R.I.P. HAM

BEAR modified

Alan’s a lawyer in Calgary, where house prices are scary. News there could soon be a direct flight between Cowtown and Beijing is even scarier.

“I make a reasonable income on the higher end. Yet, with my expenses, it is difficult to save money and build up a retirement nest egg for my security. How do other less fortunate do it?” he asks. “And, how do they manage to purchase homes now at these price levels? More to the point, what information do they have that I don’t which would lead them to purchase real estate at these lofty levels?”

Lots of people in Calgary, as in Vancouver, have been goaded into paying historic real estate prices because they fear the Chinese. As you know, there is a whole industry which has worked overtime for four years creating exactly that anxiety. In BC the fathers of Yellow Peril marketing have done everything from hire helos full of fake Chinese realtors to planting fake Chinese buyers in front of local news cameras. The message was concise and consistent: there are planeloads of filthy-rich Mainlanders who think Canada’s cheap and will gobble up all the houses, regardless of price. So, buy now or buy never.

As Vancouverites were told by Vancouver real estate blowboy Cam Good: “If you don’t want to live in a city that beautiful, with that much demand, then maybe you should live somewhere else. Either you want to live there or you don’t.”

And it worked. Canadians have become scared, confused, wondering if this supposed tsunami is the reason average people can no longer afford average houses.

“Is the answer foreign buyers? You might think this issue is beaten to death, but I do not recall seeing any hard facts about the number of properties being purchased by foreign nationals. Is this something anyone can even find out?” asks lawyerly Alan. “Do the banks or real estate companies keep such statistics private? Does the Federal or Provincial governments keep statistics that are public? Even if it turns out that the number of foreign buyers is insignificant, by not disclosing hard numbers the myth is perpetuated.”

Exactly. When it comes to flogging real estate to the masses, it’s not so important what the facts are, as it is what people believe. The myth of the voracious, teeming, unstoppable, cash-drenched Chinese horde is now firmly established. And while there’s nothing more than anecdotal evidence – offered up by realtors themselves – on the actual market impact of offshore buyers, the idiot comments on this blog are proof enough the herd’s bought it.

How else to explain the clamouring for residency restrictions on real estate ownership, or the constant conservative drumbeat of anti-immigration?

Well, now the rubber’s hit the road. Vancouver realtors may be about to reap what they sowed.

As we all know, F could not resist scrapping the Immigrant Investor Program in his budget this week. It was a perfect move to placate his base of support and purposefully throw a giant vat of cold water on the most unaffordable real estate market in Canada. Even though the program has been suspended since 2012, and even though it approved fewer than 3,000 families a year, it embodied everything many Canadians wanted to hate as unfair. Rich people (minimum net worth $1.6 million) being given permanent residency cards in exchange for lending the government $800,000 for five years. Then they could flood the market and gobble property.

Ironically, an inflammatory article about the program in the South China Morning Post, hastily reprinted by the Vancouver Province, whipped anti-Chinese sentiment to a new boiling point just four days before F pulled the plug. It alleged 45,000 millionaires were waiting in the queue, that their applications would naturally be approved, and the Lower Mainland would surely become even more Chinese and unaffordable.

After all, only 28,524 properties sold in all of Greater Vancouver last year. Just imagine 45,000 newly-arrived millionaires Hoovering up the place. Yep, prime Yellow Peril.

Now the program is kaput. Those in the queue are SOL. And while a smaller, similar program still operates in Quebec, the days of buying residency here are done. (By the way, lots of other countries allow wealthy people to do the same, including the US, Portugal, Australia and Greece.)

It took but a few hours for the wails to be heard.  Realtor Clarence Debbelle, for example, said this Tuesday night to a CBC reporter in Vancouver: “I deal directly with these people who bring a lot of wealth, who are creating lots of jobs for local Canadians — builders, trades, architects, realtors like myself. Most of the buying is coming from Chinese immigrants who are wealthy, so if we make it difficult for them to come into this country, we have killed 80 to 90 per cent of the buying in West Vancouver.”

Others, like realtor Sam Wyatt, who sells mostly on the tony Westside, is less certain. “For sure, this is going to have an influence,” he tells me. “There is no doubt about that. But in the last twelve months there has been far, far less Chinese money doing deals than in the period of 2010 to 2012.”

Truth is, we’ll see. It’s hard to measure the impact of a myth. Difficult to know if the real estate cartel can keep the natives scared and spending, now that the symbol of their financial oppression has been removed. I suspect not. This is exactly the kind of event that can help bring down the unsustainable.

The little pecker may really have done it this time.

189 comments ↓

#1 Daisy Mae on 02.12.14 at 6:56 pm

Today I am first to say stop it with the firsts!

#2 Frustrated Kiwi on 02.12.14 at 7:04 pm

Fascinating to watch. Of course, there is still the option for non-resident buying – but hard to convince oneself that buying Vancouver (or Auckland) is where the smart money is running to. I do wish we kept statistics like the Americans do – because without stats everything becomes anecdotal.

#3 Tim on 02.12.14 at 7:05 pm

Get well soon Garth.

#4 Thoughts on 02.12.14 at 7:07 pm

So today I heard a realtor looking to buy for himself and he’s one of three offers this weekend. Talk about buying into his own hype. Believing that the market is consistently going up. What I don’t get is I’ve had more agents contact me in the last month then has happened in quite awhile. Everyone is looking for work… Which is fair it is the start of the new year… But these same agents have ingnored me for awhile. Prices seem crazier then ever. Sitting tight in my paid for home maybe forever at this point. Constantly weighing the want versus need.

#5 Bobby on 02.12.14 at 7:08 pm

Yeah, but who believes what a realtor says anyways?

Most say prices will continue to go up, but it doesn’t seem to be happening here. Lots of expired listings with reduced signs.

#6 Paully on 02.12.14 at 7:08 pm

What cheese goes best with Realtor Whine?

#7 OttawaMike on 02.12.14 at 7:10 pm

Any citations dispelling the myth of foreign buyers?
Just Chinese?
What about Mid East buyers?

These buyers are only part of the reason prices went parabolic in Van and TO but they are almost certainly a contributing factor.

#8 Soylent Green is People on 02.12.14 at 7:19 pm

Bear looks like he’s wearing Stephen Harper’s pants!

……………………

Article from the great Kevin Page who Steve Harper detesed and cut his office budget to try and shut him up when he worked for the government for five years:

Others, it can be argued, were self-created. Deep tax cuts to the GST and corporate income taxes and the launch of a large number of tax expenditures have come back to haunt the government. To get back to balance before the next election in 2015, the government must cut program spending while the economy continues to operate below potential.

http://www2.macleans.ca/2014/02/11/kevin-page-on-what-happens-after-the-surplus/

…………………………

.

#9 Chris on 02.12.14 at 7:21 pm

I like your blog, except when you make up fake contacts like “Alan”.

No letter or comment posted here is manufactured. Why would I? — Garth

#10 Vancouverbound on 02.12.14 at 7:22 pm

it is going to be interesting to see the weekly price drop going forward by Vancouver Price Drop:

http://vancouverpricedrop.wordpress.com/2014/02/12/weekly-drop-suberbs-february-12-2014/

Data says everything.
Realtor Clarence Debbelle wonders who is going to buy these properties in West Vancouver? When the prices drop regular Canadians will. Who bought these properties in the 60’s, 70’s, 80’s?

#11 Matt Hughes on 02.12.14 at 7:34 pm

My preliminary weekly sales report for the GTA (Feb 3rd – 9th 2014) is up with a few interesting properties highlighted.

Avg detached home* price: $842,345.74 (87 sales)
Avg apartment* price: $357,623.94 (142 sales)

https://recomp.ca/blog/weekly-summary-feb-3rd-9th-2014/

#12 Drill Baby Drill on 02.12.14 at 7:35 pm

Cutting off HAM money wether it is an illusion or not is the type of trigger to bring down the real estate insanity in Van city. This could spread very quickly without using the threat of raising interest rates. The Peckerheads really do not want to raise intrest rates especially with an election budget in 12 months.

#13 gladiator on 02.12.14 at 7:36 pm

So Garth, will you now agree that HAM actually WAS a factor in Canadian RE price rise?
As I posted here before, I myself saw a busful of Chinese condo buyers entering the Tridel office in Toronto last summer. You have dismissed it saying they were local buyers. Yeah. Local. Coming in an organized group to buy condos. And being recorded on video, probably to entice more Richmond Hillians to buy as well.

Even if investor class immigration is kaput, there is nothing stopping HAM, Russians and others from buying RE in Canada without having to immigrate. They just need to park their money. What’s going to stop this phenomenon?

#14 Freedom First on 02.12.14 at 7:38 pm

Very good political move by F. Pi$$ed off/on RE industry though, having seen F remove another rubber bullet from the RE industries propaganda machine.

I find it amazing, that in every rising asset class bubble, whether it is RE, equities, gold, silver, etc., the noise level of the pundits pushing their self-interest asset increases in volume and propaganda, and not only by the pundits, but also, in every case, by the participating and growing #’s of the herd as the prices soar along the way. It is just like Garth told us, RE is no different in the display of the behaviour of the #’s of the herd who stood in line for gold @ $1900.00/oz. at the bank he passed by daily, and yet, when the price of gold plummeted to under $1200.00/oz., he saw no lineup at all. Majority buys every asset high and sells low. No exception. Only denial.

#15 Nemesis on 02.12.14 at 7:40 pm

@Paully/#6

“What cheese goes best with Realtor Whine?” – Paully

Why… Blue, of course. Personally, I think it pairs best with Gorgonzola.

[NoteToGT: ThePecker was off by 3 days… but I think I can safely predict that when the YVR RE historiographers have finished

#16 Larf on 02.12.14 at 7:40 pm

Paully, I can’t offer you a wine recommendation but I can pair it with a great ale for sure: http://www.arrogantbastard.com/

#17 Eat Pie on 02.12.14 at 7:42 pm

I`ve got johnsonvile brats!!!

#18 Alberta Ed on 02.12.14 at 7:45 pm

Snafouver residents might be better off to worry about the real tsunami that, sooner or later, will readjust Wet Coast real estate prices. It’s waiting just off-shore, beneath the Juan de Fuca plate.

#19 Anthony on 02.12.14 at 7:45 pm

“Any citations dispelling the myth of foreign buyers?
Just Chinese?
What about Mid East buyers?

These buyers are only part of the reason prices went parabolic in Van and TO but they are almost certainly a contributing factor.

I grew up in the west side of Vancity with a lot of rich kids and I’d consider foreign buyers to almost certainly be a significant factor.

#20 Nemesis on 02.12.14 at 7:48 pm

*BudWeiser FatFinger Truncation*

CONT:

[…polishing their treatises – the IIP QueueCancellation will ascend to that pantheon of Valentine’s Day carnage most commonly associated with a little garage at 2122 North Clark Street, in the Lincoln Park neighborhood of Chicago’s North Side. By the way, AuldPol – guess whose former residence just hit the market?…]

http://www.independent.co.uk/news/world/americas/for-sale-al-capones-85m-miami-beach-mansion-thats-a-real-gangsters-paradise-9119365.html

#21 pathcontrolmonk on 02.12.14 at 7:49 pm

if the conspicuous lack of commentary in the msm is any indication, the pendulum has now swung in the other direction.

#22 David on 02.12.14 at 7:55 pm

Stats I saw in Vancouver area, overseas Asian buyers were est under 1% of the market. There was a peak in the 90’s re: Hong Kong but even that didn’t dominate.

Realtors may salivate over moneyed buyers though. Maybe its wishful thinking. But amusing they get burned by their own hype.

#23 Waiting on 02.12.14 at 8:02 pm

You have said many times that people react to markets emotionally – panic with a herd mentality and do what they see everyone else do without any research on their part or learning the actual facts.
I started reading your blog shortly after selling my Vancouver home a couple of years ago. I had lost my job (mining sector) at the time and though I’d hold off buying until I was employed again. Well, guess what – still unemployed and have plenty of company.
Unlike some of my work colleagues who also remain unemployed, I had the cash from my house to fall back on. It saved me a ton of anxiety and worry. I now question whether I’ll ever own again.
Your statement that F has thrown a giant vat of cold water on the most unaffordable real estate market in Canada by cancelling the Immigrant Investor Program is so true. It will have a far more immediate effect than any warning or miniscule rate increase.

