First off, let me say that this will never happen. At least not as long as the Federal Liberals are in charge.
But this topic is gathering momentum, and this week alone there were at least two stories about it in the media, with one article spawning almost 1,200 comments from readers, most of which are angry, and in favour of some sort of crackdown, ban, or restrictions on foreign ownership.
But who are the people writing scathing letters, and signing petitions? Where are they from? Let’s discuss, along with the merits of potential regulation…
This is a tough subject.
And a touchy one at that.
It can bring out the worst in people, but at the very basic level, it will show people’s true colours.
Of course, many of the people opining on this subject are nameless, and faceless, and thus their true colours will never be shown.
Read the comments section for any online newspaper article on this topic, and you’ll see some of the worst behaviour that Canadians have to offer.
I have to put my name on my opinions, of course, as do any of the politicians speaking out about the idea of “foreign ownership driving up real estate prices for Canadians.”
And if you read the article that was trending on Monday, you’ll see that one British Columbia man has put his name on an online petition to the Canadian government, asking them to “do something” about foreign ownership.
The petition, of course has been signed by……you guessed it….a lot of people who don’t have their name shown in public.
I know, I know – anonymity is an important part of the democratic process. When we vote, we don’t have our decisions broadcast over the Internet, or any other medium.
But because so many people are “angered” about the idea that foreign ownership is driving up real estate prices, we have to put things into context. Who are these people, and do they have any idea what they’re talking about?
A parallel to the U.S. election can be drawn here, since most of us, north of the border, wonder, “Who are the 45-50% of the 330 Million people who actually want that ignorant, racist, belligerent man to be in charge?”
Well, probably other ignorant, belligerent people who don’t know enough about the economy or foreign relations to understand the ramifications of a Trump presidency.
My point to all this is simple: a lot of Canadians are calling on the Canadian government to “do something” about foreign ownership, but do they actually know: a) what’s really happening with foreign ownership, b) what steps the government could take, c) what could happen to the market if restrictions were put in place?
And more to the point, are these simply disenfranchised, delusional folks who dream – literally dream, about home-ownership, when they wouldn’t be in a position to afford a home even without foreign buyers driving up the price?
The anonymity of the Internet takes away their platform on which to vent, in my opinion.
But that said, let’s switch gears and look at the actual story here.
The story about the petitioner from B.C. broke on Monday on several news outlets. You can read the CTV story HERE.
Interestingly enough, Raymond Wong, the man who initiated the petition, isn’t named in the story!
You have to go to the actual petition page, found HERE, to see who initiated the petition.
Now first of all, consider that at the time this story was written and posted on the CTV website, only 2,300 people had signed the petition.
I’m sure if you launched a petition to change Canada Day to “Kim Kardashian Day,” you could get 230,000 people to sign that in a week.
Yes, society today is clearly concerned with what matters to us most…
Petition aside, and the number of signatures aside, it’s a topic that a growing number of Canadians are taking interest in.
And eventually the Canadian government will have no choice but to comment on it.
Every time I do an interview for newspaper or radio, I get asked the same question about foreign ownership. I was on CBC Metro Morning the other day, commenting on some “survey” among real estate agents, that showed more real estate agents believe that the luxury market is being bought up by foreign investors.
I told CBC that the survey was among the dumbest I’d ever seen.
First of all, there are 50,000 real estate agents in Toronto, and more than half of them don’t do a single deal in a year. And even among the ones that do – who cares what they think about about the luxury market, when they can’t even sniff at it.
Unless that “survey” was handed to a select fifty or so real estate agents in Toronto that actually do work in the luxury market, then it’s all just wild speculation.
And that’s what a lot of this noise about foreign ownership is: speculation.
Ask 2,000 random real estate agents what they think about the luxury market in Toronto, when they know nothing about it – the answer you get, is speculation.
And ask the average Canadian how foreign ownership is affecting their ability to afford a home, and the answer you get, is speculation.
The CMHC themselves will admit they have no clue what the real foreign ownership numbers are. So what stake then do we put in the opinion of the average Canadian?
I’ve long-maintained that people need somebody to blame for the lack of affordability in real estate, and many people don’t want to accept the fundamentals of supply and demand as the reason.
