Foreign buyers have invested in Vancouver for generations. Why does it suddenly matter more now?
The topic of foreign ownership of housing in Vancouver is a subject that triggers some emotional responses. Over an Easter dinner some west side relatives of mine lamented the end of neighbourhoods built upon the strength of front yard conversations and local gossip, now made more difficult on their street by language and cultural barriers. People today, I was told, just drive into their garage with the remote control entry and never have to set foot on their street. This phenomenon of households being isolated from their surrounding communities is not unique to west side homes, but is happening throughout our region.
A "letter of the week" in Friday's Vancouver Courier fingered "Chinese investor class citizens" for snapping up older homes, tearing them down, building much larger homes and not occupying them:
Re: "Vancouver realtors cater to wealthy offshore Chinese as middle class gets squeezed," vancourier.com, April 3.
It's about time that this major problem be discussed. My husband and I are increasingly frustrated with what is going on in the city and although my husband has an excellent job in finance with a great salary we continue to rent little bungalows on the West Side that sell for ridiculous prices ($2 million or more) to Chinese investor class citizens.
We watch our previous rentals get torn down so that another huge empty house can take its place. It's heartbreaking and the fact that we have a daughter who is two years old makes the situation more frustrating because we can't provide a stable situation-a small house, near a good school in a safe neighbourhood. We watch as our trust-fund friends buy on the East Side paying crazy prices to live in houses that need a lot of work in less than perfect neighbourhoods.
We are on our own financially, so sadly Vancouver has become our enemy rather than our friend. Every day we discuss leaving. Our job search in other parts of the nation continues because we are getting the message loud and clear- Vancouver doesn't want us here.
Sad but true.
Rebecca Kovacs, Vancouver
While many of us can empathize with Ms. Kovacs' anxiety over the cost of housing, her cry for help from the government doesn't garner a lot of sympathy. She spurns East Vancouver as being beneath the standard for her family without really explaining how that part of the city lacks good schools or is too 'unsafe' for their comfort. The fact is many fine schools have plenty of space in them throughout the city, and our crime rate is the lowest it has been in a generation. And don't worry, we Eastsiders have grown a thick skin for these kinds of comments.
A preciously funny letter in response to Kovacs' rant perfectly summed up my own reaction. Louise Lee writes:
I'm proud to say I'm raising a family in one of those less-than-perfect neighbourhoods. The last time I looked out my window onto my less than perfect street, in my less than perfect neighbourhood, there weren't any bombs going off or army tanks driving down. What makes Ms. Kovacs think she is too good to live in what she describes is a less-than-perfect neighborhood? What an insult to all the hard-working, decent people of Vancouver who don't live on the West Side!
Read the rest of Lee's letter here.
Twenty years ago I rented a suite in a house in Kerrisdale. During the early 1990s change was also sweeping across the desirable west side thanks to an influx of Chinese buyers from Hong Kong. Back then Vancouver had been recently marketed to the world by EXPO 86, and Hong Kong residents who feared the potential consequences of 1997's transfer of sovereignty snapped up properties here. Home prices skyrocketed in Vancouver during those years too, and in percentage terms the increases were equal to if not higher than those we've seen lately.
So what happened? Prior to EXPO 86 Vancouver's west side was made up of families with European (by and large British or Scottish) heritage. But walk through the commercial district of Kerrisdale today and the mix is increasingly Asian. Chinese families who immigrated to Vancouver twenty years ago are now a part of the fabric of the community, and their kids have graduated from Magee, Point Grey, Lord Byng and Prince of Wales high schools. And so it will be twenty years hence with families arriving here now.
Yet there are many who continue to ring the alarm bells about Chinese investors. One of first commentators to openly suggest that governments should intervene was a former city councillor with the free enterprise NPA — Peter Ladner waxed in one of his columns that we need new regulations to limit buyers from China. Ladner used the example of a mining company CFO who "couldn’t afford to trade his house in an eastern city for a decent family house in Vancouver". While like Ladner I'd like to see talented business executives make Vancouver their home, what problem are we trying to solve in this instance? If you ask me either the mining company needs to pay their CFO more, or the CFO has to consider other housing options in his price range. No one in outside Vancouver should expect they'll get a one-to-one swap today for real estate in other parts of the country.
Another call for government regulation also comes from an unexpected source. Vancouver Courier columnist Mark Hasiuk is an avowed conservative in all matters except, it seems, the rules regarding the ownership of real estate. He states in a recent column:
In B.C., Premier Christy Clark and her “Families First” Liberals could restrict foreign ownership. At city hall, Mayor Gregor Robertson could tax foreign real estate investors at business rates (18 per cent) not residential rates (4.2 per cent). It may not dramatically limit foreign investing but at least they’d pay more into municipal coffers.
The Surrey Leader newspaper also posted an editorial with its own "radical tax proposal" to offload Translink costs onto foreign owners:
So here’s one provocative proposal that might help put a dent in both problems: Double TransLink’s current residential property tax rates. But at the same time, create a homeowner grant that rebates 50 per cent of the TransLink tax.
Like the homeowner grant on municipal property tax, the TransLink version would exclude second vacation homes and disqualify owners who aren’t Canadian citizens or landed immigrants.
