In the best rent-seeking tradition, I support this law. Demand will shift from Vancouver to the west coast – including the greater Silicon Valley area where my wife and I own two houses.
Somehow I missed this story when it hit the newswires in July. Vancouver, British Columbia, is a delightful town with breathtaking scenery, a pedestrian-friendly downtown, and attractions for all manner of tourists. Add in the Mediterranean climate and the magnetism is almost irresistible. Apparently the lure was enough for flight capital from China to push up housing prices, especially in the higher-priced segment. According to Reuters,
The new law comes weeks after the province released preliminary data showing that foreigners invested some C$1 billion ($756.7 million) in British Columbia housing from June 10 to July 14, with about 86 percent of that in Vancouver.
The cost of a typical home in the Vancouver area jumped 32 percent over one year to hit C$917,800 [$694,500] in June. Foreign buyers have taken the brunt of the blame for the runaway market, though factors like low interest rates also play a role.
The results have been all too predictable. Bloomberg reports that the demand for $1 million plus priced houses in Seattle has spiked. The tax went into effect August 3. Here’s what happened:
Here are the details (from Bloomberg):
The Seattle metropolitan area has already seen a 50 percent jump in house prices in the past five years, thanks in part to a booming technology industry and growth in companies such as Amazon.com Inc. and Microsoft Corp. Still, the median home value is $409,900, less than in San Francisco and Los Angeles, according to Zillow Group Inc. In Vancouver, the benchmark home price is C$919,300 ($680,000), or C$1.06 million ($782,000) with the tax.
Interestingly, some of the demand is shifting to Toronto. Please, folks, look to the south. It’s pretty nice along the California coast from Bolinas to San Diego.