Quebec immigrant program increases in popularity … with ‘downsides’ for B.C. | Vancouver Sun

2016/07/13 Leave a comment

Ongoing coverage and controversy. I agree with the critics:

The Quebec government, running a cash-for-visa program labelled a “fraud” and “scam” by critics who say it hurts British Columbia, received a record-breaking number of rich immigrants in 2015.

The 40-per-cent increase took place a year after the former Conservative federal government complained that the program’s harms outweighed its benefits and shut down an identical national investor-luring scheme.

Quebec has autonomy to select its own immigrants under a 1991 accord with the federal government, so decided to continue its own program.

Critics, including Conservative MP Jason Kenney when he was immigration minister, have complained that the vast majority of investor immigrants are wealthy Asians who dishonestly declare an intention to live in Quebec, then move immediately, to Toronto and, especially, to Vancouver.

Quebec gets the financial benefits of the program while Metro Vancouver gets inflated housing prices and added stress on the public education and health care systems, the critics argue.

The latest evidence of Quebec’s growing enthusiasm for luring millionaire migrants prompted criticism of the B.C. government, which hasn’t been vocal on the issue despite allegations that the program has played a role in Vancouver’s housing affordability crisis.

“The silence from the B.C. government has been absolutely startling,” said New Democratic Party MLA David Eby.

“In effect, they are content with a program that brings major housing affordability problems, while allowing many wealthy migrants to use British Columbia’s social services virtually for free.”

Jobs Minister Shirley Bond said in a statement Friday that Victoria has “consistently” raised its concerns with Ottawa about the need for additional settlement funding to offset the cost of “secondary migration” when immigrants land somewhere else but then head straight to the West Coast.
“We are in active conversations with the federal government,” she said, noting that Quebec has had the authority for decades to select its own immigrants.

The total number of applicants and their family members admitted under the Quebec Immigrant Investor Program reached just over 5,000 last year.

That compares with 2014’s total of 3,669. The previous high was 4,436 in 2012.

Quebec says it will bring in roughly the same number in 2016, according to the province’s immigration plan tabled recently in the Quebec National Assembly.

The former Conservative government, while initially enthusiastic about the program, soon questioned its value and sharply reduced national admissions from an average of around 9,200 in 2008-2010 to 3,787 in its final year of 2014.

When the Tories shut down the program in 2014 they said the program’s costs far outweighed the benefits for Canadian — and especially B.C. — taxpayers.

Quebec’s enthusiasm during this period soared, from a little over 1,000 in 2008 to five times that annual total now.

Kenney, who said applicants misrepresenting themselves in their applications were engaged in “a crime” and “fraud” in 2013,  was unable to get bureaucrats to take action before he was shuffled out of the ministry later that year.

The only positive economic spin-off Eby said that he’s witnessed in his Vancouver-Point Grey riding, the focus of Vancouver’s housing price explosion, is the opening of a Ferrari dealership.

“Apart from that, it’s hard to figure out what benefit we see in British Columbia for this program. And the downsides are profound.”

Simon Fraser University professor Joshua Gordon, author of a recent report on Vancouver’s housing crisis, said every British Columbian who hears about the Quebec program is “appalled,” and yet the Clark government “won’t go to bat” for them.

“The absence of any public pressure from the B.C. government on the feds or Quebec to end the program is revealing about the way the Clark government thinks about the housing issue,” Gordon said Friday.

“What this suggests is that the Clark government’s strategy is to continue to fuel the housing bubble, since they realize it’s the main economic game in town, and hope that equity windfalls for boomers will get them re-elected — and that the whole thing doesn’t come crashing down.”

A spokesman for the Quebec immigration ministry, meanwhile, said Friday that his province didn’t jump in to increase its intake as a result of Ottawa’s departure from the field.

Quebec has actually reduced the number of applications it has accepted in recent years, from 2,138 in 2013 to 1,278 in 2015, according to Jonathan Lavallee. He indicated the recent bump had to do with a processing backlog in the federal system — a contention that Vancouver immigration lawyer Richard Kurland supports.

