Immigration taxing housing market
There can be not doubt about the pressure immigrants put on housing costs, stats show
The B.C. association that fights for housing developers has expressed its appreciation for my reporting on the growing number of international students and immigrants arriving in Metro Vancouver.
The Urban Development Institute says my articles highlight the need for supplying more new homes to keep up with demand, mostly from offshore. And they are right to point to rapid population expansion as a significant part of the housing affordability story in Metro Vancouver.
So what’s to be done? Should Metro Vancouver politicians increase the supply of housing, as the UDI urges? Or should they work on trying to reduce demand? That’s the nucleus of the region’s often ill-natured debate.
“Over the next 25 years, our province is expected to grow by more than 1.4 million people, partly as a result of the federal government’s plan to raise immigration 13 per cent by 2020,” UDI president Anne McMullin wrote this year.
“That means we must work together to create new homes if we want our children and grandchildren to have a future in B.C.”
While it’s hard to accurately forecast population trends, we do know that Metro Vancouver has expanded by an average of almost 30,000 new immigrants annually since 2005.
Meanwhile, the proportion of people moving to Metro Vancouver from other Canadian provinces is minimal; it declined to about 3,000 last year. And people are definitely not driving in from Campbell River or Prince George to buy property in Metro.
Ten thousand more people a year are moving out of Metro Vancouver to other parts of the province than are coming here from elsewhere in B.C. All in all, taking into account deaths and births, Metro Vancouver has expanded by 30,000 to 40,000 permanent new people a year for the past decade.
These Metro Vancouver figures do not include the many foreign students and other non-permanent residents flowing into Metro Vancouver, needing to rent or buy dwellings through family members. Demographers consider them a wild card.
That stream of non-permanent newcomers is a reality that few politicians, scholars, or education officials explore. The UDI cannot be blamed for highlighting this big demographic slice, which annually adds more than 140,000 students and visa-permit workers to this city of 2.4 million.
What are the implications of such unprecedented global mobility, of both humans and in many cases their trans-national wealth, for B.C. housing policy? For immigration policy? For foreignstudent policy?
Despite a dire housing crisis in Metro Vancouver, Toronto and other major Canadian cities, the intimate links between housing, immigration and non-permanent residents is rarely addressed, typically because of fear of being accused of xenophobia. But we need a more sophisticated debate about migration and its influence on housing.
A related problem is that politicians are failing to co-operate with each other. City councils determine property zoning. Provincial governments set tax policy on housing. The federal government controls immigration. Education officials, both public and private, welcome foreign students. But all operate in their own silos, often working against one another on affordability.
It won’t be effective to just build more housing supply in response to high in-migration, says Simon Fraser University political scientist Sanjay Jeram.
“Many key voices on this issue have demonstrated that housing prices have become very disconnected from local incomes. Only focusing on supply doesn’t work if the Lower Mainland happens to attract immigrants with wellabove average levels of foreignsourced wealth,” Jeram said.
“If this pattern continues and becomes more prominent, housing prices will continue to rise and shut out of the housing market those who earn their incomes and pay their taxes in Metro. Any solution has to focus on supply and demand.”
Like other scholars, Jeram points to the difficult-to-grasp fact that Metro Vancouver housing costs have soared in part because a portion of the region’s housing supply, especially at the high end, is being purchased with money that wealthy trans-nationals make outside the country, where Canada cannot tax their income.
“Vancouver is not a popular destination with migrants from within Canada. So, on one hand, immigration is needed to sustain and boost the population,” Jeram said. “However, the correlation, not necessarily the causation, between foreign immigration and rising housing prices is something to take note of. It is not a simple matter of (adjusting immigration) levels, but of how foreign-sourced money is finding its way into the Vancouver housing market.”
There is no statistical doubt, however, that immigrants put pressure on housing costs, particularly in Metro Vancouver and Toronto.
UBC geography professor Daniel Hiebert has found most immigrants show greater determination than Canadian-born citizens to buy housing in Canada’s three major cities. Hiebert’s peerreviewed study enhances earlier research by UBC geographer David Ley, as well as the Conference Board of Canada, that has shown a strong correlation between rapid immigration and pricey housing in Vancouver and Toronto.
“First and foremost, immigration policy is, essentially, also a form of housing policy,” Hiebert says in his comprehensive paper in the Canadian Journal of Urban Research.
“Metropolitan housing in Canada would, very likely, look totally different if the scale of immigration were to change dramatically in either direction. The recent decision ( by Prime Minister Justin Trudeau) to raise permanent immigration admission levels from approximately 270,000 in 2015 to 340,000 in 2020 will surely have a significant impact.”
The Urban Development Institute and the B.C. Business Council, meanwhile, encourage governments to bring in immigrants and foreign students and increase density by arguing it is beneficial for the economy.
But others caution that, while the real estate industry and the overall economy might be winning because of high immigration, too many individuals are losing. Many renters and would-be homeowners are being squeezed out of decent housing in a city that Demographia ranks among the three most unaffordable cities out of more than 400 surveyed.
Are we making any progress at unravelling the knots formed by the many links between housing and migration?
It is not a simple matter of (adjusting immigration) levels, but of how foreign-sourced money is finding its way into the Vancouver housing market. Sanjay Jeram, Simon Fraser University political scientist Metro Vancouver has expanded by an average of almost 30,000 new immigrants annually.
Next week, I’ll look at the number ■ of housing units being built in Metro Vancouver, why the last prime minister to lower immigration rates did so, and whether it is possible to change the pattern that sees the vast majority of migrants funnelling into Canada’s biggest cities.