“Foreign capital accounted for only 2.92% of Metro Vancouver real estate sales over 11 months” was the recent headline in the Georgia Straight earlier this month.
As the perennial classic book by Darrell Huff points out, there are many ways to deceive with statistics, including how they are presented.
These foreign capital statistics are misleading, as they relate only to the period between January and November of 2018 – about 7 months AFTER the implementation of the Foreign Buyers Tax (“FBT”) which added 15%-20% to the price of house for a foreign buyer in BC.
One would expect that the effect of this tax would be a dramatic decrease in the activity of foreign buyers who, prior to 2017 had been purchasing BC real estate on the same basis as Canadians, but in US dollars, thus getting a 25-35% discount based on the exchange rate.
Far more illuminating statistics would be the ones from 2010 to July of 2016 (when the FBT was imposed), however so such data exists as it was not being collected.
Thus no one knows what percentage of BC real estate foreign buyers currently own and what percentage of buyers they made up during those years.
In addition, for very high end properties (i.e. $4M and upwards), the sales activity in BC has almost stopped entirely since last year, suggesting that foreign capital was responsible for most of that activity in the first place (certainly far more that 2.92%!!)
Presenting these figures without pointing out these additional factors creates the false impression that foreigners and foreign money has had an insignificant effect on BC real estate prices.
©Pazder Law Corporation (2020)
Questions? Call Kenneth Pazder or Melissa Valana (604-682-1509) at Pazder Law Corporation anytime for a free consultation.