The Quebec government has also acknowledged the leakage problem, saying in a 2014 discussion paper that only a “small minority” choose to settle in Quebec for the long term.

Kurland praised Quebec’s recent efforts to retain more rich immigrants. One such measure gives preferential treatment to French-speakers.

The federal figures don’t break down the source countries for the immigrants through the investor program. However, the Quebec government says 89 per cent of its investor immigrants this year will come from Asia.

The Quebec investor program, for a net cost that Kurland pegs at $125,000, allows wealthy foreigners jump to the front of the immigration queue even if they didn’t speak a word of English or French.

Federal Immigration Minister John McCallum said in a recent interview that he has no intention of challenging Quebec on its immigration policy, and a departmental spokeswoman said the province has every right under a 1991 Canada-Quebec accord to set its immigration policy.

Kurland said Canada has the authority to shut down Quebec’s program if it has the political will to annoy a province in which Trudeau holds 40 of 78 seats.

And he challenged the common assertion that the Charter of Rights and Freedoms, which guarantees mobility rights, prevents authorities from forcing newly arrived permanent residents to stay in Quebec after arrival.

He noted that all charter rights are subjected to Section 1 of the 1982 Constitution Act, which says all rights can be circumscribed by “reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.”

Kurland, who believes B.C. should set up its own investor program, said a court could be convinced that it is “reasonable” to insist that newcomers stay in the province they declared an intent to live in for their first two years in Canada.

That could be enforced by requiring successful applicants to forfeit the entire $800,000 investment if they move before that time.

“The Charter has a two-part test. A breach of rights is not the end of the debate.”

Ian Young, the South China Morning Post’s Vancouver correspondent, echoed Kenney’s harsh assessment in a column last week.

“It is a money-grubbing prank perpetrated upon Vancouver by Quebec,” Young said. “It is a scam, and it needs to stop.”

Source: Quebec immigrant program increases in popularity … with ‘downsides’ for B.C. | Vancouver Sun

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Vancouver: Is racism part of the housing issue? Of course it is

2016/07/12 1 Comment

Not sure really what Pete McMartin really wants to say here beyond that yes, part of the reaction has racist overtones, but that does not diminish the underlying economic issues and concerns regarding the affordability of housing:

But what this most recent offering by the government has done, and the critics’ and public reaction to it, is bring us closer to a truth of a different kind. Finally, we’re getting to the crux of the matter. It’s about the nature of the remedy to our housing “crisis” as the critics and many members of the public see it. It’s not a vacancy tax they want, or a tax on foreign ownership, neither of which would do much to cool the market, anyway. They want to rewrite the rules of immigration and tax law, and close the door. (Or as they put it: It’s Chinese money, not Chinese immigrants, that has created this market. Which makes me wonder exactly how they would go about separating the two.)

Is that racist? 

Of course it’s racist. And if it didn’t begin as racist, as housing and real estate critics insist it did not, that it was purely an economic issue, that it’s not the colour of the homebuyers’ skin that mattered but the colour of their money, then the prolonged and lop-sided take on the matter in the media and in public opinion has made it racist.

It speaks for itself that we regard this huge infusion of capital into Metro Vancouver’s real estate market as a disaster rather than an unprecedented creation of wealth for British Columbians and the B.C. economy — which is now, not coincidentally, the best-performing in Canada. We have cultivated an Us Against Them dynamic — Them being the devious, dirty-monied, tax-avoiding, Maserati-driving, heritage-home-destroying, self-ghettoizing Chinese who steal into Canada through our immigration loopholes, outbid us for our housing, and abuse the social welfare state that we have created. We, of course, cast ourselves as innocent bystanders in all this rather than accomplices, despite the fact that not 20 or 30 years ago we were doing everything we could to attract Asian money to B.C. because of our hope to become world-class and globally competitive, and to lift us out of the cycles of boom and bust that British Columbians had suffered. How soon we conveniently forget. What did we think Expo 86 was, if not a door swung wide open?

