One market’s loss, is another market’s gain. Countries like Canada, the United Kingdom, Australia, and New Zealand are starting to see foreign buying tapering.

However, the United States is starting to see a surge in foreign buying according to the National Association of Realtors (NAR). These numbers are showing explosive growth in both the transactions, and dollar volume.

Explosive Growth Across The United States

Foreign buying is experiencing growth across the United States according to NAR. In the 12 month period from April 2016 – March 2017, there were 284,455 homes bought by foreign buyers. This represents 32.37% growth from the previous 12-month period, and roughly 5% of all homes bought across the US. The total dollar volume of these homes works out to just over US$153 billion.

Canadians Most Likely To Be Non-Resident

An interesting breakdown of foreign buyers is how they use the homes. There’s two kinds of foreign buyers, resident and non-resident. Resident buyers are people that have immigrated to the US, or have obtained a long-term visa. Non-resident buyers are buyers that (at best) use the home occasionally. Sometimes these are people that have an occasional use family home, but often they’re just speculators that are holding property as an inflation sensitive currency hedge.

According to NAR, the majority of buyers from China, India, and Mexico were resident buyers. Buyers from Canada, and the United Kingdom were both mostly non-resident buyers.

Breakdown Of Regions By Dollar Volume

The US has foreign buyers from all over the world, but just five countries are estimated to make up the majority of sales by dollar volume. Chinese buyers bought US$31.7 billion worth of real estate, a 16% increase year-over-year (YOY). Canadians bought US$19 billion worth of real estate, a massive 113% increase YOY. Residents of the United Kingdom bought US$9.5 billion, a 72% increase YOY. Mexicans bought US$9.3 billion in real estate, a 93% increase YOY. In fifth is India, with an estimated US$7.8 billion, a 27% increase YOY. This is huge growth, and likely to contribute to upwards pressure on home prices.

Breakdown Of Regions By Transactions

In terms of the number of homes, the same five countries are estimated to top the list. Chinese buyers bought 40,572 homes, a 38% increase YOY. Canadians bought 33,819 homes, a 25% increase YOY. Mexicans bought 28,516 homes, a 59% increase YOY. Indians bought 14,934 homes, a 2.86% increase YOY. Residents of the UK bought 12,869 homes, a 40% increase YOY. That’s 46% of the 284,455 foreign purchases made across the US.

SEE ALSO: Canada's red-hot real estate market is finally cooling off

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Why have one combo unit in the Beresford when you can have two? Hedge fund billionaire Bill Ackman has just bought himself yet another apartment at his favorite building, the Beresford, for $9 million, according to city records.

Ackman has lived in the building since 2006, when he and his (now ex) wife Karen paid $26 million for a duplex unit on the 17th and 18th floor. With this latest purchase, it seems like he is planning to create another combo unit in the building; the apartment he just bought is right next to an eighth-floor unit he bought in early June for $13.5 million.

His latest unit was unlisted (hence the lack of listing photos), but public records show it was owned by the estate of the late Edith Rudolph, with William Rudolph acting as executor.

In addition to gobbling up units in the Beresford, Ackman has also paid big bucks for lots of other real estate in the city, including a $91.5 million penthouse at One57 and a $17 million penthouse at 420 West Broadway.

MORE FROM LUXURY LISTINGS NYC:

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Ernest Hemingway Museum closing its doors

SEE ALSO: A Florida-based entrepreneur is selling his enormous home — complete with 'Star Trek' room — for just shy of $30 million

Join the conversation about this story »

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Château de La Barben is located in Aix-en-Provence, South of France. The castle is nearly 1,000 years old.

The current owner's father bought it in the '60s. It has been running as a family business to rent out rooms as bed and breakfasts, and for the public to enjoy. The owners want to move on, and it is currently for sale. 

The incredible home includes about 60 different rooms and 700 acres of land. 

Join the conversation about this story »

One-third of Americans overpay for housing, spending more than the recommended 30% of their income on rent or homeownership expenses.

While that group likely includes residents of the country's most expensive housing markets— looking at you, San Francisco — it's not just them.

In fact, according to a new ranking from SmartAsset, the least affordable housing markets in the US aren't necessarily the places with the most expensive homes. Rather, they're the cities where incomes haven't kept up with housing costs, rendering it even more difficult for residents to find affordable living.

To determine the list, SmartAsset gathered three data points — rent as a percentage of income, cost of homeownership as a percentage of income, and home value to income ratio — from the US Census Bureau for more than 580 cities. SmartAsset then ranked each city in each metric and calculated the average to determine a final score out of 100.

