Federal agencies suggest foreign home buying isn't that extensive, but try telling that to Vancouver residents

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      One of the joys of working in the media is getting trashed when you say something that goes against the grain of conventional wisdom.

      Yesterday, I wrote a column under this headline: "Kennedy Stewart and new Vancouver council must counter public ignorance about factors driving up housing prices".

      Among the insults directed at me were "race-baiter", "gutless", and "shoeshine boy of the Real Estate Cartel". I was accused of ignoring data.

      One reader declared that I was "assigned to the dustbin of irrelevant opinions".

      But here's my favourite: one anonymous troll claimed that my "entire function is to perpetuate the public's ignorance about the factors driving up housing prices".

      Fair enough. People are free to have their views, even anonymous trolls. Besides, their point of view is already heavily reflected in the pages of the National Post, Globe and Mail, Vancouver Sun, Province, and Maclean's.

      I've encountered similar criticisms over more than two decades as I've tried to raise awareness about climate change.

      I'm used to being called an idiot by the climate-change deniers. It comes with the territory. Sometimes, it makes me laugh out loud.

      With climate change and foreign buying of residential real estate, I've noticed that people cling to their beliefs with remarkable intensity—and respond with a special type of vehemence to the apostates in their midst.

      There's a ferocity that these two topics elicit in the comments section on our website that exceeds almost every other subject.

      I suspect you'll see this again if you click the comments below this article.

      It suggests to me that these responses are not only rooted in the prefrontal cortex, which is where logical decision-making occurs, but also in the limbic system. That's part of the paleo-mammalian brain, where emotions are centred.

      Every time this happens, I'm reminded of the research of Daniel Kahan at the Cultural Cognition Project at Yale University.

      "Cultural cognition refers to the tendency of individuals to conform their beliefs about disputed matters of fact (e.g., whether humans are causing global warming; whether the death penalty deters murder; whether gun control makes society more safe or less) to values that define their cultural identities," the Cultural Cognition Project website states. "Project members are using the methods of various disciplines—including social psychology, anthropology, communications, and political science—to chart the impact of this phenomenon and to identify the mechanisms through which it operates." 

      If you're interested in learning more about this—and the never-ending debate between communitarians and individualists—you can read this long article, which was written in 2016. It addressed climate change and real estate.

      The recent column that enraged readers was based on a 225-page study by the Canada Mortgage and Housing Corporation.

      One of my most articulate and harshest critics, SFU public policy prof Josh Gordon, is listed on page 209 in the acknowledgements of this CMHC report.

      These CMHC acknowledgements thank many academics, including Gordon, as well as market participants and government officials in providing advice for that document.

      Clearly Gordon, a political scientist by training, disagrees with the CMHC conclusions.

      Here's what he stated on his Facebook page:

      "The leadership of the CMHC decided to draw firm conclusions based on a lagged dependent variable model with major omitted variables (e.g., no measure of foreign capital) and no cross-sectional component. (Wonk alert.) No sensible social scientist would give credence to this type of analysis, except perhaps under the guise of a weak lawsuit against the foreign buyer tax."

      I can only conclude that despite CMHC hearing his input, he felt it wasn't reflected in a satisfactory way in the final report. 

      I'm not an expert on real-estate economics. I didn't study real-estate economics in university. My knowledge is merely based on extensive reading over the years, just like most of the journalists writing in all those other publications.

      But I am aware of these 13 points:

      1. Statistics Canada data showed that nonresidents owned 4.8 percent of residential property in metropolitan Vancouver. This accounted for 5.1 percent of total residential value.

      2. When it came to single detached houses in metropolitan Vancouver, 3.2 percent were owned by nonresidents, according to Statistics Canada.

      3. Nonresidents owned 7.9 percent of condos in metropolitan Vancouver, according to Statistics Canada.

      4. Housing prices fell in Metro Vancouver in late 2016 and early 2017 before rising again, according to data from the Real Estate Board of Greater Vancouver.