Now? It’s no longer a matter of housing. It’s a matter of culture and race in an increasing climate of mutual resentment — or perhaps you haven’t noticed the flood of spittle-flecked comments at the end of media stories about how we’ve been selling Canada off to the Chinese. And the remedy — one that is finally beginning to coalesce and make itself clear — is one not unlike the Chinese head tax of 1885. It’s the head tax stood on its head. In 1885, we wanted to keep the Chinese out because they were too poor and too numerous and would steal our jobs. Now, we want to keep them out because they are too rich and too numerous and would steal our homes.

We should admit to that. We should own up to that racially tinged resentment. I certainly will. I’ve felt resentment when I see an 18-year-old Chinese kid driving a Ferrari down the street with an “N” on its back bumper, and I’ve felt resentment at the thought of wealthy immigrants living in Point Grey mansions who declare incomes low enough to qualify for GAIN payments. 

But then, I’ve also felt resentment at the many born-in-Canada professionals who, long before the wealthy Chinese got here, avoided paying taxes by incorporating themselves or by hiding their money offshore, while I ended up owing more taxes at the end of the year. And I’ve felt resentment, too, for an old-stock wealthy class which in the past didn’t give a damn whether or not I could afford to live in Vancouver until they saw their own neighbourhoods besieged by an even wealthier class.

Small of me? You bet. But I’m trying to honest here.

Source: Is racism part of the housing issue? Of course it is | Vancouver Sun

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Study says foreign buyers spend more on B.C. homes, but some dispute data

2016/07/12 Leave a comment

More on Vancouver housing and immigration:

Critics argue there are larger holes in the data than the small window of time it encompasses.

Richard Kurland, a Vancouver immigration lawyer who works with wealthy clients from China, said the government should break the statistics out into postal codes so foreign ownership of high-end homes could be better tracked, and ultimately taxed. Four per cent of Vancouver sales were registered to foreigners, but Mr. Kurland said those likely occurred in a select number of tony west side neighbourhoods.

“It would be useful, because this is a problem that should not be attacked by a mallet, but a surgeon’s scalpel,” he said. “The driver is at the high end of the property market.”

Richmond and Burnaby saw the highest levels of foreign ownership in the region, at 11 per cent and 14 per cent respectively, but there is no indication of where that investment occurred, he said.

Mr. Kurland said the government’s metric is not gauging the true level of foreign participation in the local housing market because it is classifying tens of thousands of wealthy “investor immigrants” from China as permanent residents despite earning all of their income abroad and, in some cases, continuing to live abroad while owning properties in B.C.

From 2002 to 2013, about 1,000 millionaire migrants flocked to Vancouver each year under a federal government program that was ultimately shut down after Mr. Kurland raised concerns over its effectiveness at generating local economic growth.

This net migration has made a large impact because when these families bought a home in B.C. another unit of housing was not relinquished into the market.

“With domestic people it’s [often] a push: one bought, one sold,” he said. “With an immigrant investor, it’s one bought, none sold, and that’s what restricts supply.”

Tom Davidoff, a professor at the University of British Columbia and economist leading the charge for a targeted property tax, said the government should not “drag nationality” into the housing debate, but rather focus on whether people owning homes in this frothy market also earn their money in the region.

If not, then those owners should be charged a surtax for enjoying government services paid for through income tax, he said.

“When you’re using something scarce you should pay the true cost,” he said.

Source: Study says foreign buyers spend more on B.C. homes, but some dispute data – The Globe and Mail

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Panel addresses realtor language barrier in British Columbia – The Globe and Mail

2016/07/09 Leave a comment

Yet another aspect of Vancouver’s real estate industry problems:

Many of B.C.’s realtors lack the English skills necessary to protect buyers and sellers in a market where English is the operating language for licensing education and official contracts, says a report from an independent panel being used by the provincial government as a road map for regulation reform.