Three states — California, New Jersey, and Florida — are home to 15 of the top 16 cities in the ranking. Passaic, New Jersey, takes the No. 1 spot on the list. Renters there pay only $500 less than San Francisco renters, but households earn almost $70,000 less per year than they do in San Francisco, according to SmartAsset.

Read on for the top 16 least affordable housing markets in the US.

SEE ALSO: Here's how much you need to earn to rent a 2-bedroom apartment in 15 of America's biggest cities

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16. Santa Ana, California

Income spent on rent: 38.1%

Income spent on homeownership costs: 31.1%

Home value to income ratio: 8.0

14 (TIE). Newark, New Jersey

Income spent on rent: 36.6%

Income spent on homeownership costs: 40.5%

Home value to income ratio: 7.6

14 (TIE). Bloomington, Indiana

Income spent on rent: 42.5%

Income spent on homeownership costs: 33.3%

Home value to income ratio: 6.4

The world is rapidly urbanizing. The United Nations predicts that the number of people living in cities could double by 2050 — to 6.5 billion.

To accommodate growing populations, cities like Paris, New York, and Tokyo are building more housing and public resources, including parks, schools, and subways, as part of large redevelopment plans.

These cities will likely look very different in the coming decades. Take a look at some of the biggest urban projects under construction below.

SEE ALSO: 7 megaprojects that will transform Chinese cities by 2050

Shanghai, China — Todtown

Set to be complete by 2020, Todtown is a new mixed-use development in Shanghai's Minhang District.

The development will feature 1,000 apartment units, a 1.3 million-square-foot shopping mall, an additional 580,000 square feet of retail, 1.5 million square feet of office space, and a 53,000-square-foot cultural center, according to InHabitat. Todtown will also incorporate lots of greenery, from green roofs to mini parks scattered throughout.

The master plan was created by Chicago-based architecture firm Goettsch Partners and Hong Kong-based studio Lead 8. 

Construction on the $1.5 billion project began in 2014.

Cairo, Egypt — New Cairo Capital

East of downtown Cairo, New Cairo Capital will be a 270-square-mile hub with 21 new residential districts — enough housing for five million people. 

The development is being financed largely by Chinese developers. (The China Fortune Land Development Company, for instance, put down $20 billion for the project in late 2016, according to CNN.)

New Cairo Capital will also feature 1,250 mosques and churches, a 5,000-seat conference center, nearly 2,000 schools and colleges, over 600 medical facilities, and what is projected to be the world's largest park.

Egypt Housing Minister Mostafa Madbouly told the BBC that the project would cost $45 billion and be complete by 2022. Construction began in 2015.

Paris, France — Europa City

In 2016, Paris began building an 8.6-million-square-foot mixed-use development, called Europa City, north of downtown.

Designed by Danish architecture firm Bjarke Ingels Group (the company behind Google's California headquarters), Europa City promises housing, shops, and restaurants, though the exact numbers of each are not confirmed yet. The development is also slated to include plazas, an artificial ski slope, open walkways, a golf system, and a new transit system.

Triangle de Gonesse, the suburb where it will be located, is still largely rural. But according to Europa City's developers, the goal of the $3.4 billion project is to connect the area with urban Paris and reduce congestion downtown.

Construction started in 2016 and is expected to wrap up by 2024.

If you've ever dreamt of owning your own vineyard, now's your chance.

This seven-bedroom property listed with Sotheby's International Realty is in the heart of California's wine country and costs $42 million. 

The home is decked out with a spa, infinity pool, and guest house. It also comes fully furnished and with a winery license that allows for a 10,000-gallon-per-year production. 

If the property sells for the hefty price it's asking, it will be the most expensive property ever sold in the area. It's located in St. Helena, a beautiful city in Napa Valley.

Take a look around inside:

SEE ALSO: A Florida-based entrepreneur is selling his enormous home — complete with 'Star Trek' room — for just shy of $30 million

The estate known as Whitehall first came onto the market for $38 million in 2014, and at that point, it was not fully constructed.

Source: Sotheby's

Three years later, it's now a fully furnished property with its own commercial winery license and a vineyard that will soon be ready for harvest. It has a new listing price of $42 million.

Source: Sotheby's

The house is surrounded by 20 acres of wine land.

If you're looking to invest in real estate, location is paramount.

HomeUnion, an online real estate investment management firm, has identified zip codes in 20 US metros where investors have seen the highest return on investment and minimal risk over a five-year period.

To compile its list, HomeUnion calculated the total annualized return — including projected appreciation and cash flow— of single-family rentals (SFRs) for over 200,000 neighborhoods in their database using a proprietary methodology.

They then eliminated neighborhoods with an average school rating below the 70th percentile, based on data from Maponics.

