Chinese Homebuyers Spreading Wealth Make Vancouver Pricier Than Manhattan

A Gleaming Leprosy Thursday 10 Nov 2016

Augusto Pinochet said: ↑

I see the flood of Chinese money into Australia, Canada, the U.S., etc. as a sign of weakness rather than strength. China is such a corrupt, dysfunctional dump that any Chinese person who gets rich wants to get as much money as possible out of the country. That's really what's driving their investment in foreign property.

I don't want Chinese people immigrating to western countries. I don't want them buying up real estate as absentee owners, either, because it creates artificial housing shortages and inhibits family formation. But I think fears of a yellow peril are misplaced.

In the 1980s, Japan had a debt-fueled investment bubble that was a lot like what's happening in China now. Toward the end of the '80s, the Japs started buying trophy properties in the U.S. At the time many people saw it as a sign of Japan's inexorable rise, but it turned out that they were buying at the peak, and they got hosed, selling most of their acquisitions at big losses years later.

A Japanese company bought Rockefeller Center in 1989 and ended up losing all their money over the next 6 years:
http://www.nytimes.com/1995/09/12/business/japanese-scrap-2-billion-stake-in-rockefeller.html

This is faulty reasoning. There are no magic machines which turn dollars into yuan. Since Americans and Anglos don't produce any useful goods what else can the Chinese do with their huge dollar surpluses other than buy up real estate and financial assets? Since Japan still runs large current account surpluses it is still acquiring more and more foreign assets, though this doesn't get as much play in the press as it used to (valiant journalists have done their part to further mutual understanding and harmony by ignoring unpalatable realities). If having foreigners becoming more and more indebted to you is losing I would be hard pressed to imagine what winning is supposed to be.

Broseph Thursday 10 Nov 2016

A Gleaming Leprosy said: ↑

This is faulty reasoning. There are no magic machines which turn dollars into yuan. Since Americans and Anglos don't produce any useful goods what else can the Chinese do with their huge dollar surpluses other than buy up real estate and financial assets? Since Japan still runs large current account surpluses it is still acquiring more and more foreign assets, though this doesn't get as much play in the press as it used to (valiant journalists have done their part to further mutual understanding and harmony by ignoring unpalatable realities). If having foreigners becoming more and more indebted to you is losing I would be hard pressed to imagine what winning is supposed to be.

Remember that nations can inflate away the value of what they owe. Not without some turmoil, however. currencies aren't backed by gold anymore, so the old rules aren't nearly as hard and fast as they used to be.

Broseph Monday 14 Nov 2016

https://www.thestar.com/news/queens...-buyers-to-get-4000-land-transfer-rebate.html
First-time home buyers to get $4,000 land transfer rebate
Finance minister Charles Sousa is giving first-time home buyers a $4,000 land transfer tax rebate.

This doesn't make it more affordable...

Niccolo and Donkey Tuesday 22 Nov 2016

Sconvolto Broseph

https://www.theguardian.com/world/2...yor-gregor-robertson-interview-housing-crisis

Broseph Tuesday 22 Nov 2016

Fannie Mae and Freddie Mac were expanded as of 2000/2001 expressly for the purpose of making housing more affordable for the poor and homeless. The exact opposite happened.

Augusto Pinochet Tuesday 22 Nov 2016

A Gleaming Leprosy said: ↑

This is faulty reasoning. There are no magic machines which turn dollars into yuan. Since Americans and Anglos don't produce any useful goods what else can the Chinese do with their huge dollar surpluses other than buy up real estate and financial assets? Since Japan still runs large current account surpluses it is still acquiring more and more foreign assets, though this doesn't get as much play in the press as it used to (valiant journalists have done their part to further mutual understanding and harmony by ignoring unpalatable realities). If having foreigners becoming more and more indebted to you is losing I would be hard pressed to imagine what winning is supposed to be.

While we're on the topic of faulty reasoning, my post was about capital flight from China, which is a separate issue from how they invest their trade surpluses, and you're conflating the two.

China's foreign-exchange reserves have fallen 20%, or $800bn, over the past two years:
[IMG]

They've run large trade surpluses over the same period, and surpluses increase FX reserves. The only way a trade surplus can coexist with falling reserves is if the country in question experiences capital flight--in this case, estimates are that Chinese people/businesses are taking $300-400bn a year out of the country. In part, that manifests itself as rich Chinese buying property in more stable jurisdictions.