Among the panel’s 28 recommendations is a suggested comprehensive review of the licensing and education requirements for aspiring realtors, including a consideration of the role of fluency in a market where many licensees deal mainly with fellow non-native English speakers.

The provincial government released data on Thursday showing that during a three-week period last month, about one in 20 homes in the Vancouver area was purchased by a foreign buyer, the majority from China. But even if many transactions are conducted in a language other than English, the formal documents required to complete the deal are entirely in English.

“This creates a risk that licensee’s education and ongoing proficiency will be impacted by language proficiency or comprehension issues,” the report stated. “This is a risk that the regulator cannot ignore.”

Many long-time agents have argued the current system makes it far too easy for anyone to join the industry and that language proficiency requirements are too easy to skirt.

Aspiring real estate agents in British Columbia must spend at least 10 weeks completing a series of online assignments through the University of British Columbia’s Sauder School of Business. Applicants must then complete a 100-question multiple-choice test, earning a mark of 65 per cent or higher, to become licensed.

If they weren’t educated in English, the real estate students must also write a separate exam where they prove their fluency by attaining a mark of at least 60 per cent on a several-hundred-word essay.

Language proficiency within the real estate industry has become part of the charged debate around foreign ownership. But formal complaints about it are rare: A search of recent disciplinary decisions by the Real Estate Council of B.C. failed to turn up a case of realtor wrongdoing where a language barrier was a direct factor.

Tony Gioventu, a member of the advisory panel and head of a trade association for B.C.’s condominium owners, said submissions from the public and industry insiders to the advisory panel made it clear that language proficiency has been an issue.

“The parties didn’t necessarily always understand what they were signing or what the implications of what they were signing was,” he said.

Several real estate brokerages offer prep courses to help aspiring realtors cram for the multiple-choice licensing exam, as well as the essay component that non-native speakers must write.

New Coast Realty, one of Metro Vancouver’s most controversial and fastest-growing brokerages, has five branches across the region that prep students seeking to become licensed.

“This complicated professional course intimidates even native English speakers. The difficult-to-understand legal and real estate terms discourage many otherwise interested people,” states a Chinese advertisement for the company’s prep course. “Our knowledgeable instructors and concise materials will help you learn easily and pass the exam quickly, paving the way for your career or investment plans.”

UBC in the past has defended its licensing program as rigorous, but says it looks forward to working with the government to “help to promote public protection and satisfy the professional education requirements” of realtors across the province.

Realtor Gary Wong suggested that adding a written essay or oral exam component to the multiple-choice licensing test would automatically raise the language-proficiency bar and make it harder for everyone to become a realtor, something the province has promised to do as it overhauls the existing real estate regulations.

He said roughly half the Chinese-Canadian agents he deals with see his name and start their conversation in Mandarin. Mr. Wong, who speaks Cantonese and only a smattering of Mandarin, said business continues as usual once he asks them to switch back to English.

“It’s not the greatest, but you can work around it,” he said, noting that agents can use templates for most contract clauses, which eliminates grammar mistakes or spelling errors.

Source: Panel addresses realtor language barrier in British Columbia – The Globe and Mail

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Housing prices: Singling out ethnicity of buyers is unhelpful | Yuen Pau Woo

2016/07/06 Leave a comment

While his first and third points are largely valid, the nature of Vancouver ethnic demographics and that those from China are the main source of foreign investment is a reality.

Similar to having a conversation about extremism and terrorism without making any reference at all to the link with religion and Islam in particular.

Finding a vocabulary to have an open discussion, and finding a way to respectfully but honestly debate the issues, is always a challenge.

