The South China Morning Post’s Ian Young tackles two interconnected issues we're afraid to talk about in Vancouver

On Monday, a trio of local economists waded into the conversation around real estate, foreign ownership, and absentee landlords. The group, which includes UBC’s Tsur Somerville, Thomas Davidoff, and Joshua Gottlieb, proposed a 1.5-percent tax on vacant properties, one they believe would generate millions in revenue that could flow into the B.C. Housing Affordability Fund and help chip away at the problem of housing unaffordability in Vancouver. "The goal is to support those living in parts of the province that have seen skyrocketing real estate prices, while also making our local markets less attractive to investors who wish to avoid taxation or park cash," Davidoff said in a statement. The report was greeted by most local observers as an important step in the right direction. But for Ian Young, the Vancouver correspondent for the South China Morning Post and perhaps the most outspoken such observer in the city, it’s not nearly enough. I caught up to him earlier this month to talk about the politics of housing in a city that seems to have a hard time talking openly about them. Today, we feature part one of that conversation. Next week, part two. Why do we have such a hard time talking about house prices in this city without resorting to accusations of racism? The key problem we have to confront is the fact that wealth migration to Vancouver at the moment is, to such a huge extent, Chinese wealth migration. This makes it difficult to talk about it. Within the Chinese community, certainly, when you see a wealthy Chinese immigrant or homebuyer, they’re not defined by their Chineseness. They’re defined by the fact that they’re bloody wealthy. But for someone who’s outside that community—someone who, for lack of a better word, is white—when they see someone like that they might define them by their Chineseness. But that’s not what defines that person’s behaviour. And I think, inherently, that’s actually a more racist presumption—to regard someone as being defined their ethnicity or race or cultural origins when clearly their behavior, at least for our purposes, is defined by their economic power. The fact that so many of these wealthy migrants are coming from China is not the problem, but it does help us understand the problem. It’s odd to me that you have people like yourself, Andy Yan, and Eveline Xia calling a spade a spade, and then on the other side you have non-Chinese people saying that describing the problem that way is racist. It seems almost backwards. It is—it’s absurd. I think that most people can recognize the absurdity of this. It sort of boggles my mind that it’s taken so long for a lot of Vancouverites to wake up to the ridiculousness of this situation. There are plenty of people in this debate who continue to advance the idea that we don’t have enough concrete data to draw a conclusive causal relationship between Chinese money and Vancouver home prices. Is that actually the case? Everyone should be behind better data. Not everyone is—you know, Rich Coleman said in the legislature that he didn’t see a need for it—but everyone should be behind better data. But that’s not to say that we lack sufficient data to make a very good assessment about what is going on. We’ve got peer-reviewed academic data from David Ley at UBC, who found what he called ‘an unusually decisive link’ between immigration and property prices in Vancouver, and this is going back over 25 years. We had Markus Moos and Andrejs Skaburskis who did another peer-reviewed piece of academic research that found that prices in Vancouver had become decoupled from local incomes by virtue of the fact that the home buying behavior of many recent immigrants was not tied to their local income. That cuts directly to the issue of foreign money. Now, everyone gets tied up on foreignness. Are we targeting foreigners? I think the safest and most sensible thing to do is just take that out of the equation. It is not relevant whether or not a buyer is foreign, if they’re an immigrant or any of that. What is relevant is where their money is coming from and where they’re earning their money, because that’s what drives unaffordability, by definition: the gap between local prices and local incomes. It doesn’t matter whether or not the person is foreign. What matters is whether their income is foreign. So there is a strong body of evidence which points to this, as well as all the non-peer-reviewed evidence from people like Andy Yan, which is not outlier stuff. The stuff that he produced, which was that 66 percent of house buyers in the west side neighbourhoods he looked at had non-Anglicized mainland Chinese names, is not news to anyone who’s familiar with the real estate market in Vancouver. It should not be viewed as shocking or racist to be honing in on this information. The fact that somebody has a non-anglicized Chinese name is quite clearly relevant to the discussion when they make up 66 percent of those buyers, when they make up 85 percent of $3 million-plus buyers but only make up 15 percent of the domestic Vancouver population as of 2006. Is this one of those cases where the road to hell is paved with good intentions, in that you have a lot of well-meaning people who are acutely sensitive to the city’s historical mistreatment of Chinese people and, in the name of avoiding trading in racist stereotypes, are shutting down the conversation in order to avoid being perceived as being racist? Absolutely. I think there’s a fine line, though, between those good intentions and looking after one’s own self interest. There’s a gap in perception, but it is not a gap of race—it is a gap of age. People who are under the age of their mid-forties perceive this situation in a very different way to people who are older than that and who are already on the home-buying ladder. People in the older category say, ‘Oh, we’ve seen this before. It’s always been like this in Vancouver.’ Bullshit. In the past five years, we’ve seen unaffordability in Vancouver double. We’ve seen the price-to-income ratio double, and it was already hopeless. It was already something like six-to-one, and now it’s more like ten-to-one. The other favourite chestnut that people drag out is that it’s happening in cities all over the world. ‘It’s happening in London. It’s happening in Paris and New York.’ Bullshit. If you go back over the past five years, those cities have seen nothing like this. Some of them have actually gone backwards—affordability in New York has actually increased. The only city that has seen anything like it is Hong Kong, and Hong Kong is undergoing the same sort of issues in terms of money flows from mainland China—almost identical issues. The problem with that argument, from my perspective, is that New York and London and Hong Kong have incomes that can better support those prices. They have head offices and the high-paying jobs that come with them, and Vancouver has a median household income that’s basically on par with Windsor, Ontario. People confuse prices and affordability all the time. Vancouver having million-dollar homes would not be a problem if we had commensurate incomes, but we do not. We have some of the lowest incomes in Canada. People find that hard to believe; how can a city that, on paper, has some of the richest people in Canada and the highest levels of household wealth have some of the lowest incomes? Clearly, it’s actually the value of homes that’s driving this. It’s no coincidence that Vancouver also has some of the highest levels of debt in the country. But getting people to believe this is actually a hard thing. It doesn’t matter, to an extent, how much data you put in front of them. People will not believe that Vancouver has been the world’s most popular city for wealth-determined migrants. They will not believe it. Click here for the second part of this interview...