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IMO there are multiple plausible causes to the white hot market and they could be attributed to foreign money (not necessarily foreign investors) and the immigrant investor programs (Quebec).
With QIIP still in place, we're going to have individuals that have bought their PR moving to BC (even though they are suppose to stay in Quebec but who checks anyway?) and bring with them a lot of cash for homes; with the veil of being a permanent resident of Canada they would not be labelled as "foreign investors" and as such, policies aiming to tax or prevent foreign investment may not work.
Finding a way to stem the flow of foreign cash would be the best approach - but that's probably the hardest thing to do I mean FINTRAC is suppose to be the solution to stem such flows but we can all see that it's hardly effective at all.
From what i learnt, Chinese investors want to move their money away from China as there is huge risk that the RMB would be devalued in the near future (take that as an anecdote) and furthermore, they want to move out of China due to high political risks/poor living conditions (pollution etc.).
In terms of foreign money, Canada has been a country that embraces multiculturalism and as such, some of us may have some sort of ties with the countries our parents immigrated from (example Hong Kong). Some of us may have immigrated with our parents back in the 80s/90s and have grown up here to be naturalised as Canadians.
As some of us have ties to two countries (somewhere in Asia and Canada), many of us will not only look for jobs locally in Vancouver but back in Asia as well. Those of us that do choose to move to Asia will likely to be pursuing a better and more lucrative opportunity (not to mention lower taxes). Those of us that moved away from our homes to look for jobs still love Canada and our hearts are with Vancouver/Toronto, we want to retire here so what do we do? Purchase homes in Canada with the salary we make in Asia. Would FINTRAC detect and stop us from purchasing homes with cash we earn from abroad? Don't think so (I could be wrong here and if I am, great!). Once we purchased a home, we'll either rent it out or let our parents do the house sitting for us.
While I do agree that there are sense of entitlement mixed in with the message of affordability in terms of home ownership in Vancouver and Toronto but I do think something needs to be done to protect the social fabric/culture that made Vancouver so attractive to this day (I hope some of you guys still agree). If the city/country wants to remain competitive and attractive, intervention is needed to entice the next or current generation of talent and brains to stay and raise their family. Many of my friends have gone south of the border to work; choice was tough for them but as some posters have said they toughed it out and went for greener pastures.
At this point, I don't think there would be a fiscal or political solution that would cool the market without creating casualties - whether its heavy taxation, raising interest rates, or restricting foreign investment. Politicians don't want to do anything as they would not want to be the one who pressed the button to send Canada into a prolonged recession.
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