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"Over 7 billion Canadian dollars in dirty money have been laundered in British Columbia. in 2018, the cost of buying a home increased by about 5%, according to the British Columbia Expert Panel on Money Laundering in Real Estate. "
By Stephen Punwasi, Better Living:
The Canadian real estate sector is a giant washing machine, confirms the Government of British Columbia. The provincial attorney general's office released a new report yesterday. The report estimates that the amount of money laundered on the real estate market would amount to billions last year. Considering that last year was slower than usual, this represents a good chunk of all sales. It starts like this:
More than 7 billion Canadian dollars in dirty money were laundered in BC in 2018, the cost of buying a home has increased by about 5%, according to the British Columbia Expert Panel. British on money laundering in real estate.
An estimate of $ 7.4 billion in bleached cash struck in British Columbia in 2018
The estimated amount of laundered money expected to hit British Columbia last year is down. The paper estimates that $ 7.4 billion was transferred to BC in 2018, with $ 5.3 billion going to real estate. For the context, it's the size of any transaction dollars for Toronto last March. The document also mentions the model underestimate otherwise all funds are included. Since it is difficult to measure illicit liquidity, this number is probably much higher. It gets even more shocking here.
The whitened money could have fueled 4.6% of real estate purchases in British Columbia
The paper estimates that if liquidities were spread across British Columbia, they could account for up to $ 1 in 20 real estate. Last year, the $ 5.3 billion in cash represented 4.6% of the total dollar volume of 2018. If the funds had the same distribution as last year's sales, it would be 83% housing and 17% of commercial investments. That breaks down into $ 4.6 billion in residential purchases and $ 0.7 billion in commercial purchases. If the funds were only used for residential property, they would represent 5.3% of the residential market.
The document does not estimate how many houses this would represent. However, with a few basic averages, it's pretty good. Using the average selling price, it amounts to 3,604 households if they are distributed like any investment. If we invested only in the residential sector, this would bring to 4,152 households. Not an insignificant amount.
If only in the Lower Mainland, this equates to 7.4% of purchases
The paper also gives an estimate if this money only reaches the Lower Mainland, Greater Vancouver and the Fraser Valley. The $ 5.3 billion represents 7.4% of the residential transactions in the Lower Mainland last year. Since the panel used valuation data, the total transaction volume is greater than MLS. You, me and your neighbor would probably buy a house through MLS.
If all transactions involved realtors, the ratio would actually be much higher. The document does not deal with this, but valuation transactions include non-market purchases. As a result, the valuation transaction numbers are about 93.6% higher than the MLS volume only. If the money went exclusively through the Lower Mainland MLS systems, it would represent approximately 14.2% of the total dollar volume. Since residential compositions are based on MLS, the most important impact would also be produced here. If you integrated your laundered money, would you buy off-market? Probably not, but you never know.
Depending on how this money has been channeled, the impact could be greater than expected. We have already explored the influence of money laundering on real estate prices. It was with only a few purchases. We are now talking about estimates of less than 4.6% in British Columbia and up to 14.2% in the Lower Mainland.
Greater Vancouver Real Estate Prices
The price of a "typical" home in Greater Vancouver and Lower Mainland. British Columbia. The estimated period of money laundering is highlighted for the context.
All of this is quite impressive, considering that we are discussing a year when prices have fallen. In 2018, the price of a typical Lower Mainland BC home. decreased by 0.9% compared to the previous year. In Metro Vancouver, the price of a typical home dropped 2.7% from a year earlier. It is with bleached money that drives up dollar volumes.
More important for the average home buyer, who provides liquidity? The ultimate goal of money laundering is not to buy a house, but to multiply transactions for cash. At present, we have an estimate of the amount of money spent in a single year. However, we have no estimate on the part of this money that has been released. Fortunately, money laundering in real estate stops magically on the BC border, otherwise Canada could have a problem. By Stephen Punwasi, Better living.
Money laundering in Canadian real estate is a widely accepted reality today, but the impact is not one. Lily... How a bit of money laundering can have a big impact on real estate prices
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