Here at Dye & Durham a lot of our work is related to real estate, and one topic that’s on everyone’s minds lately is Vancouver’s housing market.
Earlier this year saw a headline that was hard to dismiss: the average price for a detached home in Metro Vancouver was $1.83 million this past January – up a staggering 40% from the January before. The city has been dubbed the world’s second most unaffordable housing market, where prices are “divorced from local incomes“.
BC residents have long speculated that one of the reasons for Vancouver’s extreme real estate prices is foreign ownership, and hopes are high that 2016 will be the year we finally get some some answers on whether this is the case.
Increasingly, the media is shedding light on the debate, which isn’t always civil. At times the debate has uncomfortable racial undertones, given the widely-held presumption that Chinese investment is driving up the prices for Vancouver housing, creating a housing market that’s unaffordable for people who actually live here. Writing in Maclean’s, Nancy Macdonald describes Belcarra, BC’s proposed bylaw that requires the use of “Canadian English” in all written and verbal dealings with village staff. According to Belcarra mayor Ralph Drew, the language at issue is Mandarin.
Despite years of anecdotal evidence, there has been surprisingly little concrete study of the issue. Macdonald shares some of the first hard data obtained, through research undertaken last year by Vancouver-Point Grey MLA David Eby and a city researcher. That study found that “more than 70 percent of homes sold in Vancouver’s West Side went to Mainland China buyers over a six-month period”.
Writing in the Vancouver Sun, Joanne Lee-Young gives an excellent overview of what other investigations into the issue are underway:
- Canadian Housing & Mortgage Corporation: CMHC currently only tracks foreign ownership on condos, but is planning new studies that will obtain data from many sources.
- The federal government: Trudeau vowed to review the issue, but “warned of risks to curbing foreign investment in Canadian real estate and cited a ‘lack of concrete data’ about its impact on runaway prices in Vancouver.” (This week’s federal budget allocated $500,000 to Statistics Canada to develop tracking protocols, but critics say that’s not enough funding to address the issue properly, and are concerned about a duplication of efforts at the local and provincial levels.)
- The provincial government: BC Housing has been studying the issue for more than a year. However, the “finance ministry and the B.C. Real Estate Association concluded in June that less than five per cent of home sales in Metro Vancouver were to foreign buyers.”
- The City of Vancouver: Vancouver has hired a third party to track vacant houses, a sore point for many when viewed as properties purchased as investments at sky-high prices, only to sit empty — all while vacancy rates are very low.
- Real Estate Council of BC: The Council established an advisory group last month, and is expected to release a report with recommendations at the end of May.
According to the Globe & Mail, the CMHC has said its tracking of foreign-owned housing will include international students, “some of whom live in million-dollar homes near the University of British Columbia campus in Vancouver.” The corporation is also considering a survey of Vancouver realtors in 2016.
It appears at least plausible that foreign ownership is a primary reason for Vancouver’s unaffordable real estate crisis. But just who is responsible for allowing the market to come to this point? UBC geographer David Ley says it’s not foreign investors or unethical realtors, it’s local and provincial governments, who “have showed little interest in addressing the problem as they benefit from revenue it produces”. In a recent paper he published in the International Journal of Housing Policy, Ley says the problem really began in the 1980s, when a Business Immigration Programme resulted in an “an intricate trans-Pacific real estate market”.
Indeed, The Province recently reported that “A new petition urging B.C. politicians to limit offshore investment and exploitation of tax loopholes in Vancouver real estate is getting a cool reception from Victoria as provincial coffers overflow with property transfer tax revenues in a red-hot housing market.”
With so many different takes on whether foreign investment is a problem, we’re keen to see the results of all these initiatives, and more importantly, whether the findings result in changes that will stabilize Vancouver’s housing market. We suspect we’ll be talking about it around the water cooler for a while yet.
Dye & Durham has been providing support services to Canada’s legal community and government agencies for over a century. We complete land title searches and registrations for all property types including manufactured (mobile) homes.
For real property search and registration services, or information about ETRAY™, our online work order system, contact Melinda Lawrence, Real Property Registry Support Services, at email@example.com.