Is it fear baiting or an actual assessment of radical changes in the Vancouver, British Columbia housing market. A new study charges Chinese immigrants who don’t actually live in the Canadian city are causing housing prices to overheat.
David Eby, a New Democratic member of the Legislative Assembly of British Columbia, for Vancouver-Point Grey obtained data on the housing market that he turned over to University of British Columbia adjunct planning professor and analyst Andy Yan, reported Toronto’s Globe and Mail.
The study looked at 172 sales in three neighborhoods on Vancouver’s west side from August 2014 to February 2015. Yan screened for non-anglicized Chinese names, a methodology used previously by academics in an effort to separate out names that would likely belong to recent immigrants.
The Globe and Mail reports that the study found that two-thirds of all sales of detached houses in the University Endowment Lands, Dunbar and Point Grey neighborhoods were purchased by buyers with non-anglicized Chinese names. That group purchased 88% of houses priced at more than $5 million.
The study found that on titles held by a single owner, the most common occupation was homemaker on nearly a third, or 52 properties; 18% were business people and 6% were students. More striking was that 82% of the homes were purchased with a mortgage.
Yan told the paper he could only deduce that buyers were purchasing with money from mainland China. But, he argued, it’s not much of a leap, considering the median income for 25- to 55-year-olds with bachelor degrees in Vancouver is $41,981. Those dependent on the local job market couldn’t compete.
“Unless somebody tells me that it’s suddenly possible to make a ton of money selling cellphones at in Richmond, this situation is problematic for locals,” Yan told the Globe and Mail.
Eby said their data are important because they support mounting evidence that foreign money has priced local incomes out of the market.
“We can soon safely say we have a sense of what is happening,” he said.
Attempts to find a solution to Vancouver’s housing crisis has been stymied by complaints that there is a lack of data to prove that foreign capital is having any real impact on the market, said the Globe.
Premier Christy Clark has said there is no evidence that wealthy foreign buyers are driving up the prices and therefore no reason to introduce a luxury tax.
“Constituents were telling me there were a lot of houses being bought and sold in their neighborhood, and they didn’t even see the neighbors move into a house before it was sold again,” Eby told the paper. “So it makes sense to me now that we have the data, to see this astronaut family phenomenon of mom and kids being brought over from mainland China.
“The kid goes to school and dad is at home in China working and supporting the family. Mom is only there with kids for the school year, and the house would appear to be vacant for a big chunk of year.”
The Globe said it’s been investigating court cases to conclude that wealthy foreign investors were using loopholes, such as placing a house in a relative’s name, to avoid paying taxes. It said the new data supports its findings.
The most popular lenders for the houses examined by Yan were CIBC, HSBC and Bank of Montreal. More than 80% of the mortgages on the houses in the study had been given to people with non-anglicized Chinese names. In another sign the owners don’t live at the house, 19% of assessments were sent to addresses other than the house’s address
A recent Sotheby’s report said the east Vancouver neighborhood of Grandview has seen a 30% increase in average house prices in the past year, according to the Globe.
A Landcor report exclusive to The Globe and Mail said Burnaby, West Vancouver, Coquitlam, South Surrey and Port Moody had all seen prices surge 25% to 50% for single-family homes in the past five years.
Just last month prices leapt 19.3% compared to a year ago, the Real Estate Board of Greater Vancouver reported this week and the home price index composite benchmark price jumped 15.3% during the same period.
“I hear stories of families who scrape and save and borrow money and then they go out to buy a home and they are dramatically outbid,” Eby said told the Globe. “And the outbidding is happening because the market is now international – it’s no longer connected to the local realities of what people can earn from a local job in Vancouver. … I don’t think we have to be that imaginative, looking at current trends and guessing where we are heading here – which is that Vancouver will functionally become a gated community.
Eby cautioned that the aim of gathering the data was not to try to point fingers at one group of investors. Instead, he said, it was to bring attention to a system failure.
“The trick is people want to ensure that all the appropriate taxes are being paid, all rules are being followed and that this investment is managed in a way that is supportive of future growth of the city. The worst outcome would be these moms and kids from China become the scapegoats for what is really a government problem.”