I’ll never forget the vans.
They began appearing on our street sometime in the summer of 2017. They would stop and disgorge groups of people looking to buy homes in our sleepy little village, Tsawwassen, roughly a half-hour drive from Vancouver. Real estate agents accompanying them would knock on our door, wondering whether we were interested in selling.
Their clients, we were told, were investors from China. They were prepared to pay a premium for homes in our neighbourhood. And buy they did – houses that in many cases were never occupied and, in some cases, sit empty and silent to this day, grim reminders of a maddening, and in many ways heartbreaking epoch in British Columbia’s history.
It’s difficult to regard the housing correction we are now witnessing without seething. Anyone who was looking could see something wasn’t right with the market a few years ago. Empty homes began popping up everywhere, bought by overseas investors but never lived in. Multimillion-dollar abodes were being purchased by students or homemakers with little income. Condos purchased as presales were flipped and flipped and flipped again before ever being lived in, inflating prices exponentially along the way.
In two years, the price of real estate soared. Yet anyone who drew attention to this phenomenon and pointed to the dangers it represented risked being branded a racist. It wasn’t people from another country buying property who were responsible for the dramatic rise in house prices, it was lack of supply.
That’s what the politicians told us. That’s what developers told us. That’s what the real estate industry told us. It was supply. Build more condo towers and all would be fine. When it was pointed out that much of the new supply started at $1.5-million, which was hardly affordable, the complaint was met with shrugs. The new supply wasn’t meant for locals anyway.
It was all a grubby sham. The real estate and development industry knew exactly what was happening, but had become so intoxicated from the giant profits being realized it wanted nothing to do with policies that might bring the party to an end. Well, the party has come to an end and we’re seeing the result of it now.
A recent story in The Globe and Mail documented the degree to which house prices have come crashing down in Vancouver as a result of government policies that have discouraged the rampant speculation that was taking place, and closed loopholes that allowed buyers to operate with anonymity and impunity. Measures have also been introduced to make it harder for criminals to launder money through real estate, something that was happening routinely. It’s also helped that China has cracked down on the outflow of capital from the country. The combination of these actions has pricked a bubble that was ripe for a spectacular explosion.
As The Globe’s story chronicled, home prices have plummeted by as much as 35 per cent in some cases. Foreclosures and bankruptcies are on the rise. A city such as Vancouver, lacking a sturdy source of wealth that a commerce capital like Toronto has, was always especially vulnerable if the global dollars that bloated the housing market in the first place fled town. And that’s what’s happened.
A new report by Burgess Cawley Sullivan and Associates, a property tax appraisal firm, estimates homeowners in Metro Vancouver have suffered a paper loss of nearly $90-billion in the past year. In Vancouver proper, the firm estimates residents have lost an average of $153,873 in the value of their property. And most people expect the price slide to continue throughout 2019.
Given the outsize role real estate plays in B.C.’s economy, there are going to be ramifications to what is taking place. It will trickle down and affect jobs and the broader economy. It will affect the province’s finances, which, during the great price surge, saw hundreds of millions of dollars flowing into the treasury annually from real estate-related taxes and fees.
Not surprisingly, the real estate industry is calling on the NDP government to relax some of the instruments it is using to bring some level of saneness to the market. The government should not give one second’s thought to this idea.
The public is firmly on its side. Even with the price deflation we’ve witnessed, most homes are still worth a lot more today than they were at the outset of the housing crisis. No, the New Democrats must hold the line.
The provincial government is doing an admirable job of starting to clean up this mess. History will not be kind to those responsible for creating it in the first place.