Finance Minister Mike de Jong is determined to wait well into next year for some hard, factual information on foreign buyers before he takes any definitive action on the overheated real estate market.
You wonder if voters will have the same patience. It looks like a lot of them have already made up their minds about what’s to blame for the outlandish price jumps and rampant over-bidding that’s distorting the market beyond recognition.
Rightly or wrongly, the consensus view is that foreign buyers — specifically Chinese investors — have bought the real-estate market out from under Metro Vancouver residents.
And rightly or wrongly, the Opposition New Democrats have aligned themselves closely with that view. Maybe all the assumptions are wrong and it’s a complex series of other factors sustaining the real-estate wildfire. But the NDP look to be a lot closer to representing the prevailing view on real estate than the government is at this point.
And the B.C. Liberals could find themselves in a jam next year if they’re still waiting for data, and runaway real estate prices continue and become one of the decision points in voters’ minds come May.
There are about 40 Lower Mainland ridings where real-estate prices are white hot. And the spillover has been in effect for months, as people cash out and start shopping in places such as Victoria, driving prices up. Some Victoria real-estate agents are now advertising “Investors and Foreign Buyers Want your property!... Direct connections to the Lower Mainland, across Canada and in China.”
One measure of the volatility of the real-estate issue: NDP MLA David Eby held a public meeting on the topic in March in Vancouver and found 800 people at the venue, standing to vent passionately about the impacts.
And one measure of the positioning that’s going on is that Opposition Leader John Horgan chose to lead off with real-estate prices in the annual debate with Premier Christy Clark over her spending estimates on Wednesday.
She held to the government’s line. B.C. is a victim of its own success when it comes to a strong economy. One of the downsides is the real estate impact. But reducing the equity people have built up in their homes is the wrong thing to do, she said. “We need to be careful about the remedies we bring in.”
The exchange followed the careful steps de Jong announced the day previously. A new form will require citizenship be listed on property-transfer tax forms, and that information will be compiled for at least six months to determine the impact of foreign money on the local markets.
Steps were also taken to curb shadow flipping, where real-estate agents were flipping pending house deals to other buyers at higher prices before they’ve closed, unknown to the original vendor.
By contrast, the NDP have written the Speculator Tracking and Housing Affordability Fund Act. It would impose a new annual tax of several thousand dollars on homeowners, but people who pay income tax would be exempt from the new tax. It’s aimed mostly at foreign owners of property who don’t live or work in B.C., and who leave the homes vacant.
During yet another real-estate argument in the legislature this week, Eby cited and endorsed a Simon Fraser University study that put a lot of the blame for the housing crisis on foreign buyers, and buyers from China in particular.
But de Jong was quick to note the assistant professor who wrote the summary of other studies declared: “I do not claim any expertise in this area … My academic work is far removed from this area.”
De Jong challenged the Opposition to talk about the tax increases they would impose and the “economic wall” they would build if elected.
One exchange summed it up:
Q. “Don’t you think it’s time to stop denying the role of foreign speculation?”
A. “Doesn’t the member think it’s time to base public policy … on actual data and facts?”
Liberals are going to tread slowly and carefully when it comes to intervening in this market. New Democrats are ready to barge in and take direct tax aim at foreign buyers.
It’s an open question whether the market can sustain the current mania. But if it does, the two different stands could be top of mind for some voters.