Real estate and related construction and financing arguably make up the biggest industry in Metro Vancouver. They, and everyone who owns property here, are doing very well from our housing prices being the second most unaffordable in the world after Hong Kong.
But there is a downside to it all, as anyone knows who doesn’t already own a home. Astonishingly, for such a huge industry with so much in-house research and customer tracking, hard data on the role of foreign investment in pricing locals out of their own market is nowhere to be found.
That’s why the next round of frustration to break out of the online comment sections and coffee shop conversations raging around the region is a June 24 rally around the theme: “Give us data.”
One of the organizers, Eveline Xia, said: “My objective is to make housing more affordable for the average people who live and work in the community and who want to build their lives here.”
What she really wants is data on drivers of demand we can realistically change now to make housing more affordable. That would not include “demographics, interest rates, geographical restrictions, and the health of the broader underlying economy” – all the “key factors” listed in a recent B.C. Finance Ministry document shrugging off this problem.
The province’s report bizarrely concludes that if we took measures that “drastically reduce foreign investment,” they would have “likely little impact” on general housing prices, but, at the same time, $1 billion of sales would be lost, the economy would shrink by 0.2%, 3,800 jobs would be lost, housing starts would fall homeowners would each lose $85,000. What?
The province ends up pointing an accusing finger at the City of Vancouver, calling on it to adopt growth strategies, densification, faster and cheaper approvals and financial incentives to build affordable housing. As it should. But if that achieves affordability, it will also result in some homeowners “losing” equity from the massive gains of the past few years. Do we want housing affordability or don’t we?
Here’s the data we need to have a grown-up conversation about unaffordable housing prices.
What is the economic downside of record levels of housing unaffordability on businesses that have chosen to move or locate elsewhere because of the cost of housing ownership? How much more are our universities, hospitals and research institutions having to pay to attract people who can’t afford housing here? The University of British Columbia, for example, lures faculty members with a $50,000 housing bonus.
Next, as the British Columbia Real Estate Association states in a recent report concluding that fears of foreign investment are “baseless” and “intervention policies are unnecessary,” “tracking the sources of foreign investment in housing would be beneficial to come up with possible solutions.” (That would be solutions to this non-existent problem, presumably.)
What percentage of offshore money comes from people buying one or more houses simply to park money for long-term capital preservation, rather than coming to live here?
How much of our unaffordable housing market is due to speculation – an assumption behind the City of Vancouver’s out-of-the-blue proposal for a tax on flipping?
How many Quebec immigrant investors are living in Metro Vancouver? Is 45,000 an accurate number?
How much money could be generated from foreign investors, using measures similar to those in Singapore, Hong Kong, Australia and the U.K., to finance affordable-housing initiatives?
What are the opportunities for favouring local residents and workers without affecting overall housing prices?
As China starts loosening its restrictions on capital export and two-thirds of that country’s millionaires say they are preparing to leave the country, actual data is vital in understanding the role of foreign investment in pricing our kids out of the market – and what, if anything, can be done about it.
Peter Ladner (firstname.lastname@example.org) is a co-founder of Business in Vancouver.