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December 12, 2017 | Blame Game

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

The most hateful comments to this pathetic blog which end up being DELETED? Yes, without a doubt, one topic only. The Chinese. Trump openly blames Muslims and Mexicans for America’s ills. We hang family debt and disappointment on dudes from Guangzhou.

Because nobody’s proven immigrants or offshore investors are largely responsible for stupid house prices, and yet the evidence is overwhelming that local speculators are, this blog has been a lightning rod for xenophobes, racists and disentitled whiners. It’s human nature that we want to be victims. Meanwhile realtors have played the race card beautifully, convincing millions they must buy before all the houses are gone or become forever unaffordable. Politicians can’t resist currying favour running against people who are scary, and don’t vote. It’s a perfect anti-Chinese storm. Sadly, Canadian-born folks of Asian heritage have been swept into this cauldron, too. In Vancouver – where the two founding races were anglos and Chinese – this has turned ugly.

Will things change on Tuesday?

Maybe. Probably not. But we’ll see. That’s when StatsCan releases new numbers on foreign ownership levels in the GTA and YVR – the result of T2 spending $40 million on a project to measure market activity. The feds have been looking at tax data and land registrations to determine who’s buying what. The result will probably be consistent with what we’ve already been given, which the bigots and stubborn (who send me awful notes) will dismiss. That’s the thing about prejudice. It stains deep.

Desperately-unpopular governments in both BC and Ontario brought in massive taxes on foreign buyers, catering to the unproven belief Chinese dudes make houses cost $1 million. Because so many have bought into the offshore-buyer myth, the tax caused the market to swoon as everyone stopped buying and waited to see the impact. Now the tax is a non-event, because foreigners are a non-event. As a major survey showed a few months ago, most newcomers buying here actually move here and become residents. They also tend to purchase properties costing less than the average.

Without a doubt, rich Chinese, Iranians and Americans do scoop up high-end, high-profile homes, let their spawn roar around in Lambos and cause a fuss. But this is at the margins of the market. They’re not behind a 23% increase in condo prices in Vancouver, nor were they multi-bidding against 15 other buyers in Toronto last Spring. We did that. Cheap money and idiot governments did it. Lax lending and CMHC. First-time buyer incentives. The RSP home buyer’s plan. Newbie tax credits. Voracious bankers. The Bank of Mom. And the CRA.

After all, here’s the data collected to date: Ontario reported that 4.7% of properties selling at the very height of the market last March and April went to foreign buyers. So, 95.3% did not. The Toronto Real Estate Board’s research showed 4.9% of transactions had a foreigner on the buy side. Thus, 95.1% were local buyers.

When Ontario’s finance guy Charles Sousa slapped on the 15% anti-Chinese tax he said 8% of deals were going to offshorers. When actual numbers surfaced he recanted: “This indicates to me that the degree of foreign buyers is not as intensive as many may have contemplated.”

In BC, believed to be the epicentre of foreign ownership, the province puts the number at 6% of transactions over the past year. In some areas, like Richmond, it’s higher (at 10% recently), as in portions of the GTA (like Markham/Unionville). Of course there have always been ethnic concentrations – Little Italy, or Chinatown or Toronto’s Greek Village. In fact whole subdivisions can sell out in hours or days to one community – which doesn’t mean all these folks are foreigners, newcomers, immigrants or interlopers. Mostly, they’re Canadians who like having neighbours like them. Just like you.

There are many reasons why unaffordable real estate should tick you off. The biggest culprit is loose monetary policy, which gave us 2% mortgages. That bred unbridled borrowing, epic family debt and rampant speculation. Now 14% of Toronto households own multiple properties and up to 50% of condo sales in recently years went to ‘investors’. This helped foster the real estate porn that spilled onto TV screens and create stars out of speckers and flippers. It was only months ago that ten thousand people crowded a Toronto hall to hear housing investment tips from a contractor and a rap artist.

Did the Chinese make us do this? Not a chance. But realtors, politicians and media messed with your head.

On Tuesday I bet the new data reaffirms the old.

If I’m wrong, you can export me.

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December 12th, 2017

Posted In: The Greater Fool

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