"Typically, SFRs in areas with good schools have been attractive to long-term investors, though those areas have been more challenging to locate for remote investors in today's heated housing market," said Steve Hovland, director of research for HomeUnion.

The markets with the highest returns and an average school rating in the 70th percentile or higher made it to the top of the list. Below, check out the top 20 housing markets in the US for real estate investors, where average annual returns over five years range from 5.4% to 8.1%.

SEE ALSO: 16 US cities where incomes can't keep up with housing costs

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46280: North Indianapolis, Indiana

Metro: Indianapolis

Annualized total return: 5.4%

School rating: 71.9

91602: North Hollywood, California

Metro: Los Angeles

Annualized total return: 5.4%

School rating: 71.4

73003: Edmond, Oklahoma

Metro: Oklahoma City

Annualized total return: 5.4%

School rating: 90

Canadian real estate prices are about to drop, or rental unit prices are about to soar. Numbers from the Organisation for Economic Co-operation and Development (OECD) show the home price-to-rent ratio is making a parabolic rise. Real estate prices have not been this detached from rental prices in the 47 years of data we could obtain.

House price-to-rent ratio explained

The home price-to-rent ratio is one of the most basic economic principals used for real estate valuation. It’s the ratio of the cost of carrying a home for a year, compared to the cost of a year worth of rent. Basically, it helps people understand if you should rent or buy.

That’s pretty straightforward, what isn’t is how to read the numbers. What you’re looking for is any deviation from the baseline. If it starts to drop rapidly, renting is becoming a waste of money. In this event, home prices will either rapidly rise, or rents will drop.

Conversely, if the index rises too quickly, renting becomes better deal. When this happens, rents will either follow with a steep climb or home prices will drop. In order for rents to rise however, there needs to be a rapid increase in wages to support it. If you’re using the index to help figure out which way prices are going, you should watch if wage growth even supports the possibility.  There’s a reason Realtors that deal with investment properties track unemployment.

Canada’s OECD house price-to-rent ratio

OECD index numbers show Canada’s house price-to-rent ratio started accelerating really fast. At the end of the second quarter of 2017, the index read 141.3 – a 3.59% increase from the quarter before. When compared to the same quarter last year, this is a massive 23.2% increase. To put this in perspective, from the first quarter of 2007 to the second quarter of 2016, the index only rose 23.5%. This means the increase in ratio over the past year, was the equivalent of the 9 years before that.

Will home prices come down, or rents soar? There’s some indication that rents have started climbing in places in like Toronto. It’s unclear if incomes are rising fast enough to support such massive rent increases. But that’s just Toronto? The rest of the country also saw home prices rocket, and rents didn’t quite jump the same amount.

Where do you think prices are going? Leave your comments below.

SEE ALSO: Canada has twice as many vacant homes as the US did before the crash

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Vallejo, California, a small city across the bay from San Francisco, was named the hottest housing market in America by Realtor.com in June.

It's the last place that many Bay Area locals might expect to take the title. Vallejo, which briefly hosted the state capital between 1852 and 1853, became the largest city in California to declare bankruptcy in 2008. Its reputation for crime and squalor has previously landed the "Up Bay" city on Forbes' list of most miserable cities and Newsweek's list of dying cities.

But Vallejo is making a comeback as young professionals get priced out of San Francisco and Oakland and search for affordable housing in the far reaches of the Bay Area.

I recently spent the day in Vallejo to see how a downtrodden city became a top real-estate destination in less than 10 years.

SEE ALSO: Go inside the hottest neighborhood in San Francisco, where home prices have risen 75% in the last 5 years

When I boarded a Vallejo-bound ferry, I expected to find a hipster enclave complete with artisanal coffee roasters and yoga studios on the other side.

Vallejo is 30 miles north of San Francisco, but for many city residents, it might as well be a world away.

Vallejo residents who commute to San Francisco have the option of driving up to two hours in rush-hour traffic or taking an hour-long ferry ride to the Embarcadero in the city.

A round-trip ticket on the San Francisco Bay Ferry costs $28, but commuters can purchase a monthly pass for $345, which saves riders $200 if they make the trip five days a week.

When I walked down the streets of Vallejo, I found it wasn't the gentrified urban playground for tech workers that I expected.

President Trump is looking to get rid of his luxurious St. Martin estate. The home, which he purchased in 2013, is called Le Château des Palmiers. The price was recently lowered from a whopping $28 million to $16.9 million. It is no longer the most expensive listing on the island. The price is also now on par with other estates nearby. It's a walled estate across nearly five acres, with both a main house and a guest house. In total, the compound has 11 bedrooms.

Records show that it was listed for just under $20 million when Trump purchased it. According to disclosure filings obtained by the Wall Street Journal, Trump owns the property through two shell companies called Excel Venture I LLC and Excel Venture Corp II.