But silence on the ethnic origin ignores the main driver:

First, most accounts of the role of Chinese buyers do not distinguish between non-residents and residents, or indeed between Canadian citizens, landed immigrants and foreign nationals. The vast majority of homes owned by Chinese people in the Lower Mainland belong to folks who have residency status in Canada — in other words, they are Canadians, not foreigners. There are hundreds of thousands of people with last names spelled in the fashion of mainland Chinese who are Canadian citizens or landed immigrants. [note I would not call those with Permanent Residents status Canadians, that term should be reserved for citizens]

Second, even if one is able to identify Chinese buyers who are truly “foreigners”, there has been little consideration given to their economic contribution to the local economy. Housing affordability, after all, is a function of both prices and income. Are these buyers connected to the international student population in B.C. that contributes about $1.5 billion a year to the local economy? How many local businesses have benefited from the investments of these high net worth individuals? The much-cited study identifying Chinese buyers of local condos looks at the numerator in the affordability equation, but totally ignored the denominator. Where is the equivalent study of their impact on jobs and incomes?

Third, and most importantly, singling out Chinese buyers is irrelevant when it comes to a public policy response. There may be a case for surcharges on foreign purchases of residential real estate and on property speculators, but any such policy would surely apply without regard to country of origin or ethnicity. After all, while China may be this year’s source of hot capital outflows, some other region could assume that role next year. Indeed, that may already be happening with the tightening of capital controls in China, the appreciation in the U.S. dollar, and heightened political uncertainty in much of the rest of the world.

So why this parlour game of pointing the finger at Chinese buyers? I don’t doubt that many researchers and writers on the subject have good intentions, but they are naive to think that singling out an ethnic group is nothing more than dispassionate analysis and a crusade against political correctness. On the contrary, they are unwittingly giving voice to darker sentiments in the populace and normalizing the language of chauvinism.

You see, I find out about their well-meaning articles and quotes when I get nasty spam messages from groups that actually don’t like Chinese people, or immigrants in general, and who gleefully hold up these articles as vindication of their beliefs. In the same way that the Brexit vote has given voice to racists in the U.K., the incessant focus on Chinese buyers as villains in Vancouver’s affordability crisis is propagating prejudice and promoting distrust.

None of the above is a dodge from discussing and dealing with the challenges of housing affordability in Vancouver. But there are no solutions to be found in singling out the ethnicity of buyers, and no winners in the divisive game of race baiting.

Source: Opinion: Singling out ethnicity of buyers is unhelpful | Vancouver Sun

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Douglas Todd: Ten ways to ease Metro Vancouver’s housing crisis

2016/06/27 Leave a comment

The two immigration-related suggestions by Todd. The first and second ones are easier than the third one, given mobility rights:

Press to end Quebec’s immigrant investor program

Even though the Conservatives stopped Canada’s egregious immigrant investor program in 2014, a form of it still exists in Quebec. But the vast majority of rich immigrants who buy their way into the country by modestly “investing” in Quebec never live in la Belle Province. Most move to Metro Vancouver.

 Combat money laundering, including the property transfer system

Canada’s naive honour system has failed to tax billions of dollars in trans-national property deals. Information sharing agreements between real estate officials, Revenue Canada and the immigration department are desperately needed to catch buyers and sellers who lie about whether they are residents of Canada for income tax purposes. UBC geographer David Ley says a host of money-laundering and tax-evasion schemes, including faking that a property is one’s primary residence, are  getting exposed in London and New York.

Reduce or redirect immigration patterns

In regards to the big picture, Britain and other countries are reducing immigration rates. Studies, like that of UBC geographer Dan Hiebert, show well-off immigrants are a key driver of increases in urban house prices. Nine out of 10 immigrants to B.C. choose Metro Vancouver. Some countries have found ways to encourage immigrants to move to less populated regions.

Source: Douglas Todd: Ten ways to ease Metro Vancouver’s housing crisis | Vancouver Sun

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Opinion: Mass immigration cause of demand for housing

2016/05/30 Leave a comment

Herbert Grubel on the impact of immigration on the Vancouver housing market (overall immigration not just the wealthy).

