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Comment by yummyfajitas | Hacker News Reader

The global elite are not the cause of high housing costs. Housing prices have risen globally - NYC, Mumbai, Vancouver, London, etc. There just aren't enough wealthy people to take much housing out of circulation.

http://marketurbanism.com/2016/06/27/do-the-rich-cause-high-...

I did some calculations a few months ago; if every wealthy person in NYC bought 10 homes, that would have the same (negligible) impact on the housing supply as building another NYU.

https://news.ycombinator.com/item?id=12022235#12022920

This is not an effective use of public policy. It's just an attempt to find a scapegoat while ignoring the real problems - exclusionary zoning, low density and bad local regulations.

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Vancouver has an annual average income of around $70,000. At current benchmark prices of ~$1mm, we're paying 14x our average salaries for homes. That's roughly as unaffordable as Hong Kong — the world's most unaffordable housing market.

Whether or not zoning and high density would bring housing prices down (it almost certainly would), you gotta ask: if Vancouverites can't afford these places right now, who can? People who have a lot of money.

http://business.financialpost.com/personal-finance/mortgages...

A government passes a law limiting the number of cars that can be sold. Manufacturers switch to exclusively luxury cars as they have much higher margins. Rich people buy them because they can afford them and need them. Everyone gets mad at the manufacturers and the rich people instead of the idiotic legislation. If we killed zoning laws, allowed modular housing and dorm housing, rents would drop very quickly.

Yeah, it's hard to get this across to people who live in a city where it feels like supply is increasing fast (because it's in huge, highly visible towers), but as a percentage of the total stock, is growing quite slowly.

I lived in Vancouver for a while, and though people were totally on board with the idea that increases in demand for housing would push up prices, they were highly skeptical of the idea that increased supply could decrease prices.

> If we killed zoning laws, allowed modular housing and dorm housing rents would drop very quickly.

Except you just screwed existing home owners, which is why this will probably never fly.

I agree. This is a sustainable equilibrium. But blame the equilibrium or the homeowners for supporting terrible laws, don't start burning witches.

What was the latest data on citizenship of home purchases in Vancouver? 10% foreign, 90% Canadian. And almost 30% of those Canadian purchasers were speculators.

Are the Chinese causing home prices to go up in Vancouver? Probably a little. The much bigger problem are the Canadians over extending themselves by speculating on home values.

Perhaps you don't about the situation in Vancouver BC, but it is a very common place for wealthy Chinese nationals invest in a "safer" place outside their country. This is well known to the locals and those in the region.

I've heard this about many cities, including Boston, London, and New York.

Do you have evidence that it is true in large numbers?

If you're trying to stash illegitimate money overseas, would you do it in your own name, or use a trustworthy local stand-in when available?

Secondly, even if the money is legitimate, Canada does not tax capital gains on residences that are your primary residence.

So if one wants to buy 5 homes, one could buy 1 yourself, and find stand-ins for the other 4. Or if one doesn't plan on living in any, 5 stand-ins.

I've got a home in Boston. Zillow tells me it's appreciated 45% in several years. Since I (1) got a very low interest rate and (2) got a house in a hard to come by area and (3) would have to pay realtor fees to sell, why wouldn't I just rent it out when I decide to move somewhere else?

If other people keep doing that in their lifecycle (move further out when deciding to have kids), you end up with many homes as investments where the home owners have no intention to combat high housing prices, as that only leads to higher rents and more profits.

If you rent it out, the home isn't empty.

People make similar claims about NYC, Mumbai, etc. The numbers just don't add up. There aren't that many rich Chinese people.

In any case, suppose you are right. Why not keep building homes and selling them to those dirty chinamen? They want to throw money at Canada, why not take as much of it as possible?

Oh right, exclusionary zoning. Which I'm sure is also somehow the fault of evil foreign scapegoats rather than nice white middle class Canadians.

Maybe you guys should build a wall, and make the Chinese pay for it. Make Canada Great Again!

> There aren't that many rich Chinese people.

China has 1M+ millionaires. Assume 10% have enough disposable cash and motivation to go shopping for foreign real estate. It doesn't take much effort to look across the Pacific and home in on the politically easiest place to escape to. If 10% of those people choose Vancouver that's 10K units locked away from local residents.

So how come housing prices have been skyrocketing in most global cities as well? You seem to want to blame Vancouver's problem on foreign scapegoats, but Vancouver's problem is hardly unique.