#24 Smoking Man on 02.12.14 at 8:03 pm

Where ham was real or imagined, the herd thought it was real….

Now the herd will go, holly shit…
Game is over….

Think the little pecker did it this time two….

Lucky for 416 they don’t factor ham for house last.

#25 Xiantao on 02.12.14 at 8:03 pm

And today marks the day when all the over priced (speculated for fodder) East Vancouver homes fetching millions are shot down in leaps and bounds. Today marks the death bed for all Vancouver Real Estate. You cannot possibly sustain million dollar bull doze jobs ad nauseum until the stars burn out because HAM keeps forking out the money. HAM no longer exists. PERIOD> DONE! BYE BYE HAM, Cya! And to all the free loader realtors without jobs tonight or passive revenue streams as Ozzie (I’ve been sued) Jurrock keeps reproting HAM>>>>. Time to go and pump gas all you F$cK#rs!!!!!!!!!!!!!!!!!!!!!!!!!!! Vancouver is where you send real estate money to die. GOD BLESS Flaherty

#26 shane on 02.12.14 at 8:09 pm

Garth, might stop the insanity in markham and Richmond Hill not!!….Ham think a cookie cutter home for 1 million is a good deal..crazy

Canadians of Asian ancestry are not HAM. — Garth

#27 vbm on 02.12.14 at 8:11 pm

1%? i live on the west side and its more like 70% and in some areas 100% . i grew up here and have watched the mania for the past 10 years. the same houses have been bought and sold many times over that period and many never lived in. it has been terrible for the city. sure its been nice for the avg. working vancouverite that bought a house 12 years ago on the westside for 500 000 thats now ‘worth’ 2.5 to 3.5 million depending on the lot size, and 250,000 for a house on the east side thats now ‘worth’ over 1 million,but its not good for new generations. it has been toxic here- you will now see how much of this has been offshore driven. i witnessed it with my own eyes.

#28 Son of Ponzi on 02.12.14 at 8:12 pm

More fuel on the fire.
http://www.icij.org/offshore/leaked-records-reveal-offshore-holdings-chinas-elite

#29 Son of Ponzi on 02.12.14 at 8:13 pm

A bear does not make good HAM.
Not enough MSG.

#30 Keith in Calgary on 02.12.14 at 8:19 pm

“Passport properties” as I call these homes that were acquired by HAM, do not result in immigration that brings people here whose intention is to legitimately open businesses, hire people, and create wealth in our economy.

While a small percentage actually do so, after all, the odds are that this will occur after all, one only has to look at the reports of majority percentages of empty, yet owned, condos in Vancouver, or any of the other factors that one can assimilate when visiting that city to put together the big picture which translates to a metropolis with no functioning economy. I for one am glad that the exploitation of this loophole may have finally come to an end, regardless of who uses it.

#31 raisemyrent on 02.12.14 at 8:22 pm

HAM HAM HAM, saw an Asian once, therefore, an entire market.
sigh.
Who has all the mortgages in CMHC? Rich foreigners? Nope, Canadians in debt. Smokey’s herd.
We saw HAM come and buy things at inflated prices. And instead of laughing, we said “I’ll give you more”.
Joke’s on you if you borrowed it over 20+ years, though.
Enough is enough; own up to your decisions.

#32 AACI Home-dog on 02.12.14 at 8:25 pm

That picture could only be better if there was a Black Bear IPA on the rail…nice.

#33 T.O. Bubble Boy on 02.12.14 at 8:32 pm

I’m still confused about one thing: how does stopping the Immigrant Investor Program stop foreign $$$ from buying property?

For example, the foreign $$$ buying Toronto condos — many buyers never intended to move here an live in those places. Or, foreign $$$ that buys houses sight unseen and rents them out?

I realise that canceling this program would impact foreign buyers who actually wanted to LIVE in Canada, but what about simply buying property to “get your money out” of whatever country you’re based in?

#34 Cici on 02.12.14 at 8:32 pm

My GAWD!
Instead of perpetrating hate and fear, the general BC population would be better served welcoming, and interacting and mixing with foreigners…Lord knows they appear to be suffering the unhappy consequences of inbreeding.

#35 TnT on 02.12.14 at 8:35 pm

In BC the fathers of Yellow Peril marketing have done everything from hire helos full of fake Chinese realtors to planting fake Chinese buyers in front of local news cameras. The message was concise and consistent: there are planeloads of filthy-rich Mainlanders who think Canada’s cheap and will gobble up all the houses, regardless of price. So, buy now or buy never.

************

The fact that the Mainland Chinese population in Vancouver has increased along side Real Estate prices is just a coincident?

Every seller needs a buyer and Canada’s birth rate and income levels (which are well documented) could have never sustained this level of activity….

Just sayin….

#36 Cici on 02.12.14 at 8:37 pm

What a ridiculous notion anyways: hmmm…45,000 rich immigrants with at least 1.6 million in total net worth, yet they couldn’t think of anywhere better than BC to lock up $800,000 in personal savings?

Whatever, how can anyone fall for this crap?

#37 Smartalox on 02.12.14 at 8:42 pm

The same way that a Batman only becomes apparent once prices are in decline, the hypothesis of HAM driving real estate prices up will be confirmed or rejected by the next three months’ statistics.

What will be interesting is if the departure of HAM will trigger a wave of listings, as paper millionaire$ rush to market, desperate to capture the last, fleeting vapours of HAM.

Because if the hypothesis IS true, and HAM made the market, then the pressure is now off for everyone else. Hard Working Canadians (TM) looking for a house won’t have to worry about getting scooped by rich foreigners anymore.

The competition for properties is surely now decimated, bidding wars almost definitely a thing of the past.

If not, then HAM was all a lie, the market, and people’s perceptions of the real estate industry will adjust accordingly. If yes, it turns out that HAM truly drove up prices, then these things will also adjust accordingly.

Is that a black swan I see? Or is it a Canada GOOSE?

#38 Debtfree on 02.12.14 at 8:44 pm

@34 cici take off the east of the Rockies goggles . B.C. Is and has always been the mixed marriage capital of Canada . Most of us here veiw only one race , the human race . Google … Restaurant owners run out of Morris manatoba . If you need to reset your compass .

#39 Bobs ur uncle on 02.12.14 at 8:49 pm

Pro-HAM theory have no stats but neither do you Garth. My friends rent in west side in a house that still has squirrels in the walls cause no one lived in it for TEN years before they moved in. What average Canuck would do that?

#40 walltiger on 02.12.14 at 8:49 pm

#30,#33,
yes, come to Canada, open business and hire ppl. its easier said than doen Keith. ask yourself this question, if you have one million dollars tomorrow, what business would you open. see my point?

yes, stopping the IIP program will not stop foreign buying. but who cares, market will correct itself. investors buying today will not making any money, so eventually they will stop and pull the money away.

i personally think high RE price is not a totally bad thing, it made a lot of Canadians very rich. there is always two sides to a coin.

#41 Brian Ripley on 02.12.14 at 8:51 pm

“A smaller, similar program (Immigrant Investor Program) still operates in Quebec” Garth

Montreal is an interesting destination. It’s a diverese cultural setting with lots of ‘for sale’ signs for people who don’t need work there and perhaps want a Pied-à-Terre with easy access to New York and Washington. Knight Frank identified Montreal for the first time in 2013 as ranking in the top 20 world cities in two of their 5 qualifier columns for high net worthers [Quality of Life (16th) and Knowledge & Influence (17th)] Table here: http://www.chpc.biz/whale-watching.html

If Vancouver HAM is freaked, they can still trade one average Vancouver SFD for 3.5 median priced SFDs in Montreal or measured in average Vancouver+Calgary+Toronto condos… a median priced Montreal SFD is 27% cheaper. Chart here: http://www.chpc.biz/6-canadian-metros.html

#42 AACI Home-dog on 02.12.14 at 8:52 pm

Garth…surprised comment # 34 was not deleted…cici bad.

#43 Old Man on 02.12.14 at 8:59 pm

#32 ACCI – The caption picture is an open house in the beautiful wilds of outer Vancouver. Now the real estate agent split as a bear was trashing the joint, and is waiting on the deck for something to eat. No HAM for him today because nobody is showing up.

#44 mark on 02.12.14 at 9:04 pm

Goodbye Canada, hello Australia.

Try getting data from the Australian government on foreign real estate purchases.

FOI requests are returned with a hefty black magic marker redacting information.

#45 vancouver's real estate bubble - Page 78 - Vancouver's Top Classifieds and Automotive Forum - REVscene.net on 02.12.14 at 9:05 pm

[…] weighs in on the withdrawal of the Immigrant Investor program and foreign real estate investment: R.I.P. HAM ? Greater Fool ? Authored by Garth Turner ? The Troubled Future of Real Estate __________________ […]

#46 tim on 02.12.14 at 9:05 pm

Too late, it is obvious the damage has already been done.

#47 tim on 02.12.14 at 9:06 pm

It is not a myth and if you spent any time in Vancouver you would recognize it. How could you not?

#48 Kurt on 02.12.14 at 9:13 pm

“…we have killed 80 to 90 per cent of the buying in West Vancouver.”

Do you see this, Clarence? It’s the world’s tiniest violin, and it’s playing just for you.

#49 Catalyst on 02.12.14 at 9:14 pm

Wow Garth I think your maverick streak must have worn off on F. Today he smack talks cons income split plan, a cornerstone of their previous platform for tax reductions.

Hopefully we get a F led, bourbon filled, daily blog to from the elfin diety himself to compliment yours for my daily reading.

#50 The new HAM eats Lamb on 02.12.14 at 9:16 pm

RIP?
Hot Arabic Money, 45% inflation rate In Iran courtesy of you know who’s sanctions

#51 pinstripe on 02.12.14 at 9:18 pm

How is the laundered money making its way into Canada?

When “Laundered Money” is mentioned periodically by politicians is an indicator that “Laundered Money” is here in a big way.

If HAM Money is cut back will Laundered Money pick up the slack, resulting in no change to the current situation?

Which fox is keeping an eye on the chicken coop?

#52 Aggregator on 02.12.14 at 9:18 pm

#33 T.O. Bubble Boy

I’m still confused about one thing: how does stopping the Immigrant Investor Program stop foreign $$$ from buying property?

LOL. It doesn't and the program hasn't stopped. All the government did was replace it with another new program called the Immigrant Investor Venture Capital Fund. But even if, what matters is the total number of annual immigrant entries, and that is already set to increase every year to offset the old folks that are rolling over. This not going change until you see the anti-immigration party (about a few years away).

Impact on housing? Zero. So anyone thinking this will be some sort of black swHAM event is sadly mistaken, because if one thing is certain, that is the Vancouver Sun et al will come up with a lot more creative headlines and stories then what the budget entails.

This story will fade within days. Don't get duped again Kanada.

#53 Bob Rice on 02.12.14 at 9:19 pm

I disagree and I wouldn’t just single out Chinese cash… Watch the Condo Game put together by CBC. Unless they are outright lying, a lot of foreign cash has bought up T.O. condo real estate… Russian, Middle East and Asian cash…

When my family came over from Europe in the 50s, those folks just rented flats.. within a few years they bought… but it was unheard of to hear about immigrants with big bucks coming to “invest” in this country simply b/c not many people had money after the war… here or in Europe.. unless were talking old money rich..

It has changed and foreign ownership of Cdn real estate has had an impact on housing prices.. I have no doubt about that. Prices would still be high, but perhaps not as high in T.O. or Van.. but, overall this isn’t a bad thing… lets not forget that Cdn homeowners are sitting on lots of cash with those hyper-inflated home prices.. for now anyway!

