaking person who called was irate about growing housing inequality and tax avoidance.

“It really surprised me. The biggest lesson out of it was that Chinese-speaking people are as concerned as everyone about fairness and transparency and accountability,” Yan said.

The housing researcher said Chinese-Canadians appear as worked up as others about the growing gap between the house-rich and the rent-poor in this metropolis of 2.4 million people, in which one in five people have Chinese origins.

Yan, director of Simon Fraser University’s City Program, found in a study of the 2016 census that Metro Vancouver led the 10 most-populous cities in Canada in having the highest percentage (16.5 per cent) of residents living in low-income households.

Yan’s study, in addition confirming there are genuinely low-income city neighbourhoods, also added evidence to rising worries about Lower Mainland households that appear to under-report income.

“It’s a total mind-spin,” Yan said. “In Richmond, it seems to be a special concern,” he said, explaining how residents of the municipality, who are 50 per cent ethnic Chinese, are concerned many households may be under-reporting incomes to avoid taxes.

In a large swath of northwest Richmond, centred around Westminster Highway and Gilpin Road, which is replete with new high-end condos, 33 to 50 per cent of residents report living in low-income households. The Canadian average is 14 per cent.

Yan said his study revealed parts of West Vancouver and the west side of Vancouver are also sharp anomalies, with 25 to 33 per cent of individuals in households declaring poverty-like incomes, despite the stratospheric housing prices in those areas.

Yan’s study echoes two reports by veteran real-estate researcher Richard Wozny and UBC geographer Dan Hiebert, which show that residents of core Metro municipalities, where housing is extremely expensive, are often paying less taxes than people in the suburbs, where real-estate values are more modest.

In light of the study by Yan and others, three major factors appear to be contributing to why Metro Vancouver outstripped other major Canadian cities in having the most low-income households.

One factor is the region’s unusually large cohort of poor and working poor, a result in part of tepid wages compared to other Canadian cities.

A second cause relates to neighbourhoods with high-end housing in which some families appear to not be declaring their full worldwide incomes.

A third reason came to light this week, when immigration lawyer Richard Kurland released a Statistics Canada report showing contrasting financial outcomes among foreign-born residents — who make up 45 per cent of Metro’s population.

The report by Garnett Picot and Yuqian Lu showed that immigrants from Asia, who are predominant in Metro, are much more likely to report “chronic low incomes” than the Canadian-born and immigrants from elsewhere.

The disparity was most pronounced among immigrant seniors, who were 15 times more likely than Canadian-born seniors to declare poverty-like conditions.

After Yan pored over the results of his study, he was not surprised to see that more than half the residents of Vancouver’s Downtown Eastside are on low incomes. It is a struggling zone notorious for high rages of drug addiction and mental illness. It is the most extreme example of several low-income zones dotted through Metro, where old rental apartments are the norm.

The unsettling neighbourhoods to Yan, and others, are those dominated by costly houses and highrise condos, but have 25 to 50 per of households claiming low incomes.

In addition to northwest Richmond, such tony neighbourhoods include Ambleside, Sentinel Hill and Cedar Dale in West Vancouver, and Kerrisdale, Arbutus Ridge and Oakridge on the west side of Vancouver.

Detached homes in these neighbourhoods typically sell for $2 million to $6 million, with condos going for $500,000 to $1.3 million.

“It used to be that income was a driver of real-estate values,” said Yan.

But a phenomenon is occurring in which the riches of many rely on heavy borrowing and are buried in assets such as real estate that are not taxed like income. Yan said President Donald Trump, an international real-estate mogul, is a prime example.

Although Yan said “under-reporting of income is hard to measure,” the fact many Metro neighbourhoods with expensive housing are reporting low incomes may relate to “the perils of wealth-based immigration.”

Immigration lawyers and scholars concur. They emphasize it is too easy for many trans-nationals to buy stylish condos or mansions in Metro Vancouver and Toronto, often in the names of their spouses or children, while reporting tiny or non-existent global incomes to the Canada Revenue Agency.

Yan was heartened by Chinese-speaking callers’ reactions to his report on income and housing disparity.

“Many Chinese people are aware of how income inequity has shown up in China through 3,000 years of history. They understand the instability that goes with it,” he said.