So who better to blame that an nameless, unknown entity, known collectively, as “foreigners,” who don’t live here, and are different from us, and have it better than us, and now are making our lives worse?
But I don’t know if the people complaining about foreign ownership, and as a result, high real estate prices, have any idea what could happen if drastic measures were taken to curb foreign ownership.
Let’s assume for a moment that starting tomorrow, the government outright banned all foreign ownership of Canadian properties. That would take a lot of demand away from the market, and prices would be affected.
Now, for many of those angered Canadians, they would shout, “Yippee! Prices are dropping like a stone! Now I can go and buy my dream home!”
Yes, well, in theory. But a pronounced drop in home prices would trigger a recession, and in a recession, businesses close, jobs are lost, and people have less money. When people have less money, they spend less money, and fewer products and services are sold, and more businesses close up, and more jobs are lost. And on, and on.
So I find it ironic that the very people who feel they are “priced out” of the market, and who would love to see a collapse, would be the very first people falling on hard times and thus the very last who would be able to afford real estate after the apocalypse.
And who would be most able to afford the new, low-low-priced real estate?
The rich. The very group of people that the angry despise.
Oh, and foreign buyers, of course.
And perhaps after an epic real estate collapse, the government would open the market back up to foreign buyers, to try and help stimulate price growth.
As with the theme of society today, if the government did ban foreign ownership, and prices dropped, you just know that many people would scream, “What the hell is the government doing banning foreign ownership? What right do they have to meddle with the natural, free-flow of supply and demand?”
Honestly, I think the whole debate is spurned by those the most out-of-touch, and perhaps, dare I say, a bit of those who fear people that don’t look, talk, and act like them.
What’s happening in Vancouver is not happening anywhere else in Canada, to the same extent.
Yes, we have foreign investment here in Toronto, but it’s a pittance compared to Vancouver.
I don’t know if they can regulate foreign ownership at the Provincial level, but it makes a lot more sense than doing so at the Federal level.
Another option, of course, is taxation.
And while I’m all for the free-flow of supply and demand, I’m also for taxation of non-Canadians, who want to own Canadian real estate.
NDP MLA David Eby said, “When you have a real estate market that doesn’t serve the local economy, you have to ask questions about what it is serving; what is its purpose?”
We all have different political views, and perhaps “what our taxes should be spent on” might differ.
Eby added, “If you’re paying your worldwide taxes in British Columbia and you’re buying property, that’s fine. The concern is people who aren’t paying taxes here, who aren’t contributing, who are buying properties and driving up values.”
I suppose we’ll never really know what kind of capital gains non-residents are paying.
And when the “shadow flipping” of houses in Vancouver goes on, and somebody flips a $2,000,000 home for $2,500,000, is that $500,000 taxed?
I’m taxed to death, and I hate it. If my tax dollars were being spent on more worthwhile endeavors (a topic for another day, surely), then I’d have less of a problem with it.
So maybe this is the pot calling the kettle black when I suggest that the government should increase taxation on non-residents who own real estate.
Is that NIMBY’ism at its finest?
Or does it just make logical sense?
If you just can’t get enough of this topic, then here’s another great article for you:
This covers a lot of what we talked about, but also reminds me of another growing trend among society that I dislike: entitlement.
Let us remember that it’s not a right to own a home, but a privilege.
If we begin to think that home ownership is some sort of fundamental right for every person, regardless of financial means, then we’re well, well beyond socialism, and into something else.
Would it be great if everybody owned a home? In theory, but there isn’t a single country in the world where that’s a reality, so what does that tell us?
And while it’s not a right to own a home, let’s also remember that just because somebody was “born and raised” in Toronto, doesn’t make it their right to purchase a home, which is affordable, to them, at their level of affordability.
I would LOVE It it everybody in the world was happy! I would LOVE it if everybody owned a home in Toronto!
But it’s not realistic. And I’m a realist.
I sympathize with those Canadians who can’t afford a home, but I don’t think some sort of “ban” on foreign ownership is the answer, and I don’t think a whole lot of these folks have thought of the consequences of such an action.