A Peek At Foreign Real Estate Purchases
MAC Marketing Solution’s recent debacle has left Vancouver real estate professionals in a state of shock. According to The Globe and Mail, a pair of MAC associates appeared on a news broadcast posing as sisters deliberating on making an offer for a new condo because their parents, in China, were planning to buy a new place for them. Internet sleuths who saw the broadcast identified one of the sisters as a MAC employee. The ruse? MAC Marketing Solutions is the firm selling the condo.
“Usually, Chinese people likely to buy during this time,” one of the ‘sisters’ was recorded saying.
Without making any harsh, general assumptions concerning marketing firms, their maneuver came in the midst of the lowest average condo sales recorded since 2001. According to the Real Estate Board of Greater Vancouver, residential sales are 18% below the 10-year sales average for January and down 22.7% from this time between 2011 and 2012.
However ridiculous MAC’s shenanigans, this PR calamity primed an argument about foreign buyer’s effects on communities: namely, the question “is foreign money driving up real estate prices?”
The short answer is no.
First, the reason for the eruption of this debate comes from a somewhat irrational fear that a bulk of foreign-purchased condos are lying dormant and empty, negatively affecting surrounding businesses. Second, the lack of a major impact from foreign real estate purchases on the general housing market is because foreign buyers make up only 1% to 4% of condos purchased in any given year. In fact, a recent tally by Landcor Data Corporation showed only 0.2% of buyers in Greater Vancouver last year are living outside of Canada.
The major reason is because foreigners buying real estate in Vancouver are generally moving into Canada. If you can afford real estate in Vancouver, why not live here?!