Evidence that Foreign Buyers Aren't to Blame for High Housing Prices

Vancouver's exploding housing prices are caused by income inequality, housing scarcity, and a housing bubble, not by foreign investors and vacant housing units.
July 7, 2017, 7am PDT | Michael Lewyn
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Josef Hanus

This post by Dan Bertolet discusses the rising home prices in Vancouver and Seattle. In particular, it rejects a common claim: that Vancouver's home price explosion is caused by foreign investors who buy units and then leave them vacant. In fact, the City of Vancouver regularly "assesses 'non-occupancy' based on abnormally low power consumption. The study concluded that between 2001 and 2014 the non-occupancy rate in city of Vancouver has remained flat at just under 5 percent, and that the city rate is consistent with the rate for the entire Vancouver region." 

So what does cause Vancouver's problem? Bertolet points out that the number of families earning over $250,000 has increased by over 20 percent in recent years, thus increasing demand for high-end housing. In addition, the city's high ratio of home prices to rents suggests a housing bubble—that is, people are willing to pay more for housing because they think housing will continue to become more expensive. Seattle home prices are rising less rapidly, due to the fundamentals that often cause home prices to rise: job growth and income growth. 

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Published on Wednesday, July 5, 2017 in Sightline
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