Immigration Policy Shift Coming to North America: Vancouver Housing Edition

Soaring Vancouver home prices spur anger toward foreign buyers

"Average, hardworking Canadian residents are being forced to compete for housing with the global wealthy," said Xia, who immigrated to Canada from China as child. "People here are getting angry."

That anger has contributed to a simmering xenophobia in Vancouver, a multicultural coastal city long known for its inclusiveness. With virtually no official data on foreign buyers available, many of those squeezed out of the market are left to believe the worst.

That has residents like Xia pressing the government to track international buyers, scrutinize the source of their funds and tax property speculation, before the anti-Chinese sentiment gets out of hand.

Last summer, a small anti-immigration group covered up Chinese symbols on real estate signs in the affluent suburb of West Vancouver with stickers reading "Please Respect Canada's Official Languages."

And police are investigating incidents on neighboring Vancouver Island, where anti-Chinese pamphlets appeared in affluent neighborhoods and signs for Chinese real estate agents were defaced with racial epithets and messages like "Go home" and "Not welcome".

Immigration and investment policy never had to deal with the world as it exists now. Communications and transportation make living abroad easier than ever. The biggest change, however, is that 3 billion people are rapidly developing and they still live in relatively poor countries. I don't know if the West will prove as attractive for Indians as for Chinese, but if it does, take whatever you're seeing from Chinese today and triple it, that is what you will see in 10 years when far more Chinese are able to buy property abroad and India's economy has experienced it's growth spurt.

At the same time, politics is changing in the West. Debates are shifting from economic issues, to community, identity and cultural issues. Sovereignty is a major issue with the Greek crisis. Citizens are increasingly asking the question: who should the government represent, the people who live here or foreigners?

In the last five years, the median selling price for residential properties in Vancouver has jumped 57 percent to C$1.1 million, according to data compiled by Reuters from the Real Estate Board of Greater Vancouver. The price of detached homes has soared 82 percent, to C$2.1 million. The median household income, meanwhile, has risen by an estimated 13 percent in the same period, according to Statistic Canada.

A Canadian friend told me many Chinese from cities such as Toronto are moving out to Vancouver, so there may be a lot of internal migration going on as well, but it's either foreign buying or cheap money that are driving prices.

But not everyone is convinced that Chinese money is primarily responsible for the rise in housing prices, noting that it has also been fueled by interest rates that are near record lows and a tight supply of detached houses.

"The reason why we're seeing this racialized narrative is people are looking for a scapegoat," said Victor Wong, the Toronto-based executive director of the Chinese Canadian National Council.

"It's infected the population," he added. "People have bought into this narrative that there's a flood of foreign money into the market when there's just no evidence beyond a few anecdotes."

A few anecdotes in Vancouver, and London, and New York, and Palo Alto and Sydney. It is racialized in Vancouver because most of the buyers recently are Chinese, but a similar trend is happening other cities with a more diverse influx of immigrants.

No doubt easy money policies are playing a role though. Inflation does not occur evenly. Newly created money will flow into whatever catches and bid and attracts the herd. For policy makers this isn't good news though, since it means low interest rates have blown housing bubbles bigger than the U.S. saw in the 2000s.

If foreign buying is the main factor, there's no housing bubble in Vancouver and prices can continue to rise. There will be millions more buyers in the coming years thanks to growth in emerging markets. Cities such as Vancouver could effectively become truly international cities, perhaps eventually becoming like Singapore and declaring independence or receiving special status from the national government, based on the current development path. Trends don't continue forever though, and with Europe and Australia already moved far to the right on immigration issues relative to the US and Canada, it is likely North America plays a very rapid game of catch-up. America has already seen the emergence of Donald Trump, Canada may soon see a similar figure emerge.

Canada already has it's Ann Coulter:

Activists like Xia are pushing the government to at least start tracking foreign buyers and to make the information public.

"By not addressing it, they're letting anger and resentment build through whispers and at dinner parties," said Xia.

That is the exact argument made by Coulter with regards to immigrant crime and the total number of illegal aliens in the country. In the U.S., the government doesn't break down criminal statistics by immigration status and doesn't seriously try to count the number of illegal aliens in the country. Private estimates (by financial analysts looking at data such as remittances) put the number of illegal aliens at over 20 million 10 years ago, while the government still reports 12 million.

As I've said here before, in the U.S. the immigration issue is completely open because the establishment in both political parties have the same policy, which is a peak mood policy. Social mood has changed and the foreign born population in the U.S. is at the levels seen when the last immigration halt was enacted. If no one steps up and joins Donald Trump (or moves to his right), all he has to do is make no major mistakes, keep talking about immigration and policies that support American workers, and he will be in the White House in 2016, possibly in a landslide. Just as Ms. Xia, a Chinese immigrant is leading the charge for a "Canadians First" housing policy, people will be surprised at who ends up voting for Mr. Trump.