VANCOUVER (NEWS 1130) – If you want to know the real cause of skyrocketing home prices, looking at foreign buyer stats isn’t the answer, according to a local realtor.
This comes a day after the province shared numbers indicating foreign buyers made up five percent of Metro Vancouver buyers during a 19-day stretch in June.
The number shared for that three-week period by the province’s own admission doesn’t tell the whole story.
“The numbers are probably accurate,” says Keith Roy with Re/Max Select. “There’s probably a low percentage of foreign nationals who are actually buying homes in Vancouver. The issue is where the money is coming from. As an active realtor in Vancouver, what I’m seeing on the West Side and throughout the Lower Mainland right now, is a lot of that money is coming from China. There’s a lot of deals that I’m doing, where the buyer is saying, ‘oh, I need another week for financing,’ or ‘can we move completion because the money hasn’t come in from where the money’s coming from.’
“It’s not necessarily about foreign individuals owning properties in Vancouver. The real issue is foreign money that’s driving the whole process.”
Roy says the real driver of rising home prices is foreign money, that is, cash brought into the country from elsewhere and then spent here by Canadian citizens or permanent residents.
“It’s quite often individuals who have citizenship or residency here in Canada,” says Roy. “But they have financial interests in their home country…people have financial interests all over the world, and they’ve taken an interest in the Vancouver real estate market as a safe haven for some of their money.”
Roy says whether or not this is a problem is a different conversation — noting pulling that money out of the equation could hurt gains made by homeowners in recent years.
“The issue of foreign money and foreign ownership is only a problem if we believe that the 60 percent of the people in the Lower Mainland who own their house and have increased their equity and the value of their home is actually a problem we want to solve,” says Roy. “If we want to temper the housing market, if we want to go after the price and the equity people have, we need to look at supply and demand. We need to temper the demand and stop the flow of foreign money and we need to increase the supply to make more product available, and rethink the way we live in our homes.”