The errors of 2015 continue to haunt the Vancouver housing crisis storyadmin April 8, 2021 1 COMMENT
OnePacificNews, April 8, 2021, Thursday
Ng Weng Hoong @WengCouver
Remember Eveline Xia and Saied Fard? They were the breakout names in Canada in 2015 linked to the Vancouver housing affordability crisis.
It was the year that the city was allegedly brought to “breaking point” (1) by rich foreigners buying up its scarce housing supply and driving local workers and their young families out into the wilderness.
Businesses would collapse from the worker shortage, turning Vancouver and its suburbs into a “zombie city” (2), warned urban planner Andy Yan. Macleans magazine (3) envisioned an Armageddon ending where the region’s hardworking local people would be raptured away by the housing crisis, leaving behind the greedy, the rich, and the foreign.
Ms. Xia and Mr. Fard emerged separately just as the anti-foreign mood in Metro Vancouver was heating up. She tweeted #Don’tHave1million (4) and gained a large following of angry young people who believed they could not afford to live in the city because they did not have $1 million. He gained instant national fame for his apocalyptic March 14, 2015 blog piece about “The Decline of Vancouver” (5) originally entitled “The Death of Vancouver”.
Their fresh voices and photogenic faces were taken to represent a generation of helpless Canadians being displaced by the tsunami of wealthy foreigners, notably Chinese, parking idle capital in a safe place like Canada. The pair were feted by the national media with Ms. Xia taking stage alongside politicians at protest rallies. Crucially, neither is white, freeing them from any racism charges as they joined in the blaming of “the global wealthy” (6) and “offshore buyers” from Asia.
The fear of a foreign invasion instinctively connected with the province’s long and rich tradition of anti-Asian sentiments. In the 19th century, nativism targeted poor Chinese railroad workers for “stealing” the jobs of the white workforce. In recent years, it’s rich Chinese immigrants and criminals supposedly “stealing” the homes of the local population and displacing them.
The ghost of 2015: foreign capital
The Business Council of British Columbia (BCBC) is the latest institution in the province to be haunted by the ghost of the horror Vancouver housing story of 2015. Years of foreign-blaming nurtured by the mainstream media, academics, and the ruling BC NDP government has clearly infected mainstream thinking, including the business community.
In a Business In Vancouver article (7) about the housing market on March 16, the BCBC included this paragraph:
“Sizable foreign capital inflows pushed up prices and aggravated the “affordability” crisis that developed in the Lower Mainland after 2010. In a region with severely stretched affordability metrics, there is no reason to welcome extra housing “demand” from non-residents who don’t work or pay taxes here.”
This comment, masquerading as fact, contained a number of errors from 2015 that should have been corrected in 2015.
Error of Facts
Despite the flood of media stories about the housing affordability crisis from 2015, the facts on the ground were vastly different.
In 2014, my wife and I bought a one-bedroom 645-square feet Vancouver apartment near Granville Island for $373,000. There were a few for sale in the complex at that time, including townhomes for less than $500,000. In 2015, we wanted to upsize and made an offer to buy a half-duplex house in Coquitlam that sat on a plot just under 3,000 sq ft in size. Our offer of $383,000 was accepted. But we did not follow through after being put off by the traffic congestion in the area. During that period, we viewed over 20 houses and apartments in Richmond, the Tri-Cities, Maple Ridge and Pitt Meadow areas. Their costs ranged between $250,000 and $500,000. These were not microsuites. They included single-family houses as well as apartments of 1,000 sq feet or more in size. They are large enough for most Canadian families. The commute by car to Vancouver varied between 15 minutes from Richmond to 45 minutes from Maple Ridge. We also viewed more than 10 two-bedroom and two-bathroom apartments in Vancouver city that cost less than $500,000.
On hindsight, we made a mistake not buying anything.
Given our house-hunting experience and the realtors that we spoke with in 2015 and 2016, I was shocked by the widespread claims that people needed $1 million to live in Vancouver and its suburbs. This was false, but the media went along and failed to challenge those claims. Here are some of the homes that realtors emailed to me in 2015 and 2016.