#54 Mark on 02.12.14 at 9:20 pm

If the HAM are creating jobs, where are the jobs? Where are the high salaries? Why is leverage off the charts? The logical conclusion to come to is that “HAM” is largely mythical. A fairy tale.

Its actually profoundly insulting to Asians, especially wealthy ones, to suggest that they’re coming to Vancouver, with money, in any significant numbers to buy some of the most highly priced real estate in the world. Evidence is scant, aside from anecdotes of people obviously conflicted as to their interest.

#55 shane on 02.12.14 at 9:20 pm

Garth, My apologies!!!

#56 TurnerNation on 02.12.14 at 9:20 pm

Got this dreck delivered to me:

Buy a kando, ROI 20%! Flip, eh. That’s sooo 2012.

http://www.dundassquare-insiderdeal.com/tpath/

ANNUAL ROI
(Income /rent return not including your capital appreciation)
19.6%
ROI AT YEAR OF OCCUPANCY
(If you flip/assign your unit before close)
108%

#57 CB on 02.12.14 at 9:21 pm

The investment immigration program is no dead, not in BC at least.

Noticed there are a lot of Mainland Chinese are buying up businesses/grocery store/restaurants in places like Victoria and Nanaimo.

BC has this sneaky program where foreigners who spend $200K on a business outside of Vancouver and create 1 permanent job can buy permanent residency within 6 months.

There is a big political infighting between all those dictators in China right now. As a result, money being laundered out of China by the losing group along with others are becoming more restricted.

Fear of having their dirty money confiscated by the Communist, Mainlander are fleeing China with their suitcases of money, and $200K is a small price to pay to buy a Canadian citizenship, even if they have to buy a losing business.

#58 AK on 02.12.14 at 9:31 pm

“This is exactly the kind of event that can help bring down the unsustainable.”
====================================

The only thing that will stop the unsustainable is higher interest rates.

#59 walltiger on 02.12.14 at 9:36 pm

#49 cb

How many grocery stores and restaurants are for sale in Victoria and Nanaimo? 10, 20?

#60 ILoveCharts on 02.12.14 at 9:38 pm

Does anyone have stats on how many people come to Canada on student visas from mainland China each year?

Garth: Offer is still on to come visit my apartment. You can sit in on a strata meeting – Chinese interpreter and all. Next year, I think they might just have an English interpreter and run the meeting in Chinese. These people are great – best neighbours I could wish for. The wealth is not surprising. Look around and most of the stuff in my house was made in China. I’m not a racist or a xenophone – I just call it like I see it. This money was not made in Canada.

#61 Dual Citizen in Canada on 02.12.14 at 9:38 pm

#41 walltiger
I fail to understand how high RE prices made Canadians rich. Say I had a fully paid for home I bought for $250K and sold for $1M. Ok, I have $750K in the bank but I don’t have a place to live. Yes, I will be rich if I left Canada or moved to somewhere in Canada where I get the same type home for less than $1M. The bottom line is I have to live somewhere. Any lateral move in the same area would negate my “riches”. Only option I see to spend your riches is to invest that $750K and rent baby, rent!

#62 walltiger on 02.12.14 at 9:53 pm

#61
you said it Dual Citizen, rent baby rent.
or you can sell high, lay low for a while and then…

#63 Daisy Mae on 02.12.14 at 9:54 pm

#1 Daisy Mae on 02.12.14 at 6:56 pm
Today I am first to say stop it with the firsts!

*********************

*sigh* Some idiot with nothing better to do, is impersonating me…but I know that Garth isn’t fooled by this idiocy.

#64 Hillbilly on 02.12.14 at 9:56 pm

comment # 27 vbm

The buying / selling / buying spree that has gone on for the past 6 years at least, if not longer in Vancouver, Richmond, etc. was somewhat methodical in origin.

I believe it tends to be localized in tonier neighborhoods in which there tends to be only so many houses for sale at one time.

Goes like this;

1) Come in with a some serious money along with a few others in your “investor group” and buy up all available inventory at moderate , going rate prices for cash.

2) Sell a couple of houses to one another in your “investor group”at progressively higher prices. Maintain control the properties by your association.

3) Continue to buy up anything that comes on the market when you can (obviously there are other buyers not related to your group who will compete for and pay the elevating prices).

4) Refinance within your “investor group” on the grown equity or re-market a few to your countrymen (at big mark-ups) who you more or less advise on their holdings.

5) Continue buying with your “investor group’s” money or that of other countrymen who have heard of your success and keep driving prices upwards. Maybe use local financing to bridge some transactions.

6) Finally sell some or all properties to nitwit locals or whoever will pay the absurdly elevated prices. Those in your group who do not want to sell, well they have helped manufacture serious equity (and may be greedy enough to want o hold on for further gains, keeping these properties off the market indefinitely).

7) If you are really nasty, fully refinance your inventory with local / bank / private lenders and walk away.

Did it ever occur to you that these people have been gaming the local market?

Much like art dealers did in the past to elevate the prices of a “rising talent” by restricting supply of his works and bidding them up in price among themselves?

It is not that complicated and the money and was there, looking for a ‘home’ (pun intended).

The corollary to this, of course is that it stared affecting general pricing throughout these cities with a ‘knock on effect’ exactly when interest rates started to decline, lending criteria (hello, CMHC !!!) became more lax, down payments were lessened and house lust started growing wildly= perfect storm.

Certain Asian ethnic groups are very adept at games of strategy.

It was , after all, HAM was it not?

#65 walltiger on 02.12.14 at 9:58 pm

or move to Windsor.

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/retire-earlier-with-cash-to-spare-in-canadas-most-southerly-city/article16798932/#dashboard/follows/

#66 Anon on 02.12.14 at 9:59 pm

I realize we don’t have any official stats but an absence of evidence does mean the assumptions are false. All it means is that we don’t actually know.

It could be that Mainland Chinese are driving up our market here – but no one is actually measuring it to know for sure.

I don’t think it’s racist to question that. If foreign money is driving up costs here dramatically, to the point that homes are completely unaffordable for even high earning families, then yes, I think we should consider the impact and what, if anything, should be done about it.

I do find it frustrating that the race card comes up with this. Is it only racist because people suspect Chinese investors vs Americans? My bet is if it were suspected Americans or English you wouldn’t be playing the race card. In that, I question if racism is driving your own assumptions about this issue…

I also would like to understand why is it racist to question foreign ownership in personal real estate but reasonable for our government to have foreign ownership restrictions in business?

My concern is that if it is foreign money driving up costs to the point of causing huge affordability issues – we should know this. It means we are all essentially competing for housing against people who live in areas we can’t earn an income in.

Does it mean we should cut it off or have restrictions? Not necessarily. We should also look at the economic benefits they provide. In addition, consider the longer term impacts of such high housing costs here.

My point is – if we don’t measure it – we can’t do a damn thing about it.

#67 Victor V on 02.12.14 at 10:01 pm

How Canada’s new immigration rules could slow high end real estate sales

http://business.financialpost.com/2014/02/12/how-canadas-new-immigration-rules-could-slow-high-end-real-estate-sales/

#68 economictsunami on 02.12.14 at 10:02 pm

The sheer fact that there is a Laissez-faire attitude by both federal/ provincial governments about what has grown into to an outsized but very important economic sector speaks volumes.

You would think a general lack of coordinated ‘clean’ data (not industry generated) would bring concern in the hallowed halls of Ottawa and provincial capitals.

I guess they can continue to rely on “efficient markets” and plausible dependability…

Not Everyone is Confused by Housing Bubbles:

http://tinyurl.com/lzus623

“Men cannot not live by exchanging articles, but producing them. They live by work not trade.” – John Ruskin

#69 carpicker on 02.12.14 at 10:07 pm

Housing is so old news, Garth said “Sell CAD buy USD” no one listen, Garth said buy things on sale, its so oblivious, how come you guys don’t see it. This knowledge is not for sale or rent.

#70 wallflower on 02.12.14 at 10:09 pm

#18 Alberta Ed on 02.12.14 at 7:45 pm
Snafouver residents might be better off to worry about the real tsunami that, sooner or later, will readjust Wet Coast real estate prices. It’s waiting just off-shore, beneath the Juan de Fuca plate.
======

that, and Fukushima water!
$4.95 combo

#71 Andrew Woburn on 02.12.14 at 10:11 pm

#6 Paully on 02.12.14 at 7:08 pm
What cheese goes best with Realtor Whine?
==========================

The way things are going, probably blue cheese.

#72 hohoho on 02.12.14 at 10:12 pm

> what about simply buying property to “get your money out” of whatever country

come on people, buying Canadian RE is not some sort of magic way to “get your money out”, the money is already “out”.

> Only option I see to spend your riches is to invest that $750K and rent baby, rent!

That’s right! Rent and be Rich!!

#73 Bacon Club Sandwich on 02.12.14 at 10:25 pm

http://www.zerohedge.com/news/2014-02-12/did-canada-just-pop-its-housing-bubble

Zero Hedge is all over this like bacon on a double cheeseburger with extra mayo and fries.

#74 jan on 02.12.14 at 10:27 pm

Can’t bear the truth huh?
Anyways,whats a SOL OR AM AN IDIOT/RACIST FOR NOT KNOWING >>>>>???????

SOL means ‘short on luck.’ You are an unhinged person. — Garth

#75 Sunny and warm Nosty on 02.12.14 at 10:27 pm

Garth — Looks like your knocks against Kias (Hyundai) have been vindicated.

#8 Soylent Green is People on 02.12.14 at 7:19 pm — “Bear looks like he’s wearing Stephen Harper’s pants!”

Nice catch. Typical politicos. Screw up and blame the succeeding party (unless it’s themselves, so keep perpetuating the myth). Is it any wonder why people don’t trust, vote or listen to them anymore?

The only reason the deficit / debt is looking better is because it’s election time soon.

#18 Alberta Ed on 02.12.14 at 7:45 pm — “It’s waiting just off-shore, beneath the Juan de Fuca plate.”

That plus the Cascades will wake people up!
*
For Granny!!!I!D!I!O!T!!!Grantmi and Crowdedelevatorsnugglebumzfart, this is for you — Sandy Hook revisited and Engineered.

#76 x on 02.12.14 at 10:28 pm

Toronto Life Magazine had an article about a year ago that it was estimated that 10%-15% of sales in the GTA was in part by foreign buyers. Hard to determine the validity of such an article but….

1. Legislate it that foreign buyers must be tracked so we can see the data
2. Tax foreign buyers (speculators for the most part) at a much higher rate and put those funds in to CMHC for that stormy day (it will be Canadian ‘s who’ll need it)
3. Homes that are owned by foreign buyers that have been unoccupied for a specific time should be hit with a penalty or repossessed. Reasoning: local businesses and governments loosing out on potential revenues that are generated by local residents participating in the economy.

#77 hohoho on 02.12.14 at 10:28 pm

Without CMHC there would have been no bubble, HAM or no HAM. No one tries to out bid foreign millionaires with 20-to-1 leveraged funds on anything, except RE.

#78 Mr Reality on 02.12.14 at 10:41 pm

The beautiful thing about this move is all those morons out there are finally realizing this government is bent on cooling the market. It takes this move, although minor in numbers but huge in psychological impact for it to finally sink in…..

Sheeple

M. R.

#79 Aggregator on 02.12.14 at 10:42 pm

#60 ILoveCharts

25,346 in 2012 and rising. Chart

Don't complain when one bedroom rentals breach $2000, and to my calculations that will come within 2-3 years at the current growth rate. You want more immigration, you got it.

#80 ILoveCharts on 02.12.14 at 10:45 pm

#75 Aggregator:

Great chart.

That’s the real story – not the handful of people that came in through the investor class.

The students get in on a visa and buy a house. Then they can easily turn that into permanent residency on the Canadian Experience Class route.

#81 Walter Safety on 02.12.14 at 10:51 pm

Reporting on my friends east Toronto bung today. Well the offers came in and the house sold for $47,000 over asking. Prior to viewing offers, realtor e mailed other agents and told them to only bring offers of list plus 15k or don’t bother.
Asian buyers were the winning bid. But who would know?

