Every city has its own urban legend. Vancouver’s fantasy over the last few years is that it has the world’s second most unaffordable housing.
On the back of this piece of unchallenged, unverified claim, Canadian opinion makers and media have been portraying a city pushed to a breaking point by a runaway housing crisis caused mostly by wealthy immigrants and corrupt Chinese officials fleeing to Vancouver with stolen money.
A more twisted version paints Canadians of Chinese descent as Beijing’s pawns in a long-term chess game to take over Vancouver and its housing market.
Either way, the city’s rising housing cost has become an issue in this year’s federal election with Chinese buyers firmly cast as the villain in profiteering at the expense of the city and its regular working people.
The political pressure has led Prime Minister Stephen Harper to announce his government is investing $500,000 to gather “comprehensive data” and study the impact of foreign investment in Canada’s real estate market.
This special five-part series deconstructs the narrative to present the issue in a broader framework.
Those campaigning against foreign investors in Vancouver’s real estate market have seized the upperhand in the public relations battle.
In June, 64 per cent of respondents in an Angus Reid survey said that they blame offshore money for the continuing rise in the city’s housing prices. Nearly 20 per cent of them said they would leave Metro Vancouver to escape the “extreme housing and traffic pain”.
Reflecting the mood of its respondents, Angus issued a shrill warning that the city could lose a generation of more than 150,000 families who would “simply leave in search of more manageable living.”
The mainstream media has been providing the optics by highlighting a handful of high-profile Chinese buying expensive homes to contrast with stories of young professional couples being forced to flee as they cannot afford the average $1.16 million single-family house in metro Vancouver.
Getting “real” data
The campaigners have since shifted their focus to demand “real” data that they believe will prove their complaints and compel the government to act against foreign buyers.
Instead of calming public nerves, the BCREA and CHMC reports have further fuelled suspicion that government agencies are working with the real estate industry to cover up the true extent of foreign ownership and offshore money in Vancouver’s real estate.
Earlier comments by the British Columbia government and reports by the BCREA and Canada Mortgage and Housing Corporation (CHMC) to downplay the role and impact of offshore money in Vancouver’s real estate market were met with disbelief and anger.
Instead of calming public nerves, the BCREA and CHMC reports have further fuelled suspicion that government agencies are working with the real estate industry to cover up the true extent of foreign ownership and offshore money in Vancouver’s real estate.
“If foreign speculators are driving the cost of housing to unaffordable levels, that is something the government can, and should, find a way to address,” Conservative Party leader Stephen Harper said.
The announcement was cautiously welcomed as it raised the possibility that the data might lead Ottawa to “do something” to make Vancouver houses affordable.
Online discussions have generated a number of options: reducing or capping in-bound migration, especially of the wealthy, placing curbs on foreign investment in Canadian real estate, and imposing new taxes on purchases by non-resident foreigners.
[T]he populist narrative ignores the big-picture need for foreign trade, investment and talent to drive Canada’s increasingly uncompetitive mid-sized resource-dependent economy.
Executive Director of the Chinese Canadian National Council (CCNC), Victor Wong, said the problem with the “Don’tHave$1million” and “We Want Data” movements is that they are narrowly motivated to prove foreign speculation is causing Vancouver’s housing problems and that young professionals are completely helpless to deal with rising prices.
He emphasizes that another set of data, widely available but ignored, shows the ample supply of good affordable housing for middle-income families in metro Vancouver.
Ignoring the big picture
There has been little acknowledgement from the campaigners that first-time buyers could start off by buying town homes (median price of $511,500) or apartments ($405,400), instead of reaching straight for that $1.5 million house in Vancouver.
They also ignore the possibility that people can live and work in suburbs like Coquitlam, Surrey and Burnaby, located about 30 to 45 minutes from downtown Vancouver, where single-family houses are still available for C$400,000 to C$700,000.
Just as important, the populist narrative ignores the big-picture need for foreign trade, investment and talent to drive Canada’s mid-sized resource-dependent economy.
In demonizing Asian investors, the campaigners ignore the role of new migrants and business talents in helping Canada develop export markets in countries that it knows little about.
Many new business migrants also bring in capital and their global network of contacts to help develop Canada’s increasingly cash-strapped resource sector.
The dire state of the Canadian economy amid the volatile global environment is also keeping politicians from acting to cool Vancouver’s vibrant real estate market.
Contrary to the fears expressed in the Angus Reid survey that rising housing prices will force the young and educated out of Vancouver, Wong said the city’s population is growing as people are adapting and finding solutions, which include buying homes and living in places they can afford.
“People adapt far better than the media gives them credit for. Professionals and tradespeople leave for different reasons. I work in Toronto, others work in L.A., Hong Kong, or the oilfields, but our home is Vancouver,” he said.
“We work elsewhere for career, income, change of scenery. But look at the data: there’s net in-migration to B.C. these past 12 months and net immigration is steady at 30,000 a year. It’s more accurate to say we are gaining people, not losing them.”
Avoiding wider negative repercussions
Metro Vancouver’s planners agree with Wong’s assessment. In planning for the region’s transportation needs, they are projecting the population to grow by another million people by 2041.
The weak state of the Canadian economy amid the volatile global environment is also keeping politicians from acting to cool Vancouver’s vibrant real estate market.
In a June 5 study, the B.C. finance ministry said any moves to drastically curb foreign investments could lead to wider negative repercussions that would result in the loss of C$350 million or 0.2 per cent of the province’s Gross Domestic Product (GDP).
It warned that roughly C$1 billion in residential real estate sales and around 3,800 jobs would be lost, mainly in the construction and real estate sectors.
B.C. officials have good reason to fear, seeing how quickly the collapse of the oil and gas markets is crushing the once red-hot housing markets in Calgary and Fort McMurray.
Foreign investors are fleeing or refusing to invest in Alberta – the same ones that three years ago some in the Canadian media and government attacked for trying to invest in Canada’s oil sands reserves.
Read Vancouver and Unaffordable Housing Part 1: A Global Issue
Read Vancouver and Unaffordable Housing Part 2: A Tale of Many Cities
Read Vancouver and Unaffordable Housing Part 3: Solutions or Scapegoats?
Read Vancouver and Unaffordable Housing Part 5: The China Factor
