Hi, I'm Globe and Mail reporter Kathy Tomlinson. I will answer your questions about factors that fuel speculation in Canadian residential real estate and the holes in the system facilitating it. I'll be here from 2 p.m. PT/5 p.m. ET to 3 p.m. PT/6 p.m. ET.


Comments: 158 • Responses: 43  • Date: 

Firsmith31 karma

Do you feel a large portion of the attention this is getting as of late within the provincial governement is solely due to the election cycle. If so, should be worried of lack of attention, or worse a roll back on initiatives, once the election is done?

The fact it took this long for anyone to even call a spade a spade let alone take action is concerning.

ktomlinson27 karma

I do believe politics are playing a big role here. And I agree. The complacency on the part of politicians at first as many people were ringing the bell is upsetting to many people. The government has been criticized for listening to the real estate industry and therefore being blind to some of the holes in the system frankly being exploited by some people in that same industry. People have made a ton of money from real estate here in the past few years - and that is not a bad thing - but it needed to be more carefully monitored and regulated.

ktomlinson25 karma

Thanks for this everybody. It was fun!

WyomingValley23 karma

How long did it take to get the photo of Kenny Gu? He must have been pretty illusive.

Good work and thanks Kathy!

ktomlinson31 karma

That photo was taken by Ben Nelms, who waited on the public street in front of Mr. Gu's home in the early morning. Ben got the shot as he was leaving home to get in his car

TheFallingStar23 karma

PM Trudeau seems to be relatively silent on this issue in the public. Do you know if this is actually getting his office's attention behind the scene?

ktomlinson27 karma

My understanding is the federal finance dept is very actively looking at this and all aspects of the real estate situation. So we shall see

donovanbailey22 karma

Hi Kathy, great investigative reporting recently. Somewhat OT, but I'm wondering your thoughts/experience w/r/t the provincial government's transparency and responsiveness to FOI requests?

It feels like they're holding a lot of cards in terms of material data on the housing crisis, and being very selective in what they trickle out.

ktomlinson22 karma

Housing data has not been drilled into nearly as much until now. I believe they are gathering a lot of data but you are right it is not very accessible. I hope that improves. We have to wait for them to release it

donovanbailey10 karma

If the housing data collected doesn't fit their political narrative, do you still think they'll release it? Or will the onus remain on persevering investigative journalists to find access.

ktomlinson25 karma

We will keep pushing that is all I know for sure. FOI is often useless because it takes too long and stuff gets redacted. We just need data to be released period!

smaads21 karma

Do you think BC should limit the ability of trusts to purchase real estate or require more proof of beneficial owners?

ktomlinson16 karma


ktomlinson16 karma

At least with residential real estate. Business/commercial transactions not so much.

UnsubstantiatedClaim5 karma

What's weird about this is I think it should be limited, but I would still want the ability as a Canadian to set up a trust that can purchase real estate.

There are countries that do not allow foreign ownership. Maybe this is the direction Canada takes?

ktomlinson8 karma

That would be pretty drastic given we are a small country that welcomes and depends on immigration and foreign investment. There are people much smarter than me that know a lot more about trusts and beneficial ownership etc. I just believe all of it should be much more transparent. Digging through the records is so onerous. And it's all very opaque.

stcalvert17 karma

Is there any evidence that there's an active effort in any level of government to prevent barriers to foreign speculation from being erected?

The CRA apparently has known about this situation for 20 years, for example, and yet it seems that no serious effort to investigate or combat the issue has taken place until now.

Or do you think that this is just a case of the various agencies preferring to stay away from trouble?

ktomlinson28 karma

I do believe the CRA was reticent to go after this hard for quite some time. I believe it didn't want to target a particular demographic and it didn't have the auditing staff and expertise it needed to have, esp out in Vancouver. Not willful negligence, but complacency yes. And that impression comes from talking to CRA insiders and accountants.

smaads13 karma

Do you think the 15% tax on foreign buyers will be effective in cooling the market? Or do you think it will be too easily avoided?

ktomlinson31 karma

I hope it will be effective but I believe the province must do what it promised to do and that is have enough auditors to scrutinize all the transactions and drill into beneficial (hidden) ownership, corporate structures etc. Otherwise yes some people will find a way around it

velobob9 karma

Do you think that that the Canadian banks could / should be doing a better job of determining the source of funds being transferred for the purposes of buying Real Estate in Canada - ie doing more to prevent money laundering?

ktomlinson17 karma

Yes. I believe at the ground level some people at some banks have been taken advantage of by dishonest or shady people. There is a lot of money involved and the banks want customers. The loans officers etc know that. So they try to get/keep customers and things get overlooked

AmateurLeather9 karma

Recently FINTRAC released a report saying how they had found a high percentage of issues in the data they had, but nobody has discussed the lack of reporting in the FINTRAC program itself. Realtors collect the data, but it never gets sent anywhere. It sits in offices around the province just in case FINTRAC asks.

