BCBusiness

greg ehlers/sFU jUly/aUgUst 2018 BCBusiness 37 threat to their living situation. Today in B.C., the possibility that things could get nasty isn't far-fetched—especially if prices con- tinue to climb steadily. Surging nativism isn't the only problem on the horizon if housing costs, like some fairy-tale beanstalk, keep growing skyward. But can they? It's possible. First, credit remains cheap. Canadians have gorged themselves on debt, and our debt-to-disposable-income ratio now hov- ers around 170 percent, according to Statistics Canada. Yet ultra-low mortgage rates have meant that in the last quarter of 2017, the national DSR, or household debt service ratio (all mortgage and non-mortgage debt commitments, includ- ing principal and interest, also known as the monthly nut), was a little less than 14 percent of average disposable income—holding almost steady since 2007. (No standalone DSR stats were available for Metro Vancouver. But the inŒation-adjusted car- rying costs for an average-priced Vancouver home were much less in 2015 than in 1981, when a one- year mortgage was an incredible 19.75 percent.) Since July 2017, the Bank of Canada has raised its benchmark interest rate from 0.5 per- cent to 1.25 percent. Despite those hikes—and a recent warning that more are likely—a cautious, tinkering-at-the-edges approach prevails. That means rates should remain relatively low for the foreseeable future, ensuring that cheap credit and low carrying costs, prime factors in the rise of B.C. house prices, remain in play. But cheap money isn't the only driver, as urban planner Andy Yan, director of the City Program at SFU, has been saying for years. Yan's research into non-resident ownership—notably, his 2015 study found that two thirds of the 172 homes sold over six months in select areas of Vancouver's West Side had been purchased by people with non- Anglicized Chinese names—kicked the foreign buyer discussion up a notch. It also opened him up to the accusation that his approach Œirted with racism, a charge levelled by certain stakeholders who some believed were trying to reframe the conversation, or prevent it from taking place. Yan, no stranger to racism—his great- grandfather paid the head tax on Chinese immi- grants—uses a computer science analošy to illustrate the ploy. "Basically, it's looking for an exploit," he says. "You see a fault in the code which is open, through which you have nefarious players who want to take advantage." Today, it's widely recognized that foreign money, mainly from China, has played a major role in Vancouver's overheated housing market, and not just at the ultra–high end: according to Yan, non-residents purchased almost 20 percent of condos built in the city since 2016, a torrid pace. But can it continue? An assumption: as demand- side measures make things increasingly di¢cult, global capital will seek out other sandboxes to play in—like booming Montreal, which o£ers Canadian stability at a discount without the punishing cave- ats found here. But Yan says that isn't happening. The reason? "Networks—bidirectional transnational networks that have historic roots in Vancouver," he says. Yan pulls up a chart on his computer. It shows that Metro Vancouver is largely a place of immigrants: in 2015¤16, they made up 40.7 percent of the popu- lation—second in North America to Toronto, with 46.1 percent, but dramatically ahead of other cen- tres like New York (28.6 percent) and San Fran- cisco (30 percent). Vancouver is unique, however, because so many of those immigrants hail from China: almost 20 percent, roughly twice the pro- portions seen in Toronto and San Francisco, and about ¦ve times as many as in New York. Yan is quick to add that speculative buy- ing affects everyone, regardless of ethnicity: An assumption: as demand-side measures make things increasingly difficult, global capital will seek out other sandboxes to play in—like booming Montreal, which offers Canadian stability at a discount without the punishing caveats found here foreign funds Urban planner Andy Yan drew fire for a study show- ing non-resident homebuyers' clout

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