2017-vancouver-market-outlook-image

It’s been obvious that the constant increase in Vancouver real estate pricing did not appear to be a locally driven construct.  Global Televison  and Sam Cooper’s team have referenced a confidential report from Police that studied 1,200 luxury residence purchases in Metro Vancouver in 2016. The study  found that while only ten per cent of the purchasers had criminal records, 95 per cent of those transactions were “believed by police intelligence to be linked to Chinese crime networks.” This means that  home purchases could have laundered one billion dollars of black/gray cash in 2016.

The house purchases examined were in the 3 million to 35 million dollar range. The study did not include housing between 1 and 3 million dollars or condo flipping due to a lack of resources to scrutinize over 20,000 transactions. Researchers felt that significant suspicious activity would be found in these purchases as well.

Evidence is appearing that the funding for these real estate  purchases is from the street proceeds of selling fentanyl, and laundering that cash. One unidentified expert stated “You know that Netflix show Ozark, about laundering drug cartel money? I always think that if those characters came up to Vancouver, they could launder all their cash in just one day.”

There are suggestions of a  “fluid coalition of hundreds of wealthy criminals in Metro Vancouver, including gangsters, industrialists, financial fugitives and corrupt officials from China.” They are all linked together in an illicit banking scheme  which transfers funding between China and Richmond B.C. to fund fentanyl importation and distribution.

But here’s the disturbing part~while B.C. Lottery casinos does launder some illegal money,  this study suggests  “it is miniscule compared to the sums flowing through real estate.”

Simon Fraser University’s Duke of Data Andy Yan views this new data as providing an explanation for the tremendous price increases in the real estate market that are totally out of keeping with local salaries. Calling it “financial fentanyl for our real estate” Andy observes “You have found $1 billion. But it is probably magnified in the banking system, with all of the black money, gray money, and legitimate money cascading through local institutions, to make a toxic sausage. So this is a national security issue. And also a national financial issue.”

You can take a look at Sam Cooper’s in-depth research on a few key  housing transactions  and who owns these houses here. There’s also a discussion on how lucrative fentanyl is and the value of fentanyl in transforming heroin into a counterfeit product, making millions of dollars. It is those millions that appear to have transformed the Vancouver housing market.

 

Image:Rew.ca

Comments

  1. The study found that while only ten per cent of the purchasers had criminal records, 95 per cent were “believed by police intelligence to be linked to Chinese crime networks.”

    I think it’s important to emphasize because I finding the way it’s phrased here unclear that that’s 95% of the 10% purchased by those with criminal records.

    Or 95% of the 120 luxury homes purchased by people with criminal records.

    As others have pointed out this may have distorted the upper end of the market, but how does this explain the rise in the non-luxury sectors.

    1. That’s pretty simple: the knock-on effect. Where do you think those doctors and lawyers who used to be able to afford Dunbar went?

      And keep in mind that 120 homes is the number that was easily traceable, and it is just for one year.

  2. I’m curious that the focus is mainly on single family dwellings when there is so much multi apt / development activity. For instance: for the last two or more years, across my west end lane, I’ve witnessed a perfectly good low rise apartment, 50 plus suites, building sit virtually empty, while the new owner / developer goes through the planning process. This in the midst of a housing crisis like never before. Not to mention that they’re foregoing a big chunk of $542,000 per annum in lost revenues (realtor’s figure). Something is very fishy here indeed. And, yes, the off-shore based developer has a spotty record.

  3. This article is fuelled by more speculation than you’ll find in the local property market. There’s a cavalier employment of suggestive modals and Jacobin matter-of-factness that a lack of proof is proof itself. Nobody’s denying that there isn’t some dirty money in real estate. There always has been. And I doubt the proportional scale of dirty money is any greater than during past booms. But is this the basis of a reasoned argument for wanting to ban all capital from China? Or just moral panic? It’s often hard to tell.

  4. All this data and no proof. Only conjecture that foreign money, corrupt and non-corrupt, drove prices up very high.

    Will someone please conduct some genuine comparative economic research to try to determine what the level of foreign influence really is compared to one of the influence of the longest period of ultra-low interest rates, a half-century of exclusionary zoning that effectively created a land supply shortage during a period of high demographic growth, ordinary local demand, desirable locations over less-desireable locations, a true division of the market by housing type and so on?

    Is it 5% or 55%?

    Further, with all properties in BC worth $1.3 trillion, and with the Metro ringing in at about $900 billion, a billion isn’t a lot of value, comparatively speaking.

  5. And once again, Dan and Alex step in to try and minimize the problem. Why so bound and determined to try and pretend this was not a huge factor in the real estate price run-up? Did you both get a 100% raise during those years? You certainly seem to think most Vancouverites did, and that allowed them to afford such ridiculous prices. And before you trot out low interest rates, let me remind you: a) everywhere in North America had the same rates and b) one would still have to qualify for a mortgage with proof of income.

    This is a pretty exhaustive piece of research. The fact that our governments can’t provide such details tells you about what they are trying to hide than lack of data.

    1. There’s a difference between “minimizing” problem and calling out conjecture. Earlier this month a man in Mexico was beaten to death by a mob because a WhatsApp rumour started from somewhere that he had kidnapped a kid. It was completely made up. The guy was just passing through town.

      There’s nothing exhaustive about the “research” you reference. It’s a bunch of isolated facts strung together by common fear, anger, and suspicion. There’s truth in it but you don’t know how much. If you think we’re too civilized to take matters into our own hands like they did in Mexico, then you haven’t been paying attention.

  6. No one is trying to minimize anything. Some of us just want more clarity through the clouds of conjecture. There are quite a few folks elevating one factor above all others without a complete comparative analysis of all price influences. As it happens the prices did not decrease in lockstep with sales and remain at a higher plateau despite three years of targeting foreigners and their money, as corruption was documented, and as an obvious price ceiling was reached. Why is that? And the modest decreases just so happened to occur precisely when noise was made about raising interest rates. The timing is very interesting, but it seems lots of people missed it, with the exception of a few economists who don’t myopically confine their efforts to the lone topic of foreign money.

    1. Again Alex, everywhere in North America had ultra low interest rates. Unless you bought into the B.C. Liberals “Best Place on Earth” propaganda, it is ludicrous to think Vancouver with its low average incomes would outpace almost everywhere else in price increases without external influences being a major factor.

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