Trump typically uses the Caribbean escape as a rental property, and, according to the disclosure, he gets between $100,000 and $1 million a year from it. Lesley Reed of Sotheby's International Realty has the listing.

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When you become a homeowner, a mortgage isn't the only expense you're faced with.

The average homeowner in the US spends an additional $9,080 each year covering unexpected or forgotten costs, from insurance to taxes to maintenance, according to a new report from real estate-listing site Zillow.

"Determining how much a home will ultimately cost you each year and what you can afford is one of the most challenging aspects of homebuying, especially for first-time buyers," said Svenja Gudell, Zillow's chief economist.

Indeed, Zillow found in a previous report that nearly 40% of first-time buyers exceed their budget. It's easy to do. Although the standard measure of housing affordability is 30% or less of your pre-tax income, many homebuyers only plan in advance for their mortgage payment, forgetting about the extra expenses that are part of owning a home. 

To give shoppers a more accurate idea of affordability, Zillow launched Realestate.com earlier this year. Its all-in monthly pricing tool considers all the monthly homeownership expenses typically omitted by a traditional mortgage calculator.

As part of its latest report, Zillow calculated the hidden costs of homeownership in the country's largest metro areas by population, factoring in property taxes, homeowners insurance, and utilities from Utility Score. They also included estimates for six of the most popular home maintenance-related projects from Thumbtack: carpet cleaning, yard work, gutter cleaning, HVAC maintenance, house cleaning, and pressure washing.

San Francisco homeowners shell out the most money of the metros Zillow analyzed, at just above $16,000 — not surprising considering the area's notoriously high home values and property taxes.

Below, check out how much homeowners spend on the unexpected — but often unavoidable — costs of owning a home in the 16 biggest US cities, from lowest to highest total cost.

The New York City metro area is a unique housing market and was excluded from Zillow's report.

SEE ALSO: 16 US cities where incomes can't keep up with housing costs

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St. Louis

Median home value: $148,700

Total hidden costs: $7,787

Detroit

Median home value: $140,900

Total hidden costs: $8,145

Phoenix

Median home value: $235,100

Total hidden costs: $8,366

President Trump's luxurious St. Martin estate has gotten a massive price cut.

Le Château des Palmiers was previously listed for $28 million with Sotheby's International Realty. The price was lowered by more than $11 million about a month ago, the Washington Post reported. It's now listed for $16.9 million.

It's a walled estate across nearly five acres, with both a main house and a guest house. In total, the compound has 11 bedrooms.

Records show that it was listed for just under $20 million when Trump purchased it in 2013, though it's unclear how much he ended up paying for it. 

According to disclosure filings obtained by the Wall Street Journal in 2015, Trump owns the property through two companies called Excel Venture I LLC and Excel Venture Corp II. Trump typically uses the Caribbean escape as a rental property, and, according to the disclosure, he gets between $100,000 and $1 million a year from it. The sale is being handled by a revocable trust run by Donald Trump Jr. and Trump Organization executive Allen Weisselberg.

Take a look around inside:

SEE ALSO: This mysterious billionaire just beat out Jeff Bezos to become the second-richest man in the world

Though Trump didn't develop the house himself, he added his own flair to it after purchasing it in 2013.

Plenty of light shines through the main house.

The front doors bear his family crest.

Nicknamed "Billionaire's Beach"— an homage to the ultra-wealthy residents who call it home — Carbon Beach is a 1.5-mile stretch of sand that sits between the iconic Pacific Coast Highway and the glistening Pacific Ocean in Malibu, California.

Up until mid-2015, the beach was largely closed off to the public. But now, after a decades-long, complicated legal battle between the state and homeowners, its 70-plus residences share their backyard with tourists and beachgoers from sun up to sun down.

We took a walk down Billionaire's Beach on a recent summer day — scroll through to take a peek at what it's like to live and play on the richest stretch of sand in the world.

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Carbon Beach runs about 1.5 miles from Malibu Pier down toward Santa Monica. The homes situated on the sand are just feet from the water.

The properties' front entrances belly up to Pacific Coast Highway, often with little room for driveways or garages. Some are palatial, even from the street.

Others are perceptibly modest. Many of them maintain high hedges for privacy from the road.

A twisting, smog-eating tower is nearly finished in Taipei, Taiwan.

The skyscraper's facade, roof, and balconies will contain 23,000 trees and shrubs — nearly the same amount found in New York's Central Park. Inside, it will hold 40 luxury condos.

The plants are projected to absorb 130 tons of carbon dioxide per year — the equivalent of about 27 cars, lead designer Vincent Callebaut told Business Insider.

