Conservative Leader Erin O'Toole scores some cheap political points by calling for a ban on foreign homebuyers

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      When I read the most recent news release and backgrounder from the federal Conservatives, I thought "here we go again."

      "To stop homes from sitting vacant," Erin O'Toole's party said, "Canada's Conservatives will ban foreign investors not living in or moving to Canada from buying homes here for a two-year period, after which this policy will be reviewed."

      Regular readers of may have noticed how we've gone against the grain of the Canadian media by pointing out that offshore buying is not having nearly as great an effect on prices as many other factors.

      As a result, we've regularly been pilloried on social media, regardless of how much data we put forward to support this argument.

      Here's one piece of data: a chart from the Canada Mortgage and Housing Corporation demonstrating how low the rate of foreign ownership of housing really is in Canadian cities.

      CMHC released this chart showing the low rate of foreign ownership of housing in major Canadian cities.

      Journalist Ng Weng Hoong has pointed out on this site that the focus on foreign buyers has come at the expense of more than a dozen other factors responsible for rising home prices.

      Here's just one of them: a doubling of the money supply in Canada from 2009 to 2019. 

      Ng also proved beyond doubt that the media misled the public in 2015 and 2016 when it peddled the fiction that you needed $1 million to buy a home in Metro Vancouver.

      Meanwhile, antiracist activist Victor Wong has repeatedly pointed out on his Twitter feed that the media and politicians' focus on foreign buyers has delayed effective policy responses to address the real problem, which is the supply shortage.

      But many mainstream outlets have played into a false narrative that people from mainland China were responsible for our rising home prices. In fact, poor policy choices were far and away the main reason.

      This has even been highlighted by a former politician who had ties to the Conservative Party of Canada. Former Vancouver mayor Sam Sullivan made a video in 2018 demonstrating why economists have questioned the narrative espoused in Vancouver.

      Former Vancouver mayor Sam Sullivan created a video explaining why Vanouver academics were at odds with Ottawa economists on the cause of higher housing prices.

      Conservatives rely on NDP playbook

      The B.C. NDP won the 2017 provincial election in part because it advanced the narrative that foreign buyers and money launderers played a huge role in Vancouver's high home prices.

      Now, O'Toole is borrowing from that same playbook to try to knock Justin Trudeau out of the prime minister's office.

      Like the B.C. NDP, O'Toole also plans to introduce a housing registry if his party forms government to make ownership more transparent. And like B.C.'s attorney general, David Eby, O'Toole promises to crack down on money laundering in real-estate markets.

      None of these things appeared to have any effect in moderating home prices in B.C. They reached record levels last year and peaked this past March in the midst of the pandemic even as immigration crashed and foreign investment in housing paled into insignificance.

      Even Vancouver's shrillest foreign-buyer blamers have moderated their tune, now acknowledging that other factors, including central bank quantitative easing, are playing a role.

      Domestic buyers, encouraged by low interest rates, and institutional buyers are spurring demand. And there are not nearly enough homes for sale, which is why prices never seem to come down. In May, Scotiabank issued a "Global Economics Housing Note" pointing out that Canada has the lowest number of housing units per 1,000 residents of any G7 country. 

      Perhaps in recognition of this, O'Toole has promised a million new homes over the next three years.

      But it's hard to see how he can achieve that, given the role that city councils play in zoning. To put it bluntly, it's outside of O'Toole's jurisdiction because municipal governments are a creation of the provinces, not the federal government. And the Conservatives had a dismal record under Stephen Harper's leadership in funding nonmarket housing.

      One of O'Toole's other policy prescriptions is actually going to drive up home prices. He's going to allow those who sell rental properties to defer paying a capital-gains tax if they sell a rental property and reinvest that money in rental housing.

      That will encourage more of the so-called domestic "home hoarders"—often high-income Canadians who buy houses that they rent out—to get into this side business. Those who are already in this "industry" will start trading up their second, third, and fourth homes that they're renting out.

      This will lead to more intense bidding wars in markets where there's already a tight supply of homes.

      Pointing the finger at foreign buyers is cheap politics that panders to the uninformed. It's likely a contributing factor behind Vancouver becoming the "Anti-Asian Hate Crime Capital of North America".

      It's not going to help young people become homeowners if politicians aren't going to get serious about municipal zoning restrictions that are curbing the overall supply. And tax policies that encourage more hedge funds to buy homes for the rental market aren't going to boost homeownership rates.

      But let's face it, Conservatives have been appealing to the so-called low-information-voters ever since the start of this century with antediluvian policies on climate change, crime and punishment, and dealing with drug addiction. We shouldn't be surprised that in 2021, they've added housing to that list.