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Impact of out-of-town investors: yes, increases prices; increases them more when supply restricted

November 8th, 2017 · 4 Comments

If you want to be guaranteed loads of clicks in this town, write about how everyone is being driven out by high real-estate prices (caused by heartless politicians, shadowy foreign investors, the real-estate cartel, etc etc) and/or about a study that tries to bring real data to the anecdotes.

So this recent study from UBC got loads of attention all around, though some didn’t like the author’s comments (made separately from the study) that the solution was supply first, and then, a poor second, restricting demand.

The study noted that, yes, out-of-town investors (whether from Chilliwack or Chengdu) who buy properties and leave them empty as second homes or investments do drive up prices. Some people were scornful that it took an academic study to come to this conclusion, but the point was not, do they or don’t they. It was: If they do, by how much.

This quantified the increase, noting that it is greater in Vancouver, where there is more of a supply problem, than in New York, where much more supply was already available and more is being added all the time.

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  • earl hickey

    Question: What is the effect on the foreign investor who buys a million
    dollar property and does NOT rent it out but leaves it vacant and still
    pays property taxes, insurance and utilities and holds it empty year
    after year with no income?

  • Frances Bula

    If you look at the story, you’ll see that the study looks only at exactly those kind of people. It doesn’t study the impact of out-of-town investors who rent out their properties, only of those who buy and leave them vacant or mostly vacant (i.e. used a couple of weeks or months a year as a vacation property)

  • cinnamom

    Everybody who wants to be like NYC raise your hands. Higher, so we can see!

  • Gord Collins

    Trudeau’s new plan to bring in 1 million new citizens into Canada will push demand way up in Vancouver. Most apparently will be Asian, and they like Vancouver. In fact, a lot of people like Vancouver, so perhaps investors could be encouraged to invest in new construction housing such as this http://gordcollins.com/investment-2/student-housing-investment/ It’s got a nice ROI.