#82 Chickenlittle on 02.12.14 at 10:55 pm

# 38: Debtfree:

“Take your east of the Rockies goggles off…” LOL!

I forgot that BC is the centre of the cultural universe.

As for all the mixed marriages, did your friends marry Klingons or Vulcans?

Lots of people have “mixed” marriages now. It’s not just a BC thing.

Maybe you should leave BC once in a while and see what the rest of the world looks like.

And btw: no one uses the term “mixed marriage” anymore.

#83 Mr Reality on 02.12.14 at 11:00 pm

http://www.icij.org/offshore/leaked-records-reveal-offshore-holdings-chinas-elite

This may have a little to do with the decision as well :)

Mr.R.

#84 gtrz4peace on 02.12.14 at 11:00 pm

Garth – from your post: “Rich people (minimum net worth $1.6 million) being given permanent residency cards in exchange for lending the government $800,000 for five years.”

– YES, that is something we of the lowly “middle classes” are coming to hate, as many of those “rich investor” families are international criminals. Or at least some certainly are. And those people should not be allowed in at all, unless officially seeking asylum, IMHO

But it’s just part of a long list. I am not a doomer, but unless inequity is addressed in more effective ways, the list of things that make policies towards the wealthy naughty, not nice, is going to be so long and compelling that things will be changed by force at some point. Which would be a messy hassle for all.

So I applaud the government for recognizing that changing laws like this — even if mostly for perception — is just one salvo they can offer to keep the day of reckoning off one day longer.

Enjoy your recovery!

#85 gtrz4peace on 02.12.14 at 11:03 pm

@#18 wallflower

Good point. We are very concerned about pollution from Fukushima. Watching things very carefully.

#86 High Plains Drifter on 02.12.14 at 11:10 pm

On the most barbaric, shortest day of the year, 2013 I bought shares in the barbaric metal and the slide has been greased since then. I bought with wifey’s money, you guess if I could take the pressure. She going to Istanbul with the doe, shortly.

#87 TakingResponsibility on 02.12.14 at 11:15 pm

Oh, the Immigrant Investor Program had created a burgeoning Immigrant Industrial Complex – much, much more to it than the nefarious ‘buying a citizenship card.’ Rampant with fraudulent practice.

Do admire the Sask Premier for just coming out and saying it, though – his province alone gained over 160 million in new homes through the program. Say whaaaat?!

#88 Ontario's Left Coast on 02.12.14 at 11:23 pm

Not pleased with all the thinly veiled racist rhetoric that creeps out whenever this topic pops up.

#89 coastal on 02.12.14 at 11:24 pm

Perceptions are everything, and HAM was the biggest scam of them all. I can only imagine how many shady mortgage brokers are crying all over their Cam Good glossy brochures. Brings a tear to my eye. Not.

#90 bigtown on 02.12.14 at 11:31 pm

I saw on CNBC today that sales in Phoenix, Arizona are down 25% from last year and the inventory is piling up over 30% from last year…so all you boomers out for some coyote hockey can get in if you missed the low prices a couple of years back. You can get a neat little rancher for well under $200k.

#91 Smoking Man on 02.12.14 at 11:44 pm

Vladimir, I caught the Sandy hook flick. Now I don’t swallow anything from msm or alternate media. I always try and zero in on what the goal of the pitch is. How will the pitcher profit, what’s the goal. Etc any good smoking man would do the same.

He made some interesting points, however he’s looking at doing a road show, make some extra loot. It’s suspect.

But a point he never made was, why hasn’t a parent tried to write a book. Capitalize on the lose.

In any tragedy, some on always publishes some thing, or even an payed interview, nothing, nada.

I understand the motivation of the machine wanting to get guns out of circulation. And not beyond the relem of possibly this was a staged Hollywood event.

Right now I’m 60/40 in agreement with the dude, but had he not been trying to solicit funds. It would be 70/30 based on his credibility and what he said.

#92 Anon on 02.12.14 at 11:49 pm

Does anyone have stats on how many people come to Canada on student visas from mainland China each year?

* I don’t have the answer but I can tell that the Provincial Government is mandating a 20% increase in international student enrolment to help fund domestic spots.

#93 Basil Fawlty on 02.12.14 at 11:52 pm

Wherever they are coming from, a recent stat indicated that 45,000 people per year move into Greater Vancouver. This would obviously contribute to price increases.
In regards to the issue of who holds the CMHC backed mortgages, odds are that not many of them are held on Vancouvers Westside. A lot of HAM money has entered Vancouvers Westside. When you grew up here it is obvious. Plus, my Asian friends know what is happening. Where else is every second vehicle a Landrover?

#94 calgaryPhantom on 02.12.14 at 11:53 pm

What are your trying to say in today’s post Garth?

Is it those medicines?

#95 Yuus bin Haad on 02.13.14 at 12:05 am

Speaking of ham: if Olympic medals were made of bacon, the U.S. would win them all!

(Thanks to Sage and Conan for inspiring your chuckle-of-the-day.)

#96 David Lee on 02.13.14 at 12:06 am

Spinning right on cue, courtesy of the mouthpiece of Metro Vancouver’s Real Estate Brokerage and Development Industry, the Vancouver Sun (all posted within the space of a few hours):

http://www.vancouversun.com/opinion/columnists/Pete+McMartin+Canada+should+money+worth+from+investor/9501326/story.html

http://www.vancouversun.com/opinion/columnists/Cayo+Many+factors+besides+immigrants+drive+house/9500775/story.html

http://www.vancouversun.com/news/metro/Wealthy+investor+immigrants+little+taxes+struggle+with/9501194/story.html

#97 Dogs playing poker on 02.13.14 at 12:28 am

Big Hot Asian Money, is not an illusion, it exists, it really is only the tip of the iceberg or “hamburg” if you will.

The money that these “investors” have shovelled into to local real estate markets represents a financial “killing” to many long time owners that have elected to sell and move on. God bless them. Lots of dreams have been realized by this unique set of circumstances.

Lots of dreams have been vanquished.

Many adult children will never be able to afford to live in the neighbourhoods that they grew up in. Others will sell their souls to the devil to allow their children to share the same experience that they cherish. This is known as the human condition. Even in a young country, we cling to the past.

The “investor program” was rigged. How else do explain our govt. telling a prospective chinese immigrant that they will have to move to somewhere in Nova Scotia if they want to live in Canada, when they want to live in Vancouver?

The solution was simple, big HAM “investors” simply deposited their money in Nova Scotia and walked away from it. HAM is forfeited to the host province. What was supposed to be a loan is now an immigration head tax.

No, it is not the ultimate percentile of rich chinese “investors” that have screwed up the colonial real estate market.

The factor that has changed Canadian real estate for all eternity is overall immigration numbers. Between 1972 and 2012 we have added roughly 10 mil more people inhabitants to the country. Some were born here, some came here by invitation.

What was never considered was where all of these new people would live. Where are we going to house them? Where will they go to school? Do we have enough transit, hospitals, roads, govt. services?

No, the laissez faire system of allowing the “market” to determine it’s own level prevailed. Business has been allowed to determine what the final outcome will look like.

This laissez faire system is fine, as long as it it allowed to fail under the weight of it’s own stupidity, which naturally allows for a reset of market value and forces the “market” to start over.

When govt. colludes to “game” the “market”, then the rules by which we play have been changed and no firm ground can be found. This is what confuses the “experienced mind”.

What should be happening right now, is not happening, and our past experiences can’t support the new reality.

The “experienced mind” has to accept that all bets are off, the game is rigged, the old rules no longer apply, it’s a total gamble on what will be created next to keep this new reality going.

No, the “Canadian Black Swan” is the unmitigated immigration of poor people to our shores. These are the people that we are going to have to turn into North Americans with all of our cultural norms, on our dime.

Business could give a crap about the real cost associated with the relocation of the people, beyond what it costs them to employ them.

The real problem, as the Capt. of the “Titanic” found out, is that you can’t see 99% of the iceburg.

We all know what happened to the “Titanic”.

#98 Keith in Calgary on 02.13.14 at 12:35 am

#40 Walltiger…..

Are you really that naive ?

I’d set up a RE investment company, rent an office address drop ina business center, hire my relatives as employees (on paper) of course as I need to dodge taxes, buy my mansion as the first corporate asset and then drive over to the aforementioned mail drop for my confirmation that my application for PR cards has been approved. Passports soon to follow……

#99 David Lee on 02.13.14 at 12:49 am

@#52 Aggregator:

If the “story” is going to fade, it will have to fade on a number of fronts, in different jurisdictions and in different publications (i.e. the cat may be out of the bag).

Does Metro Van’s RE Brokerage and Development Industry have the reach?

From the Wall Street Journal:

“The government said it would replace the program with a new Immigrant Investor Venture Capital Fund, which will require immigrants to invest money, rather than just loan it.

But the new program hasn’t assuaged concerns among emigrant hopefuls. Larry Wang, the chairman of a Beijing-based immigration consultancy firm, said he has been dealing with a stream of worried clients since the change was announced Tuesday in Canada. “They can’t believe it,” he said. “The clients are getting the message: Canada doesn’t want them. They now will have to look for other opportunities,” he said.

and

“Jean-François Harvey, an immigration lawyer based in Hong Kong, had 4,000 clients waiting for approval for the Immigrant Investor Program, with some waiting for over five years. He said three-quarters have sought residency in other countries, including the U.K. and U.S.

“I tell my clients, ‘Let’s go to a country where you’ll be welcome because Canada is not friendly right now,’ ” he said.

http://online.wsj.com/news/articles/SB10001424052702303874504579377782536917724?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303874504579377782536917724.html

#100 Jon B on 02.13.14 at 12:58 am

Vancouver real estate blowboy Can Good will surely find another demographic with money and foreign credentials to support the cartel’s message.

#101 meslippery on 02.13.14 at 12:58 am

It maybe just a one off but as I worked as a delivery
driver in Markham, I had the occasion to be on delivery
to a home there. German Shepard gave me cause for
concern. In the end the dog was great, The old man seen how well we go along and when He sold asked if I would
take his dog as he had to go to a old age home.
He told me (I said yes) that his house was sold on line
to someone (Ham) who never came and seen it.
OK so it dose happen.

#102 meslippery on 02.13.14 at 1:03 am

Best dog ever.

#103 LS in Arbutus on 02.13.14 at 1:11 am

This is kind of sad… but of course, totally understandable with the cost of housing (and daycare) in the city.

———

Vancouver schools are shrinking

Each year for the past three years, Vancouver has been losing the equivalent of two schools.

Below you’ll find a Vancouver School Board internal memorandum enumerating the inflow and outflow of students as families move to and away from Vancouver.
The average size of a Vancouver school is roughly three hundred students. In the 2009-2010, 2010-2011, and 2011-2012 school years, the district lost 678, 697, and 629 students respectively.

http://www.vancouverobserver.com/city/education/shrinking-schools-broke-parents-we-cant-afford-grow-vancouver

#104 LS in Arbutus on 02.13.14 at 1:16 am

Good article in the WSJ

Canada Scraps Lax Investor-Visa Policy

http://online.wsj.com/news/articles/SB10001424052702303874504579377782536917724?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303874504579377782536917724.html

#105 Obvious Truth on 02.13.14 at 1:19 am

The rate predictions and the effect or perhaps lack therof was interesting yesterday. Done with such ease. No worries. Canadians can use 100% of their income for housing. No HAM. No worries again. We can borrow more.

Here’s the way I see it. The last 25 years had us go through high rates, low rates, many recessions and market peaks and corrections in almost all asset classes.

I predict the next 25 will be similar. Everybody ready?

#106 Roy on 02.13.14 at 1:34 am

Could scrapped immigrant program drop Vancouver home prices?
http://bc.ctvnews.ca/could-scrapped-immigrant-program-drop-vancouver-home-prices-1.1683915

Bye, bye HAM pie
Drove out the rich investor and now the levee is dry

Pete McMartin: Selling citizenship OK, at the right price
http://www.vancouversun.com/opinion/columnists/Pete+McMartin+Canada+should+money+worth+from+investor/9501326/story.html

McMartin: “we weren’t selling Canadian citizenship. We were giving it away.”

