Yesterday I threw a frequent and articulate poster off this blog. In response to a comment from someone proud that their immigrant parents had produced three doctors and two pharmacists who were helping Canadians’ lives, he wrote:
Born and raised Canadian kids could have been trained for those jobs, so don’t get too full of yourself. And doctors and pharmacists mostly are public servants, rather than net taxpayers. With most of their compensation derived from payments from government.
The implication was clear: immigrants steal jobs. The kids of immigrants are not ‘Canadian kids.’ Besides, the government subsidizes them.
Xenophobic, anti-immigrant sentiment is a sad, dark and persistent theme in the comment section of this site. That mirrors social prejudice, but it’s concentrated here because we often talk about real estate. Since houses cost so much – usually more than average people can afford without pickling themselves in debt – the hunt is always on for someone to blame. Rich foreigners are easy game. Especially in Vancouver. Especially now.
Last month the average detached home price in YVR jumped back into record territory, at $1,303,256. In Toronto it has also restored to a peak level, now $1,056,238. The average household income in Van is under $73,000, and in 416 about thirty grand more. It’s easy to see why mortgage borrowing is rising so quickly or the national debt-to-income is a record 164%.
My thesis has been that real estate values have been mostly impacted by the advent of cheap money and the legacy of 2008. When people who had unbalanced, equity-heavy mutual fund RRSPs and investment accounts were whacked in the financial crisis, they sold, took losses and vowed never to repeat. Even those who lost no money still lost their nerve. The aversion to perceived risk was then stoked by the real estate industry at the same time desperate governments were slashing interest rates to encourage borrowing.
So the cheaper money got, the more people borrowed and the higher house prices traveled. Before long 70% of families owned, and most net worth was being concentrated in one asset. As prices rose, more wanted in. Up she went.
But the thesis of many others, including those who cannot afford the house they feel entitled to, is that they’ve been denied a birthright by a foreigner who stole it. Thus, the myth of all of those thousands of Chinese millionaires beating down our doors, snapping up properties and through their sheer influence driving values skyward.
Standing by to fuel the panic are professional realtors and marketers. They’ve hired helicopters to have Chinese agents buzz the Lower Mainland. They’ve hired chicks of Asian heritage to pose as fake Chinese buyers. They’ve fed the ‘buy-now-or-buy-never’ meme a whole generation of virgin buyers now believes. They encouraged flawed surveys showing HAM is everywhere. And now they’re telling us a cheap Canadian dollar (in part because the economy sucks) is going to unleash the next wave for foreign buying.
“With the loonie falling about 10% against the U.S. dollar in the last six months,” said the Financial Post yesterday, “foreigners who have their money parked in greenbacks or in currencies pegged to the American dollar are likely to ramp up their interest in the Canadian marketplace, say industry experts.”
See what I mean? It’s a relentless and consistent message, yet one which is supported by no authoritative data. And any empirical attempt to counter it – as CMHC did recently with a survey showing only 2% of condos in 416 or 604 are foreign-owned – is instantly attacked.
So, what are we to think? If a massive doubling of mortgage debt on the part of Canadian citizens is not enough to make it clear who the buyers are, what is?
Well, here’s a glimpse.
The Victoria Real Estate Board tracks exactly who buys real estate in that market, BC’s second-largest. Yeah, I know. Victoria is not Vancouver, 115 watery km away. Maybe there are twice as many foreign buyers in Van. Maybe it’s five times. But at least this is a good starting point in understanding who is buying houses in one of the priciest cities in the country, and a provincial capital. The numbers below were just released privately to members of the Victoria Real Estate Board:
By the way, of the 1.64% of Victoria buyers who were foreigners, 50% were from the US.
Of course, such stats won’t change the minds of those who hate without thinking, or blame others for their shortcomings. That’s the nature of prejudice. We all have some.
But it’s a fair assumption all real estate board have similar numbers. Guess why they’re not published?