Tucked away in a recent news report on the Turkish-turned-Syrian-refugee town of Kilis was this curious line: “Kilis rents doubled in some neighborhoods after the Syrians began arriving… [a]n apartment that cost $120 shot up to $300 a month…Turkish generosity may be wearing thin…”
The remark raises an intriguing yet never-broached topic here in the US: Can immigration drive-up home prices? Logic would have to say yes; more bodies does indeed equal more demand for housing. But to what extent can prices be affected?
Well, if Vancouver, Canada is anything to go by, the answer’s “a whole lot.” The housing market in the West Coast city has dominated national headlines in Canada for years with the city consistently topping global housing-unaffordability indices.
The main reason say critics?
Hundreds of thousands of Mainland Chinese (including investors) coming across the Pacific Ocean to take advantage of Vancouver’s top-notch public school system as well as its publicly-funded university, the University of British Columbia, one of Canada’s biggest and best.
{mosads}But with a veritable exodus now underway among city natives too pinched to stay in the place they grew up, the local government’s recently installed two new taxes intended to slow-down home purchases from foreigners—The federal government intended to do the same in 2014 when it scrapped its relatively large investor-visa program, a popular vehicle for Vancouver immigrants.
That the new laws were barely veiled attacks against Chinese home-buying in particular was fairly shocking for the ultra-liberal city which, if anything, deserves the label ‘xenophilic’ rather than ‘xenophobic.’
As documented in one recent op-ed in Vancouver’s main newspaper, the city’s political leaders have actually long pleaded for ‘breathing room’ from the federal government, asking that they adjust immigration-levels downward for the sake of local renters and hopeful first-time homebuyers.
Looking back at the last three decades, University of British Columbia professor David Ley states that the correlation between immigration and home prices is very tight and not only in Vancouver but in Canada’s other major cities as well—Around three-quarters of all Canada’s 300,000 annual immigrant-intake goes to just three of the country’s metropolitan areas: Toronto, Montreal, and Vancouver. In his 2010 book on the subject, Millionaire Migrants, Professor Ley found that the connection was “unusually decisive” with a “positive correlation coefficient of 0.94 between Vancouver house prices and net international migration.”
There’s little reason to think Ley’s findings wouldn’t be replicated in the US as well. Like Canada, immigrants to the US tend to create concentrated enclaves with nearly half the million-plus we take in annually going to just five cities: New York, Los Angeles, Chicago, Miami, and Houston.
Meanwhile, numerous other immigration hot-spots around the world have been forced to recognize the house-inflation/immigration connection, including Sydney, London, Singapore, and Hong Kong. So why the conspiracy of silence on immigration-induced house inflation in this country? Professor Ley may have an idea.
As he explains in his book, in their “desire to soothe frictions over immigration”, Vancouver’s real estate industry clandestinely created an economic think-tank, the Laurier Institute, to “study” the immigration-impacts on housing. Falsely billed as “independent”, the think-tank published a series of reports which “found” that it wasn’t foreigners, but internal Canadian migrants, who were to blame for pushing up prices.
That conclusion, says Ley, was bogus and even among real estate brokers, he writes, the reports elicited laughter.
Looking back at the data, Ley found that the made-in-Canada argument was “conclusively denied by the wage-home price mismatch during this period.”
“Despite dramatically rising house prices”, he writes, “real median family income in metropolitan Vancouver actually fell by 3 percent between 1990 and 2000.”
In other words, the reason the city had become increasingly unaffordable, then as now, was immigration.
But still, Ley concludes, the reports “did significant ideological work” and achieved just what Big Business intended: to make an “end run around local resistance.”
As a result, he says, in Vancouver and cities like it, excessive immigration has created “an unbreachable affordability barrier for many families.”
There’s certainly a barrier against housing affordability for families here as well. Whether and to what extent it relates to our own reckless immigration policies has to be debated.
Ian Smith is an investigative associate at the Immigration Reform Law Institute, a public interest law firm working to defend the rights and interests of the American people from the negative effects of mass migration.
The views expressed by contributors are their own and are not the views of The Hill.