What is your opinion of the already existing owner information gathering and income source reporting that is supposed to be collected for FINTRAC?

ktomlinson14 karma

Realtors will tell you (with a lot of frustration) that FINTRAC reporting is too time consuming and difficult. FINTRAC of course sees it otherwise. The realtor reporting is so low it's non existent. But the realtors will also tell you they don't know nearly as much about their clients as lawyers do. And lawyers are exempt from reporting to FINTRAC because the challenged that obligation and won in court.

UnsubstantiatedClaim6 karma

This makes sense. I don't need to show my realtor proof of my income or where it comes from. I write my occupation on a form and that's that. How this is supposed to stop money laundering beats me.

And that's assuming I even use a real estate agent. It would not surprise me one bit to learn that some of the large real estate transactions are performed privately without a licensed agent at all.

ktomlinson9 karma

In fact they are. I have seen that many times. It's the lawyers who know the most, with accountants a close second.

zanzibarmangosteen8 karma

What can we do? What is your advice

ktomlinson24 karma

Do what you are doing now. Be active in pressing for answers and for change. Complacency and lack of awareness was a big part of why and how the market grew so quickly with not enough levers to keep things in check

UnsubstantiatedClaim7 karma

For so long all we heard from the government was "there is no problem, nothing to see here."

I just wish it was less about staying in power and more about solving problems. Of course, there are many who don't have any problem what so ever with rising real estate prices and the general affordability of housing for the very people who need to live here.

Thanks for helping bring this all to light.

ktomlinson14 karma

You're welcome. I have a great job. Governments were listening too much to the real estate industry, in my opinion. But then no one was really digging into this either, so they weren't getting much in the way of detailed information from anywhere else.

RupertMurloc6 karma

Why do you think Vancouver won't embrace much-needed densification (aka more high rises) and just flood the market with supply?

ktomlinson10 karma

The city planners have long resisted (and rightly so perhaps) too many high rises etc because Vancouver proper is quite small geographically

ktomlinson9 karma

And there are a lot of multi unit buildings coming on stream. Cambie Street for example

touchable9 karma

Vancouver is embracing densification. There's mid- and high-density development going on all throughout the city. There's only so much you can do at once though. The infrastructure to support that density needs to be built at the same time.

ktomlinson8 karma


kbraar146 karma

I don't know why this thread has so many down votes all throughout. As a banker, the rules involved in foreign acquisition of property in Canada are some that I find very lax in some ways, and not remotely fair to Canadians who propose the same.

The origin of funds is one part of it, but not the most concerning. It's the number of properties and amount of inflation that I find crippling to the rest the nation.

Has anyone proposed either better policies for everyone, or stricter guidelines for investors? A 15% tax is negligible for far too many of these buyers. Feels like a money grab.

Would love to offer a solution, I'd prefer to see equality in approvals for Canadians and non residents alike.

ktomlinson3 karma

I would love to talk to you. Please email me [email protected] Thanks!

van_gold6 karma

Thanks so much for the work!

Have you been able to uncover anything about what foreign investors (specifically Chinese) are told about the rules in Canada. E.g. looking at how lax fintrac is, are they being told that paying the occasional fine is just a cost of doing business and not a serious crime?

ktomlinson17 karma

Chinese-Canadians I have talked to - real estate agents, bankers, accountants, lawyers etc - tell me many of their clients do what they have to do and don't do what they don't have to do. Just like most people would. It's up to our regulators and govts to address this head on I believe.

sp1kermd6 karma

After years of waiting, my wife and I just bought a house this week (3br townhouse). It was $125k lower than it was listed at a month ago. We like the area and can (just) afford the house.

My question: Are we screwed? Did we pull the trigger too early?

ktomlinson13 karma

I hope not! I wish I had a crystal ball or someone did. Good for you for saving $125,000.
At the end of the day, as long as you can afford your mortgage and you aren't planning on moving, the property value is just on paper anyway. Enjoy your new home!

russilwvong5 karma

Any thoughts on the BCHAF proposal vs. the provincial transfer tax vs. Vancouver's vacant-property tax? I'm wondering why the BCHAF proposal hasn't gone anywhere.