Called the Tao Zhu Yin Yuan Tower, or Agora Garden, the building topped out in July and is set to open by the fall. Take a look inside.

SEE ALSO: The 7 cities with the most green space around the world

The 455,694-square-foot structure, a double-helix twisting 90-degrees from base to top, is modeled on a DNA strand, Callebaut said.

The 20-story skyscraper sits in the XinYi District, in the heart of Taipei City.

The top floor was completed in July 2017.

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Cantor Fitzgerald CEO Howard Lutnick is the new owner of the famous penthouse atop New York City's Pierre hotel, Page Six reported.

He apparently got the triplex penthouse at a steep discount. 

The property, which belonged to late investor Martin Zweig and his widow, Barbara, hit the market for a record $125 million in the spring of 2013. It then underwent several price chops before eventually going off the market. It last appeared on sale for $57 million in April 2016.

Property records show that an LLC paid $44 million for the spread, The Real Deal reported. Page Six has unmasked Lutnick as the mystery buyer. 

The apartment encompasses three floors and was originally the hotel's ballroom. After several years on the market, it had a makeover that gave it a more modern look.

The 16-room spread was most recently listed with Brown Harris Stevens.

Julie Zeveloff contributed reporting to an earlier version of this article. 

SEE ALSO: No one wants to buy Trump's Caribbean estate, which just got a $11 million price chop

The Pierre, located on 61st Street and Central Park, is one of the most iconic properties in New York City.

The apartment is a triplex, taking up floors 41, 42, and 43 of the Pierre.

It formerly housed the famous hotel's ballroom.

The INSIDER Summary:

• The barn that inspired E.B. White's "Charlotte's Web" is for sale.
• You can buy it for $3.7 million.
• The entire property is 44 acres and includes additional buildings and landscape features.

The barn that inspired E.B. White's seminal children's book "Charlotte's Web" is up for sale. It — and the 44-acre Maine property its on — can be yours for $3.7 million.

White — a novelist and writer for the New Yorker — lived in the property's house while writing "Charlotte's Web." The property is now on the National Register of Historic Places and looks "pretty much the same as it did when E.B. White and his wife, Katharine, owned it,"according to Boston.com. The author died in 1985 and his wife passed away in 1977.

"They swing on the same rope swing that they knew Fern had; they sit on the milking stool where Fern had sat,"one of the current owners, Mary Galland, told Yankee Magazine in a tour of the home. "I wanted [visiting students] to grow up remembering this day. I hoped one day they’d want to find Mr. White’s other writings."

The entire property is much bigger than the 4,000-square-foot house and the barn. It's a 44-acre saltwater farm with a wood room, a greenhouse, former outhouses, three ponds, several gardens, a guest house with a bedroom and a kitchenette, and another small house that White used to write.

"I love trying to keep E.B. White’s spirit going,"Gallant said.

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If you've ever dreamed of living in a castle with an easy commute to New York City, you're in luck. Located just over an hour north of midtown Manhattan, 249 Croton Dam Road in Ossining, New York is on the market for $3.69 million.

Built in the 1920s by David Abercrombie, cofounder of Abercrombie & Fitch, the castle is dubbed "Elda Castle" after the first initials of his four children, according to New York History Blog. The castle, which has a storied past detailed on the blog, served as an oasis for the Abercrombie family after they endured the tragic deaths of two of the four children: Lucy in 1929, and David in 1937.

Currently in disrepair, the buyer of the castle will have to take on a full renovation project to make it livable again.

Continue reading to see photos of the castle and the surrounding land, which is currently listed for sale on Sotheby's.

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You'll have to budget more than just the $3.69 purchase price. Nearly a century old, the castle requires a full renovation.

Many of the original details, such as a cast iron spiral staircase and an open patio with a fireplace, remain and can be restored.

Abercrombie's wife, architect Lucy Abbott Cate, designed the 4,337 square foot castle, which has 4 bedrooms and 4.5 baths.

Rents have stagnated in much of New York City, but landlords aren't letting up.

Instead of lowering prices, landlords are handing out one-time concessions to attract tenants, according to a recent New York Times article. These can include flashy offers like covering your broker's fee, gift cards, and even a month of free rent.

That may sound like a sweet deal at first glance, but many renters aren't fooled by the "gimmicks,"writes Times reporter Ronda Kaysen.

You can spot these offers in apartment listings that use the phrase "net effective rent," meaning what you see online isn't what you'll actually pay month-to-month for the duration of your lease.

For example, a one-bedroom apartment listed on Nooklyn with skyline views in Greenpoint, Brooklyn advertises a net effective rent of $2,677 a month, Kaysen writes. A call to the listing agent revealed the true monthly cost to be $2,900 with the first month free. When the time comes to renew the lease, any increase would be based on the true rent price.