Most working folks would notice no difference. But the transportation authority would suck twice as much cash from foreign buyers, other non-resident owners and speculators.
Slapping higher levies on "foreigners" is not a new idea. Australia has been doing it for over two decades, but it hasn't improved affordability in Sydney by a long shot. The Aussie metropolis see-saws with Vancouver in terms of low affordability, casting doubt on this scheme.
So while we've got conservative thinkers pushing for more regulation, one of Vancouver's staunchest left wing commentators is advocating a more market-based approach. Allen Garr went on the attack against those whom he suggests have made the buyer from mainland China into Vancouver's real estate boogie man. His scathing column is titled "Blaming Chinese for high house prices in Vancouver is racist".
We have an unfortunate tendency to vilify someone or something when we have a problem and seek a simple solution. In this case, the problem is the extreme shortage of affordable housing…
…you can set your hair on fire and blame Chinese foreigners. Then you can turn to the simple solutions that racists frequently come up with: quotas. I'm surprised we aren't hearing proposals to reintroduce the head tax.
And who do you decide to hang this fictional phenomenon on? Who better than your local politician. Reaching for another stereotype, you blame politicians who won't do anything about this because they are all corrupt. They need to line their political party's pockets with money from big real estate developers who are making a fortune selling houses to all those Chinese foreigners.
If you buy into this proposition, you shut down serious debate about the need to increase supply through densification and changes to zoning regulations, to say nothing of what kind of city we all want to live in. Together.
I admit that Garr's market mantra caught me completely off-guard. Next thing you know we'll see Allen walking down the street holding hands with his arch nemesis Sam Sullivan, another defender of market urbanism.
By quoting former planning director Larry Beasley that this talk about Chinese buyers is 'racist', Garr was arguably trying to provoke a reaction from readers. The Courier did get a full response from an aspiring city councillor named Sandy Garossino who has forged her political reputation around the Chinese real estate buyer issue. As an independent candidate during the 2011 civic campaign, Garossino took a page from her friend Ladner and frequently commented on how Chinese buyers were influencing the real estate market. Since the election she's been often quoted in the media for her opinions on foreign ownership. Having attached herself to such a politically divisive issue, it's understandable why Garossino wouldn't want to be branded as a bigot by Garr or anyone else.
Garossino's rebuttal to Garr is titled "Concern about foreign Chinese buyers in Vancouver based on facts". Her thesis points to several media articles "well sourced with rich information" which have been written on the topic of Chinese investment in Vancouver, and she backs that up with a few anecdotes from 'Canadian Chinese Vancouverites' who despair about the exodus of young talent from Vancouver. Young people fleeing Vancouver is one of the many arguments Garossino lately puts forward for more government intervention. While no one wants to see our youth leave the nest for other parts of Canada or beyond, it's hardly a new phenomenon. Kids here have always packed up for Toronto, L.A. or Hong Kong, usually after they've got their education. But Vancouver remains expensive because just as many youth come here too from points beyond.
A clever retort to this discomfiting debate about race and real estate comes from a friend of mine, Andy Yan of BTA Works, an urban design and research firm. Quoted by writer Luke Brocki, Yan says "the plural of anecdote is not data". In other words, let's stick to the facts, not just what people think is happening. Brocki's own research backs up what Garr says, that only about four per cent of housing purchased in Metro Vancouver is owned by offshore buyers. And the majority of foreign ownership in Vancouver real estate is from buyers in the USA, not China. I can't remember ever reading about the problem with Americans buying homes here, but the concerns about Chinese buyers seem endless.
When people get priced out of the market it's understandable when they seek someone to blame for it. Just as EXPO boosted Vancouver's image on the world stage decades ago, we're faced with the consequences our recent Olympic marketing campaign, combined with the lowest sustained interest rates in history. To make things more challenging Vancouver's population continues to grow by roughly 10,000 people per year. That translates into a need for about 4,000 new units of housing to be built per year just to keep up with demand. Vancouver currently permits just about half that amount of housing to be built. How many of us howl about building more housing in our city? Which one of us shake their fist at the Bank of Canada for that 4.1% five-year rate?
Vancouver's housing challenge is not only to build more places to live so that it may provide more affordable housing options. It may be that, as a young woman named Bonnie Wong commented on the Open File website, the longer term goal is to change the culture around real estate here:
Ooh, a sensitive subject [foreign ownership] and not to be taken lightly. I just moved to Vancouver from London, England, where there was a similar issue – foreign investors with significant amounts of money buying up property, propping up demand, and inflating values…I have this solution: instill a culture and behaviours that promote long-term use value in property rather than encourage price speculation or people generating financial wealth from property values rising. i.e. don't sell out. Start teaching a different sort of land economics in schools, university, and TV (enough of these property tycoon and property ladder type of TV programs). Put land back into common ownership (see Community Land Trusts or wider-scale, more mainstream applications of co-operative housing models).
I admit it's hard to imagine Vancouver without condo-flipping, but I salute Bonnie Wong for proposing some new thinking on this subject. It does go back to my west side relatives and their reminiscences about front yard chats, and about building community. I think the city we crave is right in front of our nose if we're willing to work hard to make it happen.
That means more housing, more choice in the types of housing, and most of all uniting and not dividing Vancouver over the issue of foreign ownership.
- post by Mike