Figure1. Maple Ridge houses listed in 2015 that sold for less than $400,000. The links no longer work as the properties have long sold.
On the average Metro Vancouver family income of $60,000 to $80,000 a year, there was no affordability crisis for the regular family in 2015 and 2016. Most people living in the region already had built up equity that could have been tapped for a downpayment, leaving them to borrow between $200,000 and 400,000. This was a comfortable level of debt on a five-year mortgage rate then hovering at around 3%.
In 2015, it was only a crisis if you insisted on buying a $1.2 million single-family house in Vancouver city, especially if you were a 29-year-old graduate with a few years of work experience like Ms. Xia. In 2015, someone of that profile could have paid less than $400,000 for a starter apartment in many parts of Metro Vancouver, or a house in Coquitlam, Surrey or Maple Ridge.
The housing crisis has always belonged to the homeless and the working poor with little or no equity. It still does. The protestors that I met were mostly middle-class people demanding to own $1.5-million houses in Vancouver city.
Error of Economics
The lament about “sizeable foreign capital inflows is strange coming from B.C.’s top business group, which is tasked to attract investments. As a reminder, the province — and Canada — was founded on a combination of foreign capital, colonial invasion, and the theft of native land. To this day, B.C. continues to depend on foreign capital to survive and thrive. Our population of 5.1 million is simply too small to provide for everything we need. One would assume the BCBC welcomes foreign capital, especially with the provincial economy (8) facing a record $13.6 billion deficit in the wake of the economy shrinking by an unprecedented 6.2% in 2020. Indeed, with the global economy still struggling after last year’s collapse, every country will be desperately competing for foreign investment.
B.C. doesn’t have many world-class companies, and their products and services do not have enough heft to compete on world markets. Without the constant infusion of foreign capital, BC is really Banana Columbia. How do we pay for so much of the infrastructure and quality services that we are so used to having? Through trade and investments, especially from external sources, and I am not advocating attracting laundered money or the proceeds of crime.
When Amazon invests in Vancouver, its injection of foreign capital flows into the economy, including its real estate market. When Singapore-owned Woodfibre began work on a liquefied natural gas terminal in Squamish, its foreign capital helped revive what used to be a dying town and its housing market. Should we be complaining that foreign capital “stretched affordability metrics” or should we be grateful for the injection of money into the economy?
Error of Politics
Politically, that paragraph conveys that B.C., including its business community, sees foreign capital as undesirable and threatening.
That attitude smacks of hypocrisy and double standards. Often living beyond its means, B.C. has long depended on foreign capital to help pay the bills. At the same time, the province’s opinion leaders see the need to regularly demonise the money, especially if it is from Asia.
This has led to a new habit of increasingly blaming our housing and crime problems on “foreigners”, especially on those who look Asian. As young writer Rose Wu (9) observed in The Tyee: “While…my family and I haven’t contributed to the skyrocketing prices…we’ve been lumped together with all Asian-looking people.”
In May 2019, the B.C. NDP government launched its much-anticipated money-laundering inquiry based largely on the suspicion that criminals and politicians from China were channelling vast amounts of illegal funds into the province. Yet, according to the government-appointed panel (10) that investigated money-laundering in B.C.’s real estate market (10), the US and Europe have been the main sources of illegal funds into the province. On page 49 of its report, the panel said North America supplied Canada with $4.8 billion in laundered money in 2015, while Europe provided $4.3 billion. East Asia, including China, supplied a mere $750 million.
Error of Judgment
The BCBC repeated the false and unbalanced story that foreign capital caused the “affordability crisis” from 2010. Like the mainstream media, politicians, and academics, the writers failed to mention that a multitude of factors, not just foreign capital, brought about Metro Vancouver’s housing expansion.
Here (11), I have given a list of at least 16 other factors that drove the region’s housing market the past decade.