“Some Chinese people are not doing that well in Metro Vancouver. And many are concerned about having a real community. So they want to see fairness.”

Source: Douglas Todd: Vancouver’s ethnic Chinese irked by inequality, tax avoidance | Vancouver Sun

Douglas Todd: Mixed motives fuel rise of foreign students

Not surprising that universities and other educational institutions view foreign students from an economic perspective and that foreign families consider not only the education but financial (shift money to Canada, invest in real estate) and political benefits (citizenship).

But, as in the case over the debate over housing prices, it raises policy issues:

Immigration Canada data shows about 72,000 foreign students from Mainland Chinese were accepted in 2014, 36,000 from India, 17,000 from South Korea and 13,000 from France. In total, one out of four foreign students in Canada is from China.
Canadian politicians talk in predictable ways about the increasing number of foreign students.

Wilkinson maintains Chinese and other foreign students bring “social, cultural and economic benefits.” And they pay full fees for their own educations, unlike subsidized homegrown students.

The federal Immigration Minister John McCallum often calls foreign students “the cream of the crop.”

But noted specialists in higher education, including Boston College’s Philip Altbach and Ontario’s Jane Knight, say the quality of foreign students is going down as their numbers inflate.

Most foreign students are now second tier, say Altbach and Knight. They’re generally not doing well in the schools in their countries of origin. But many have rich parents.

Given the trend, Knight argues that most Western foreign-student programs have lost their humanitarian origins and become elaborate cash grabs. They make it possible for governments like British Columbia’s to mask that they are tightening education funding.

What are some foreign students in Canada doing when they’re not studying?

Canada’s federal housing agency, looking for new methods to track foreign ownership in the country’s soaring real estate markets, has considering classifying foreign university students as foreign buyers as it steps up its investigation into global money-laundering.

Bloomberg News discovered that Canada Mortgage & Housing Corp., the Crown corporation that tracks housing data, is especially interested in how the red-hot housing markets in Toronto and Vancouver are partly fuelled by foreign students, some of whom live in multi-million-dollar homes near the UBC campus.

In a related study, urban planner Andy Yan, head of Simon Fraser University’s City Program, discovered that in a six-month period in 2015, about 70 per cent of 172 detached homes sold on Vancouver’s west side were purchased by Mainland Chinese buyers.

Yan’s research showed that, of all self-declared occupations among owners of the high-priced homes in the study, 36 per cent were housewives or students with little income.

Five of eight homes owned by “students” were bought outright with cash at an average value of $3.2 million.

Vancouver immigration lawyer Richard Kurland, a frequent adviser to the federal parliament, said it’s clear that most children from around the world who are able to afford to live and pay full education fees in expensive cities like Toronto and Vancouver are from “elite families.”

One bonus of getting children into Canada as foreign students, Kurland says, is that those who are able can become players in real-estate investment. Students are being declared as property owners of Vancouver residential property because they aid in international money transfers, Kurland said.

Foreign students have the advantage of being able to appear as residents of Canada for income tax purposes, even as their declared earned income would be extremely low.

As principal resident of a dwelling, Kurland said, a foreign student does not have to pay capital gains when his or her home is sold at a profit. “Then, out of the goodness of their heart, they can send the profit back to their uncle in China,” Kurland said with irony.

In addition to aiding the movement of trans-national wealth, however, possibly the more common reason a well-off foreign family puts a great deal of effort into establishing their son or daughter in Canada is that it goes a long way to obtaining a second passport.
Canadian politicians often rank international students as prime candidates for immigration. Roughly three out of 10 foreign students have gone on to become Canadian citizens. And that proportion is expected to rise.

Kurland believes more foreign students from China are being flown to Canada at “younger and younger ages … in part because they’re a no-fit in the Chinese educational system.” They need to establish themselves early in Canada’s educational system if they’re going to make it.

The immigration lawyer, who publishes a newsletter called Lexbase, discovered that Mainland Chinese families have doubled the rate at which they’re sending their children to Canadian elementary and high schools. Four out of 10 foreign students in Canada, including those from Mainland China, now apply for “secondary school or less.”

Source: Douglas Todd: Mixed motives fuel rise of foreign students | Vancouver Sun