#107 James on 02.13.14 at 2:07 am

Canadians of Asian ancestry are not HAM. — Garth

But some are conduit or middle man of HAM. From personal experience, I know of a family friend who bought a 4M house cash. Wife have 3 kids and husband works and live in China. When ask him what kind of business he is in? Vaguely said he discovered a mine. Mind you he was farmer and chauffeur not so long ago. Something tells me he is being used.

#108 Craig on 02.13.14 at 2:08 am

Anon #66 – great comment

There is no doubt that offshore money has contributed to the bubble in high end Vancouver neighborhoods. reliable data appears hard to come by but the anecdotal evidence is quite strong. There is also no question that this is a reasonable and fair issue to raise.

Don waste your time trying to convince Garth of this. His position on this is not rational. Now he has hatched a theory that the myth of HAM was driving the market -conveniently covering his ass when the market changes.

That said, I’m not convinced the end of the program will really stop the flow of money out of China. There are other avenues.

#109 Sam on 02.13.14 at 2:09 am

http://www.wallstreetsectorselector.com/2014/02/canada-looking-frayed-around-edges/

#110 thedoubter on 02.13.14 at 2:10 am

10% HAM, 90% interest rate.

If you plot the interest rates against house prices, you will see what I mean.

The low rate makes low monthly payment and easy mortgage qualification. And this is fuelling the rocketing house prices. I doubt the new immigration law will make any difference.

#111 John Prine on 02.13.14 at 2:11 am

5 Bobby on 02.12.14 at 7:08 pm
Yeah, but who believes what a realtor says anyways?

Most say prices will continue to go up, but it doesn’t seem to be happening here. Lots of expired listings with reduced signs
____________________________________________

All of the realtors I know are aware that the market has softened to the tune of about 15% in our area and will discuss it anytime…The challenge they have is convincing vendors that watch too much Global TV that their homes are NOT going up in value now and that if they don’t list at a realistic price they will be on the market for months with multiple reductions before having a successful sale. We have American friends that bought their home in 2006 for $650K…It went down to around $150K and now has clawed it’s way back to around $400,000. They can’t believe that we haven’t had our “adjustment” yet.

#112 Infused with Opiates on 02.13.14 at 2:17 am

30 Keith – dont you own a condo in Rio? I’d be curious to know approx what you paid, average income in Rio, how often it is occupied, and what hoops you had to jump through to buy it.

It would be interesting for comparison to Vancouver and Toronto.

My apologies if my assumption is incorrect.

#113 Christopher Lackey on 02.13.14 at 2:26 am

Here on the greater fool, we can come to escape the mythmaking we are all subject to in the real world. i.e., that the Canadian Real Estate Market is an unstoppable juggernaut that makes exceptions for nobody.

Regarding F and the budget, this mythmaking persists in many areas other than the housing market in Canada. This guy I work with is just hopeless. Drops the Metro on my desk today about the balanced budget. Yeah its easy to balance the federal budget when 9/10 provinces are in the red because they can’t raise the money for the schools, hospitals, old folks and poor folks they have to pay for.

Then he says Canada got through the crisis better than any other country. Who needs economic indicators when you can swallow PMO spin?

To top it off he says that the PM is better than the two other guys (who I can’t imagine voting for either, for the record) because he’s an “economist”. I said the guy never worked a day as an economist in his life he’s been full time reform party since 1987.

Wouldn’t listen to me. Why let facts get in the way of emotion?

If you repeat lies often enough they become true I guess

#114 Joe on 02.13.14 at 2:50 am

I guess we will have to wait to see the impact or lack of.
People are still getting into Canada and will continue to regardless of laws or bills, Persian,Chinese..
It’s the golden rule, he who has the gold rules.
There will be loads of immigration lawyers working their connections.
Time will tell.

#115 Mac on 02.13.14 at 3:00 am

It is asked how does the cancellation of the IIP stop hot money from buying property anyway? The answer is that HAM are the biggest believers in HAM.

They are a tautology that believes in their own mythical herd power. Now the big question is, will F replace this visa with another with a bigger price tag? Google Australia’s 188 and 888 visas aimed at … who else?… The Mainlanders.

#116 Dan on 02.13.14 at 3:01 am

#39 Bobs ur Uncle,#47 Freedom First,I agree with both of
you. I completely understand the ridicule of the “HAM”
concept after the likes of Cam Good and helecopters,not to
mention the other scams shown on “Global & CTV” over the last 4 or 5 years,but there is a lot of denial over Hams
existence on this blog that I find perplexing! Peoples ire
over the B.S. we’ve all witnessed on tv seems to justify the belief that HAM is completely fabricated and to the
numbers that have been presented in the markets ratio
of sales (by HAM) that is likely true.
I posted a few weeks ago about sales in my mothers
neighborhood (Edgemont village,North Vancouver)where I grew up I might add.A large ammount of sales over the years have been to developers who quickly built the largest house on the lot
that was allowed,at the expence of some very nice tidy,
albeit 60yr old houses. You are hardpressed to find a
house less than 1.8m in this (the 60yr oldies)neighborhood!I stated before that there are 5 or 6
large never before lived in houses that sold near mom,
that remain uninhabited to this day,not a stick of furniture in any of them some are now a year later! I find
that rather odd,how about you?If you can afford 3.2m
(that was the asking of the nearest one to mom)you
would think you could pony up for some furniture by now,unless of course you own but don’t live there…ahh!
If I (or You!),bought that ,or any of the other houses in
the neighborhood you would be in there asap,just a thought. As I said before I grew up in this neighborhood,
and it is very much a white middle class part of Van. and in the last 8 yrs or so quite a lot of Asian families have
moved here mostly Asian Canadian I believe, but “Ham”
are well represented as well.No racism intended,just an
observation that I and some other Vancouverites would
probably agree with although not out loud.

Also #14 Freedom First,people that bought gold at $1900/oz. when it has dropped to$1200 now etc etc,
there is going to come a day when that is going to be
recognised as a good price.

Dan

oops now i’ve done it,sorry Garth!
some more than a year ago

#117 Notta Sheeple on 02.13.14 at 3:19 am

“…..I deal directly with these people who bring a lot of wealth, who are creating lots of jobs for local Canadians — builders, trades, architects, realtors like myself…..”
=========================

Eeeewwww……..Wasn’t that just an insult to builders, trades and architects everywhere?

#118 World According To Garth on 02.13.14 at 3:37 am

Speaking of cherry picking (which seems to be happening allot on this blog these days):

http://news.investors.com/ibd-editorials/021114-689673-how-can-we-be-warming-when-its-so-cold.htm

#119 Helpful on 02.13.14 at 4:09 am

Although I respect your inference that HAM is simply a genius marketing ploy by the real estate industry and you do supply evidence to support it, my personal experience says otherwise. I suppose it comes down to the attitudes of the communities in which we live and operate. For those of us who live in areas where the physical manifestation of HAM is as plain as the noses on our faces, there is negative and I suppose on some level envious feelings (of the wealth). These feelings are pretty normal for any group of people living in any area of the world when an influx of wealthy foreigners comes in and starts living an elite lifestyle while the locals toil away in the mundane regular working world. It shouldn’t be denied, it should be understood and then acted upon ( one way or another).

An incipient anti-immigration wave is building in western and northern Europe. It’s also in Australia, and seems to be starting to pop up more frequently with our cousins down south. Are we next? Did “F” give some indication of that with this latest thing?

You’ve implied in the past that HAM is somewhat racial in nature. With some people, no doubt it is, but I think that we “natives” would resent any race or nationality who was allowed by preferential treatment of government to move into our neighborhoods and buy everything out because their level of wealth can always offer more for something, to the detriment of the needs of the many. This is normal. You can see it in many places in the world, even some where it is Canadians in the role of the ” evil foreigner “.

This isn’t about hating on Chinese people. This is age old class conflict, just given a fresh “21st century real beginnings of an overcrowded planet” dash of flavor.

#120 whatever!! on 02.13.14 at 5:26 am

What I don’t get is. out of 45,000 applications only several thousands were approved (3000-5000) new immigrants.

So How many houses and condos were sold over the past two years

http://creastats.crea.ca/natl/index.htm

From the Crea records, it indicates about 1 to 2 million sales per year. So if HAM was the main cause for all the sales that means those few thousand new immigrants have bought over a thousand houses year, so each will bring over a billion bucks into the real estate market. Based on what real estate agents are flogging to joe public.

Even if there were 45,000 immigrants there’s now way they can buy up so much inventory. Which comes to only one conclusion. Canadians must be buying close to 85% of all inventory.

#121 Humtpy Dumpty on 02.13.14 at 6:52 am

In the Netherlands, bankers turn to God — by law

Lloyd Blankfein, the chief executive officer of Goldman Sachs, once famously said he believed banks were doing “God’s work.” Now, the Netherlands is going one step further: starting later this year, all 90,000 Dutch bankers will have to swear an oath that they’ll do their “utmost to maintain and promote confidence in the financial-services industry. So help me God.”

http://blogs.reuters.com/great-debate/2014/02/12/in-the-netherlands-bankers-turn-to-god-by-law/

Galatians 6:7

Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap.

#122 I'm stupid on 02.13.14 at 7:49 am

I was having a beer with a few friends yesterday, when my friend started talking about his neighbour.

His neighbour sold his home for 1.3 million because his son (a hedge fund manager) told him that home prices are going to go down. The neighbour now rents the same house for 3500 a month. Everyone was laughing about it and calling him an idiot. That houses will never go down. I didn’t say anything but I know who the idiots are.

The neighbour is in his 60s and got a platinum retirement because he sold at exactly the right time. He will earn 100k a year for the rest of his life while the rest of us will work forever.

#123 Tony on 02.13.14 at 8:48 am

Re: #69 carpicker on 02.12.14 at 10:07 pm

The U.S. housing market had a “dead cat” bounce thanks to syndicate buyers who *thought* they were buying at the bottom. Prices are heading back down so the idea was to sell Canada and forget about real estate for at least a generation.

Resale prices rose 10% in the last 12 months. Stop making things up. — Garth

#124 Mike in Germany on 02.13.14 at 9:25 am

#121 I’m stupid

I had a coworker in her 40s once tell me that if she won $3M in the lottery, it wouldn’t be enough for her to retire.

I was a little less diplomatic in those days, I told her that if you could save $10k/year after taxes and expenses (very respectable by Canadian standards), it would take 300 years to save that money. If you invested spectacularly, it might only take two lifetimes.

She didn’t seem to understand what I was getting at.

Good for him for *seeing* that $1.3M was his ticket to retirement. Not everyone understands how expensive houses have become. The numbers are completely abstract.

#125 Chris Hadley on 02.13.14 at 9:30 am

Just because stats aren’t gathered doesn’t make it false. Want proof? Take a tour of Burnaby, Vancouver and Richmond. They aren’t all actors.

My neighbor next to our old house (a nice Asian lady that my wife was acquainted with) in a smaller Canadian city, lived there alone with her son. It was about 3,500 square feet. They husband lived back in their country of origin (can’t recall which one). Apparently the lady kept the heating system in the house at about 5 degrees because she didn’t want to waste the money, and used to spend most of the time in the office getting some extra heat from the computer. We are talking about a cold climate, not Vancouver. My wife said it was like that each time she visited them, which was several times a year. She couldn’t bring our baby over to visit because it was too cold in there. After the son finished high school, they sold the house and left.

#126 Ret on 02.13.14 at 10:10 am

Only a complete fool would believe anything that any elected official in this country spews. What is far more important is always what is not said.

The HAM issue is a nice emotionally charged, topic of the day, diversionary tactic for the sheeple. The government’s real agendas on this file or any other matter are never revealed in these over-hyped budgets that always lack hard number targets. They do what they want.

