Now that Bank of Canada Governor Stephen Poloz has warned that house prices in Vancouver are rising too quickly, I'm sure that will be enough to instantly cool things off.

Right.

I will say that the good governor is right when he says that the current rate at which prices are going up is not sustainable. But I don't believe the correction he's foreshadowing is going to be of the nature that will suddenly make housing in Metro Vancouver affordable for the masses. No. Not now. Not ever.

Story continues below advertisement

Perhaps the escalation that we've witnessed in the past year will slow. Homes will only increase in value by 10 per cent annually in a year or two instead of, say, more than 40. But I certainly don't see any institution or government taking the kind of action that will slow the rate of growth to something that would be considered normal – like 5 or 6 per cent.

I just don't think there are fiscal tools available that could be that precise. The greater risk is doing something that would ignite some sort of screeching reversal in prices, damaging equity values in the process. Even Mr. Poloz does not want that to happen.

Frankly, I don't think anyone quite knows what to do. The public is furious with governments that have sat on their hands the last couple of years and watched this madness unfold. And yet, people can't agree on what it is they want governments to do. Is it a luxury tax? A vacancy tax? Should government allow foreign investors to only buy new homes, like Australia does?

I mean, our politicians are still saying they're not even sure that foreign investors are the problem. Federal Finance Minister Bill Morneau said this week that he's having his officials do a "deep dive" on the relationship between foreign investment in the housing markets of Vancouver and Toronto and the price rise we're witnessing. Deep dive? Now? After prices have gone up more than 40 per cent in Vancouver and other environs?

Meantime, in my little town outside Vancouver, where prices have soared 48 per cent in the last year, real-estate agents are walking the streets with Chinese investors hungry to buy up more property. The other day two realtors led a group of about 18 investors, all with notebooks in hand. They stood outside our house for about 10 minutes chatting and writing things down. It was, um, what's the word? – unnerving.

What did I read in Forbes magazine the other day? It's estimated that between $700-billion and $1-trillion in capital fled China last year. Shocking doesn't even begin to describe those numbers. I can tell Mr. Morneau right now that a healthy chunk of that cash ended up in Metro Vancouver and Toronto. That is simply a fact. (He likely knows it as well.)

So where does this all leave us? Not much further ahead, I'm afraid. We have all levels of government looking at one another, shrugging their shoulders, all but admitting there isn't much they can do or are prepared to do other than around the edges. That is why we'll likely see some form of luxury tax or vacancy tax brought in that will at least help raise money for other things, like affordable housing (whatever that means now) or transit, since young people who are entering the market have to commute from the outer reaches of Mongolia if they work in downtown Vancouver. There could be a task force formed to further study and analyze the situation.

Story continues below advertisement

As I said earlier, it is likely to conclude that the situation we are experiencing is a supply-and-demand problem.

Right now, when I look around, all I can do is feel enormous sympathy for first-time home buyers in Metro Vancouver. After dealing with their mortgage payments, many of these people have very little left with which to enjoy themselves. I know people will say it's been forever thus, but that's not true.

In Metro Vancouver and Toronto, mortgages are eating up an increasingly large segment of household income. (And all that debt has government economists worried.) If I was a millennial right now, I'd seriously consider renting and waiting for that inheritance many will receive when their wealthy boomer parents die off.

Life is too short to be a debt slave.