Vancouver's housing bubble was driven by billions in laundered criminal proceeds

Originally published at: https://boingboing.net/2019/05/13/5b-per-year.html

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Of course! You always get bubbles when you do the laundry.

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It’s little folk that get to pay the bill for this, never ending cycle of avarice greed by swine that likely never set foot in that city.

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I’m trying to imagine some sort of regulatory device to discourage this sort of thing. And by “this sort of thing” I mean: obscenely wealthy people buying luxury homes/apartments/etc. that they will never set foot in.

Maybe a 1000% tax on second homes that kicks in if you don’t actually live there 180 days a year?

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So - will this all crash when the stock market does shortly? No new money to roll in and many needing to cash out as the economy tanks?

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BC has instituted a public register of beneficial owners of houses. It has done a lot to deflate the bubble.

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We have one of those in BC. Numbers may be different than you propose. But it just went into effect so who knows how it will turn out. It may just be seen as a service fee on the laundering.

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It’s not really about the health of the stock market, it’s the about the health of the black market.

It’s criminals parking their money, so they’ll only stop doing that when people stop buying drugs, or international governments stop having corrupt officials hiding bribes, or it’s regulated and prosecuted enough to push the money parking into another kind of transaction.

If the economy tanks, there could be less, or could be more, high-volume criminals and white collar corruption.

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This is nonsense. And easily fixed. I’d propose the following laws, immediately.

  1. No house buying in cash; none. It’s just a tax dodge.
  2. No house buying unless you have a f**ing passport – citizens get homes,. visitors rent.
  3. Any home empty for more than 182.5 Days a year gets a 5,000 % increase in property tax, as a penalty.
  4. Selling a property above $100,000 more than once a year results in an audit of all current and past buyers.

And if you currently have a house and don’t live in Canada and all you’re doing is driving rents up with an Empty house – Well, we should nationalize that shit. So hard. Because fuck rich people, and I’m tired of knowing that the rules are just for poors and dopes like me.

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I wonder if it is the case that these are being done in Canada because the US tightened up its monetary system and made these sorts of shenanigans more difficult? If Canada fixes it where do they go next? Mexico? Korea? Dubai?

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End private ownership of land! (just joking, not joking, just joking)

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Roger That!

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This is the thing to me. I don’t want to see empty home taxes because that just becomes a new revenue stream for municipalities and we end up with them wanting more empty houses to balance their budget. I want to see rules that residential areas are for living in, and if no one is living there then eventually the city just takes it.

That includes places that are up for rent but that can’t find tenants. Lower the damn rent and eventually you’ll find one. I know someone who commutes to work in Toronto for more than an hour. It’s not like there aren’t enough people who would take the space.

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There is anecdotal evidence that the speculation tax is B.C. is doing that. We will see if it translates into widespread rents going down. I suppose I should find a link to the speculation tax since that is the second time I have referred to it here.
Edit:

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I’m not seeing the problem with taxing empty homes, just because the municipality profits from it doesn’t mean that they will encourage it (for example the municipality profits from parking tickets too, and I don’t see them doing much to take full advantage of that revenue stream). And the current reality is that there are too many vacant properties in Toronto. There are at least four, possibly five, on my downtown block alone – and only one of those is under renovation (for the past two years!!).

Likewise I don’t see how the city can justify simply seizing property so long as the taxes on it are paid and the area is maintained. Hell, we can’t even impose an income tax on people, so I hardly see seizing their property as being a possible thing…

Also, if property owners had to pay for vacant properties it might help bring down rents.

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Parking tickets are exactly the example I’d use of how revenue streams corrupt the intent of policy. Cities do see parking and traffic tickets as revenue streams. One time when the police were annoyed with the city in my area they “retaliated” by handing out less tickets. Based on the articles written at the time, the city basically couldn’t function if people started obeying traffic laws. Just like the province would be in hot water if people stopped smoking or gambling.

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Meanwhile, in Toronto… we have the second highest real estate prices in the country, and there is every reason to believe that this is at least partially due to money laundering.

Because of the concerns about dirty money inflating the market, the province had just started keeping track of foreign buyers (who might be laundering money). Now our new (nightmare from hell) provincial premier Doug (brother of the crack mayor Ford) is handing the city over to developers. And, surprise, those records of foreign buyers have mysteriously vanished!

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The recently introduced “speculator’s tax” was far milder: An annual tax of 0.5% of the assessed value but only if you don’t live there as your primary residence AND you don’t rent it (even to a family member) for 3 or more months a year.

…and people went ballistic!

Of course, these people are (by definition) those who own at least two homes, one of which they mostly leave empty. Since they’re unsympathetic to the fact that they’re fuelling a market that makes it extremely difficult for many to afford rent, let alone home ownership, fuck them.

I’m happy that the current NDP government has stood firm against this backlash.

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In the defense of these people - the first version of the tax would have applied to holiday cottages in the gulf islands, for example. Forcing you to spend three months a year at your cottage to avoid a tax (that’s staged to reach 4% of assessed value anually) is a pretty bad design.
That’s mostly fixed, but still screws anyone who commutes heavily for business - I know a number of folks who keep condos in Vancouver for 2 nights a week occupancy over several months of the year. It’s easy to come up short of 3 months of occupancy. Maybe it’s “bad” to be in the position for this to be the sensible way to handle Vancouver accommodation, but that’s not at all what the law was supposed to target.