Foreign investor data revealed

Foreign investor data revealed

Foreign investor data revealed It may be a small-scale study, but the statistics are sobering: One association says a large portion of buyers in Vancouver over the past six months are likely mainland Chinese.

An academic case study, entitled “Ownership patterns of single family home sale on selected west side neighbourhoods in the city of Vancouver,” by city planner Andy Yan, found that 70% of buyers in west-Vancouver neighbourhoods over the past half-year are likely from mainland China.

The study employed name analysis methodology commonly used in public health, political science, and Asian American studies to identify the origin of names. According to that methodology, “non-anglicized Chinese” names suggest newer immigrants or Chinese nationals.

The study found that 70% of homes purchased in the area over the six-month period were done so by people with non-anglicized Chinese names.

Not exactly the most concrete evidence, but the author of the study is confident in the methodology.

“There may be some mis-categorizations as an Anglicized Chinese name could be someone who is a new immigrant and a non-Anglicized Chinese name could be a locally born citizen, but after an external review, we feel this is minimal,” Yan writes in the study.

The most interesting finding for brokers, perhaps, is that most of the properties were purchased with mortgages – defying conventional thinking that these foreign-owned homes are usually purchased outright.

According to the study, only 18% of the 172 home purchases were not mortgaged by banks.

It may not come as a surprise to some brokers, though.

“I had a request from a foreigner who wanted to purchase 20 condos and I was able to find a lender for that buyer,” Walid Hammami, a broker with Dominion Lending Centres, told “I didn’t go through with the transaction … in the end I didn’t want to get involved.”

Click here to access the study.
  • Dustan Woodhouse 2015-11-04 11:25:15 AM
    The study is of such incidental volume (172 transactions in a market with 50,000 this year) focusing on a very small niche of the market (ultra high end homes) that it is the proverbial butterfly flapping its wings with the media creating a storm with erroneous headlines such as '70% of Vancouver homes sold to Mainland Chinese'. A truly ridiculous headline when one reads the details.

    172 homes in one westside neighbourhood
    3M$ and up detached homes only
    buyers with 'non-anglicized' names

    I have three sets of clients currently with non-anglicized names that were all born here 40+ years ago. Yes their ID has a mainland Chinese name, but you would never know this unless you requested their ID. And to these folks this study, the hype around it, and the twisting of the content into hyperbolic headlines has the feel of a witch hunt.

    Supply & Demand people, it really is that simple.
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  • Walid Hammami 2015-11-04 1:24:13 PM
    Dustan, We don't know the real answer at the end. But the worries are definitely legit.

    We could end up like some countries in Europe where you pass down your mortgage for 2 to 3 generations.

    The inflation is not even between revenue and goods prices, it is further accentuated in home prices where the affordability is no longer there.

    One of the consequences is that if people think the mortgage criteria are not fair they will not be deterred. After all "an unjust law is no law at all".

    I am not saying I grasp everything regarding this situation, but we need to look deeper than skin level.

    BTW great book :)
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  • Sean Jang 2015-11-04 1:52:07 PM
    Agreed that the media is responsible for erroneous headlines. Still, the study is useful on many fronts.

    The selected properties represent over $550m in transactions, and over $100m in foreign investment injected into Vancouver's economy in a 6-month span. The data accounts for all detached home sales over this period across the whole of Westside Vancouver. Also, $3M represents the average sale price for this data set (not the minimum). Real estate activity in this area impacts affordability throughout the city.

    The researcher notes that although the Name Analysis Method is imperfect, it is widely used in academic research, and was suitable given the data that is publicly available. It begs the question why better data is so hard to come by?
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