So, is one month of free rent worth the higher monthly cost?

Not if you're planning to stay for more than a year.

Here's why: If a renter signed the lease on the Greenpoint apartment as-is, they'd shell out $31,900 over the course of one year, paying 11-months of rent at $2,900. But if they found an apartment renting for a true $2,677 a month with no concession, they'd spend $32,124 during the same time frame — just $224 more for the year.

But, in the second year, assuming no rent increase, the annual cost for the Greenpoint apartment rises to $34,800 — an increase of $2,676 for the year, or $223 more each month. That could easily be a deal breaker for renters when it's time to renew the lease.

A report by Douglas Elliman Real Estate cited by the Times revealed about 17% of rental listings in Brooklyn and nearly 24% of listings in Manhattan offered these rewards to potential renters in June.

"There's a point where concessions become tone-deaf to the market,"Jonathan J. Miller, the author of the report and the president of Miller Samuel Real Estate Appraisers and Consultants told the Times. "A large swath of renters can't afford the apartment without the concession."

There is one group these deals make sense for, however: transient renters, like students.

"If you're only going to be there one year, play the incentives as much as you can,"Erin Whitney, a saleswoman at Bohemia Realty Group told the Times. "But if you want a place to set up a home for a while, you want a lower rent."

Read the full story at The New York Times »

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There’s nothing like Vancouver real estate anywhere else in the world. You might think your city has foreign buyers, but it’s nothing like Vancouver. It’s almost as if the world’s most powerful people had a meeting, and decided to create a currency out of the city’s homes. Filtering through quotes from these powerful people, that could be exactly what happened. To help you understand this, we’ve compiled a brief history of foreign buying in Vancouver real estate. You’re really going to want to read this.

The Handover Of Hong Kong

It wasn’t quite clear what would happen when the British handed Hong Kong over to China in 1997. So decades before, people began to get worried about what life would be like under Communist rule. From 1979 to 1980 over 160,000 illegal migrants from China snuck into Hong Kong, with not-so nice stories about life on the Mainland. Like with the current global millionaire migration, Hong Kong residents with resources packed up and left.

In 1989, the June Fourth Incident, better known as the Tiananmen Square Protests broke out. For you millennials that haven’t read about it, you really should. Basically peaceful protesters occupied Tiananmen Square in Beijing, and demanded an end to political corruption, as well as freedom of speech, and freedom of the press. You know, only things “crazy people” would want. Beijing declared martial law, and a slaughter of the protesters ensued.

People in Hong Kong saw how the government reacted to Tiananmen Square and were understandably worried about their way of life. This is when migration accelerated. Most Hong Kong migrants settled in other Commonwealth countries like the UK, Australia, and Canada. Right up until the July 1997, it’s estimated over 100,000 Hong Kong residents came to Canada.

Canada Pioneers Millionaire Visas

Canada heard there were wealthy migrants, and saw the opportunity to pad poor domestic economic performance. Starting in 1976, the Canadian government (led by Pierre Trudeau) rolled out a program to attract wealthy Hong Kong immigrants. Those with $365,000 ($1,541,504 in 2017 dollars) in net-worth, who invested in $183,000 ($772,864 in 2017 dollars) could come to Canada without any ties. The immigrant had to create 1 job, and establish either a home or have a child attend school. The LA Times called it a program “so liberal that it might make a college athletic recruiter envious.” It was one of the first millionaire visa schemes.

A large number settled in Vancouver, but it wasn’t the bustling place of opportunity Hong Kong was. A lot of migrants saw Vancouver as a stop over, and a way to get the safety of a Commonwealth passport before returning to Hong Kong.

Terry Hui did an interview with the New York Times briefly discussing this in 1997. “July 97 is not a date that has really changed anything,” the then president of Concord Pacific, owned by Li Ka-shing at the time, told the Times reporter. The article goes on to explain that half of the 1,200 condos his company has built have been sold to Hong Kong investors, who don’t live in them. Hui elaborated “No one really got out of Hong Kong…They just shifted their portfolios.”

“No one really got out of Hong Kong…They just shifted their portfolios.”

-Terry Hui, Vancouver’s largest real estate developer.

Just so you aren’t hanging, Li sold Concord Pacific to Hui’s family. Li eventually became Asia’s richest man, and Concord Pacific became Canada’s largest developer.

The Pegging And (Unpegging) Of The Yuan

The pegging, and the step to free floating the yuan, is another significant event the Vancouver real estate market felt. For those that don’t know, a currency peg is when the value of a currency is directly tied to that of another currency. In 2008, the yuan was pegged at a fixed rate against the US dollar. Since the yuan was pegged, it took a nose dive with the US dollar, in order to keep trade competitive.