While I agree with his characterization of many of the interest groups supporting continued high levels of immigration, his reference to the “silent majority” is left undefined: is it code for ‘old-stock’ Canadians or a more inclusive concept that includes many second generation new Canadians who face similar affordability issues (see Chinese real estate investors are reshaping the market):

The other alternative is curtailing mass immigration, which is the responsibility of the federal government. Such curtailment will not take place since federal politicians are pressured to maintain present policies by the many beneficiaries of mass immigration: the construction industry, real estate agents, employers hiring immigrants to keep labour costs low and increase profits, retailers benefiting from increased sales, the owners of land and homes whose capital gains depend on high demand by immigrants, the members of the immigration industry (lawyers, consultants, providers of adjustment assistance, teachers of English as a second language and others who are paid by government to serve immigrants), members of immigrant communities wanting to increase their economic and political influence, and immigrants who want to have their parents and grand-parents join them.

There are also Canadians who enjoy more abstract benefits from mass immigration: socially conscious people who want to do good and get satisfaction from seeing immigrants escape poverty in their home countries, and making Canada a globally admired multicultural society. Politicians whose re-election chances are increased by catering to these do-gooders and who, ironically, gain status and self-esteem by designing and financing at taxpayers’ expense policies for the assistance of those suffering from the high costs of housing.

Because of the politics surrounding building rules and immigration policies, Vancouver’s young will continue to suffer from the high and increasing costs of housing. Many will leave Vancouver. Some will live in the basement of their parents’ home or share accommodations with others, postponing and often forgoing marriage and having children.

However, eventually the silent majority of Vancouverites who do not benefit from mass immigration may vote for changes in federal policies. This will happen once this silent majority becomes aware of the negative effects on their own well being caused by mass immigration: fiscal deficits resulting in higher taxes; lower wages and incomes per person; traffic congestion, pollution, scarcity of family physicians, hospital beds and university places and diminishing returns from multiculturalism.

Source: Opinion: Mass immigration cause of demand for housing | Vancouver Sun

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The Asian force behind Vancouver’s housing boom

2016/05/28 1 Comment

More on immigration and the over-heated Vancouver housing market and the related analysis by David Ley:

If he wanted to, geographer David Ley could consider himself a data point in his own research. It was back in 1996 that he was named UBC director of the Metropolis Project, an international inquiry into immigration and diversity. By that time, he’d seen his own Kerrisdale neighbourhood being remade by rich immigrants from Hong Kong and Taiwan who’d sent house prices soaring.

Ley’s 2010 book, Millionaire Migrants: Trans-Pacific Life Lines, displayed empathy for the immigrants while also identifying problems that their mass arrival wrought. By the time it was published, a new wave, this time from mainland China, had begun turbocharging Vancouver property markets yet again. For concerned officials and researchers, Ley’s book was one of the few resources available, even though it described an earlier time and a different group.

Today, a continuing lack of research and official data about the role of Chinese immigrants and investors in Vancouver’s housing insanity* remains, for some in government and the real estate industry, a rationale for doing nothing. “The interesting question is why there are deniers,” Ley says. “Often you find a vested interest.”

Ley’s latest research describes an influx of foreign capital turning Vancouver’s housing market into a Wild West land rush. He pins much of the blame on governments for whom rich Asian immigrants have become an easy fiscal fix.

In the early 1980s, Canada and especially British Columbia were in deep recession. One cure, governments in Ottawa and Victoria hoped, would be programs encouraging high-net-worth individuals from Asia and elsewhere to immigrate.**

While the immigrants did come, the economic benefits did not. It hardly mattered that Canada’s visas had less demanding standards than most other countries’, Ley says, because we didn’t uphold them anyway. Originally, aspiring business-class immigrants could choose from two main streams. In the investor stream, Canada required a lower net worth and minimum investment than did the United States – and, in the end, while banks and governments definitely got a take, there was never much in the way of actual investment.