#127 OZY - Go see Markham, Richmond Hill or C15 in GTA on 02.13.14 at 10:22 am

Go see Markham, Richmond Hill or C15, get off the Hummer and pay a bus fare. Reality does not lie. Tell me % wise what you see. We all know the answer, so why aren’t we embracing the truth.
Yes, HAM immigration (whatever the programs) is legal and yes it sustains the house prices plus 10% growth a year. You should metaphorically “kiss those guys hands” for working hard, being frugal and fueling great wealth in the middle of nowhere kind of city and country (from a global perspective). They placed Toronto on the map, so to all haters, shut-up and pay!

#128 stop lying on 02.13.14 at 10:28 am

HAM is not a myth. There are asian investors buying blocks of condo apartments with cash. There are asian investors buying mcmansions. The only question is how many of them are there and why are we trying to compete with them? They already have more money than we can ever hope for due to many reasons, for one their tax system is much cheaper than ours – they do not believe in using the tax system to spread wealth so the middle class and up become more rich than we can here (and conversely the poor become more poor than they could here). And our housing looks like a bargain to them, even still. Try buying something nice in HK or a major mainland city and you’ll see. I have an asian realtor in my family, and trust me, HAM is not a myth.

#129 PoltawaDiva on 02.13.14 at 11:21 am

With all those unoccupied mansions, how is the insurance on them handled? As far as |I know, if a building is unoccupied, or no one stays there overnight at least once a month, the insurance companies will be very “hesitant” about covering damages. OK, so maybe there was nothing inside to steal, but what about water damage, fire, vandalism, etc. Anyone?

#130 Penny Henny on 02.13.14 at 11:36 am

I think this headline in the post today was written specifically for our host-“Sorry real estate bears, you’re going to have to wait a while longer for that crash”.

Sort of like the photo for today’s post.

#131 Yo on 02.13.14 at 11:42 am

I am Chinese Canadian and live in Markham, and for certain areas like Markham, North York, and likely many parts of Vancouver the HAM is not a myth. Its true. They come and buy, price is not an issue. Simply because a one bedroom condo in China/HK cost more than a mcmansion. Also, there is a historical mentality of worried about the future of China, and instability. I don’t think you can find any example in history where as a country gets richer, people leave faster. I think this has only happened in China, not in Japan or in America during their economic rise. So its an unqiue situation, and I think Canada priced the program way too low. Perhaps similar to Australia would of been better. I think in the long run, this is better for everyone, and for the Chinese since as a society they need to evaluate why so many want to leave with all their money. As for Canadians, we need to stop living off the real estate market. A big correction is coming to the areas I mentioned. That being said, I do not agree with the comments about an invasion. Prices are high in areas like Parkdale and Leaside not because of HAM, but because of yuppies with no idea of what they are doing. I know allot of boomers in my former North York area who sold their properties for $1M plus. Far above they ever thought. So thank the HAM.

#132 Holy Crap Wheres The Tylenol on 02.13.14 at 11:51 am

Smoking Man have fun in Yuma. I don’t think you can write a novel in one week following Hunter S Thompson’s methodology however good luck!
I forgot to tell you DO NOT CROSS INTO SAN LUIS RIO COLORADO. Do not go to Mexico that city is dangerous, it was dangerous back in the late sixties and from what Ive heard it is even worse now. Unless you Habla español and do not look Caucasian then do not consider it.
Smoking Men die there.

#133 rosie "moving forward" in the knowledge that, "this won't end well" on 02.13.14 at 11:52 am

Discuss.

http://www.reuters.com/article/2014/02/12/us-eu-banks-savings-idUSBREA1B1ZI20140212

#134 Grantmi on 02.13.14 at 11:59 am

#129 PoltawaDiva on 02.13.14 at 11:21 am

With all those unoccupied mansions, how is the insurance on them handled? As far as |I know, if a building is unoccupied, or no one stays there overnight at least once a month, the insurance companies will be very “hesitant” about covering damages. OK, so maybe there was nothing inside to steal, but what about water damage, fire, vandalism, etc. Anyone?

Are you kidding! They don’t care! They hope someone DOES set it on fire.. and then they don’t have to worry about the cost of tearing it down to put up McMassion. Only thing missing from the front of the lawn is not a ADT sign.. but “Please Light!” It’s the land baby! You can’t burn land.

#135 sciencemonkey on 02.13.14 at 12:14 pm

Anyone hear Rob and Doug Ford on Z103.5 this morning? They mentioned that Toronto is booming and doing great, look at all the cranes in our city, more than a number of major US cities combined!

Yay for our condo bubble.

I’m still going to vote for him in the next election, because I’m cynical (I don’t trust any politician), Rob Ford is amusing, we know his evils (as opposed to other politicians who hide it better), and most importantly I hate Toronto and want to punish this city with a mayor it hates.

#136 HD on 02.13.14 at 12:19 pm

#124 Mike in Germany on 02.13.14 at 9:25 am

#121 I’m stupid

I had a coworker in her 40s once tell me that if she won $3M in the lottery, it wouldn’t be enough for her to retire.
I was a little less diplomatic in those days, I told her that if you could save $10k/year after taxes and expenses (very respectable by Canadian standards), it would take 300 years to save that money. If you invested spectacularly, it might only take two lifetimes.
She didn’t seem to understand what I was getting at.
Good for him for *seeing* that $1.3M was his ticket to retirement. Not everyone understands how expensive houses have become. The numbers are completely abstract.

——————

Funny, I had a very similar conversation with coworkers the other day. 2-3 or of them were arguing with me that $10M wouldn’t be that comfortable to retire on.

They all looked at me like I was crazy to think that $2-$3M would be more than enough and $10M was a ridiculous amount to expect.

They just wouldn’t get it.

Or maybe I’m the one who doesn’t get it.

Just a whisper, I hear it in my ghost.

Best,

HD

#137 Nemesis on 02.13.14 at 12:32 pm

GoodBye, Vancouver… Hello!SanGabriel…

[LAT] – Chinese visitors turning San Gabriel into a boomtown

…”Ta, a guest at the San Gabriel Hilton who wished to be known only by her last name, is visiting the U.S. from China for the first time. She and her husband have started to look around for homes.

“Our friends are talking about it,” said Ta, hitching a gold-zippered red Prada bag further up on her shoulder and snapping a picture of a her daughter with an iPhone.

Ta, who spoke no English, was full of questions about life in America. Which cities were best for Chinese people to live in? What about the schools in Arcadia and San Marino? How were the colleges?

Valley Boulevard caters to these families as well. As you exit the San Gabriel Hilton, a glass-walled office to the left advertises a new home loan program for foreign nationals. In the office on the right, Victor Chang, an immigration attorney, helps Chinese investors get visas and green cards.

His company, California Investment Immigration Fund, helps Chinese investors navigate a special immigration program that awards visas in exchange for investments of $500,000 or more. Chang says he currently manages more than 150 clients looking to obtain these investor visas, and walk-up business from Hilton guests is common.”…

http://www.latimes.com/local/la-me-san-gabriel-20140213,0,907106,full.story

#138 Keith in Calgary on 02.13.14 at 12:32 pm

#112 Infused………..

Sure…..no sweat……

We paid $60K USD in 2002…..we could sell for $200K today, but would be taxed at the maximum bracket on the profit, and the place was not bought for resale. We feed it to the tune of about $400 CAD a month for condo fees, taxes, utilities, etc. It’s our retirement home and vacation home. Basically unoccupied unless we are there….which is roughly 2 months a year.

Didn’t have to jump thru hoops per say, got a CPF number for banking and other things as well (you have to register with the Receita Federal) and hiring a lawyer to close the transaction, even though one is not technically required.

Owning property in Brasil does not give you any rights per say to anything at all, other than the fact that your monthly overhead just went up accordingly. FYI…..they have an immigrant investor program as well like many countries do, but it is far more restrictive and significantly complicated than the simple passport purchasing program that Canada has…….errrrr…….”had”.

Once I move there for good I have to provide the government with advance notice thru a formal application, and then once it is approved, after “3 years of physical residency in country” (which is totally different than our ridiculous program in Canada) I will get a passport, but only because I was married to a Brasilian national at the time of my immigration…..not because we own a condo there.

#139 Aggregator on 02.13.14 at 12:41 pm

Canada makes the #2 spot for Bloomberg's best place countries for doing business. Table

Hong Kong #1 and Canada now #2. No HAM correlation here. Move on.

#140 Vamanos Pest on 02.13.14 at 12:49 pm

#38 Debtfree

I did google that. SHAMEFUL. Truly an embarrassment.

Also, in scholarly sociologic discussion, the term “interracial marriage” would tend to be used over “mixed marriage”. (I, however, think the sign of true progress will be when we refer to 2 people of different skin colour being married as simply “marriage”.)

#141 Old Man on 02.13.14 at 12:56 pm

I have no idea what this discussion is all about as your not focusing upon the reality at hand, and too many of you are just blowing a lot of smoke about this and that. Now if you are thinking of a real estate purchase just park and wait a few years; if you own something that needs to be kicked out sell it quickly to the herd; and rent something for a few years. I am focusing upon the Toronto area which has many variables such as housing type, area in general, neighbourhoods, and all the factors that pertain to quality of life. Its time to make critical decisions to save a lot or lose a lot of green in this coming race to the bottom, as it will come like a fire storm sooner or later. This will be my final warning, as a fool and his money soon departs.

#142 Bottoms_Up on 02.13.14 at 12:56 pm

#213 princess airhead on 02.12.14 at 7:11 pm
———————————————-
In Ontario they are cracking down on retired teachers working part-time/supply teaching. It’s only fair. But I agree, how does a newly minted teacher with $80,000 debt with net wages of $2900/mo start to pay it down?

Impossible.

And that’s IF they’re able to quickly land a permanent job, which in many cases takes them 3-5 yrs AFTER graduating.

#143 Reddy on 02.13.14 at 12:58 pm

Just bought a house! Ncc region. Whoo hoo! Very exciting times indeed. We move in a couple of weeks !! So long renters!!

#144 fixie guy on 02.13.14 at 1:00 pm

#22 David “Stats I saw in Vancouver area, overseas Asian buyers were est under 1% of the market. ”

Yet somehow almost all of Richmond’s west half is ESL Asian. Again, all that matters to market impact is whether the money was earned in Canada or offshore, citizenship of the buyer is irrelevant.

#145 Bottoms_Up on 02.13.14 at 1:02 pm

#207 Stickler on 02.12.14 at 4:56 pm
——————————————-
You’ve obviously never been to university recently in Canada.

To go to teacher’s college, you need at least a 3-yr university degree, and in most cases, 4 or 5 yr honours degree. THEN, you go to teacher’s college.

So your average teacher is looking at 5-6 years of post-secondary education, at an average cost of $20,000 per year, this includes tuition, books, living expenses (1/2 of which becomes debt). Thus, it is quite easy to see how a graduating newly minted teacher walks away with at least $50,000-60,000 debt.

I love your math though, that to become a newly minted teacher only requires $7000 BWAHAHAHA.

#146 Steven on 02.13.14 at 1:02 pm

Non citizens should be barred from real estate investing in Canada. Canada should also ban dual citizenship. China’s idiotic real estate market problems should not become Canada’s idiotic real estate market problem.

Should they ban you from Florida or AZ, too? — Garth

#147 Penny Henny on 02.13.14 at 1:10 pm

Ford encouraged young people to campaign for him because it would “look good on their resume” and “they can get jobs.”

http://news.nationalpost.com/2014/02/13/rob-fords-youth-vote-strategy-mayor-campaigns-at-nightclub-before-appearance-on-fm-dance-station/

You can’t make this stuff up.
Smokey if you run out of ideas for your book just follow this guy around.

#148 bill on 02.13.14 at 1:11 pm

‘ realtor in my family, and trust me, HAM is not a myth.’
I am afraid you lost me right after ‘realtor’.
sure I believe him/her.
they wouldnt lie….

