Here’s a tale of two countries (and at least as many cities) and the scam real estate deals that tenuously bind them together. Welcome to the United States and Canada and more specifically, New York City and Vancouver. Without a doubt there are other cities playing the real estate shell game. Miami comes to mind.
But here’s the deal: in Vancouver, NYC and Miami foreign buyers have made serious money hiding behind fake names and shell companies to purchase real estate in cash. We’re talking homes you couldn’t even dream of dreaming about!
Buy, flip, repeat
Buy the property, flip it for profit and launder the money back to China or wherever. All done anonymously and going on longer than most people realize until finally the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) will start identifying and tracking secret buyers of properties who pay $3 million in cash or more in NYC or $1 million or more in Miami. Not only that, title insurance companies will be required to notify the identities of the buyers, which investigators will compile in a database. The requirement is temporary, from March-August 2016, but if it gets results, the program could be extended nationwide. The rule change will affect billions of dollars in real estate transactions.
The rule change will affect billions of dollars in real estate transactions.
Segue to Vancouver, BC
It was a dark and stormy night. Okay maybe not, but the Vancouver real estate market is HOT. Thing is, it’s not the Canadians who are snatching up all the property.
The Vancouver Sun recently reported that sellers are celebrating a banner year for Vancouver’s real-estate market. Case in point: The benchmark price for residential property in Metro Vancouver was $752,500 in November, up nearly 18 percent from 2014 (according to the Real Estate Board of Greater Vancouver). But it doesn’t stop there. Zerohedge.com points out that in Vancouver, residential property sales in rose 31.7% in January. That’s 46% above the 10-year sales average for the first month of the year and the second highest January ever.
High demand and low supply will keep prices climbing for some time, but critics say the high prices could create problems for the region’s economy and environment.
Lack of cooperation and communication
So you get the point. The average person in Vancouver is not throwing down change for a house. Foreign investors ARE and buying property hand over fist. The lion’s share of these deals isn’t legal either. Kind of sounds like Miami or New York City. Now you would think that the US and Canada would notice similarities here. Maybe a trend of sorts and entertain the idea of working together.
They are not.
Similar to the Big Apple or Miami or who-knows-really-where-else-this-is-happening, the Vancouver real estate market, at least a good part of it has all the elements of a television thriller: shady deals, money laundering, and an occasional body that turns up in the trunk of a car. It would all make for great entertainment if not for the fact that all the above are really happening. Read more and prepare to be shocked when you dig into an investigative expose by Sandy Grossman on Storify.
It just unveils a huge, intricate network.
It also begets the question of what money fuels the Vancouver real estate industry? And in what light does it show how well the real estate profession is policed in this city?
It’s obvious that on some level Canada is dragging its feet in establishing specific methods of resolving these money-laundering real estate scams. Maybe because there’s money to made? Canada needs to take action and America for her part needs to make the temporary status permanent.
Sandy Garossino breaks it down: