If he wanted to, geographer David Ley could consider himself a data point in his own research. It was back in 1996 that he was named UBC director of the Metropolis Project, an international inquiry into immigration and diversity. By that time, he'd seen his own Kerrisdale neighbourhood being remade by rich immigrants from Hong Kong and Taiwan who'd sent house prices soaring.
Ley's 2010 book, Millionaire Migrants: Trans-Pacific Life Lines, displayed empathy for the immigrants while also identifying problems that their mass arrival wrought. By the time it was published, a new wave, this time from mainland China, had begun turbocharging Vancouver property markets yet again. For concerned officials and researchers, Ley's book was one of the few resources available, even though it described an earlier time and a different group.
Today, a continuing lack of research and official data about the role of Chinese immigrants and investors in Vancouver's housing insanity* remains, for some in government and the real estate industry, a rationale for doing nothing. "The interesting question is why there are deniers," Ley says. "Often you find a vested interest."
Ley's latest research describes an influx of foreign capital turning Vancouver's housing market into a Wild West land rush. He pins much of the blame on governments for whom rich Asian immigrants have become an easy fiscal fix.
In the early 1980s, Canada and especially British Columbia were in deep recession. One cure, governments in Ottawa and Victoria hoped, would be programs encouraging high-net-worth individuals from Asia and elsewhere to immigrate.**
While the immigrants did come, the economic benefits did not. It hardly mattered that Canada's visas had less demanding standards than most other countries', Ley says, because we didn't uphold them anyway. Originally, aspiring business-class immigrants could choose from two main streams. In the investor stream, Canada required a lower net worth and minimum investment than did the United States – and, in the end, while banks and governments definitely got a take, there was never much in the way of actual investment.
Meanwhile, "with the entrepreneur stream, after two years you had to have hired one Canadian," says Ley. "In the equivalent American scheme, you had to hire 10 Americans." But in B.C. – where more than half of all business immigrants eventually landed*** – evaluations were minimal or were waived. "And this was because there was half a dozen people in the Vancouver office tasked with following up on the thousands of cases, which simply wasn't possible."
The Canada Revenue Agency has been similarly ineffective. The declared income of business immigrants is lower than any other category of immigrants, including refugees, Ley points out. Nor did we bother tracking property markets. The B.C. government did keep records of home buyers' nationalities but stopped during the 1990s. "The reason I've heard is that there was a storage issue," he says. "I'm passing that along while raising my eyebrows."
Then there is the federal agency Fintrac, which is supposed to stop money laundering. Anecdotal information suggests that a large portion of Chinese buyers pay in cash (in the U.S., there is data).**** "The property market is one of the easiest ways to dispose of hot money," Ley notes.
Ottawa abruptly eliminated both the investor and entrepreneur streams in 2014, but many of the 50,000 Chinese lined up at the time opted instead to use a new 10-year come-and-go visitor visa that does not lead to citizenship. Of the more than 300,000 Chinese come-and-gos that year, most were tourists, but a significant number employed it as an inexpensive, low-hassle mobility tool, in many cases to buy a second home occupied by student children.
In 2014 China had more than one million people with liquid assets of over $2-million. Up to 60 per cent were weighing or pursuing emigration, with Vancouver among the three top intended destinations. It's hardly surprising that several surveys and estimates (none of them officially sanctioned, of course) place the proportion of Chinese buyers of detached homes on Vancouver's west side at about 70 per cent and growing. "The top end of the market is not being supported by local conditions," says Ley. "We've got a housing market that is totally out of whack with the labour market." That is, people who actually hold jobs in Vancouver increasingly cannot afford to live there.
Some of the additional machinations that are throwing that market out of whack have only recently come to light. New Coast Realty stands accused of both shadow flipping and predatory pricing, following a Globe and Mail investigation.
Of course, there are beneficiaries besides the real-estate industry: namely, Vancouver homeowners. But not Ley. "My wife and I are steadfast stayers. But the craziness of the last six months has shifted a lot of people."
*During April, the median selling price of a detached home on Vancouver's west side was $3,688,000. The benchmark price of west-side homes was up 28.4 per cent year over year, and up 54.8 per cent from three years earlier.
**Up to 2008, B.C. (essentially Vancouver) accounted for 49 per cent of all investor-class landings. An additional unknown proportion landed elsewhere, especially Quebec, but subsequently relocated to Vancouver.
***From 1980 to 2001, almost 330,000 people landed in Canada through the various streams of the business program, the largest response to any of the many such programs offered by Western nations.
****The National Association of Realtors reported in 2015 that 70 per cent of Chinese buyers paid cash (compared to 25 per cent of domestic buyers), and that their average transaction price of $831,800 (U.S.) was more than three times the norm.