The problem is, China’s economy was doing really well at the time, so this artificially weakened the local currency. Chinese people basically took a hit on all foreign transactions, for the sake of the economy. InJune 2010, they finally loosened the peg. This saw the yuan rapidly appreciate against the dollar, rising over 13% by 2014.

Cash usually doesn’t appreciate this fast, so many decided to anchor in other investment vehicles. Inflation sensitive assets, like bonds or real estate, became a huge target. For those unaware, an inflation sensitive asset is one that rises closer to the true rate of inflation. This is unlike CPI, which governments have a vested interest to keep low.

Laurence Fink, the CEO of BlackRock and one of the world’s most influential investors, mentioned this in passing in 2015. “The two greatest stores of wealth internationally today is [one] contemporary art” Fink said, speaking at the Megatrends conference in Singapore. “And two, the other store of wealth… is apartments in Manhattan, apartments in Vancouver, in London.”

If that didn’t mean anything, you have to understand the context of what happened at that event. Fink’s BlackRock has US$5.1 trillion assets under management (AUM) and is the largest shadow bank in the world. To give a sense of scale, their AUM is more than 3 times the size of the aggregate value of all stocks on the Toronto Stock Exchange. He announced this trend in a room full of the world’s most powerful investors. If it wasn’t a trend, it was going to be a trend now.

We did reach out to Fink directly to ask about this statement, but he had to “pass on this opportunity.”

Xi Jinping’s Anti-Corruption Campaign

China has a reputation for government corruption, which even the Chinese will acknowledge. It’s estimated that in just 2003, the proceeds of corruption totaled US$86 billion, roughly 3% of the country’s GDP that year. Lavish gifts, and property rights were sold in exchange for giving access to the government coffers.

In 2013, when Xi Jinping was elected General Secretary of the Communist Party, he vowed to end corruption. This resulted in one of the largest anti-graft campaigns in history. In 2015, over 300,000 officials were punished for corruption, and by 2016 over 100,000 officials were indicted for graft. Even the mom of Vancouver Mayor’s ex was arrested in the campaign, for allegedly taking US$69 million in bribes. Boring, I know. What’s interesting is what happened to all of the money that was embezzled

Through a process called smurfing, Canadian banks had been helping Mainland Chinese get money out of the country for years. For those unaware of what smurfing is, it’s when a large amount of money is broken down into small chunks. These chunks are then given to a number of different people (called smurfs), and sent to separate bank accounts in another  country. This avoids detection of financial regulators, and was a loophole in China’s US$50,000 capital controls. Canadian banks are experts at helping with this process.

Canadian banks receive the transfers, and assemble them into one bank account, all you need is a reason for them to help you – like get a mortgage. It sounds like a conspiracy, but it’s really not. One of Canada’s largest banks details the procedure in passing during a wrongful dismissal suit. A former bank employee claims her bank “supported” the practice.

If that sounds like the perfect way to sneak the proceeds of corruption out of the country, that’s because it is. Hiding amongst legitimate immigrant cash, in 2013 over US$258 billion in illicit cash left Mainland China. There’s no comprehensive estimates on how much illicit cash left after that, but in 2014 through 2016, over US$1 trillion left the country than entered. Considering how much money enters the country every year, that’s an f-in huge outflow. It’s unclear exactly how much of the illicit cash ended up in Vancouver, but there was a massive surge in real estate purchases in the city at that time.

China Cools The Market

About one year before an election in 2016, the BC government played a textbook government PR card. They gave foreign buyers 30 days notice of a new 15% tax that would come into effect in August 2016. Giving notice pressured foreign buyers to make the decision now, or pay 15% more. This resulted in a surge before the tax, and the appearance that things cooled afterwards. It’s a textbook play from governments to take credit for the appearance of doing something, without doing anything. Shortly after, foreign sales climbed higher until January 2017.

In January 2017, China and the PBoC decided to implement a new round of capital controls. The controls targeted smurfing, and now requires the approval of the use of funds. Real estate buying and mortgage payments in other countries is not an approved use. Foreign sales immediately started plunging in Vancouver, as well as a number of other hubs where Mainland Chinese investors became popular – like New Zealand, and Australia.

China is pretty serious about stopping capital outflows this time around. The PBoC announced in July 2017 they had trained over 400,000 people to stop “money laundering.” Money laundering in China being any circumvention of their capital controls. The PBoC is also heavily researching the adoption ofblockchain technology – hoping to eliminate paper cash, eliminate counterfeiting, and more importantly makes all transactions traceable.