Error of Target
The BCBC targeting of non-residents “who don’t work or pay taxes” but choose to invest in B.C. is wrong and short-sighted. Amid B.C.’s troubled economic outlook with record deficits and debts, you would think attracting wealth, even if it is passive, would be a key priority. For sure, draw the line on footloose speculative funds and laundered money. But what about wealthy people with legitimate money who want to invest here for the long term? How about those living off old family money or have legitimate business activities around the world but do not need to work or choose not to work? Is the BCBC against such people? Are we too good for their money?
Two other ghosts from 2015
Thankfully, the BCBC article did not mention two popular but deeply flawed studies from 2015 that are often cited to exaggerate Vancouver’s housing affordability crisis. In October 2015, Andy Yan, an urban planner and academic with the Simon Fraser University (SFU), published a study based on the racial profile of the buyers of 172 expensive homes in a small Vancouver neighbourhood. The data was provided by David Eby, then the housing critic for the B.C. New Democrats Party (NDP) when it was in opposition. More than 66 percent of the new owners had “non-Anglicised Chinese” names, according to Mr. Eby, now the housing minister and attorney general in the B.C. NDP government.
The media immediately pounced on the study as confirming a widely held suspicion (12) that the Chinese were buying out of the city’s housing supply. Having contributed significantly to Chinese-scapegoating in the Vancouver housing discourse, the Eby-Yan study remains influential to this day. If the media and other analysts had been less trigger-happy, they would have noted the absurdity of a finding based on the microscopic sample size of 172 houses. In 2015, that constituted about 0.4% of the more than 42,000 homes sold in Metro Vancouver.
A few people did criticise the “study”. Gregor Robertson (13), who was Vancouver’s mayor at that time, and urban planning consultant Bob Ransford (14) called it racist. But they were shouted down by influential journalists Ian Young (15) of the South China Morning Post and Douglas Todd (16) of the Vancouver Sun. Garth Turner (17) too called the Eby-Yan study racist, but the former Federal politician lives in eastern Canada, far too remote to have any influence on the politically-skewed discourse that was unfolding in B.C.
The other study, Demographia (18), is an annual survey that purports to rank international housing affordability. It was pivotal to the selling of the Vancouver housing crisis narrative in 2015 and remains as popular today with a recent high-profile mention by Bloomberg (19). Like the Eby-Yan study, the survey suffers from a flawed methodology and insufficient data to support a credible finding on the state of Vancouver’s housing problems. Covering just eight countries and Hong Kong, it has consistently ranked Vancouver’s housing as being either second or third most unaffordable on that list. But that has not stopped the Canadian media (20) from writing fiction every year by misrepresenting Demographia as a global survey, thus elevating Vancouver’s housing to being the world’s most second or third most unaffordable. Just as the Eby-Yan study failed with its small, unrepresentative sample size, Demographia has no credibility as a global survey for omitting the vast majority of the world’s estimated 192 countries.
A collective failure blamed on foreign capital
If Metro Vancouver’s housing crisis was already “severe” (21) and “extreme” (22) in the 2010s, what adjectives will the media use now to terrify the renting and non-owning class? Catastrophic? Doomed? Terminal?
In the face of the world’s worst economic downturn since the Great Depression of 1929, home prices around the world (23), Metro Vancouver included, have surged to an all-time high. According to the Real Estate Board of Greater Vancouver (24), an average detached house in the region cost $1.7 million in March 2021, up 17.9% from a year ago. A townhome was worth $872,200 (+10.4%) and an apartment cost $715,800 (+3.7%). Those prices could rise further as the world’s central banks have indicated they are in no hurry to raise interest rates.
As a result, B.C.’s shrunken, COVID-ravaged economy has become even more dependent on Metro Vancouver’s real estate market. The province’s multi-billion-dollar liquefied natural gas projects are in limbo while the construction of major oil and gas pipelines has ceased, and the Site C hydro power project is turning into a long-term financial black hole. The tourism and travel industries have largely collapsed, the international education industry has shrunk, and the casinos are in decline. B.C.’s high tech sector is thriving but its rewards are narrowly concentrated in a few hands. The cannabis business is booming but much of it is unregulated and likely controlled by local organised crime.
