Has there been a misdiagnosis when it comes to Vancouver's housing market?

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      Those who live in glass houses shouldn't throw stones, right?

      So right off the bat, I'm going to offer up a couple of mea culpas from my journalism over the years.

      More than a decade ago, I became keenly interested in the topic of peak oil. It began after I read The Party's Over by Richard Heinberg. My fascination carried on for several years, thanks to a bunch of other books.

      I wasn't alone. Authors Michael Klare, Kevin Phillips, Dmitry Orlov, Jeff Rubin, Jeremy Leggett, Matthew Simmons, and others also banged this drum. One of the earliest Cassandras was Scientific American, which published a very influential article on this topic in 1998 called "The End of Cheap Oil".

      There were graphs like the famous Hubbert curve, created by U.S. geologist M. King Hubbert, that declared an inevitable crash in oil supplies. The resulting high prices would grind the world economy to a halt.

      All this math suggested that an economic calamity wasn't far off on the horizon. According to the peak-oil theorists, Big Oil was lying about the scope of the problem because it wanted to gobble up as many short-term profits as possible before the end came.

      In 2006, I was at a newspaper conference and had an opportunity to ask a single question of former U.S. president Bill Clinton. Naturally, I inquired if he thought that Middle Eastern countries had exaggerated their estimates of proven oil reserves, as had been suggested in Scientific American. Clinton responded by mentioning the books by Leggett and Simmons.

      Others were more skeptical, notably SFU resource economist Marc Jaccard and writer Daniel Yergin, who both knew far more about energy than I ever would.

      The skeptics pointed out that there were massive supplies of fossil fuels ready to be taken from the Earth through unconventional drilling techniques. But it would require technological advancements before this could happen.

      Sure enough, clever U.S. wildcatters figured out how to do that through fracking, spawning an energy revolution. The price of oil and natural gas plummeted, causing severe hardship in Alberta this year.

      AIDS and syphilis linkage was another example

      There have been more missed forecasts. When I was very young, I wondered if syphilis and not HIV might explain the pandemic of gay men's deaths.

      This area of inquiry was triggered mainly by Toronto science journalist Coleman Jones, who prepared documentaries on this topic for the CBC Ideas program. He was keenly interested if the latent stage of syphilis, where symptoms are hidden, could explain what was going on.

      Big Pharma stood to make a lot of money marketing drugs to counter a puny retrovirus called HIV. According to the syphilis-causes-AIDS crowd, Big Pharma had a vested interest in looking the other way, just as Big Oil had a vested interest in lying about its proven reserves. 

      But it turned out that HIV was indeed the cause of AIDS. Thanks to some brilliant Vancouver researchers, HIV/AIDS has been converted into a chronic disease rather than an automatic death sentence. And one day, Vancouver's Dr. Julio Montaner may win a Nobel Prize for this accomplishment.

      It demonstrated once again that sometimes the experts know a lot more than lay people about complicated subjects.

      Journalists are fallible

      The Globe and Mail's recently retired Jeffrey Simpson used to write an annual column on his lousy forecasts over the previous year. It served as a constant reminder of the fallibility of journalism, which is often prepared in a hurry. As far as I know, no other columnist in North America does this.

      Nowadays in Vancouver, there are journalists and lay people convinced that buyers from China are the dominant force driving Vancouver's housing market.

      According to this narrative, Big Real Estate is engaged in a cover-up so it can line its pockets with ill-gotten, corrupt money pilfered from mainland China.

      This meme has taken hold in the Vancouver media, most notably in the Vancouver Sun, Globe and Mail, and CBC Radio, which all serve an upper middle class and mostly white audience. And for all I know, this meme may be correct. There's not enough evidence to make a final determination.

      But recently released preliminary statistics from the B.C. government threw a monkey wrench into these perceptions. And the data has been dismissed as bogus by the proponents of the theory that Big China is making housing unaffordable for Vancouver's middle class.

      Yesterday, I wrote a long essay about the whole issue of denial.

      In response, former federal NDP candidate Victor Wong wrote a comment offering a contrary view to the dominant meme. I've reproduced part of it below to open readers' eyes to the possibility that the media might have misread the cause of Vancouver's high real-estate prices:

      In the end, there's been a misdiagnosis.

      According to the first tranche of data, foreign nationals, including international students and temporary workers WHO ACTUALLY LIVE HERE(!!) are only 5% of #VanRE. The data will be confirmed next month and the month after that and the month after that plus or minus a couple of percentage points. Or I'm wrong. Call me on it in a month.

      Egalitarians then pivoted to the more malleable notion of foreign money ie. relatives sending money from abroad, immigrants bringing in capital, Canadians borrowing offshore, etc. OK, fine. I'll pencil in 10% as my estimate of Canadian/permanent resident buyers using foreign capital. That gets us to 5% + 10% = 15% of #VanRE purchases by foreign nationals and Canadians and permanent residents using foreign capital.

      Foreign capital is a small component of #VanRE thus the private market will sort itself out.

      So what's my policy prescription?

      IMO we should focus on the real crisis:
      1. the need for more social housing,
      2. the lack of affordable rentals, and
      3. the need to renew co-op agreements.

      There may be some adjustments to be made on the tax side: taxing luxury homes by adding more PPT brackets, ensuring builders/speculators pay business income/GST on a timely basis, and taxing vacant homes but these measures should be modest, broadbased and implemented for social equity purposes.

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