Canada needs more housing supply. Blaming foreigners' mortgage applications, sketchy or otherwise, is just cope.
If you disallow foreigners to buy up whatever little housing there is on the market you solve part of the issue though.
"Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
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Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#372Earlier quoted context omitted.
Most Chinese don't invest in their stock market. The accredited investor qualification is much harder to get than in the US. Most investment is in real estate, which has remained fairly stable in Tier 1 cities (which is where most of the post-2008 Chinese Canadians are from) To get more than the $50k limit out, people would use a hawala type system where you'd use assets in China as collateral and get guaranteed cash…
> Most Chinese don't invest in their stock market Most Chinese aren’t buying British Columbian property. > accredited investor qualification is much harder to get than in the US On a relative basis, right? In absolute terms, it’s still very low. Similar to the practical requirements for opening an American brokerage account. > Most investment is in real estate, which has remained fairly stable in Tier 1 cities Do you…
> Most Chinese aren’t buying British Columbian property.
Yep. They don't buy Chinese stocks either. They would invest in property within China.
The kind of Chinese moving to Canada (and Australia) after 2008 aren't "most Chinese".
They tend to be from much more affluent and connected backgrounds. Think businesspeople, large property owners, or middle level party members.
Upwardly mobile Chinese (eg. Those in the tech industry or finance) will target the US or Singapore if they emigrate because they can keep their careers - something which Canada absolutely sucks at (eg. Most foreign degrees aren't recognized, white collar salaries have largely stagnated since the 2000s, blue collar work like oil drilling pays much more)
Blue collar/middle class Chinese tend to target Malaysia, Thailand, or Singapore because it's easy for Chinese to emigrate and average salaries are higher and they can blend in as the Chinese diaspora is massive in all those countries
> On a relative basis, right? In absolute terms, it’s still very low. Similar to the practical requirements for opening an American brokerage account
But faith in it is low for most Chinese. The 2015-16 market crash was extremely volatile.
Also, stock investing is a new concept for a lot of Chinese - stock markets started unofficially in the 1987-1991 period, didn't formalize until 1997, and most companies preferred listing in Hong Kong or Singapore until the 2010s.
Also, if you have a finite amount of cash, you would be chasing the highest stable returns, and for most of the post-Mao era, that was in real estate.
> Do you have data for this
I'm using Shanghai as my example, but it's the same story for Shenzhen, Beijing, and Guangzhou - the Tier 1 cities.
The real estate bust happened in cities outside of those, but specifically, in property located outside the "Inner Ring"
Chinese cities are planned with 3 rings - an Inner Ring with all the businesses, government offices, and residential property of people working for both, a middle ring that would often be industrial but increasingly converted into residential, and an outer ring that was farmland until 10-15 years ago when it was converted to residential.
It's that expansion of outer ring construction in all cities across China that caused the property bust.
Inner Ring residential property is basically VIP. Those are the kinds of people buying property in Canada.
From 1995-2021 [0] From 2022 [1]
[0] - https://www.statista.com/statistics/1325915/china-average-pr...
[1] - https://www.statista.com/statistics/243404/sale-price-of-res...
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#373Earlier quoted context omitted.
> I think the Canadian mortgages linked to Chinese accounts will likely all be paid. This is a "heads, I win", "tails, you lose" type of scam. The mortgage holders are all judgement proof. They have no income or assets to go after. So if the housing market crashes, the banks have no recourse. It's the same as taking out a mortgage and instead of buying a house, you go to the casino and bet double or nothing. Sure, th…
Mortgages in Canada are different than mortgages in the US in that they are full recourse. If the sale price during foreclosure doesn’t cover the costs, the banks can go after you personally for the balance. So you’d have to either a) leave the country, or b) declare bankruptcy. So, not exactly a risk-free option.
It is a risk free option. The Chinese income isn't real. You can't meaningfully garnish the wages of a part time casino dealer. They have no other assets to cover the potential shortfall.
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#374Canada has bee fuelled by money laundering and asset hiding for decades.
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#375The issue is not new. I am of East Asian heritage and live in Canada. Several people asked me causally why I went to school and had a regular job. They explained that with the "Chinese money" I should not compete for jobs with folks who really needed the money. Smh...
I get that they shouldn't be stereotyping, but I frequently travel to Markham, and see lots of young Chinese kids with expensive cars. I think the last time I was there, I counted 40 Teslas.
A Tesla is not an expensive car anymore, it's the new Toyota Camry.
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#376Could someone explain why Canada with their 40M population (almost 10x smaller than US) is running into highly overpriced homes?
Canada is one of the largest countries on the planet.
Why can’t Canada build more homes?
Also why can’t we ban foreigners from owning homes?
Same issue applies to US as well.
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#377Canada needs more housing supply. Blaming foreigners' mortgage applications, sketchy or otherwise, is just cope.
If you disallow foreigners to buy up whatever little housing there is on the market you solve part of the issue though.
Foreigners that don't live their will probably rent it out, no? If so, they are not contributing to housing scarcity.
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#378> The whistleblower, whom The Bureau is calling D.M., immigrated to Canada as an international student from India, making him a minority among mostly Chinese-Canadian co-workers at the Aurora branch. > “I am going to reveal potential mortgage fraud at HSBC Bank Canada and possibly some employees benefited from the fraud, financially pocketing thousands of dollars, which I call the proceeds of crime.” > FINTRAC’s stud…
HSBC is rotten to the core. Regular judgements against them for facilitating outlawed behavior, zero systemic reform.
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#379Earlier quoted context omitted.
Mortgages in Canada are different than mortgages in the US in that they are full recourse. If the sale price during foreclosure doesn’t cover the costs, the banks can go after you personally for the balance. So you’d have to either a) leave the country, or b) declare bankruptcy. So, not exactly a risk-free option.
It is a risk free option. The Chinese income isn't real. You can't meaningfully garnish the wages of a part time casino dealer. They have no other assets to cover the potential shortfall.
You assume these are poor people, other assume they're quite wealthy and laundering untaxed income into assets in .ca. If the latter, they may even have a proportionate pile of assets to seize locally. I betcha you could restate your point to come across a little less jingoistic.
Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
#380Earlier quoted context omitted.
If you have information that contradicts what multiple banks have told me I would love to know it, since it would be very nice to have that information available to my Canadian bankers. In the 3 banks I've worked with in Canada, all were completely unable to access my American credit history. The governments do share tax data, but AFAIK the banks have no way to link "John Smith SSN:123-45-6789" to "John Smith SIN:098…
Yes this is accurate. I work at a lender that operated in both Canada and the US and the credit bureau integrations were with totally different companies and had different APIs (even for Equifax on both sides of the border)
It's been a while but I don't even think that a credit score in Canada is comparable to a credit score in the US. Sure, an Equifax terminal in either country spits out a number in the same range but the formula and calculation are probably different, with different legal frameworks regarding the information contained therein.