If all these evil Chinese folks are going primarily to Vancouver, what's the cause of SF, NYC, Boston, Mumbai, Delhi, Bangalore and London's high housing prices?

And why is Houston somehow immune to this global phenomenon?

The total housing inventory available in all these cities is just not high enough to satisfy the demand of investors. It seems there are certain cities that attract attention while others do not. Seems to be about where the marketing effort is and what the screening criteria is on the buyer side.

This is nothing to do with evil. It's just business/common sense. If I had a lot of money and I was living in China where there's a large risk and I was looking to make a similar investment I'd probably go the same route. A lot of wealth was created in a short time and those wealthy people like any normal person are concerned about preservation of that capital and some sort of safety net.

The total housing inventory available in all these cities is just not high enough to satisfy the demand of investors.

But why is the inventory not high enough? Certainly we could easily build more.

Oh yeah, exclusionary zoning in NYC and SF. FAR limits of 1.33 in Mumbai. Mumbai and Delhi have half the density of Brooklyn, Vancouver about a third - there's plenty of room for more inventory. Even in Manhattan we could fit a lot more inventory in.

We don't do this because the middle class don't want it.

Yeah, it's like regulatory capture. The owners in the cities want to keep what they have, and vote for it. I'm sure some of it has to to with propping up house prices, but I don't think all of it does either! It's an interesting problem when it comes into conflict with a city's growth.

It's mostly single family homes that investors are after in Vancouver and that have appreciated the most in value. Vancouver is landlocked between mountains, sea, and river. You can't build many more single family homes in Vancouver. I imagine with most other cities building more would be either more sprawl or more density both of which can create problems.

Canada isn't densely populated so why should the Vancouver people need to squeeze into apartments while houses are sitting empty? So you're right. The middle class doesn't want it.

It's true that not everyone can have the "American Dream" house/garage/car any more but at the same time having a bunch of expensive houses sit empty is worse than them having someone live in them.

I think part of the solution might be building new cities, something that doesn't seem to be happening.

Boston does not have enough affordable housing. There is a ton of building in the city, but most of is it high end housing and very expensive towers/hotels. Good luck finding a freestanding house for under $800K.

When the market prices are high, and land is expensive, and you have the slow zoning/permitting process of Boston, developers are going to only build luxury housing, until the city changes the permitting/zoning process and requires them to build more affordable housing units.

See this detailed article [1]

[1] http://www.bostonmagazine.com/property/article/2016/02/21/bo...

Chinese buyers are not restricting themselves to Vancouver....

There are also a good number of wealthy Russians and Middle Easterners paying cash in the cities listed. If you've followed NY or London real estate news for the past decade, you would know that what's happening in Vancouver has been happening in other cities as well.

> "And why is Houston somehow immune to this global phenomenon?"

"We don't like yer kind 'round here."

There are lot of rich Chinese people. A friend of mine in a Vancouver suburb sold their place three months ago to a buyer from China who paid cash and who left the house empty. That's a fact. Another story I heard which may or may not be fact :) but I tend to trust is that someone came in to a local insurance office to insure 30 houses they owned. Houses in the Vancouver suburb I live in went from about 700K to 1.4M in two years in direct correlation with the arrival of foreign buyers. Some of those actually do live in those houses but a lot of houses are left empty.

China owns $1.25 trillion of US debt. I think this gives a window into the amount of money sitting there. That's a million $1M houses. Vancouver has 47K houses...

Vancouver has a lot of for sale signs in front of houses that are entirely in Chinese.

60% Chinese rich people plan to buy house overseas, US most preferred - "About 1.34 million Chinese people who own at least 1.5 million USD took the survey from August to October, 2016." - http://usa.chinadaily.com.cn/china/2016-11/09/content_273251...

Which is why in Boston (5th most expensive US housing market), I get 50% discount on my property taxes, because I actually live in my house. If the house was an investment property, I'd pay 2x as much in taxes.

[1] Boston Residential Exemption https://www.boston.gov/departments/assessing/how-file-reside...

It does not have to be wealthy people, just people who make substantially more then the locals. Housing prices have risen in my city(2nd tier city) in India. Most are brought by NRI's/outsiders, many vacant. There are numerous flats coming up. For locals it very difficult to acquire one, hence they are buying out in smaller cities, and prices have risen in smaller cities as well.

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