China has run large trade surpluses for 15 years, but Chinese people only started buying foreign property in large numbers in the past few years. If the trade balance really necessitated buying foreign RE, it would have started much earlier.

Also, when a country's central bank accumulates reserves as a result of a current account surplus, they almost always park the money in the debtor country's government bonds. As China's experience shows, the reserves can be drawn down quickly, so they aren't something that the central bank can invest in illiquid things like real estate.

Niccolo and Donkey Thursday 8 Dec 2016

Broseph Sconvolto

Broseph Thursday 15 Dec 2016

B.C. first-time homebuyers loan program sparks debate, concern

Can I get a loan for my loan?

Niccolo and Donkey Thursday 22 Dec 2016

Broseph

Toronto eclipses Vancouver as country's least affordable housing market

Toronto's screaming real estate prices have made it the least affordable market in the country, with the relatively scarce supply of detached housing one of the leading stressors, according to RBC.

The bank's aggregate affordability measure was up 3 points in Toronto in the last quarter — rising to 63.7 per cent, making it the least affordable quarter since spring 1990 when interest rates were around 14 per cent.

A higher measurement means lower affordability on the RBC scale.

Nationally, the index hit levels similar to the fourth quarter of 2008, rising 1.3 per cent to 44.3 per cent, said the bank's Housing Trends and Affordability report.

Housing affordability in the Toronto area , which has now surpassed Vancouver on the RBC measure, is expected to deteriorate further next year.

RBC is predicting a continued increase in Toronto-area home prices, but at a much slower rate than this year, said senior economist Robert Hogue.

He said the bank expects prices to rise between 5 and 10 per cent next year compared to 14 per cent, the increase RBC expects for this year overall.

"Poor and still-rapidly deteriorating affordability (especially for detached homes) does not appear to be a significant impediment for buyers at this stage," said Wednesday’s report.

Hogue doesn't expect the government will step in immediately with further cooling measures for the market. It will wait and see the impact of October's more rigorous mortgage qualification requirements and its new mortgage insurance requirements, introduced last month for low-ratio mortgages.

The latter move may not look like a big deal, but it changes things, particularly for non-bank lenders, he said.

"It will alter the type of funding that they can get in the marketplace. So December might start to reflect some of that. It's a cumulative impact of all those changes that will matter,” said Hogue. “Into spring we'll have a better sense of what the impact has been and will be on a permanent basis."

Royal LePage CEO Phil Soper points to the drop in the Vancouver market following the introduction of a foreign buyers' tax as a reason Ottawa should go slow in introducing more cooling measures.

"When you're playing with the perceived value of their homes so dramatically, particularly in the case of Vancouver, where they're going down, it's not popular policy," he said.

"If homes prices drop rapidly, which is what happens if you try to interfere in the market to too great an extent, it sends shockwaves through the whole economy,” said Soper. “It's not just the home that doesn't trade — it's the renovations that don't occur, the lawyers, the accountants that have fewer clients.”

Although he expects Toronto to continue outpacing other Canadian markets, Soper expects there will be improvements in Quebec, the Maritimes and Alberta with mid-single-digit price growth.

In Toronto, he said, "I can't see it being single digits. I think we're looking at double-digit price increases," he said.

Statistics released by Canada's national housing agency on Wednesday showed that nearly 13 per cent or 1.4 million urban households were considered to be in core housing need. That means their housing was inadequate or unsuitable and cost more than 30 per cent of the household’s before-tax income.

In Ontario the number of households in need was about 16 per cent, according to Canada Mortgage and Housing Corporation's analysis based on 2014 Statistics Canada data.

But that figure has remained more or less the same since 2012, whereas the number dropped very slightly in the other high needs provinces of British Columbia and Nova Scotia.

Niccolo and Donkey Thursday 5 Jan 2017

Broseph Mireman Sconvolto

http://torontolife.com/city/life/anatomy-real-estate-disaster/

Chinese Homebuyers Spreading Wealth Make Vancouver Pricier Than Manhattan

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