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Baby, we got a bubble!?

TheKingEast

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It's also just a matter of time until Canada starts cracking down on immigration fraud. It may not happen under this government but eventually the public outcry will reach a fever pitch that politicians will capitalize on.

http://www.huffingtonpost.ca/2016/05/03/canadian-citizenship-fraud-immigration-auditor_n_9828452.html
http://news.nationalpost.com/news/canada/how-a-b-c-man-pulled-off-one-of-the-most-sophisticated-immigration-frauds-in-canadian-history
http://news.nationalpost.com/news/canada/toronto-immigration-consultant-slapped-with-88-charges-for-allegedly-forging-papers-to-get-visas

"Wang collected some $10 million from about 1,200 clients for his “fraudulent services,” a court would find."

One single guy helped 1,200 people get citizenship through fraud. One. guy. This is a big problem.
This is happening everywhere though. Again, I need hard numbers that support yay or nay. I have plenty of anecdotes of my own that would show that there are a lot of Canadians buying homes.
 

Migos

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This is happening everywhere though. Again, I need hard numbers that support yay or nay. I have plenty of anecdotes of my own that would show that there are a lot of Canadians buying homes.
I haven't seen evidence of immigration fraud in other countries like we have seen here. I suggest reading the AG report: http://www.oag-bvg.gc.ca/internet/English/parl_oag_201602_02_e_41246.html#ex2

...we examined 150 of the addresses for the 9,778 applicants. We found that 102 addresses had multiple entries in the system because of variations in how they had been entered.
In 18 of the 49 cases, citizenship officers did not request additional evidence as required to verify whether the applicant met residency requirements.
For example, one address was used by at least 50 different applicants during overlapping time periods between 2008 and 2015. Among these applicants, 7 became Canadian citizens.
We also found that citizenship officers did not check travel documents against the Lost, Stolen and Fraudulent Document database, as instructed by departmental guidance.
In one region, no documents suspected to be fraudulent have been seized for in-depth analysis since at least 2010
We selected 38 cases where these individuals had been charged by the RCMP with a crime, some serious enough to make an individual ineligible for citizenship, such as drug trafficking and assault. We examined whether the RCMP shared this information with citizenship officers in a timely way so they could make informed decisions. We found that the RCMP shared the required information in only 2 of the 38 cases we examined
While reviewing 42 revocation cases, we found that 7 individuals who had been charged with a crime by a police force other than the RCMP had not self-reported the charges, and had obtained citizenship.
We found four cases in which information about criminal charges was available in GCMS, but had not been acted upon by citizenship officers.
We concluded that Immigration, Refugees and Citizenship Canada did not adequately detect and prevent fraud to ensure that only applicants who met selected eligibility requirements were granted Canadian citizenship.
 

Migos

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Also, of course Canadians are buying homes. They will always be the majority buying homes. However, even a relatively low percentage of foreign investment will drive price increases because price is set at the margin.
 

James

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I think it's a combination of several things and foreign investment is one of them. I just don't believe foreigners are buying every lice of real estate. I see plenty of homegrown Canadians buying and taking advantage of equity in their homes and the low interest rates.

Dont think there as much foreign investment in Toronto as there is in Vancouver.
I agree with this. While there is most definitely foreign money invested in Toronto real estate, foreign money isn't engaging in bidding wars on that semi in Leslieville or that detached home in the Beach or that Victorian in High Park. A major part of the market is still largely driven by local demand.
 

James

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You should check out some of the preconstruction events around the city. Not much English being spoken there...

This is an enjoyable read to get an idea of the craziness: http://forums.redflagdeals.com/1-2-week-line-ups-pre-construction-new-norm-1967089/
That thread on Red Flag Deals is quite an eye-opener. I didn't think pre-con sale events in areas like Brampton and Ajax would draw in such massive crowds. The alternative, of course, is to vie for something in the city and have to battle it out on offer date against a dozen other bidders. Pick your poison, I guess.
 

Migos

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http://www.blogto.com/city/2016/05/sales_of_luxury_homes_in_toronto_second_in_the_world/

Toronto's real estate market is second to only one in the world when it comes to luxury homes. According to a new study by Christie's International, the sale of luxury homes in this city (defined as homes that sold for more than $3 million US) was up a whopping 48 per cent in 2015, which trailed only Auckland during that period.

Toronto did, however, take top spot when it comes to the speed of luxury sales, which averaged just 28 days, which is 167 days less than the global average of 195. Um, can you say red hot market?
 
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TrickyRicky

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It's probably been years since I posted in this thread but one point I wanted to emphasize here again when we are speaking about real estate pricing and the facts of who are buying or how property prices are increasing is that the entire market is not set by the average buyer or owner or average resident of the city. Market prices are set by a very small number of individuals buying right at the moment.

That means that foreign buyers can have a huge influence on the market even if they only represent a few percent of buyers. When someone in my neighbourhood sells their house for a million dollars, would I then not expect at least one million dollars for my home if I was selling regardless of the intrinsic or historical value of the property? So once the precedent of one million is set the market will re-set at that value and a whole bunch of "real average people" will fill in the rest of the sales at that benchmark. Then another benchmark sale will occur at a higher price and the process will repeat.

