Studying ‘foreign ownership’ in Vancouver won’t explain why this mossy hovel costs C$2.4million
Vancouver’s long-suffering affordable housing advocates could be forgiven for jubilation at the news this week that provincial authorities were finally studying the impact of foreign investment on the city’s real estate market.
But as with any property deal, it all hinges on the fine print.
The exact framework and scope of the study - which is being handled by BC Housing, a crown corporation - hasn’t been made public, although The Province cited a focus on foreign home ownership.
And that worries me.
Because the outcome of any study that focuses on foreign owners - while ignoring foreign wealth and earnings brought to Vancouver by immigrant buyers (including Canadian citizens) - seems predestined. Such a study would likely be a rip-roaring success if the goal is to produce reassuringly scant evidence of foreign ownership (and inspiring market boosters to shout “case closed!”, screwball comedy style).
But it’s thoroughly pointless if the goal is to actually work out why, say, the moss-covered hovel pictured hereabouts can be realistically priced at C$2.4 million, or HK$13.3 million (OK, the interior isn’t bad, and it’s in a great neighbourhood). This price is about average for a detached house in the City of Vancouver, and Greater Vancouver’s average is C$1.83million, a ludicrous 50 per cent increase since mid-2014.
Regular readers of the Hongcouver blog should feel free to tune out at this point. You’ve heard it before (and, on a side note, I really want to write about something other than real estate and affordability).
Yes, there is already plenty of data - long-term, peer-reviewed academic research, as well as reams of non-peer-reviewed work - that all points to the key role of wealthy and foreign-earning immigrant buyers on Vancouver’s housing market. Yes, the vast majority come from China.
But no, none of it suggests that these buyers are truly “foreign”, that is, neither Canadian residents nor citizens. Let me repeat: There is no evidence that foreign buyers play a great role in Vancouver’s housing market. Foreign money is an entirely different story.
Let’s go through it. In 2010, UBC prof Dr David Ley published peer-reviewed research that found international immigration (as opposed to inter-city or inter-provincial migration) had an “unusually decisive” 94 per cent correlation to home prices in Vancouver. No true foreigners to see here.
The same year, Dr Markus Moos and Dr Andrejs Skaburskis (of UBC and Queens University respectively, at the time) conducted peer-reviewed research on the “globalisation” of Vancouver’s housing market which revealed “a de-coupling of local housing from labour markets as recent immigrants' housing consumption became less tied to their local labour market participation”.
“Labour market income measured in national datasets becomes less instructive in explaining housing market outcomes and neighborhood change if immigrants arrive with established wealth and continue to earn unreported income outside the country,” they conclude.
And nope. These are not foreign owners.
Then there are the non-peer-reviewed “Chinese name” studies by Andy Yan, Landcor, Reuters and Macdonald Realty (here and here), conducted from 2008 to 2015. All had thoroughly consistent outcomes: that folk with non-Anglicised Chinese names play a massive role in detached buying - making up 66 per cent of C$2 million-plus buyers and 85 per cent of C$3million-plus buyers in the Westside neighbourhoods Yan studied, for instance.
Yet according to the 2006 Census, only 15 per cent of residents in Metro Vancouver spoke any form of Chinese as a mother tongue.
Again, this disparity and all of these studies point squarely to the role of recent high-wealth immigration.
But no – there is no indication that these buyers are “foreigners”.
Limiting the provincial study to foreign ownership simply will not suffice if Vancouverites want more data on what actually propels their city’s remarkable real estate market and unaffordability. It won’t prove any more illuminating than last year’s bogus “less than 5 per cent” appraisal by the BC Real Estate Association, upon which Christy Clark’s government has previously relied.
On the other hand, Ley, Moos and Skaburskis are heavy-hitting, big-brained, research-founded academics, who have studied this stuff under the harsh glare of peer review for years. Do we trust them? Or do we trust the outcome of an opaque government study, the confirmation of whose very existence required the efforts of an investigative reporter?
The Hongcouver blog is devoted to the hybrid culture of its namesake cities: Hong Kong and Vancouver. All story ideas and comments are welcome. Connect with me by email [email protected] or on Twitter, @ianjamesyoung70.