OnePacificNews, March 9, 2021, Tuesday

Ng Weng Hoong

Yes, it is different this time.

As Metro Vancouver’s housing prices surged to yet another record high (1), the public’s response today stands in stark contrast to what it was a few years ago.

During the housing boom or crisis of the 2010s, politicians and opinion-makers angrily blamed foreign investors for allegedly killing affordability in the region.

The outrage against the supposed foreign invasion, led by newspaper columnists (2) being mistaken for real estate experts, created a new type of populism (3). Politicians were quickly on the bandwagon as they campaigned to crack down on the so-called “toxic demand” (4) emanating from out of Asia, notably China.

These days, the public is just as anxious but the anti-foreign anger for Metro Vancouver’s housing problems seems less explosive. More people are waking up to the far bigger but less-publicised threat of increased domestic money supply and low interest rates that have been driving the housing market for over a decade. Some have just discovered the modern-day alchemy called quantitative easing (QE) (5) where central bankers mysteriously create money out of thin air. (Yes, it can be done).

Josh Gordon (6), the Simon Fraser University academic who became famous for his strident blaming of Chinese buying, is finally showing signs of acknowledging monetary policy. Another veteran anti-foreign capital campaigner, Raymond Wong (7) of the Housing Action for Local Taxpayers (HALT) recently discovered QE and can’t stop tweeting (8) about it.

Between 2009 and 2014, the US Federal Reserve System, effectively America’s central bank, led other countries to launch three rounds of QE to fight the global financial crisis of 2008. Together, they unleashed trillions of dollars into the world economy so that it would not collapse under the combined weight of the US subprime banking crisis and the humongous costs of President George Bush’s two disastrous wars in Iraq (2003) and Afghanistan (2001).

The high priests of finance continue to conduct extreme monetary experiments on an unsuspecting public that even most Canadian politicians still do not comprehend. Equally blindsided, the Canadian media has failed to explain to the public that billions of dollars, mostly leveraged from within the country, have poured, and continue to pour, into the hot housing markets of Metro Vancouver, Greater Toronto, and other major cities. The Bank of Canada did not participate in the initial QE exercises, but it oversaw the doubling of the country’s domestic money supply between 2009 and 2019.

I first mentioned the impact of QE and money supply on housing prices on my blogsite in October 2015 (9). I emailed my article to David Eby and Professor Gordon, as well as mentioned QE in conversation with David Ley, a University of British Columbia academic who studied the migration of Asian people into Vancouver. Mr. Eby, B.C.’s housing minister and attorney general in the ruling NDP provincial government, was then the housing critic when the party was in opposition. Astonishingly, these three influential people dismissed QE’s relevance to the Vancouver housing market despite it being the most important monetary event of this century.

More than a decade of ultra-loose monetary policy has led to the inflation of stock prices and real estate values in major cities around the world. But wages or labour costs hardly budged as businesses held back investments as companies chose to hoard their surplus cash and buy back stocks to the delight of shareholders.

The early QE experiment was deemed a success as governments claimed credit for saving the global economy while keeping inflation low. For those who realised what the central banks were doing, QE was manna from heaven, which explains the huge widening of the wealth gap between the elite and the rest over the course of the 2010s.

The convenience of Chinese scapegoating
When people in Metro Vancouver started feeling the pain (or pleasure) of rising housing prices, the focus immediately fell on foreign buyers, especially Chinese people.

The 2010s coincided with China’s growing assertiveness under President Xi Jinping, and the increasing presence of “Asian-looking” people in Metro Vancouver that included old-stock Chinese Canadians as well as the rising number of students, businesspeople, new immigrants, and affluent travellers from across the Pacific.

The conditions for scapegoating were set. They were further enhanced by dubious research (10) and flawed studies (11) that purported to “prove” that Chinese investors were buying up Metro Vancouver’s limited housing supply. The media heaped more misery on Vancouverites with regular false stories that they had the world’s second least affordable housing (12), an erroneous ranking derived from Demographia’s limited survey of eight countries.

People were soon led to the “obvious” conclusion that “foreigners” had cornered the housing market at the expense of “hardworking local wage earners.” Politicians joined in the scapegoating as it enabled them to evade responsibility for the region’s housing problems, widening income disparity, and rising living costs.

While foreign demand certainly contributed to Metro Vancouver’s rising housing cost, the mainstream media and academia failed to investigate a host of other factors that were also in play.

Since last year, I have tweeted out at least 16 other factors that have driven the region’s housing markets over the past decade. I have compiled them into the list below, in no order of importance.

Given the precarious state of the COVID-scarred global economy, most major countries will likely continue with their policies of suppressing interest rates and boosting money supply. Governments everywhere, including in Canada, are bankrupt of ideas and money. They are counting on their housing markets to stay strong and remain a source of growth for their heavily indebted economies.

Whether they succeed or not with more QE is another matter.

The world’s geopolitical and economic conditions today are far worse than they were a decade ago. So, yes, it already is different this time.


‘Off the charts’ housing could force feds’ intervention: Scotia economist
BNN Bloomberg, March 3, 2021

Ian Young on Vancouver’s ‘freak show’ housing market
Maclean’s, May 10, 2016

Vancouver considers banning foreign buyers amid ‘perfect storm’ in housing market. Reuters, November 28, 2017

Greg Bonnell speaks with David Eby, BC NDP MLA, about Vancouver housing prices. BNN, June 2017

Quantitative Easing

House prices are going bonkers again. Where is the outrage?
Gary Mason, Globe and Mail, March 2, 2021

Citizens’ group rises up for Vancouver real estate reform
The Globe and Mail, July 15, 2016

Great! More Quantitative Easing QE (aka money printing) coming.
Raymond Wong, February 22, 2021

Vancouver Doesn’t Have The World’s Second Most Unaffordable Housing. OnePacificNews, October 8, 2015

Yellow Peril. Garth Turner, November 2, 2015

Chinese Buyers In Vancouver Real Estate Account For One-Third Of Sales Volume: Bank. Huffington Post, March 24, 2016

The media crisis in Vancouver’s housing crisis: Demographia.
OnePacificNews, November 11, 2018