Wow. I’ve been astounded at the reaction to my column about restricting overseas investment in local real estate to try to make housing in Metro Vancouver more affordable to people who want to live, work and pay income taxes here.
I’ve been flooded with requests for media interviews, online comments and direct emails. Realtors and landed immigrants are particularly outspoken, knowing the scene more intimately than most. They’ve been telling me about the tour buses of buyers cruising Kerrisdale, buyers purchasing sight unseen and the overseas owner with 300 local residential properties.
It’s becoming pretty clear that there is a deep undercurrent of resentment and anger about offshore investors pushing up residential real estate prices. People are fearful of speaking out, not wanting to be labelled socialist or racist – or both.
Others wonder whether overseas investors are being scapegoated for soaring real estate prices when the real causes are lack of new supply and easy low-cost borrowing. Still others fear the decline of foreign-investor-funded high-end rental condominium construction or the ruin of recent first-time “Generation Debt” buyers if prices drop. (At least wait until the remaining units in the Olympic Village are sold!)
One real estate expert shrugged off the issue by saying we went through the same debate in the 1980s and “most people think this city is better off now than it was in 1987.”
Actually, not. How does being the third-most unaffordable city in the world, with average house prices more than nine times average income, make “most people” better off? It makes businesses less well off, since it’s harder for them to attract employees from out of town. Stupidly high housing prices also discourage foreign investment in business and head offices here. They even drive up public-sector costs: one senior provincial government employee wrote to say he agreed to move to Burnaby from Edmonton only after the government raised its salary offer.
Absentee foreign ownership makes neighbourhoods unattractive and unsafe, like the block in Kerrisdale where one resident told me five homes were unoccupied. It breaks up families, forcing younger members to live far away.
“For the price of a home, on my income, you would need at least 10 adults working full time to pay the mortgage. I’m moving to Alberta,” wrote one online commentator.
It forces us to spend billions on transportation so the people who make this city so livable and attractive can carry out their life sentence of expensive commuting from far-flung suburbs. It reserves big chunks of our city for people who only live here parttime, if at all, contributing nothing to the community, often paying no income taxes. It widens the gap between rich and poor, then drives billions of dollars in public spending on subsidized housing and rent supplements to shore up the lives of the most desperate.
Restrictions on foreign ownership of real estate are widespread around the world.
Some jurisdictions simply discourage foreign ownership: in Florida, non-residents (Canadians!) pay higher property taxes. We could have a higher property transaction tax for non-residents or higher capital gains taxes for foreign investors or time restrictions on re-sales to prevent flipping.
If it weren’t for foreign ownership restrictions in Bali, the locals would be completely priced out of their own communities. Yes, friends, when facing new waves of overseas investment wealth paying cash for homes here, we are as Balinese.
Or Australians. In Sydney, foreign ownership restrictions were imposed, then relaxed, then re-imposed last year after that city shot up to the No. 2 most unaffordable city in the world. There, non-residents can invest only in new projects, and then only up to 50% of the units. If they buy bare land, they have to start building within 12 months. Temporary residents have to sell their properties when they leave the country.
Solutions aren’t easy, but we don’t even have the data for a rational discussion. Judging from the response I’m getting, it’s long overdue.