On April 7. 2022 the Federal Budget was released and one of the hottest topics of discussion is the 2 year ban on foreign buyers. What does this mean to you if you are a Buyer or Seller in North or West Vancouver?The short answer is nothing.While there was a period on the North Shore that we were seeing a huge influx of foreign buyers, 2011 – 2015, the current climate is that there are very few foreign buyers now. In 2016 the Government issued a foreign buyer tax, a hefty 20% tax that was intended to cool the market. And, the market did cool but not because of this tax. By the time it was implemented, the market was already considerably slowing down. Markets ebb and flow.
In 2016 we came out of what was the busiest, most frenzied market Vancouver and surrounding areas had ever seen. Prices had skyrocketed and we had firmly been in a Seller’s market for over 2 years. What goes up must come down. Thus followed a very flat market for 2017, 2018 and the first quarter of 2019. Sellers were stuck on “could have” prices at the peak and Buyers were saying, no way. By May of 2019 activity was starting to pick up. No one could have predicted the fast paced market that followed and prices had risen considerably in all neighbourhoods by 2020 with a further jump in 2021. These markets were like 2014 & 2015 but moving even faster with even higher prices.
Enter the Foreign Buyers. Or not, as the case may be. Yes, there are many people from other countries that are still buying homes here, however, almost all of them are Canadian citizens. People who were born here and have been living abroad and wanted to raise their kids back in North and West Vancouver. On the surface, it may look like these people are foreign buyers, but they are not. The worst part about this entire scenario is the Government is trying to make it look like they are taking action on the housing market when in reality they know exactly how many foreign buyers we have. We are now required to declare residency on the Contract of Purchase and Sale for both Buyer and Seller. It is easy to track and yet, have you ever seen the demographics released? I have not and I have looked.
One other thing to consider is that countries such as China and India have made changes to their Capital Export Rules making it difficult to get money out of the country. Even if a foreign buyer wanted to buy in Canada, it is a challenge. The market reached a peak here in Vancouver, West Vancouver, North Vancouver, Coquitlam, Burnaby, Langley, Richmond, Surrey and all other surrounding areas around the first week of February 2022. It is now the third week in April and we are seeing an uptick in sales due to looming interest rate increases. Buyers are trying to purchase before losing their rate holds. That won’t last.
My expectation is that the market will start to balance out and slow down. The Government will take credit for it because just like in 2016, the market slowed down and then they introduced the foreign buyers tax. To a lot of people, it looked like the tax slowed the market but the market had actually slowed down several months earlier. I’d like to see them back up the foreign buyer data – it exists but no one is reporting it. As a Realtor who is extremely active in the market I can tell you that neither myself or my colleagues are seeing any Foreign buyers here in North and West Vancouver. Want to know why the market got so hot in the last few years? Stay tuned for my next blog.