Why does the average detached house cost $796,182 in Toronto, and $919,900 in Vancouver? After all, who can afford them? Those prices represent a huge multiple of the average household income for both cities, which has led many people to the same conclusion: Canadians are being priced out of their own homes by foreign buyers. Not just any foreigners. Chinese.
It’s a meme pushed relentlessly by realtors and their marketers, then regurgitated on cue by a gullible and fact-challenged media. Just watch this clip which aired on Vancouver television on May 30th, 2011:
In the last two years Van-area realtors worked hard at creating a buy-now-or-buy-never frenzy among the locals by raising the spectre of waves of cash-imbued Chinese buyers. That led to fake Chinese realtors buzzing White Rock by helicopter and fake Chinese buyers giving TV interviews in condo sales offices. Meanwhile suburban agents like Gee Moore were telling reporters fake things like this:
“Burnaby is very attractive because it is up high and for its proximity to Metrotown for the Asians. It has always been prices were higher in North Burnaby, but now more and more it’s those areas. They’re getting all the Asian buyers. Almost 90 per cent of higher-end house buyers are foreign.”
Ninety per cent foreign?
This was a low point for the Canadian real estate industry, of course. Creating a new Yellow Peril, appealing to the basest of xenophobic fears, all in the name of higher sales, higher prices and higher commissions. And it worked. Suddenly we heard serious talk about the need for restrictions on foreign property ownership, like they have in Australia (one of the less tolerant places on the planet). In that country non-permanent residents are disallowed from buying resale homes unless they receive government approval. Mexican laws prevent foreigners from acquiring oceanfront land. Even little PEI limits the size of property non-Islanders can own.
To its credit, the BC government has told the Canada-firsters to buzz off. “British Columbia does not have any policies in place that limit foreign ownership of residential properties,” it says. “We have not identified any conclusive evidence that foreign ownership of residential property is itself measurably affecting the B.C. real estate market in a way that requires government intervention in a private market.”
But hold on. Does anyone have any empirical evidence on where buyers are actually coming from? Especially in urban BC where ridiculously-stupid real estate prices are universally blamed on HAM?
Actually, yes. Quietly, real estate boards – made up of the same horny house humpers who tell you the Chinese are ubiquitous – compile statistics on precisely where purchasers originate from. In Victoria, for example, we know that 65.5% of the people buying homes already live in that city. Another 18% come from BC, while 14% traveled from elsewhere in Canada. The foreigners? Just three per cent.
But how about Vancouver and the Lower Mainland, where the realtors have joyously described mass HAM invasions of Richmond, West Van, Burnaby, White Rock and Shaughnessy? How else could prices have increased by up to 70% in a decade without an unbridled torrent of moohlah from all those wealthy industrialist playboys in Guangdong?
Turns out the Vancouver board does the same thing. Currently 88% of all real estate buys in the region are being made by people who live there. About 6% come from elsewhere in Canada, and only 6% don’t live in the country. Seriously.
What conclusions can we draw from this? Obviously that prices are insane not because of immigrants or foreign investors, but because the locals have made them that way through house horniness, speculation, competition and greed. Here are five more:
- Realtors who scare people with race-based marketing are pond scum.
- Most folks are unbelievably gullible and will swallow anything.
- The media should be ashamed of itself. Honestly.
- Real estate is making us intolerant.
- If you want lower house prices, people, stop buying.
There’s nobody to blame but yourself.