Premier Clark was asked the wrong question on foreign ownership of housing
The B.C. government needs to find out exactly how much foreign cash flows into BC real estate
The frustration of those priced out of the housing market is showing signs of boiling over.
The latest clue is the 20,000 or so who've signed an online petition calling for restrictions on foreign ownership of B.C. housing.
It's the latest in a series of pleas for the government to do something about some of the world's least affordable housing prices.
The argument this time is that offshore money is inflating the market and preventing locals from buying their first home.
The petition gathered enough attention that the idea of taxing foreigners who purchased B.C. homes was tossed at Premier Christy Clark.
She promptly axed the idea of a new tax saying it would hurt current homeowners.
"In terms of a tax on foreign buyers, people who already own homes are I think often a little bit concerned about that idea because it would probably mean a big reduction in the equity they own in the home," she said.
There are a number of problems both with Clark's answer and the question she was asked.
Clark: Big reduction in equity for homeowners
The first problem is the assumption that foreign money is driving up Vancouver property prices. There is plenty of anecdotal evidence to support this notion:
- Realtors talk about the impact of money from China.
- Residents in some neighbourhoods complain about houses bought and left to sit empty for years.
- There is also frequent speculation that illicit money is being parked in the perceived safety of Vancouver real estate; a parachute for those worried about leaving all their wealth in potentially unstable home countries.
- The laundering of drug money is also pointed to as a possible driver.
No data being collected
All of these are intriguing, but there's one big problem. No one is collecting data on any of this, despite the potential impact on the economy and the lives of Vancouverites.
David Ley, a UBC geography professor weighed in on the subject last week, saying, "this is quite unusual for government to have a hands-off position to an important public need."
Ley has studied inflated housing markets including Hong Kong, Singapore, Sydney, London, and Vancouver.
In those other markets he says "We know the percentage of overseas buyers, we even know where they are coming from."
So, the question that housing enthusiasts should be asking our governments should be this: Why aren't you collecting data on who buys and owns housing in our city/province/country?
The reason for asking that question is blatantly obvious; if you want to confirm or refute any of the volatile issues around foreign ownership you need reliable data. No government would consider putting a toll on a road, for example, without first counting the cars on the existing route.
Every time housing is bought, sold or taxed it would be simple to start asking who owns the property and where does the owner reside. Those simple questions would separate the offshore investor with no stake in our city from newcomers and residents building a life here. We would then know if in fact there is a real problem that needs action.
Governments outside of B.C. are changing policies
Other countries, and even some Canadian provinces, aren't shy about asking those questions, and shaping policy around the answers.
It's astounding that given how long this issue has been around that the BC government, has chosen to ignore it. So why are they determined to keep their heads buried in the sands of ignorance?
The answer is most likely linked to a desire to maintain the status quo. If there's no data, you can't prove there's a problem, and if you can't prove there's a problem, no action needs to be taken.
As geographer Ley said, the federal and provincial governments are "missing in action."
Clark hinted at the real fear when she voiced her concerns about doing anything that might endanger the billions in paper real estate wealth that continues to pile up. High housing markets have made a lot of people wealthy and contribute to tax revenues.
But there are clear dangers to the economy, not to mention fuel for racism in continuing the present course.
A more responsible approach would be to carefully explore what's going on behind the currently closed real estate curtain and then decide if anything needs to be done.