The chief economist of the B.C. Real Estate Association (BCREA) says that homes did not become more affordable after the province started taxing foreign buyers.
Brendon Ogmundson noted that although prices saw some oscillations since the levy was introduced in 2016, and later increased and expanded in coverage in 2018, little changed.
“In terms of overall affordability, we’re clearly not in any better place now than where we were in 2016,” Ogmundson told the Straight in a phone interview.
In July 2016, amid strong anti-Chinese sentiment, the B.C. Liberal government of then-premier Christy Clark announced a tax on home purchases by foreigners.
It was a 15 percent levy on residential properties in Metro Vancouver. The tax was intended to make homes more affordable for local buyers.
In that same month, the typical prices of homes in the region were as follows: condo, $533,000; townhouse, $676,100; and single-family detached home, $1,574,100.
Meanwhile, the average price of all homes in the province at the time was $662,667.
The 2017 provincial election came, and Clark’s B.C. Liberals were banished from power. John Horgan and his New Democrats took over.
The B.C. NDP government unveiled its first budget in February 2018 and announced that it was increasing the foreign-buyer tax to 20 percent.
In addition, the tax was expanded outside Metro Vancouver to cover the Fraser Valley, the Capital Regional District, the Nanaimo Regional District, and the Central Okanagan. Again, the purpose was to make homes affordable to locals.
In that same month of February 2018, the benchmark prices of homes in Metro Vancouver had increased since the first tax was announced in 2016.
Specifically, a typical condo at the time was $700,300; townhouse, $807,700; and single detached, $1,588,200. As for the average price of all B.C. homes, the amount had increased to $747,315.
Later, in the fall of 2018, the B.C. NDP also introduced a speculation and vacancy tax, which was again directed at foreign homeowners.
Meanwhile, in the previous year of 2017, the City of Vancouver implemented an empty-home tax, a levy that took aim at supposedly unoccupied homes owned by foreigners.
Prices remain high
Look ahead to December 2020, though, and the numbers are slightly different.
As of last month, a typical condo in Metro Vancouver had a benchmark price of $676,500; townhouse, $813,900; and detached home, $1,554,600.
Meanwhile, the average price of all B.C. homes in December 2020 was $847,600.
“Obviously, there’s a lot more driving the market than just external factors,” BCREA’s Ogmundson said.
On November 30, 2020, the federal Liberal government of Prime Minister Justin Trudeau indicated that it will introduce a tax on “Canadian housing by foreign non-resident owners”.
Again, the declared intent is to achieve affordability for local buyers.
“Too often,” the federal government stated in a budget document that talked about the tax, “the price of homes is out of reach for Canadians, in particular for those looking to buy their first home.”
Moreover, “Speculative demand from foreign, non-resident investors contributes to unaffordable housing prices for many Canadians.”
In order to “make the housing market more secure and affordable for Canadians”, the government will ensure that “foreign, non-resident owners, who simply use Canada as a place to passively store their wealth in housing, pay their fair share”.
Hence, “The government will take steps over the coming year to implement a national, tax-based measure targeting the unproductive use of domestic housing that is owned by non-resident non-Canadians, which removes these assets from the domestic housing supply.”
The national foreign-buyer tax is expected to be introduced in the federal budget this spring. If the budget fails in the House of Commons, Canadians will head to an election.
BCREA’s Ogmundson noted that hardly anything is known yet about what a foreign–home buyer tax means to British Columbia.
What Ogmundson knows is that demand-side taxes like this prospective national levy can only “buy some time”.
“We keep enacting these policies that buy us time, and then we don’t do anything with that time,” he said.
According to the economist, there is a “lot of demographic demand” in B.C. because of its young and growing population.
“The problem is that every time demand is on an upswing, it’s hitting a very undersupplied market,” Ogmundson said.
Tiny sample drove public discourse
Ogmundson also had something to say about the persistent antiforeign sentiment in B.C. that led to the housing taxes.
“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.
Ogmundson didn’t mention any such “silly” example, but one may come to mind.
That was in 2015, and it’s recalled in an online post by former Canadian MP Garth Turner, now an economic commentator.
On his blog The Greater Fool, Turner recounted that David Eby, B.C. NDP MLA for Vancouver–Point Grey, “pulled land records for 172 sales in one small area of Vancouver (on the ultra-expensive Westside) and handed them over to a researcher for analysis”.
Turner noted that the 172 sales represented 0.52 percent of the 33,116 residential properties that changed hands in the province in 2014. These are also about 0.4 percent of the number that were expected to trade in 2015.
“In other words, it’s statistically meaningless,” Turner wrote in a piece titled “Yellow Peril”.
Turner went on: “Eby’s guy then looked at the names of the 172 buyers, screening them for ‘non-anglicized’ Chinese names, which is a racist little thing some people do in Vancouver to try and ferret out Asians who might be more Asian than the vast number of locals of Asian heritage.”
After the 2020 election, B.C. premier Horgan named Eby minister responsible for housing.More