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Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

On Vancouver Real Estate - Remain Calm - All is Well!

I'm not an expert on Vancouver Real Estate but I hear things. I wanted to learn more. Especially after a  "no evidence of housing bubble" report from Mortgage Professionals Canada was released. Talk about a red flag.

Marc Cohodes had the most rational comments (From Vice - July 5)

But here's what you know for sure: you know China has capital controls on—they restrict their citizens from pulling more than $50,000 out of the country. So when a college girl buys a $31 million place in Vancouver—who has no income, who can't answer questions about what her father does for a living, who can't answer questions about where she gets the money—you know the Chinese don't want this going on. They're pissed about capital flight into YVR. Toronto as well. At any point in time, the Chinese can crack down on people, on Canada—they can do whatever behind the scenes to make it end abruptly. Without warning or notice... At some point a cool mind should say, "Hey, why don't we just have open disclosure of who owns all these properties?" That's a real solution.

The Canadian Real Estate Association (CREA) has been reluctant to track suspicious transactions as requested by the Financial Transactions and Reports Analysis Centre of Canada or FINTRAC. 

CREA has not hesitated to push back against regulations it deems to be too onerous. In its most recent annual report, it credits “three years of sustained lobbying” for significantly reducing the administrative “burden” of FINTRAC requirements. (see Real estate group peeved over email asking for ‘suspicious’ records just hours after gunman stormed Parliament.).

The train kept a rollin' until this June when the Province of B.C. took away the Real Estate Council of B.C.'s right to self-regulation. This basically meant that the real estate industry in British Columbia could not be trusted to manage itself (even with a reduced administrative burden).

There's no Vancouver housing bubble IF we assume that Chinese money will flow into the market UNIMPEDED, FOREVER. However, on the Canadian side of the Pacific all three levels of government are finally starting to pay attention and putting resources into enforcing existing laws as well as considering policies that will discourage real estate speculation. Across the pond, China is also irritated by obvious violations of their strict currency regulations. 

There is not going to be an easy fix. It won't end well. The ripples will be felt throughout the country, including the Canadian stock market. The individual stories collected below are pieces of a very big elephant in the collective Canadian living room.

It is a slow motion train wreck but for now, remain calm, all is well. 

 

2012

Time to Cash Out? Is the Vancouver Real Estate Market heading for another crash? 

2013

Great Canadian real estate crash of 2013

2016

February 22 - Infographic: Vancouver Real Estate Mania

March 10 - ‘We’re not realtors!’ Former ‘wholesaler’ reveals hidden dark side of Vancouver’s red-hot real estate market

May 9 - China is buying Canada: Inside the new real estate frenzy

 June 29 - Mortgage Professionals Canada says there's no evidence of housing bubble

June 29 - B.C. real estate reform: What you need to know

July 5 - Meet the Wall Street Short Seller Betting Against Canadian Real Estate

July 8 - Vancouver Real Estate May Already Be Crashing: Stats

July 15 - CRA leak about crackdown on B.C. real estate tax cheats heats debate

 

Chip Diller says remain calm, all is well.