Meanwhile, “with the entrepreneur stream, after two years you had to have hired one Canadian,” says Ley. “In the equivalent American scheme, you had to hire 10 Americans.” But in B.C. – where more than half of all business immigrants eventually landed*** – evaluations were minimal or were waived. “And this was because there was half a dozen people in the Vancouver office tasked with following up on the thousands of cases, which simply wasn’t possible.”

The Canada Revenue Agency has been similarly ineffective. The declared income of business immigrants is lower than any other category of immigrants, including refugees, Ley points out. Nor did we bother tracking property markets. The B.C. government did keep records of home buyers’ nationalities but stopped during the 1990s. “The reason I’ve heard is that there was a storage issue,” he says. “I’m passing that along while raising my eyebrows.”

Then there is the federal agency Fintrac, which is supposed to stop money laundering. Anecdotal information suggests that a large portion of Chinese buyers pay in cash (in the U.S., there is data).****  “The property market is one of the easiest ways to dispose of hot money,” Ley notes.

Ottawa abruptly eliminated both the investor and entrepreneur streams in 2014, but many of the 50,000 Chinese lined up at the time opted instead to use a new 10-year come-and-go visitor visa that does not lead to citizenship. Of the more than 300,000 Chinese come-and-gos that year, most were tourists, but a significant number employed it as an inexpensive, low-hassle mobility tool, in many cases to buy a second home occupied by student children.

In 2014 China had more than one million people with liquid assets of over $2-million. Up to 60 per cent were weighing or pursuing emigration, with Vancouver among the three top intended destinations. It’s hardly surprising that several surveys and estimates (none of them officially sanctioned, of course) place the proportion of Chinese buyers of detached homes on Vancouver’s west side at about 70 per cent and growing. “The top end of the market is not being supported by local conditions,” says Ley. “We’ve got a housing market that is totally out of whack with the labour market.” That is, people who actually hold jobs in Vancouver increasingly cannot afford to live there.

Some of the additional machinations that are throwing that market out of whack have only recently come to light. New Coast Realty stands accused of both shadow flipping and predatory pricing, following a Globe and Mail investigation.

Of course, there are beneficiaries besides the real-estate industry: namely, Vancouver homeowners. But not Ley. “My wife and I are steadfast stayers. But the craziness of the last six months has shifted a lot of people.”

Source: The Asian force behind Vancouver’s housing boom – The Globe and Mail

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Plenty of blame to go round in real estate crisis: Mason

2016/03/26 Leave a comment

The (valid) criticism of governments continues.

But at least, the planned StatsCan study will illustrate the extent to which (mainly Chinese) immigration has contributed to increased housing prices:

The B.C. government recently vowed to crack down on real estate agents involved in nefarious practices such as shadow flipping that help to drive up prices. But this is a small measure that will do absolutely nothing to improve affordability. Its primary purpose is to improve optics: Look, everyone, Premier Christy Clark is finally doing something about this mess. The Premier also asked B.C. Housing to look at the impact of foreign investment in the market.

In this week’s federal budget, meanwhile, $500,000 was set aside to help Statistics Canada determine the best way to collect data on international buyers.

It would be comical if it weren’t so sad.

Others, meanwhile, aren’t waiting. This week, two economists from the National Bank produced a study showing as many as one-third of house purchasers in Metro Vancouver last year were from China. But perhaps the most interesting numbers to be revealed lately concern the impact that the immigrant-investor program – both the one run for years by Ottawa (and terminated in 2014) and another that still exists in Quebec – has had on the real estate madness we are witnessing.

Under the program, immigrants can come to Canada in exchange for $800,000, up front, that serves as a five-year loan to the government. The report, brought to light by Ian Young of the South China Morning Post, reveals how completely porous and unaccountable the immigrant-investor system has been. Truly awful might be another way to describe it.

For example, after 10 years the average annual income tax paid by these millionaire migrant investors is $1,400. That compares with $7,500 for the average Canadian. The report notes that after five years, many of these investors have secured Canadian citizenship and returned to their home country.