Even with the improved controls, 1 in 10 homes in the Richmond suburb of Vancouver goes to foreign buyers. These are non-resident buyers, meaning they use the home occasionally at best. Strangely enough, analysis on resales we conducted show that 1 in 10 homes listed for resale on Vancouver’s MLS have never been lived in – as identified by the seller.

Former Vice President of Quantitative research for JP Morgan, one of the world’s largest banks,explained to us that there’s plenty of ways to still get money out of China. While you might assume Bitcoin, he says the fees are too expensive. More common, large assets are bought and sold with inflated values. An impromptu fiat currency if you will, where value is arbitrarily established – and has nothing to do with fundamental demand. Can you think of any large assets with inflated values?

The mistake most people make when analyzing Vancouver real estate is they compare it to regular real estate markets. However, Vancouver isn’t really a city, it’s a bank. People just happen to live in some of the vaults.

SEE ALSO: Vancouver condos are overpriced and a rent hike could be coming

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An increasing number of ordinary investors are earning substantial returns in real estate through Non-Traded REITs. These Non-Traded REITs offer tax-advantaged passive exposure to private real estate, typically provide quarterly dividends, and oftentimes diversify their portfolios by property type and geography. But while the returns are certainly headline-grabbing, so too are the fees, as evidenced by an SEC Investor Bulletin explaining that the transaction costs are typically 10-15% of the investment amount.¹

Finally, some newcomers are looking to redefine the Non-Traded REIT industry’s fee structure. These new “Crowdfunded” REITs – like stREITwise, MogulREIT and Fundrise – allow anybody to invest online for a fraction of the cost of their more traditional competitors. By marketing directly to the crowd and avoiding financial advisor commissions, they’re raising capital cheaper and more efficiently, and passing the savings on to investors. The relative discount Crowdfunded REITs offer on the upfront costs means they can earn a considerably higher return by merely performing the same as their traditional Non-Traded REIT competitors. The math is compelling; for instance, over the course of a 5-year investment period, here is a comparison of potential returns from stREITwise (which charges 3% upfront) versus Company X (which charges 12.5% upfront – the midpoint of the 10-15% SEC estimate):

* The figures shown in the table above with respect to stREITwise are not actual returns and are for illustrative purposes only. It is not a representation, warranty, or guarantee of future investment performance. We will seek to invest in real properties and other real estate-related assets that we believe can produce a 10% return. Based on our sponsor’s prior experience, we believe that we can acquire a portfolio of assets that has the ability to achieve this return for investors. However, we cannot guarantee, and investors should not assume, that we will achieve these returns for our investors or that we will perform comparably to our competitors.

Assuming stREITwise and Company X both achieve the same 3% annual appreciation and 7% annual cash yield net of fees, a 5-year investment in stREITwise would earn 42% more profit than the same investment in Company X.

The new crop of Crowdfunded REITs are beginning to catch on with retail investors across the country. In total, they raised over $100 million since the beginning of 2016. Meanwhile, the traditional Non-Traded REITs are having major issues raising capital; sales of their shares have dipped 77% to $4.5 billion from their 2013 peak of $19.6 billion.² Contributing to the dip in sales of traditional Non-Traded REITs, many financial advisory firms have banned their advisors from selling their shares to clients with retirement accounts for fear that the excessive fees incurred by investors would be looked unfavorably upon by the Department of Labor.

Despite the glaring disparity in fee structure, Crowdfunded REITs have so far been unable to raise the same amounts of capital as their traditional Non-Traded REIT competitors. One reason is that Crowdfunded REITs are sold directly to investors online, while the traditional Non-Traded REITs are sold through financial advisors, who may be incentivized to put their clients into products that pay them high commissions. Take the financial advisor out of the question and the answer becomes more obvious.

Learn more about how stREITwise's low fees are changing the real estate industry. 

^{1. SEC’s Office of Investor Education and Advocacy, Investor Bulletin: Non-traded REITs, August 31, 2015.}

^{2. Robert A. Stanger & Company, 2016 Mid-Year Report: Non-Listed REIT & BDC Industry, June 29, 2016.}

SEC Disclaimer

1st stREIT Office Inc. may undertake a public offering, pursuant to Regulation A under the Securities Act of 1933, as amended. No money or other consideration is being solicited at this time with respect to such offering, and if sent in response to these materials for such an offering, it will not be accepted. No offer to buy securities can be accepted and no part of the purchase price can be received for an offering under Regulation A until an offering statement is qualified by the U. S. Securities and Exchange Commission, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. An indication of interest made by a prospective investor in a Regulation A offering is non-binding and involves no obligation or commitment of any kind. 1st stREIT Office Inc. has filed a preliminary offering statement with the SEC that can be reviewed here www.streitwise.com/offering-circular.

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