Affordability problems, skyrocketing housing prices, and the most expensive city to live in the world were some of the labels attributed to Vancouver. Foreign buyers were always the first group of people that takes the blame. Without doubt that foreign buyers partially contributed to the raising housing prices, but to what degree?
2016 was when the Liberal government imposed a foreign buyer tax. Since then, the volume and price of properties steadily declined. The policy was a negative signal for real estate market. Therefore, the decline was reasonable and extremely effective when foreign buyer was the hottest topic at the time.
BC Real Estate Association released 2020 real estate data showing share of foreign buyer in the fair market value of homes was 0.56%. Foreign buyer accounted for 1.4 percent of homes sold. By the end of 2020 and early 2021, the housing market rebounds significantly. The price of a typical home rose to $1,084,000 in February. A 33.8% increase compared to the same month in 2016. Bidding wars were happening everywhere, and the market will likely get hotter.
BCREA economist believes the price adjustment is rational. Low interest rate, undersupplied market, and proven resilient economy amid the pandemic. However, we believe the three factors has existed long before the boom happened in December.
If we look back, foreign buyers accounted for
- 2017: 3% market share, 3.97% home value
- 2018: 2.4% market share, 3.16 home value
- 2019: 1.7% market share, 0.86 home value
The annual average home price increased to $782,027 in 2020, 11.7% more than the previous year. The data speaks. It is not just foreign capital that is causing housing boom. It has more to do with Vancouver’s potential to grow in the long run. A strong demand sees investment potential in the housing market. As OCP and transit options continues to grow, investing in this city will net a great return. If foreign buyers were not the main culprit then it is the residents in the city is playing its role.
“The non-economists claim foreigners are to blame. The economists claim we Canadians are to blame,” according to Sullivan, former Vancouver Mayor.
“Just last month Stats Canada researchers and Government of Canada housing economists finally released their report. They found 3.2 percent of all single detached homes in Metro Vancouver were owned by nonresidents. This includes Americans and British Columbian snowbirds who live south of the border most of the year,” Sullivan added.
"The trouble is that we kind of always try and find whats the one thing that’s driving the market when in fact it’s generally a whole bunch of different factors that are all happening at once or kind of reinforcing each other,” Ogmundson said, chief economist with the B.C Real Estate Association in an interview with the Georgia Straight.
“We have a thriving pan-Asian population for a long time, but even people who have been of second-, third-generation are still sort of seen as foreign because of their names or something silly like that,” Ogmundson said at the time.