B.C.’s economic reliance on the housing market has reached such desperate levels that finance minister Selina Robinson (25) has declared the government will not intervene to cool the current boom (or crisis).
This is hugely significant, coming from a left-of-centre party that came to power in 2017 promising to make housing and living in Metro Vancouver more affordable. Mr. Eby and his supporters who for years have fanned the bogeyman story surrounding foreign capital have gone silent. There is grudging but growing recognition that the region’s housing boom has largely been, and continues to be, driven by the Bank of Canada boosting the country’s money supply.
This makes the BCBC commentary even more poignant and out of touch. Instead of taking a broad, balanced view of the housing challenge, it has belatedly endorsed the populist bandwagon blaming foreign capital for the abject failure of B.C.’s political, business and intellectual elite on a major public policy issue. The media and academia too should be examined for their roles in enabling today’s housing crisis. Collectively, B.C.’s institutions have wasted precious time in failing to identify and address the multitude of factors driving Metro Vancouver’s housing prices. Their singular blaming of foreign capital has turned out to be a costly distraction and diversion.
As for Eveline Xia and Saeid Fard, both have disappeared from the public limelight after their brief stints with fame.
Have they become homeowners and found out that most people did not (and still do not) need $1 million to live in Vancouver and its suburbs? Did Mr. Fard belatedly realise that multi-millionaire or billionaire tech entrepreneurs (he could be one) are far more responsible for creating housing crises than Chinese immigrants, who are mostly middle to working class people?
David P Ball: Vancouver Mayor: City Is ‘At a Breaking Point’, July 27,2015
Rod Mickleburgh: Q&A with Andy Yan, July 2, 2015
Ken MacQueen: Can families still afford Vancouver? June 8, 2015
Yuliya Talmazan: Can you afford to live in Vancouver if you #donthave1million? April 16, 2015
Saeid Fard: The Decline of Vancouver, March 14, 2015
Julie Gordon: Soaring Vancouver home prices spur anger toward foreign buyers, July 8, 2015
Jock Finlayson, Ken Peacock: Real estate rolling on rock-bottom costs of borrowing, March 16, 2021
B.C. Ministry of Finance: Economic rebound predicted for 2021-22, February 26, 2021
Rose Wu: Vancouver’s ‘race estate’ market has hurt many of us, July 4, 2019
Maureen Maloney panel: Combatting Money Laundering in BC Real Estate, March, 31, 2019
Ng Weng Hoong: What the Chinese scapegoaters didn’t know about Metro Vancouver’s housing boom or crisis, March 11, 2021
Gary Mason: B.C. government must stop hiding from the data on house buyers, November 3, 2015
Vancouver real estate study embroiled in racism debate, December 19, 2017
CBC: Vancouver foreign ownership research prompts cries of racism in hot housing market, November 2, 2015
Ian Young: Ethnic Chinese housing researcher defends work, as Vancouver’s white mayor cries ‘racist’, November 4, 2015
Douglas Todd: There’s nothing racist about Metro Vancouver housing study, November 12, 2015
Garth Turner: Yellow Peril, November 2, 2015
Demographia: International housing affordability, 2021
Ng Weng Hoong: The media crisis in Vancouver’s housing crisis: Demographia, November 11, 2018
Ari Altstedter and Kevin Orland: Housing boom that never ends has wiped out all the short-sellers, March 15, 2021
Andrea Bennett: Foreign investment in real estate market resulting in empty condos, panel told, March 21, 2013
Geoff Dembicki: Christy Clark isn’t being honest about the housing crisis, May 5, 2017
Kenneth Rapoza: Liquidity is also causing global real estate prices to rip, February 28, 2021
REBGV: Metro Vancouver Market Highlights, March 2021
Liza Yuzda: B.C. not making any moves to cool the white-hot housing market, March 17, 2021