Elected officials blaming the 6% of foreign buyers for rising home prices should review the historical data.
Significant leaps in home prices are preceded by half a dozen or more years of market stagnation.
From 1992 to 2000, single family home prices stagnated or declined due to a poor economy.
As conditions improved, prices began to increase and in a 2 year period from 2003 to 2005 there was a $135k or a 41% jump.
From 2008 to 2009, a global meltdown caused price declines until the BC govt announced the HST, which temporarily boosted demand in one year as consumers tried to avoid paying the tax.
Subsequently, real market conditions caused price declines from 2010 to 2013.
With an improving economy, prices began to rise and in a 2 year period from 2014 to 2016, there was a $145k or 24% jump.
The historical data show big rises in home prices follow periods of stagnation and/or decline.
We had price leaps of $135k more than ten years ago, yet nobody blamed foreign buyers.
Rising costs are mostly from housing supply unable to keep pace with an improving economy and employment.
Our supply is obstructed by poor regional planning, slow development processes, rising municipal fees/amenities, and costly regulations offering minimal benefit (e.g.) BC Step Code.
CMHC CEO Evan Siddall says it may be convenient for politicians to use foreign buyers as a “scapegoat” for rising prices, but it is both factually wrong and divisive.
He is supported by the historical evidence.
For more info on housing supply challenges visit our news blog at www.vrba.ca/misguided-policy-undermines-housing-supply/.
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