Toronto and Montreal have surpassed Vancouver as the biggest targets for Chinese buyers in Canada.
The most basic economic principle is, when there is a rise in demand, the invisible force of supply will kick in, and this is how economic growth is generated. For those who want to blame the housing crisis on immigrants, let's think about how our economy would look like if B.C. or Canada did not have the intake and growth brought by immigrants.
Foreign investors and a shortage of single-family homes are driving the luxiry market.
There's lots of talk these about how "terrible" it is that "the Chinese are driving up housing prices" in Canada, especially in B.C.'s Lower Mainland. As usual, when people jump on a bandwagon or take hold of a hot button issue, some perspective is a good idea.
The fact that the Home Price Index has obscured the extreme and unusual volatility in average detached home prices may itself be a problem. Few home buyers or sellers are likely aware that it is even occurring. It certainly hasn't been widely reported. Since early 2011, average house prices have changed direction by a factor of 10 per cent or more five times. Such volatility had never happened before, and the swings are getting wilder.
As prosperity spreads and its economy grows there's another 600 million people in China striving to reach middle class status. While this undoubtedly creates challenges for Chinese policy makers, it represents a tremendous economic opportunity for North America, a highly favored destination for Chinese investors.