#149 princess airhead on 02.13.14 at 1:13 pm

I’m sure many don’t understand that HAM was buying thousands of houses IN ANTICIPATION OF APPROVAL…marking them as true HAM and not the immigrant status they have been allowed to shelter behind. There are tens of thousands of houses owned by HAM….primarily from the PRC that will now exist in a state of limbo…..

http://www.vancouversun.com/news/metro/Wealthy+investor+immigrants+little+taxes+struggle+with/9501194/story.html

In my career I had hundreds of HAM clients get off airplanes at YVR and buy in the course of an afternoon…..and off again the same day to Toronto do do the same. To suggest that HAM wasn’t an integral part of the market is ludicrous and naive to the extreme.

#150 -=jwk=- on 02.13.14 at 1:20 pm

@ #56 Turnernation. this is just sad. I work close to Yonge and Dundas and could not understand from the pictures where Dundas Square Gardens was? The picture on their web site clearly shows the Eaton center and Dundas Square and even includes the Dundas Street care. So it must be looking west, but from where?

So I went for a walk down Dundas. A long walk. I got to Church. Nope. I got to Jarvis…and then I see the construction site. It’s on Dundas EAST of freaking Jarvis. It was cold, and then where was your typical “east of yonge” druggie screaming at people to “stop doing that…argh!” so I turned around and trudged back.

It’s nowhere near Dundas Square. I guess the foreign buyers won’t know that….

#151 Victor V on 02.13.14 at 1:34 pm

http://ca.finance.yahoo.com/news/barrick-reports-big-loss-impairment-123103002.html

TORONTO, Feb 13 (Reuters) – Barrick Gold Corp, the world’s largest gold miner, reported a big fourth-quarter loss on Thursday as it took a hefty impairment charge, cut its gold reserve estimate by 26 percent and said costs per ounce would likely rise this year.

Toronto-based Barrick forecast its all-in sustaining costs – a measure meant to capture the effective day-to-day cost of producing an ounce of gold – would be between $920 and $980 per ounce in 2014, up from $915 in 2013.

It also slashed estimated gold reserves to 104.1 million ounces from 140.2 million ounces a year earlier. About half the decline came because it used a lower gold price assumption of $1,100 an ounce, down from $1,500.

#152 BigD on 02.13.14 at 1:38 pm

Garth,
When you balance your tfsa, RRSP, non registered assets, for example 60% equities/40%fixed, do you balance as a whole of the total amount of portfolio or do you try to balance each of the components 60/40?

Always the whole. Place assets in account for tax efficiency, not balance. — Garth

#153 Hicksville Alberta on 02.13.14 at 1:45 pm

A very interesting read by Ambrose Evans- Pritchard – World asleep as China tightens deflationery vice at http://www.telegraph.co.uk/finance/comm…-vice.html

Firstly it discusses the incredible undisciplined credit expansion in China especially since the GFC in 2008/09 and then goes on to discuss the inevitable deflationery unwind that has to and likely is starting to take place in China right now.

If true enough this could be the real donkey kicker not only to the H.A.M. influence on real estate but to many other things in the Canadian as well as Global economies.

Planes don’t run on air and Global economies can’t sustainably run on undisciplined credit and money creation forever. Inevitably malinvestment, stupidity and greed, etc. has to come in to play to suck up the slack.

#154 TnT on 02.13.14 at 1:59 pm

Speaking of Bears…

“Canadian real estate bears are patient. For more than half a decade they have been waiting for the inevitable crash in the Canadian housing market, only to be disappointed by a defying market,” Mr. Tal writes.

“The market will be tested by higher interest rates. But as things stand now, those bears will have to continue to wait as interest rates are likely to remain low well into 2015.”

http://www.theprovince.com/business/fp/Condo+correction+cards+Toronto+Vancouver+says+report/9503331/story.html

#155 Derek R on 02.13.14 at 2:02 pm

#129 PoltawaDiva on 02.13.14 at 11:21 am asked:
With all those unoccupied mansions, how is the insurance on them handled?

Remember, a $10,000,000 mansion in London may well be a $100,000 mansion sitting on a $9,900,000 lot. If you are using it as a store of value and it burns down, you just lost 1% of its value. Hardly worth insuring really.

And if the mansion is a Vancouver crackshack sitting on a $1,500,000 lot, the arsonist may well have increased the value of your lot. So who cares about insurance?

#156 Dupcheck on 02.13.14 at 2:22 pm

Think of this: What message do these RE prices send to the kids that are currently graduating university? 800k for a shack of house in GTA, and 50K annual salary waiting for them if they are lucky to find a job! Ridiculous… I bet you a lot of them will run for companies in the states. Canada does not hold much future for the young generation. Way to go lets ship our brain power outside of the country and keep the ignorants here working for the gov. etc… Is this our future?

#157 Old Man on 02.13.14 at 3:03 pm

There is a scholarly article in the Financial Post written by a one Garry Marr called, “Sorry real estate bears, you’re going to have to wait a while longer for that crash.” I feel so sorry for Mr. Marr, as he gave his best shot with lots of booga, but the best part of it all was the comments. The crowd beat him up badly without any mercy at all. :)

#158 JL on 02.13.14 at 3:15 pm

Garth,

I thought you said demand for commodities was calling and Alberta should be careful.

Of course we should be careful, everyone should, but looks like you were wrong.

http://finance.yahoo.com/news/robust-demand-tightening-oil-market-103853963.html

It’s absolutely crazy how vilified and disrespected the oil patch is in Canada. Look at the most recent federal budget, billions in subsidies to Quebec’s aeronautics industry, billions more to Ontario auto manufacturing. Albertans don’t ask for any of that. And yet the Mulcair’s and Trudeaus act like they would prefer if the oil industry shut down. Garth, you used to be minister of revenue right? In your opinion, you take the oil industry in Alberta, Saskatchewan, and NFL out of Canada and where are we as a country? GDP, deficit, unemployment, etc.. Would we be much better than a Spain or Greece honestly? As you’ve pointed out manufacturing is gutted. Without resource extraction we might be second world.

#159 ponerology on 02.13.14 at 3:37 pm

@127: Sure, but they were like that before housing prices took off. Not only that but go look up places like Brampton (cheapest in the GTA), Newmarket (check out the demographics), Oakville, King City and tell me your theory still holds.
Heck, check out a place like Bradford Ontario where the prices appear to just starting to leave the realm of sanity. It’s 90% folks of European decent (according to stats can) and I’m pretty sure it has nothing to do with what our neighbors to the south would call “white flight”.

#160 Nosty In Cognito on 02.13.14 at 3:56 pm

#91 Smoking Man on 02.12.14 at 11:44 pm — “But a point he never made was, why hasn’t a parent tried to write a book. Capitalize on the lose. In any tragedy, some on always publishes some thing, or even an payed interview, nothing, nada.”

Agreed, and there is the crux of the problem. Sworn to secrecy? How much of taxpayers’ money did it cost to buy their silence? Sheeple will always swoon before large sums of money, but see #124 Mike in Germany’s on 02.13.14 at 9:25 am to see how a nice windfall should be handled.

To further embellish the issue, here are a couple of extra links — Silence is Golden and Actors

Is Obama Communist? History teaches well, which may have something in common with the aforementioned. Remember Stalin?

#161 Alex Smith on 02.13.14 at 4:13 pm

We sold our Burnaby condo to a mainland Chinese family last fall. It was the only offer we got.

She’s here with the kids. He’s still back in China working. It’s not all a myth.

#162 Mike T. on 02.13.14 at 4:39 pm

Just a question to #128 stop lying:

Do you have 1 piece of evidence, just one

rather than the typical anecdotal – I go outside and see Asian investors blah blah

how many Canadians live in China?
the US?
Thailand?

please provide at least one fact if you want to make claims such as you did

#163 Old Man on 02.13.14 at 4:48 pm

#156 Dupcheck – this is the critical problem facing the present generation as jobs are subject to competition; the cost of housing has been leveraged; and no future indication for wage gains. Its a trap of economics, as even a couple with good education and a combined gross earnings of $135,000 into entrance positions is historically looking at a home purchase of $337,500 with a small down payment and heavy closing costs. Now with cheap money they are looking at a target purchase of say $425,000 tops, as they need to keep a margin of safety at hand for interest rates to increase to 7% with little earnings gained over years due to world deflation; the loss of a job; health issues; or whatever. I have based this model with a historical period of time with equivalent earnings; home prices; and the cost of mortgage money at 9% moving into 2014, and there is no mistake. They have no choice but to rent for a few years and save their money for a better day, as to buy high equals financial suicide in the City of Toronto.

#164 stop lying on 02.13.14 at 5:00 pm

#148 – fortunately for him, he isn’t lying, he has made good money buying multiple units for HAM, he even owns one for himself. I kno

#165 Smartalox on 02.13.14 at 5:11 pm

I was reading the Vancouver ‘Metro’ rag at Lunch today.

Front page article on reactions to the end of the HAM.
– Clarence Debye seems to have gotten over his fits of the last few days, and appears now to think that the real estate market in Vancouver will not be affected. I guess he was under tremendous pressure from his peers and the cartel to recant his prior statements.

– The bigger eye-opener though were quotes from Vancouver’s Bob Rennie. He discounted the HAM effect by stating that his research indicated that 69% of Vancouver (condo presumably) buyers already owned homes in Canada, while foreigners and first-timers were lumped into the remaining 31%. He did not specify the % of foreign investment, but hinted that first-timers were still the majority of the 31%.

HAM shmam – is anybody else worried that 69% of the Vancouver condo market are people who already OWN homes (i.e.: SPECUVESTORS?). This won’t end well when rents drop due to over-supply and higher interest rates sour the cash flow from all those second condos.

#166 Victor V on 02.13.14 at 5:33 pm

http://www.theglobeandmail.com/report-on-business/report-warns-of-excess-supply-of-rental-units-in-toronto-and-vancouver/article16844345/

“In one possible scenario, the Toronto rental market may no longer absorb supply as it comes on stream, resulting in lower rents and increasing cash outflows for landlords, who then decide to sell, at first in a trickle and then in a thunderous herd,” he added. “In this scenario, condo prices could drop dramatically, given relatively small unit sizes that do not attract a wide segment of potential buyers and the already weak underlying fundamentals.”

Mr. Tal says the “real challenge for investors down the road won’t be falling rents, but rather higher financing or opportunity costs when mortgage rates eventually rise.”

#167 TnT on 02.13.14 at 5:45 pm

#162 Mike T.

A proof is a proof. What kind of a proof? It’s a proof. A proof is a proof. And when you have a good proof, it’s because it’s proven.

Jean Chretien

#168 devore on 02.13.14 at 6:07 pm

#33 T.O. Bubble Boy

I’m still confused about one thing: how does stopping the Immigrant Investor Program stop foreign $$$ from buying property?

It doesn’t. The investor immigrant program has nothing to do with buying houses, and its elimination has nothing to do with real estate. It simply is the result of the people coming in under this program not generating the kinds of benefits it intended, opening business, hireing people.

#169 Rexx Rock on 02.13.14 at 6:41 pm

Its sad the immigration program is ending for residency.The goverment,I guess believe houseing is getting unaffordable for born and raised Canadians.Any way all forieners can declare refugee status and say their prosecuted in their home country.Simple as that,then funnel your money to Canada.Tens of thousands do this every year.

#170 espressobob on 02.13.14 at 6:48 pm

#151 Victor V

As far as Barrick is concerned, look out below! Goes to show how risky commodity & sector plays can pan out.

The goldbugs ‘aint’ defending their positions anymore! Tough break? Diversification wins again.

#171 stop lying on 02.13.14 at 6:50 pm

#162 that my fil has bought many units in the same building for HAM is a fact. However there is no way for me to prove this to you, I’m just saying what I know.

I could give ancedotal evidence of HAM (and Russian) as I have been to many mcmansion open houses and new build releases in the bathurst/dufferin/rutherford/maj mack area. Those two groups are very much over represented. But I don’t as that could just be a small area not representative of much.