Quebec accepts about 1,750 such applications annually. After handing over their $800,000, most move to Vancouver and buy real estate. The vast majority of all who have taken advantage of these programs over the years have ended up in British Columbia (by one estimate, nearly 200,000).

Those who have come to Canada acknowledged to federal researchers that their primary motivation for obtaining citizenship was as a hedge against political or economic upheaval occurring in their home country.

The federal government has known about the impact the investor pipeline was having on things such as real estate and didn’t care. It was more than pleased to sell Canadian citizenship to the wealthy. The B.C. government, meanwhile, is only too happy to take rich immigrants through the investor back door that continues to be provided by Quebec. It doesn’t care that it isn’t seeing any of the loan money that immigrant investors have to pay; it is making tens of millions from the insane escalation in real estate prices these immigrants have set off.

Canadians should be furious that their governments allowed this to happen. Now all that these same governments can do is introduce lame measures that will have no meaningful impact on housing prices, but rather are designed to show that government is on the problem!

Except they’re not. And never have been. And hopefully history will judge them harshly for that.

Source: Plenty of blame to go round in real estate crisis – The Globe and Mail

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Blame politicians for Metro Vancouver’s housing price crisis

2016/03/22 1 Comment

More analysis by David Ley on the roots of Vancouver’s housing prices (likely some similarities in Toronto’s overheated housing market although the pressures likely come from a more diverse group):

Canadian politicians, keen to stimulate B.C.’s economy, are responsible for creating the conditions that created Metro Vancouver’s housing affordability crisis, according to a new study.

Politicians decided to “reboot a troubled regional economy through an infusion of activity from the growth region of the Asia Pacific,” UBC geographer David Ley says in a peer-reviewed paper published in The International Journal of Housing Policy.

Largely as a result of governments’ efforts to attract wealthy immigrants and investment from East Asia, “house prices have risen rapidly and the detached housing market is now unaffordable to most Vancouver residents,” writes Ley.

Given that federal, provincial and municipal governments have shown a “minimal response” to Metro residents’ housing difficulties, Ley concludes most politicians have accepted that astronomical prices and mortgage debt are just the “collateral damage” from expanding the B.C. economy.

One of the federal government’s key policy tools for attracting Asia-Pacific money to Metro Vancouver real estate was the business-immigration program, says Ley, a leading expert on how the world’s “gateway” cities are changing because of high in-migration.

The program, which gave preferential treatment to wealthy migrants, proved extremely popular in Hong Kong and Taiwan in the 1980s and 1990s and in Mainland China since 2000.

More than four out of five of the affluent people who took advantage of Canada’s business-immigrant program have arrived from Mainland China, Hong Kong and Taiwan, Ley found.

And roughly 200,000 of them moved to Metro Vancouver, where they account for almost nine per cent of the population, Ley estimates in his study, titled “Global China and the making of Vancouver’s residential property market.”

Repeated government trade missions to Asia in recent decades also effectively generated East Asians’ desire to invest in Metro Vancouver real estate, where Ley says deregulation meant local citizens would have virtually no legal protections from runaway housing costs.

Vancouver’s Expo 86, which took shape during the 1980s’ recession as a transportation fair, was a key event in Canadian governments’ strategy to market the city to Asians, Ley maintains.

The fair’s promotional power for enticing Asian money to Vancouver real estate, Ley said, boosted even higher when B.C.’s Social Credit government sold much of the Expo lands, at a low cost, to Hong Kong’s richest man, billionaire Li Ka-shing, owner of developer Concord Pacific.

The huge volume of Mainland Chinese multimillionaires who are coming to Metro Vancouver to buy property is out of proportion to the city’s relatively small size, Ley says.

“Vancouver, the closest major city to East Asia and with a high quality of life, is the most popular destination, especially for the wealthiest investor newcomers,” the vast majority of whom concentrate on real estate.

Source: Blame politicians for Metro Vancouver’s housing price crisis

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