“Government” and “regulation” are words that rarely work well together in the real world, but in the case of the Canadian housing market, we may have to consider writing them in the same sentence.
It may be the only way to create a happier ending to the depressing story of families watching helplessly as their dreams of home ownership fade on the horizon, the victim of escalating prices.
The villain in the piece has, as in too many B grade espionage “thrillers,” become foreigners – in this case, faceless buyers from outside our borders who have money to spend and aren’t shy about using it, thus driving up prices for everyone else. Their presence in the market has been cited anecdotally as a prime reason Vancouver, to pick one major market, is among the most expensive places on Earth in which to live (not exactly the slogan Tourism Vancouver had in mind).
It puts a new spin on the real estate cliché of “location, location, location;” instead of focusing on where our best options are to be found, the script shifts to a discussion of where these offshore buyers are coming from. And that’s where, as with so many tales, this one can take some nasty detours if we’re not careful.
So let’s be clear: this is not yet another Us vs. Them story. Xenophobes have enough of those in their libraries (two more words, come to think of it, that are rarely heard in the same sentence: “xenophobes” and “libraries.”)
The point instead is that Canada needs to consider some regulation of foreign investment in real estate, because the marketplace has proven itself to be as capable of responsible self-management as Snookie from Jersey Shore.
In the tradition of great story-telling, we need to borrow and adapt ideas that have been used previously, and successfully, by other countries when faced with a similar issue – without worrying that tougher measures somehow don’t fit the worldwide image of “polite Canadians.”
Take Switzerland, for example. Like us, the Swiss are renowned for non-confrontation, for being nice. And that reputation continues in spite of them having some of the strictest limits in the world on foreign ownership of their real estate.
The Aussies – another population renowned for friendliness – also have put up barriers, to protect citizens against untenable housing market inflation. And that accent hasn’t lost a bit of its charm.
Even here at home, some of our provinces prevent speculators and investors from distorting markets, and thereby harming their neighbours. Alberta, Manitoba, Saskatchewan and Quebec have limits on the purchase of agricultural land. PEI closely guards its waterfront. Vancouver has explored some action of its own.
Those are all reasonable safeguards that place the public interests ahead of private profits. Now we need to build on them. As a start, let’s explore limits on the numbers of properties foreign investors could own in major centres, where prices have risen higher than Steven Tyler at a ‘90s Aerosmith concert.
Government regulation won’t put an end to damaging housing bubbles. But it may be able to curb some of the current investor excess that makes for such a fascinating read – fascinating, that is, until you find yourself as the protagonist in the next story of a buyer who can’t afford a home.