#172 Old Man on 02.13.14 at 6:58 pm

In 1973 the average home sold for $40,605 in the City of Toronto which was heavily weighted with detached bungalows; two story; semi- detached; and row. There were very few condo projects as this housing type was just taking off, but two comes to mind in Mississauga and Don Mills. The developer was selling them for about $17,000 with a contract payment of $500 and by closing in 1974 the market was $34,000.

A couple with gross earnings of $19,680 in 1973 could buy a nice home for $49,200 5/25 with 10% down or even a bit less as they only need P.I.T. and the CMHC fees were half; not to mention no heating cost was needed for the GDS ratio with a cost of money @ 9% or a bit more. This fits my model with a small room for error, and property taxes were cheaper. The point is they could afford an above average home.

Now wages were increasing; home prices were moving up; and mortgages rates were escalating. The key to this rant is wages must increase to justify this insane bubble or all explodes. Wages will not be increasing for years to come; mortgage rates are climbing; and good paying jobs are blowing up year by year with closings and globalization. Get the big picture now?

Case in point. In 1973 R.N.’s were paid $640 per month in Ontario for first year entrance, and in 1974 negotiated a new 18 month contract for $850 per month, as wages were escalating everywhere in most areas within the workforce. These days are over, but gave purchasing power to buy real estate sending prices higher.

#173 gladiator on 02.13.14 at 6:58 pm

@168 devore:
totally agree with you, and that’s exactly the point: killing the investor visa program does not stop the HAM phenomenon in any way – maybe dents it a very little bit.

#174 BillyBob on 02.13.14 at 7:09 pm

Non citizens should be barred from real estate investing in Canada. Canada should also ban dual citizenship. China’s idiotic real estate market problems should not become Canada’s idiotic real estate market problem.

Should they ban you from Florida or AZ, too? — Garth

—————————————————————–

I don’t agree with the idea of banning foreign investment, that’s nonsense in a global economy. But some regulation may in order, or at the very least, some proper tracking. Part of the problem of this whole argument is that no one is able to really measure the phenomena.

Having said that, the attempt to equate China -> Canada as being the same as Canada -> US is pretty weak, given the massive demographic differences. Given that the US is 10X the size of Canada, and China is what, 25X? The former is the world’s largest economy, and the latter, the number 2 and set to become 1.

Somehow I don’t think either the US or China has to worry about being swamped by Canadian property investors. The reverse? Hmmm.

#175 Rabbit One on 02.13.14 at 7:17 pm

>#172 Old Man

Regular mandatory maitenance cost to own property
(property tax, insurance, strata fees if strata unit),
and upkeep (1~3% of property value) are so big
and cannot amortize over 25~30 years.

If you own $500K 1+den condo in Vancouver,
you likely putting $600~$800 just to own and keep it up
(not counting mortgage or opportunity cost), and they are likely increasing more than inflation rate.

This in my opinion could give similar negative effect over time as lending rate increase, what do you think…?

#176 Steven on 02.13.14 at 7:21 pm

Should they ban you from Florida or AZ, too? — Garth

If I am not an american citizen, absolutely! American and canadian people should not be priced out of their countries by real estate speculators either foriegn or domestic.
As a canadian citizen I have been effectively banned from living in canada by real estate investors who like to buy low and sell high. I am just here by virtue of birth and the ability to rent cheaply and when I work I don’t get paid to do better than that. Not everything in this world is my fault Garth.

#177 jess on 02.13.14 at 7:27 pm

Why do Chinese companies flock to the BVI? | http://treasureislands.org/why-chinese-companies-flock-to-the-bvi/
========

By Sasha ChavkinFebruary 11, 2014, 10:45 am
The British Virgin Islands have never been accused of taking financial secrecy lightly. But last week, members of the BVI legislature took a step toward raising the territory’s noted secrecy protections to new heights.

A bill introduced in the BVI legislature, the Computer Misuse and Cybercrime Act, would impose tough criminal penalties on individuals who leak secret data and journalists who publish those leaks.

http://www.bvigazette.org/extrafile/G00591_Computer%20Misuse%20and%20Cybercrime%20Act,%202014.pdf

http://www.themalaymailonline.com/money/article/china-foreign-exchange-reserves-top-us3.8t-in-2013
========

#178 Wally on 02.13.14 at 7:27 pm

You know Garth, I’ve been living in Vancouver since the 60’s. I must admit, the foreign speculation overall has immensely benefited those of my era / generation. But how on earth is a program like the one which has been in place for the last decade benefited my generations children? All homes in Vancouver are all grossly over priced. That is without doubt. As much as I’d like to think that someone will pay me the same money for my house today as they would 10 years from now? I don’t think so. I’m not sure even my children could afford the property taxes in another 10 years as I am currently receiving a grant for my taxes through City of Vancouver.
If as many have said on this blog for since I’ve been reading it, that Vancouver is without any proper economy to drive the same real estate values north along with anemic incomes over the next 10-15 years I’m thinking that there is simply no hope to sell hard assets to people that can barely afford their own car loans (our children) let alone homes valued at 1 to 1.5 to 2 million etc. It’s crazy to assume that the same demand to market will exist as the money supply erodes and bond yields steadily creep forward moving our central bank more in line with the United States Federal Reserves logic of halting the debasing of currency supplies (reserve notes) as their economy moves from anemic to mildly healthy. I would err on the side of caution and not encourage anyone to take out big mortgages on homes here in Vancouver. The entire city has been over-priced for years now.

#179 jess on 02.13.14 at 7:33 pm

Chinese villagers attack factory after reports of pollutingResidents of Baha in Yunnan province arrested for smashing office and equipment at local metalwork factoryShare Tweet this

Associated Press in Beijing

theguardian.com, Wednesday 12 February 2014 12.13 GMT

==========
freedom industries , duke energy, patriot have something in common
read @ william rivers pitt
http://truth-out.org/opinion/item/21835-william-rivers-pitt-the-poisoners-reckoning

#180 Calgary Rip Off on 02.13.14 at 7:34 pm

Calgary is like Brooklyn, New York. With high prices to match. Calgary is scary. Think white knuckle car rides.

Here’s the deal. Vacancy rates in Calgary are 1%. Costs of most rentals are more than mortgages. The houses are still ridiculous priced, however if your job is here it makes sense to get the mortgage even if the whole thing is ridiculous. I know my house market value of $463K reflects not inherent worth, just trends. Actual value is more like $180K.

People need to look at facts of when they are retiring to determine if they should subsidize a landlord or be a mortgage owner. Either way it is all lousy and a ripoff.

Better to focus on the clean water you can get by turning on the tap, food that you can eat that wont kill you, having an able body. These things wont likely change unless there is warfare or a zombie attack. I think of all the small things I am grateful for not the things that are beyond my control.
http://www.calgaryherald.com/business/Calgary+Edmonton+have+lowest+rental+vacancy+rates+Canada/9503560/story.html

#181 jess on 02.13.14 at 7:56 pm

So does Ontario have rules against this?
apartments as hotel rooms

backlash against tech companies in san Francisco
Evictions and displacement

==========

Airbnb, the 5-year-old vacation-rental business, lets you post your apartment online .

http://nypost.com/2013/11/04/turning-your-ny-apartment-into-a-hotel-is-illegal/

In response to complaints, New York did something unusual: acted to fix the problem. Three years ago, state Sen. Liz Krueger got a bill passed to close loopholes dealing with illegal rentals. City Hall tweaked its own laws, too, raising fines for violators.

“This started with tenants’ concerns,” Krueger notes. “People they had never seen had keys to the front door.”

Now state Attorney General Eric Schneiderman is seeking Airbnb’s records, to see if clients are evading hotel taxes.

These enforcement efforts have Airbnb worried. It has hired lobbyists to get the law changed. In this effort, it paints its “hosts” as innocent victims who shouldn’t risk big fines…”

========
Didn’t go well in Germany for that idea
Berlin Bans Short-Term Vacation Apartments for Tourists – SPIEGEL …www.spiegel.de › English Site › Germany › Berlin
Nov 22, 2013 – Berlin’s tourist boom has led many locals to rent out their apartments to … Now the Berlin senate, amid soaring rents, has passed a law … Squeezed Out: Rocketing Rents Become Election Issue in Germany (01/02/2013).

#182 KommyKim on 02.13.14 at 8:12 pm

RE: #160 Nosty In Cognito on 02.13.14 at 3:56 pm
Is Obama Communist? History teaches well, which may have something in common with the aforementioned. Remember Stalin?

I don’t think you’d recognize a communist even if they messaged you directly on this forum. ;-)

#183 Lisa on 02.13.14 at 8:56 pm

Re the dead cat bounce in real estate in US. I paid cash for townhouse in Tucson last March. Prices have not gone up at all in this end of the market. Prices rose mainly in real estate that could be rented out. As we purposely chose to buy in a development that doesn’t allow rentals we don’t care and aren’t expecting to see much appreciation other than through strengthening American dollar.

The Southwest economy is morphing around the twisted new reality of perpetual bifurcation. The US is a third world nation. I love living here part time but anybody thinking they might make a windfall on property has to understand that a lot of the gains have been underwritten by vulture capitalists like Blackstone

#184 jess on 02.13.14 at 10:02 pm

vacancy rates…how accurate are those?

No condo bust on horizon, CIBC analyst says
Thousands of units being built in Toronto and Vancouver, but that won’t help renters

http://www.cbc.ca/news/business/no-condo-bust-on-horizon-cibc-analyst-says-1.2535951
=

Why not?
Toronto Hydro executive expense accounts hard to track
Tue Dec 17 2013

Toronto Hydro is not divulging the amount of money its senior executives are billing for expenses, even though the publicly owned corporation gets most of its revenue from ratepayers.comments

“People are becoming poorer, the waiting list for subsidized child care is over 15,000 now. The number of working poor has spiked from about 16 per cent to 21 per cent.”
http://www.thestar.com/news/city_hall/2014/02/12/rude_bureaucrats_lead_complaints_by_toronto_residents_ombudsman_finds.html

#185 DeadMountain on 02.13.14 at 10:11 pm

“conservative drumbeat of anti-immigration?”

Are you serious ? The cons have brought immigration to an all time high !

#186 wallflower on 02.13.14 at 11:02 pm

#116 Dan on 02.13.14 at 3:01 am
If you can afford 3.2m
(that was the asking of the nearest one to mom)you
would think you could pony up for some furniture by now,unless of course you own but don’t live there…ahh!
====
Where I live there are lots of immigrant mainlanders who reside in their homes here and there kids go to school here… ZERO furniture in their homes which would list for around $1.2M. They have two Mercedes in the driveway, a $1.2M home and zero furniture (I am assuming they have beds but I have not been in their upstairs). I know this because I have been in these homes to drop off my kid and pick him up… which is not often at these homes because these kids are not allowed to “play” much. My Hong Kong friends tell me that Chinese put a much higher value on wealth and money than “Canadian” people. Things like furniture are not valuable because they don’t “show” — and these families don’t have people over much. Again, they show their wealth by eating out as well. But, my Hong Kong friends have furniture… I can sit down and chat with them at their homes.

#187 Willy2 on 02.14.14 at 5:36 pm

I recently learned of a trick realtors have up their sleeve.

Let’s assume a house is/was listed for $ 500.000 but is sold for “only” $ 400.000. Then the realtor will leave the advertisement on the internet for a while with the sign “Sold” on it.
But the trick is that the realtors don’t adjust the price on the advertisement down to the selling price of $ 400.000. No, the advertisement still shows the asking price ($ 500.000).

#188 screwed on 02.14.14 at 6:24 pm

The real question we should be asking is this:

Why is Flaherty so hell bent on destroying the Canadian economy? We knew HAM would be a problem before it started. We also knew 40 yr amortization and subprime would be a problem.

Once Pandora’s box had been opened, you can’t close it. Flaherty is THE WORST Finance Minister this country has ever seen.

#189 T.o.renter on 02.14.14 at 6:41 pm

Wealthy Russian and. Chinese are storing their wealth in North American real estate. Fact, not a myth. Well know by industry.
Total addressable correlation to increased valuations in Canadian real estate is not known nor will it be studied in any depth and reported.