Next B.C. housing minister may come under fire if Vancouver prices continue rising

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      Once an idea gets embedded in the neural pathways of the populace, it's very difficult to dislodge.

      Take the housing market.

      There's a prevailing view expressed through journalists, local politicians, website comment sections, and some real-estate agents.

      To them, it's obvious that B.C.'s housing market is driven by speculators. This point of view maintains that many of these property flippers are overseas, driving prices higher and higher and higher.

      According to this perspective, these unconscionable rip-off artists are buying "stocks in the sky", as condos are sometimes called. There's even a movie about that.

      People most concerned about this issue likely voted for B.C. Green and NDP candidates. And politicians with these parties have promised to take action to address the problem.

      The B.C. Greens want to double the foreign-buyers tax and extend it across the province. Their aim is to lower housing prices.

      The NDP doesn't go quite that far but it's also talking tough.

      "There's clearly a shared priority between the two parties of what we both see as the corrupting influence of fraud, money laundering and speculation in our housing market preventing families from getting an affordable place to live," the NDP's David Eby recently told the Globe and Mail.

      Other factors have not warranted nearly as much attention. In some instances, they're scoffed at as minimal contributors to the rising prices. 

      These factors include:

      * a shortage of housing supply;

      * interprovincial migration and immigration;

      * equity-rich boomers passing money to their kids and grandkids;

      * the growth in millennial household formation;

      * central banks' quantitative easing;

      * and historically low interest rates.

      Let's just look at new arrivals. In 2016, the provincial population grew by 61,598, according to B.C. Stats, "largely due to international and interprovincial migration".

      "Net interprovincial migration accounted for a gain of 20,026 and net international migration added 32,912 persons from January 1, 2016 to December 31, 2016," the provincial agency reported.

      The net number of people moving to the province in the fourth quarter of 2016 was the highest total for these three months in the past five years.

      A majority of these newcomers likely arrived in the Lower Mainland, given that it has nearly half the provincial population and it is the preferred destination.

      B.C. Green Leader Andrew Weaver promised to double the foreign-buyers tax and extend it across the province.

      If an NDP minority government in B.C. is stable, thanks to the support of the B.C. Greens, it will be fascinating to see how it makes housing more affordable.

      If those on the government side of the house think fraud and speculation are primary factors driving up housing prices, it should be relatively simple to stamp out. Just bring in punitive measures and beef up regulatory agencies. And crack down on shady real-estate agents and developers. Scare the daylights out of them. And do it in the first legislative session.

      That should push the flippers into other provinces and countries. Presumably, that will make housing more affordable for people living in British Columbia.

      But what if the Greens and New Democrats have underestimated the impact of low interest rates, net in-migration, the supply shortage, and other factors? Then British Columbians who voted for these parties might be in for a rude surprise.

      That's because if there is a raft of regulations and penalties imposed, they just might not have nearly as big of an impact on prices as some NDP and Green voters might have expected. And when the next election rolls around, some of these citizens might be experiencing voters' remorse if they see home prices continuing their upward trajectory.

      Eby and B.C. Green Leader Andrew Weaver have been the most vocal in citing speculation as the monumental problem to address.

      That's because speculation creates bubbles, which can suddenly pop, leaving people in serious financial distress.

      Mike de Jong and Christy Clark might have thought a foreign-buyers tax would keep them in power, but the B.C. Liberals were still hammered in many areas of Metro Vancouver.

      As an aside, we've been hearing predictions for many years about the Vancouver housing bubble bursting. More space on blogs has probably been taken up with this subject than virtually anything else. 

      It's predicated on the belief that speculators are driving up the market and sooner or later, it would come crashing down on them.

      And yet for years, this sharp correction in prices has not occurred, even after mortgage rules were tightened and a foreign-buyers tax was introduced. 

      At the start of this year, there were predictions of a sharp drop in housing prices in the Vancouver area from bankers and professors. So far, they've been dead wrong. 

      In May, the benchmark price for all residential properties in the Real Estate Board of Greater Vancouver was up 2.8 percent over April. Prices were up 8.8 percent over the past 12 months.

      In other words, there's been no home-price crash in Metro Vancouver since the 15 percent levy was introduced.

      In the eyes of some NDP and Green politicians and media commentators, the problem has been that the penalties aren't high enough. And there are too many loopholes on presales overseas. 

      Fine. Now the NDP and Greens have an opportunity to fix that. They're in charge and they can write new laws and regulations.

      Maybe we'll find out what will happen if the foreign-buyers tax is jacked up to 30 percent.

      Perhaps heavy fines will be imposed on developers who market projects in Shanghai or Dubai.

      But if this happens and home prices are still rising by the next election, then the incoming Horgan administration is going to have some explaining to do.

      Traditionally, one of the toughest tasks in cabinet has been overseeing the Ministry of Children and Family Development.

      But under the next government, it could turn out to be the Ministry of Housing.

      Whoever gets this job already has my sympathies.