It matters little what direction you look at this from; the housing crisis in B.C. was caused by unrestricted foreign purchasing of residential properties.
Just for the record farm properties also have been seriously affected by this lack of due diligence but that is yet another growing problem. By any means it seems highly unlikely that the Governments of the day could not see the damages that were being done, but were driven on by outright greed and an inability to curb their own spending.
This started more than two decades ago as the wealthy looked to get their assets out of unstable or totalitarian countries. The fuse was ignited with the turn over of Hong Kong to communist China but the fault is not there; it lies directly with our own Governments and continues to this day. This is a country wide crisis that involves both past and present federal and provincial governments but is dominant in B.C.
Now we have the recent revelation that million-dollar homes were being purchased with poverty level incomes being declared by the purchasers. Other records are showing direct ties to the BC Casino money laundering scandal. Those purchases, by the governments own standards qualify as the proceeds of crime but the involvement of so many high-level names make it unlikely that seizures or charges will ever happen. Further to that the cascading effect has involved so much of the province that a meaningful solution is hard to imagine without an economic melt down of the housing market. That would now be a devastating blow to many innocent people who have been forced to pay highly inflated prices for homes, and those were the fortunate ones who were able to get into the market in the first place.
Many thousands of others will never be able to attain the dream of home ownership and will be condemned to paying crippling rents for the rest of their lives and likely their children also will face this fate.
One other effect is those who either through luck, or shrewd business sense find themselves on the positive side of this market have seen their wealth grow substantially. Now by liquidating their assets are moving outward to the lesser valued rural areas. These people flush with wealth are pushing the property values out of sight often building executive style houses in low-income rural areas. These spiraling property assessments are starting to force other lower income locals out of the market. In the case of seniors, rather than freezing the assessment the perpetually money staved Government has proudly stated: “We have the solution, they can defer their taxes.” Which for many in the middle class ensures that their offspring will see nothing of their family legacy and will join those condemned to that high rent payment; forever widening that gap where the middle class used to live. There are of course many cries for government to provide affordable housing but let’s be clear, when the government supplies something it has to apply more property tax to pay for it. Difficult to do without making the problem worse yet. Without a doubt this kind of crisis has been the catalyst for civil strife in many other places in the past and if left unchecked will fester until a release explodes.
This has also been happening with farm lands and that is starting to have a negative effect on food prices further adding severity to the ever-growing food supply and security problem.
When, not if, the interest rate goes up we may see a collapse reminiscent of the 30’s. Just something else to look forward too.
This is what happens when governments become derelict in their diligence and fail to look closely into the crystal ball. It will be interesting to see if a future government will have the strength and determination to find a gentle solution or will we need a dose of chaos and heartbreak.
A terrifying quote from the past;
“The way to make money is to buy when blood is running in the streets.”
John D. Rockefeller