The last few months of 2016 were slow for Vancouver real estate, but it looks like the market is making a triumphant return, and bringing with it a proportional number of foreign buyers. The BC Ministry of Finance transfer tax data shows solid growth from foreign buyers. Despite this growth, domestic transactions increased by so much it still remained a fairly small segment of buyers.
Number of Transactions With Foreign Buyers Up 68%
The number of real estate transactions involving foreign nationals was up in May. The month saw 436 transactions, a 68% increase from the month prior. While that does seem like large growth, the general market saw a massive 14,824 sales. This leaves the total number of foreign buyers still relatively low, at 2.82% of the total market.
Average Price Fell, Median Price Rose
Foreign buyers went after less expensive homes, but the floor of which they bought came up. The average purchase prices of a home fell to $855,646, a 22% decline from the month prior. The median value rose to $575,000, a 20.7% increase from the month before. Kind of confusing, but the read here is that the gap between the highest and lowest price of homes being bought are coming closer for foreign buyers.
Greatest Growth Was In The $1-3 Million Price Range
Breaking down Vancouver’s foreign buyers by pricing bands gives us a little more insight into the market. There were 348 transactions under a million dollars, a 69% increase from the month prior. 75 sales were between $1 and $3 million, a 78% growth from the month before. 13 sales were over $3 million, an 8.3% increase from the month before. The largest growth was in mid-priced (for Vancouver) purchases, but all ranges grew fairly consistently.
Sure, the number of foreign real estate buyers in Vancouver increased, but still remained a small segment in contrast to the total market. Not sure what’s worse: the fact that foreign buying doubled in one month, or the fact that domestic buying increased by so much in a month that it made the massive foreign buying increase almost not noticeable. Wonder how many of these domestic buyers were from the BC government’s subprime lending scheme?
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No Control on incoming black money . We just pay tax and rent from foreign . They are really buying Canada- -Just say we have stupid government
Consider the following.
China wants to keep the renminbi in China.
China wants to invest in foreign endeavors, to maximize their economy with outside money.
The renminbi is not convertible, so it really doesn’t make sense for a Chinese investor to make money outside of China in renminbi. Greenbacks are particularly worthless in China in normal commerce.
And it makes less sense for anyone outside of China to own renminbi. They really can’t spend t anywhere but in China.
I really don’t think there is a single Chinese buyer of Canadian real estate that has purchased the property in renminbi.
The ONLY place, essentially, where you can exchange renminbi for any other currency is through the Bank of China. Eventually, all renminbi that leave the country eventually find their way back to China. The only question is, what happens to the level of official foreign holdings of the Bank of China at any one particular time?
An investor, state or otherwise, in the markets outside of China wants to ‘launder’ renminbi into other currencies, then bring the renminbi back to China while their investment grows in value in foreign currency. So, for instance, buy a hotel, (down payment by converting renminbi to dollars), convert the hotel to condos, pay the rest of the purchase cost of the hotel back in these local dollars, and build up a pile of foreign dollars on just a small temporary investment of renminbi, briefly converted to foreign dollars.
Once the property is purchased, any future increase in value is not in renminbi, but in foreign dollars. Even if it is sold at a loss, it is sold for foreign dollars, not renminbi. It is really difficult to change these dollars back to renminbi.
So, Chinese investors make a great deal of money on foreign dollars, and the renminbi stays in China.
If you REALLY want to see the real estate market go balistically foreign in Vancouver, legislate that all strata units may be rented out, bypassing most strata clauses that prevent the rental of the units. No such limitations in Toronto. so it is easy for a Chinese investor to launder renminbi into a steady income stream of foreign dollars.
In fact, I have argued that the Chinese own so many greenbacks, that soon the greenback will be China’s foreign currency, and the renminbi will be their internal currency. (Cuba had a dual currency at one time – one for inside the country and one for external trade. Unfortunately for them, the ‘external; currency became used as tender inside the country. China has not made this mistake – the greenback is virtually unseen within China). There are more greenbacks outside of the US than inside. The greenback is NOT backed by anything American – not gold, not silver, not government holdings of any sort. So if more non-Americans hold greenbacks than Americans, on what basis can you call the greenback American currency? It becomes the currency of whatever nation holds the most of them.
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