I lived in Vancouver from 2009-2018 and saw the insane price appreciation from money laundering.
The main question people asked about the appreciation was: "is appreciation really being driven up by foreign buyers".
Many came to the answer "no", because foreign home ownership was "only" in the 5-10% range depending on the neighbourhood.
This article lays out the case why foreign ownership % isn't the right thing to be looking at:
1. The goal of a money launderer is to launder as much as possible
2. The goal of a home seller is to sell for as much as possible
3. If the asset being purchased is a home, incentives between buyer and seller are aligned and prices are higher than the non-laundering market would support (esp if there's another launderer who's interested).
4. Since the market for home prices is based on comps, a few launderers can raise market prices substantially
5. Lather, rinse, repeat
The foreigner question was the wrong one to ask, though certainly a large part of the market was driven by foreign investment. The right question to ask -- and the problem to guard against -- was: "what's the impact of laundered money on the market".
BC added the foreign buyer's tax of 15% in 2016[1]. But beneficial ownership laws come into effect on November 30 of this year[2]. The former created a slight disincentive for foreigners laundering $$ to buy. But turns out what was really needed to slow the tide of illegal money flowing into housing was more transparency and disclosure rules.
[1] - https://financialpost.com/personal-finance/mortgages-real-es...
[2] - https://www.mondaq.com/canada/real-estate/988830/bc-real-est...
The main question people asked about the appreciation was: "is appreciation really being driven up by foreign buyers".
Many came to the answer "no", because foreign home ownership was "only" in the 5-10% range depending on the neighbourhood.
This article lays out the case why foreign ownership % isn't the right thing to be looking at:
1. The goal of a money launderer is to launder as much as possible
2. The goal of a home seller is to sell for as much as possible
3. If the asset being purchased is a home, incentives between buyer and seller are aligned and prices are higher than the non-laundering market would support (esp if there's another launderer who's interested).
4. Since the market for home prices is based on comps, a few launderers can raise market prices substantially
5. Lather, rinse, repeat
The foreigner question was the wrong one to ask, though certainly a large part of the market was driven by foreign investment. The right question to ask -- and the problem to guard against -- was: "what's the impact of laundered money on the market".
BC added the foreign buyer's tax of 15% in 2016[1]. But beneficial ownership laws come into effect on November 30 of this year[2]. The former created a slight disincentive for foreigners laundering $$ to buy. But turns out what was really needed to slow the tide of illegal money flowing into housing was more transparency and disclosure rules.
[1] - https://financialpost.com/personal-finance/mortgages-real-es...
[2] - https://www.mondaq.com/canada/real-estate/988830/bc-real-est...