Thanks for all the investigative work you've been doing!

ktomlinson5 karma

I think it is a great proposal but the stumbling block is it needs buy in by more than one level of government (BC and Ottawa). That is a perennial problem. It's easy for one govt to bring in a quick change (like the foreign buyer tax) but not when it takes negotiation and cooperation at two levels. I hope it is still being considered in some form.

criticalfactories5 karma

I understand that there is a limit to the amount of money that Chinese citizens are allowed to remove from the country each year. It seems to me that the Chinese government would have active interest tracking and recovering cash that has flowed out of China illegally.

Is the Chinese equivalent of the CRA at all concerned about this situation? Or are they powerless?

ktomlinson8 karma

Yes I do believe (from reading only) the Chinese govt is increasingly concerned about capital outflows. On the other hand, the Chinese govt has also been enthusiastically encouraging/promoting the adoption of its currency globally as well as global investment by its citizens. Hard to see how they can have it both ways

bobadole5 karma

Being someone who has more experience then the rest of us what do you think can actually cool down the real estate market besides the b.o.c. increasing interest rates?

ktomlinson11 karma

I believe the banks may be tightening up their lending practices because of concerns inside the banking sector and at the federal government level, about sustainability and risk. So I think that's a factor which is having and will have an effect. Also global economic shifts are a big part of this because real estate isn't local at all anymore

PorcelainBus7 karma

Kathy's great articles and the subsequent action taken by the provincial government has already helped to cool the market. Like you bobadole I'd like to see it cooled further.

ktomlinson12 karma

It's a two sided coin, though. Kind of a "be careful what you wish for". Because the real estate industry is driving the BC economy big time and many people have all or most of their wealth tied up in their homes. So cooling is great. Crashing would be awful.

GrandmasKisses5 karma

Do you take an optimistic view that one day Vancouver's housing market will come back down to earth?

ktomlinson9 karma

Well I must say I hope not actually. Coming down to price levels that are normal in the rest of Canada would wipe out a significant amount of wealth for people here who have put all their eggs in their real estate basket. I worry particularly about people who bought into this market with large mortgages over the last couple of years. Big price drops could put them underwater. Vancouver has always been pricey (at least in recent history) and I expect it will remain that way

stcalvert13 karma

This is why the brakes should have been put on in the late 2000s, when it was clear that there was a big problem with housing speculation in this city. This is a complete failure of leadership, at all levels. Now this is everyone's problem.

ktomlinson9 karma

I agree.

Firsmith7 karma

Why should we feel sympathy for those that gambled/played greed and put all their eggs in one basket?

ktomlinson10 karma

Because a big hit to the BC economy from a real estate crash would affect every single one of us. Our jobs etc.

Firsmith7 karma

short term pain needed - on the backs of those that have accumulated wealth through speculation (indirect or as a side benefit) I don't see why not.

ktomlinson4 karma

I don't disagree. But what about everyone else that would be taken down with them?

TuftyLongshank7 karma

I think the key words here are what's normal in the rest of Canada. That would be a disaster. But back to normal for BC would be nice and if some people fall, well, that's the price of their speculation.

ktomlinson4 karma

Cooling off and stability would be great I agree.

squealteam66 karma

What is the point of all this then? It sounds like in either situation someone is going to get the shit end of the stick.

ktomlinson7 karma

We will be very fortunate I believe if this levels out but doesn't crash. Because that I think would be ideal.
It's not easy for govts to figure out how and if they can engineer that. Much is market forces beyond anyone's control. Esp because it got so out of hand in the last couple of years.

TuftyLongshank5 karma

Being a political issue, have you or your editors received any push back or interference from powers that be?

With papers seeming to go the way of the dodo, or at the very least let's say a readership that increasingly seems to prefer the short and snappy, what's your take on the future of investigative journalism and has the interest and response in this series you've been working on changed your views of the future of journalism at all?

ktomlinson9 karma

No. In fact I have had politicians compliment us for breaking this open. We've heard from many people who appreciate the time we've put into this and I hope that translates into more support for investigative journalism overall. The Globe is incredibly supportive.

smaads5 karma

How much of an effect do you think AirBnB is having on the market? Do you think a lot of investors are buying up condos to rent out on the platform?

ktomlinson10 karma

Big effect for sure. I don't know of any cases where people bought with the intention of setting up an AirBnB suite, but it wouldn't surprise me. This is a bit of a sleeper issue I think that needs more attention. Homes are becoming little hotels.

