Immigration and the Future of Vancouver’s Property Market with Daniel Hiebert | VREP #101

Is there a difference between “foreign buyers” and immigrants who buy property?

Daniel Hiebert joins Matt and Adam this week to tackle this issue and discuss his recent paper that was published in the Canadian Journal of Urban Research and subsequent Vancouver Sun article.

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Episode Summary

About Daniel:

Daniel has been at UBC for a long time. He works with immigration policy and outcomes, mainly focusing on Canada but other countries too. He looks mostly at how things play out in cities, as most immigrants settle in cities. Daniel researches how they get incorporated into labour and housing markets, along with neighborhood structures of places like Toronto, Vancouver, Montreal, and mid-sized Canadian cities.

On findings from his Immigrants and Refugees in the Housing Markets of Montreal, Toronto and Vancouver, 2011 research:

Daniel’s research is on how newcomers have become incorporated into the housing markets of Montreal, Toronto, and Vancouver. For the three cities, he looked at the propensity for people to buy a home, the ratio of home owners vs. renters, and the relationship between mortgage/rental payments and household income. He also did this for different categories immigration (economic, family, and refugee immigrants).

The single most important thing is the rapidity with which people enter home ownership (especially in Toronto and Vancouver—only about half the population of Montreal owns their home, whereas in the other two cities this is about two-thirds of the population). This has to do with the immigrants coming into Montreal and the market—which is not rising as rapidly, so there is a much calmer pace. In Toronto and Vancouver there is the mentality if you don’t buy quickly, you’ll be locked out of the market.

The most surprising finding was that the process of gaining home ownership is happening for family and refugee-class immigrants, not just economic immigrants. Toronto is home to about half of all refugees who come to Canada, and a third of those refugees already own a home within their first five years of arriving. About 75% of refugees who have been in Toronto for over 20 years own a home—this exceeds the rate for the population, overall. It’s incredible, given the life disruption these people have gone through. This clearly indicates most of the refugee population not only becomes self sufficient, but thrives economically. Though it’s generally positive, a fraction of the immigrant and refugee population—even those who have been in Canada for up to 30 years—gets stuck with a high ratio of their income going towards rent.

On the link between culture, home ownership, and real estate investing:

The visible minority category research is not in the above-mentioned paper, but for the most recent immigrants and refugees, ownership rates vary a lot between categories of visible minorities. For Toronto, on the high end, those who self-identify as Chinese and arrived within the past five years already have a home ownership rate of 75%. Conversely, the rate for those who identify as black is 32%. For Vancouver, immigrants that own homes within the first five years of arriving is highest for the Chinese group (at 56%), with the Filipino group at the low end (21%).

On what this means for Vancouver real estate in the future:

Over half of Chinese immigrants purchase housing within five years of arriving, which is substantial. The more immigrants coming from China, the more you’ll see home ownership demand. This is also true for those coming from Korea and Western Asia (Iran).

On if housing and immigration policy should be linked, and if the Canadian government should change policy based on his findings:

There is a conversation in the media about trying to identify THE single cause. There is no single cause for high prices in places like Vancouver and Toronto. It has to do with interest rates, household formations, migration rates (in and out), etc. Sometimes people are quick to blame immigrants buying homes as the reason for unaffordability. This is only one factor.

Sure, the number of immigrants Canada chooses to bring in does influence the housing market. Does this mean the policy should change? It’s been on a consistent trajectory over the past 20 years and is subtly encouraging people to settle outside of the big cities. Immigration is a benefit to society and having this benefit spread out to smaller areas is good policy. It does not need to change dramatically.

On Winnipeg being a good investment because of the number of immigrants heading there:

The provinces and territories are negotiating with Ottawa to get a certain number of provincial nominees, and Manitoba has been very successful with this. They have a low unemployment rate but do not attract immigrants through the regular system, so Ottawa has been generous. Most will go to the biggest city in a given region—in this case, Winnipeg.

On the historical precedent to demonize newcomers when a society faces challenges (i.e. affordability in Vancouver), and if we are at risk of doing this when discussing housing and immigration:

We are at risk of this when the discussion gets polarized and sharp. For instance, a writeup of his paper was in the Vancouver Sun, and within a day he got messages from white supremacists who were against his statements in support of diversity and immigration. Daniel hopes we get real data to understand what’s happening, and put it in front of the public in the most accessible way as possible (e.g. for free, in an open-sourced journal). We bring in immigrants to make positive economic contributions—about two-thirds of immigrants are economic immigrants. So, why should we be surprised that they want to plant roots and buy housing? This should be expected. From interviews, Daniel has learned it’s a straightforward list of what people want when they immigrate here:

  1. Find opportunities for their children
  2. Get a job
  3. Buy a house

These coincide perfectly with the rationale of our immigration program, so it’s disingenuous to say, “if you’re achieving these objectives, we’ll be angry at you”.

On the foreign buyers’ tax—which can signal to the population that the problem is related to immigrants:

Daniel wishes people would make a powerful separation between foreign buyers and immigrants. Permanent residents are Canadians. There needs to be public education so people can learn the difference. He is supportive of a foreign ownership tax to cool down the market. However, we don’t really know the number of foreign buyers as many are buying through Canadian companies, which isn’t tracked. We’re only tracking the small-scale purchases from those who don’t buy this way. People who come here and buy for their kids are making a life investment—this is very different.

Five-wire:

  1. Favorite neighborhood in Vancouver: Main Street
  2. Favorite bar or restaurant: Les Faux Bourgeois
  3. Downtown penthouse or west-side mansion: Heart says downtown penthouse, head says west-side mansion
  4. Where he first takes someone visiting from out-of-town: Granville Island or UBC
  5. UBC, UofT or McGill: Can’t say

To find out more about Daniel and his work:

http://www.geog.ubc.ca/persons/dan-hiebert/

 

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