      5. The CMHC report notes that it's difficult to quantify the impact of foreign investment on Canadian housing markets. "While official data on the stock and flow of foreign investment appear low, it is possible that upsurges of foreign investment at market peaks could alter expectations of domestic homebuyers on the price they should pay for housing, and encourage domestic speculators."

      6. A CMHC survey showed that 52 percent of recent homebuyers in Toronto and Vancouver "believed that foreign buyers were having an influence on home prices in those centres". The federal housing agency stated: "Actions taken by the Provinces to curtail foreign investment could therefore have been timely to reduce short-term spikes in housing prices."

      7. CMHC reported that 68 percent of Vancouver respondents to its survey believe foreign buyers have "a lot of influence" on housing prices. An Angus Reid survey in 2015 stated that 64 percent felt that foreign investment was "one of the main causes" of high Vancouver housing prices.

      8. CMHC stated: "It is possible that the narrative around foreign investment in Vancouver with an endless flow of funds has created a compelling story encouraging residents to enter the market. The actual size of foreign investment in Vancouver would therefore not matter if the narrative were compelling enough to alter households' beliefs and therefore encourage exuberant expectations of future prices."

      9. CMHC noted that the Canadian dollar plunged when oil prices crashed. The federal housing agency report surmised that this would have made Vancouver, Toronto, and Montreal more attractive to foreign buyers.

      10. B.C. government statistics noted that in each of the final four months of 2017, between 3.1 percent and five percent of residential real-estate sales in Metro Vancouver involved foreign buyers.

      11. Chinese president Xi Jinping has made corruption a central issue as he's consolidated power and essentially designated himself as a ruler with no term limits, unlike his immediate predecessors.

      12. The Chinese government has taken dramatic action in the past year to enforce its currency-control laws.

      13. CMHC and Statistics Canada have never publicly raised concerns about the role of B.C.'s Business Corporations Act in shielding ownership of residential real estate.

      The Gordon Campbell government introduced this law in its first term, preventing access to shareholder lists except under very narrowly defined terms.

      Section 49 of the act makes it difficult for independent observers to know who is behind companies that own residential real estate.

      The NDP government could amend the Business Corporations Act to peel back corporate secrecy. But after 18 months in power, it's refused to do this.

      Finance Minister Carole James has, however, introduced legislation for a speculation and vacancy tax. Her ministry has also released regulations around a new condo and strata assignment registry.

      Beginning January 1, 2019, developers will be required to collect the name, social insurance number or business information of parties who purchase condos, including assignments to purchase, and this will be available in the online register.

      That information will be forwarded to federal tax officials.

      When the NDP was ruling B.C. in the 1990s, anybody could walk into a corporate records office and see shareholder lists of private companies. That's no longer possible. But you can do that in Alberta.

      The reality is that nobody will really know the truth—and be able to document this irrefutably—until the provincial government ends corporate secrecy once and for all in British Columbia. In the absence of this, cultural cognition will influence our beliefs.

      The recent move to disclose ownership of condos purchased after January 1 is a step in the direction of greater transparency. But it will do nothing to shed light on the ownership of companies that bought residential real estate in the past.

      If a Progressive Conservative government could live with full corporate transparency for years in Alberta, why can't an NDP government do the same in our province?

      Gordon claims that I'm not being progressive because I'm not siding with local working people who want a decent shot at the housing market.

      I could just as easily accuse him of blaming foreigners in the absence of a great deal of confirmation from Canada's well-respected national statistical agency, the national housing agency, and data from the provincial government. So who's the real progressive?

      In the meantime, some of Gordon's acolytes simply don't believe the information coming from Statistics Canada, the Canada Mortgage and Housing Corporation, and the B.C. Ministry of Finance. In their mind, it's bogus. They deny there's any truth in these numbers.

      My column yesterday merely recommended that Mayor Kennedy Stewart and the new Vancouver council counter public ignorance about factors driving up housing prices.

      If that's enough to elicit a torrent of insults, it suggests to me that perhaps I struck a culturally cognitive nerve.

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