Godslamb5 karma

I would like to address the elephant in the room, as far as the decades of inaction on speculation in your opinion how much of that is due to PC culture and fears of appearing xenophobic? (Inaction from both the media and government)

ktomlinson10 karma

I think that is a factor. I took the approach that this is about money not race. And I just kept telling myself that, because I believe it is true. It's not easy to stand up to accusations of racism, though. Powerful stuff. Most of my very best sources are Chinese Canadians. I know, I know, that sounds like the old saying "some of my best friends are XXX" But it's true.

Godslamb5 karma

Its going to be one heck of a ride thank you for your courage and excellent work.

ktomlinson9 karma

Thanks for the kind words. I love my job.

burgoo4 karma

How well enforced do you believe the Vancouver vacancy tax will be?

ktomlinson8 karma

Well that's a funny one to me. I guess it depends how many neighbors rat each other out. But that said, even if the tax is applied to a particular home, it seems to me it will get messy when the homeowner challenges that determination. Some lawyers may be gearing up for just that.

toucha3 karma

Do you think Canada developing a National Housing Strategy will normalize anything about the Housing market in Vancouver?

ktomlinson6 karma

A national housing strategy is tricky because each market is different. I do worry Ottawa will not be able to focus enough on the problems Vancouver has to really make a difference. Ottawa's real power to provide funding. I think it's up to the city/province to keep pushing for money for transit and affordable housing and figure out how to spend it best here

Secrets72 karma

Hi Kathy,

Thanks for doing this ama!

My favorite line in your shadow flipping article was this bit about an owner being shocked and upset when a developer bought her tear-down and made a profit by building a new house on the site.

Nan Zhang, of Royal Pacific Realty, was in the process of getting her real estate licence in 2014, when she bought an older house in Vancouver for $2.8-million. She had it knocked down, then rebuilt. Nineteen months later, she sold her property for $5.6-million – netting an estimated $2-million profit, after substantial effort of her own.

The original seller, Hong Shen, said she was shocked when The Globe informed her how the broker had profitted. “I’m very angry,” she said, acknowledging there was not much she could do after the fact. “The buyer would buy the house with no conditions, so I said yes.”

My questions are,

*Do you feel this section of the article is a little disingenuous and was written to stoke the flames of indignation amongst ill informed readers willing to be outraged at any sort of profiteering from developers, even something as simple as building a new house on an older site? Why did you include this paragraph at all? Why did you approach the original owner at all?

*Can you clarify what is unethical about someone buying a site and developing it?

ktomlinson9 karma

Well I certainly didn't write this thinking it would "stoke flames". Anyway. That is how she felt when I tracked her down and interviewed her. As prices were skyrocketing in recent years, many sellers were shocked to learn what happened to properties they sold. Sure they don't have any right or say over the place anymore, but it's emotions and opinions, not dry logic.

theboxdoctor1 karma

What are the top 3 factors affecting the Vancouver market?

Will the Chinese crack down on the 50k limit that residents can take out? Will that affect the market?

ktomlinson6 karma

In no particular order: low interest rates, good exchange rate, good schools China has reportedly cracked down on $$ limits but there are many ways for people to get their money out. Like trying to stop a torrent with a weak dam.

Laser450 karma

From an outsider's perspective, it appears foreigners (predominately form China), want to pay Canadians in Vancouver to build housing they will never use. Why doesn't Vancouver embrace this and enable high density housing to meet demand? This creates a huge number of jobs for those on the ground.

Americans buy a lot of junk that people in China create. China just never put artificial limits on how many Iphones or cheap furniture could be produced. Why do you feel Canada doesn't do the same with housing? (I am talking about high density highrises, since land is finite, but high rise apartments don't have much volume limitation).

Firsmith7 karma

False ecomony. Displaces a population, drives up debt for residents trying to live here. Because no roots and pure speculation, the longer it goes on the larger problem you have you can't control. If those not living her pull out enmasse, it would devastate the city as the market will crash hard and leave many upside down. We need a crash now as the longer we wait the more painful it will be.

ktomlinson7 karma

Well I don't disagree for the most part. It's pretty scary it's come to this point. But I don't agree we need a crash. A prolonged period of stability and level prices would go a long way to helping us catch our breath and give us the opportunity to bring some control and long term planning into this

ktomlinson5 karma

I thought I answered this one but it seems to have disappeared. Impossible to mandate what someone can do with their home and we wouldn't want that in a free society. But restrictions on development - cost and time to get permits - does slow this down. More limits on demolitions perhaps would help

ktomlinson4 karma

Private ownership of property gives us the freedom to do what we want to do with our homes, so barring people from leaving them empty would be impossible. Development is restricted quite substantially on the ground, though, simply by how long it takes to get a permit and how much it costs. More could be done there, though, perhaps to save our heritage homes from being demolished period.