The result in this hypothetical example is that you can see that only a few individuals can set the price expectation for an entire area where thousands of people live. The average or median statistics about the population are a good indicator of the long-term trend or the behaviour of the market over decades but they are not relevant in predicting the short-term behaviour or cyclical condition of the market. A perfect example of this is immigration levels. The number of immigrants moving to the Toronto region is often cited as the reason for market sustainability in the short-term sense. This is completely factually false as immigration levels and population growth have never stopped the market from busting in the past. Immigration or increasing population levels are long-term positive signs for trends measured over decades but they will not stop the market from crashing nor are they a factor in the year-over-year price appreciation during a boom.
 

interested

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It's probably been years since I posted in this thread but one point I wanted to emphasize here again when we are speaking about real estate pricing and the facts of who are buying or how property prices are increasing is that the entire market is not set by the average buyer or owner or average resident of the city. Market prices are set by a very small number of individuals buying right at the moment.

That means that foreign buyers can have a huge influence on the market even if they only represent a few percent of buyers. When someone in my neighbourhood sells their house for a million dollars, would I then not expect at least one million dollars for my home if I was selling regardless of the intrinsic or historical value of the property? So once the precedent of one million is set the market will re-set at that value and a whole bunch of "real average people" will fill in the rest of the sales at that benchmark. Then another benchmark sale will occur at a higher price and the process will repeat.

The result in this hypothetical example is that you can see that only a few individuals can set the price expectation for an entire area where thousands of people live. The average or median statistics about the population are a good indicator of the long-term trend or the behaviour of the market over decades but they are not relevant in predicting the short-term behaviour or cyclical condition of the market. A perfect example of this is immigration levels. The number of immigrants moving to the Toronto region is often cited as the reason for market sustainability in the short-term sense. This is completely factually false as immigration levels and population growth have never stopped the market from busting in the past. Immigration or increasing population levels are long-term positive signs for trends measured over decades but they will not stop the market from crashing nor are they a factor in the year-over-year price appreciation during a boom.
I agree with most of your quote and thesis but for the last point point highlighted and my disagreement would apply to other factors as well besides immigration, but let's use the immigration argument. While some immigrants are higher net worth immigrants and do contribute to the overall demand, it one accepts(and I do your argument) that it is individuals at the margin who are buying, if we postulate that the majority of the purchasers at the margin are immigrants and higher net worth individuals looking to park their money, if a significant amount of that stopped, and the number of people at the margin left are only the locals, and say for instance interest rates rose slightly so $1 million dollar homes were not the purvue of a lot of the residual buyers and therefore no multiple bidding situations or few, prices would drop. So yes while it is a "trending issue" I don't think it is factually false to postulate that the market could not bust from immigration levels dropping or population growth slowing down.
 

Migos

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Canada, the world leader in money laundering for corrupt foreign officials and other scumbags that we welcome with open arms!

Dozens of real estate firms not compliant with anti-money laundering rules
http://www.theglobeandmail.com/news/national/a-quarter-of-real-estate-firms-not-compliant-with-anti-money-laundering-rules/article30123991/

At least 85 real estate companies have not implemented a plan showing how they are trying to detect money laundering and other suspicious transactions, nearly 15 years after they were required to do so, according to data obtained by The Canadian Press.

The federal anti-money laundering agency received 337 compliance reports from roughly 1,000 companies in the real estate sector it surveyed — including brokers, sales representatives and developers — between Jan. 1, 2013, and Feb. 8, 2016.
An analysis of the data contained in those reports found that roughly a quarter of the 337 respondents admitted they had not yet fully implemented a compliance regime, which has been required by federal anti-money laundering laws since 2001.

Thirty-eight of the companies said they had only partially implemented a compliance regime, while the other 47 said they had not even begun to do so. The names of the companies were not included in the documents.
 

mig174

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What incentives do real estate firms have to detect money laundering activities? If anything, it's a punishment, as they are would miss out on money their less scrupulous competitors stand to make.

RE agents are some of the most unscrupulous, corrupt, and greedy individuals. They have failed to self-regulate and cannot be allowed to do so.
 

Migos

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What incentives do real estate firms have to detect money laundering activities? If anything, it's a punishment, as they are would miss out on money their less scrupulous competitors stand to make.

RE agents are some of the most unscrupulous, corrupt, and greedy individuals. They have failed to self-regulate and cannot be allowed to do so.
Precisely. There are real estate agents that specialize in money laundering. There are mortgage brokers that specialize in creating fraudulent documents for mortgage applications. There are few checks and balances. It's the wild west.

Is it a surprise that people are willfully ignorant? 70% of Canadians own their homes. Many people have become very rich over the past decade because of this. How many people do you know that make $50k/year but made hundreds of thousands in profit on their homes? It's the only thing keeping Canada's hollowed-out economy going.
 

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