It's been a record-breaking few months for Vancouver real estate.
By latest count, Greater Vancouver home sales went up 65.6 percent between January and February, setting a new high-water mark at 4,172 transactions over the month. According to one international real estate firm, housing prices in Vancouver rose faster than any other city in the world in 2015—ahead of Shanghai, Sydney, Istanbul and Munich.
Along with these distinctions have come a few more strange and telling signals: a house that literally burned down is asking for $2 million; a Metro Vancouver municipality has introduced an awkward "English only" bylaw; the BC Supreme Court recently ruled you can't quit paying spousal support—even when your ex-wife's home value near-doubles. And way down the income food chain, at the supposed bottom end of the housing market, at least one Downtown Eastside single-room occupancy hotel is now advertising $1,500 for a room.
Reading these stories, you get the sense anything can happen in Vancouver's "overheated," "unregulated," "out-of-control" housing market. And while provincial and federal leaders are finally starting to take notice and make changes (more on this later), few experts agree on how much worse it could get, or what more is needed.
For young people all this means stretching modest and minimum-wage pay to cover bigger and bigger rents. Some surf couches, move in with casual partners, or rent out their own beds online just to stay afloat. Owning feels like a laughable dream for most. For readers out there who are pretty sure they've done nothing to cause this hot mess, VICE breaks down some of the forces at play.
You can't have a conversation about Vancouver's ridiculous housing market without mention of "foreign money." One Angus Reid poll last year found 64 percent of Vancouverites name foreign investment as the main driver of unaffordability.
Here's why: From 1986 right up until 2014, Canada encouraged people with deep pockets to move here with an investor immigration program that had very few rules beyond loaning the government $800,000 for five years. Thousands of millionaires—a great deal of them from Taiwan, Hong Kong, and more recently mainland China—have made use of these investor visas each year.
A study by University of British Columbia geography professor David Ley found as many as 200,000 of these immigrant investors chose Vancouver as their home in these decades. A huge volume of those wealthy migrants have put their money into property—in some cases to escape volatility at home, in other cases just to make money.
At the time, politicians saw wealth migration as a way to "reboot a troubled regional economy through an infusion of activity from the growth region of the Asia Pacific," Ley told the Vancouver Sun earlier this week. That helped make residential real estate British Columbia's most sought-after commodity, raising housing values nearly 75 percent over the last six years.
Even though the federal investor visa program was shut down by Stephen Harper in 2014, Quebec still has a similar business-immigrant program that continues to operate. Ian Young of the South China Morning Post reports that about half of them end up in BC.
TRADED LIKE STOCKS
With all this wealth and demand in the system, stock market types of all kinds have looked to Vancouver houses and condos as money-making machines.
Clearly this is paying off. Property values shot up as much as 30.9 percent in the last year alone. On a $1.5 million house, that's a cool $463,500 return in one year. "Hot doesn't quite describe Vancouver's three-alarm fire of a housing market," Bank of Montreal chief economist Doug Porter recently told Global BC.
In fact, analysis over at The Tyee found real estate is eclipsing "virtually every other aspect of [BC's] economy." With Greater Vancouver real estate now worth about $636 billion, housing outvalues BC's natural gas, forestry, fishing and mining industries combined.
REALTORS BEHAVING BADLY
Until recent weeks, BC hasn't showed much interest in making sure the real estate industry follows its own rules, even as buying and selling volume reaches uncharted highs. Industry has been allowed to regulate itself, which means sellers, buyers and agents of all kinds have been getting away with some shady practices.
Back in February, Globe and Mail investigator Kathy Tomlinson broke a big story about "shadow flipping," a technically legal reselling practice that BC Premier Christy Clark has recently promised to end. In these scenarios, realtors arrange a sale, and then find one or more new buyers willing to pay more before the deal is closed. Land-transfer taxes are only paid once, the agent makes commission on multiple sales, and often the original sellers have no idea.
Another piece of the puzzle is unlicensed real estate "wholesalers" who are buying houses on behalf of investors and don't report to regulators who monitor money laundering.
"You can't go with cash in hand from an investor and act as their agent and buy property without a licence in British Columbia," explains Province journalist Sam Cooper. "Straight up, that's illegal."
A really wonky government agency called the Financial Transactions and Reports Analysis Centre (FINTRAC) is supposed to track this stuff, but so far has been slow to impose charges or fines. FINTRAC did recently audit 80 realtor offices and found most weren't following basic anti-money laundering procedures. The latest federal budget included $444.4 million in funds to crack down on tax evasion and avoidance, which could potentially help turn those sketchy habits around.
'GIVE US DATA'
One of the biggest demands from Vancouver housing activists has always been a call for more data on foreign ownership, vacancy and how quickly properties are being flipped. Because again, any stats on this stuff have been collected and provided voluntarily by the industry itself—a group with obvious skin in the game.
Only with the most recent BC budget has Premier Clark said homebuyers will now have to state whether they're a citizen or permanent resident, and if not, where they're from. Though it's yet not clear that will even help solve Vancouver's affordability problem, since many of the wealthy investors brought in by immigration incentives are by now settled Canadian citizens.
"It's really nice window dressing," one Vancouver immigration lawyer recently told the Globe and Mail.
In the federal budget released yesterday, Ottawa also set aside $500,000 for Statistics Canada to develop a way to monitor offshore money in housing. And recently the City of Vancouver released a study on vacancy, which many observers called flawed.
What's not yet clear is how quickly these new data collection efforts will translate into action on affordability.
MISERABLE TIMES AHEAD?
What Vancouverites think should be done next has a lot to do with how old, how invested, and how hopeless they're already feeling. When asked last year whether they were "happy," "comfortable," "uncomfortable" or "miserable," a full 45 percent of poll respondents said they were uncomfortable or miserable in the city. The vast majority of miserable people have thought about leaving the city because of high housing costs.
Not surprising is the fact happy Vancouverites skewed old, white, and likely to have bought a home more than a decade ago. Seventy percent of people who said they're "happy" are over 55, 85 percent are white, and 82 percent bought their home before the year 2000. Most of the uncomfortable and miserable people are 34 and under.
That adds to more recent debate over whether young people are packing up and moving out. (Some argue they're more or less being replaced).
What seems broadly supported even among well-invested boomer types, are a tax on flipping (69 percent by last count), a tax on vacancy (82 percent) and an extra property transfer tax for buyers outside of Canada (79 percent).
For the first time ever, BC's government now seems willing to consider those options: "We are going to work with the City of Vancouver and other cities on issues with respect to vacancy, and speculation and supply," Premier Clark told a crowd late last week. "So all of those issues are on the table. Nothing is off the table for discussion."
While hurting young people wait on those fixes, you may as well get comfortable in your subterranean closet full of spiders. You're going to be there a while.
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