# Supply, not foreigners

By [Brandon Donnelly](https://brandondonnelly.com) · 2017-08-21

bob-dugan, canada, cmhc, foreign-buyer-tax, foreign-tax, home-sales, housing-market, macleans, real-estate, uncategorized, vancouver

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The chief economist at the Canada Mortgage and Housing Corporation (CMHC), Bob Dugan, recently published a piece in Macleans called: [why the foreign buyers tax isn’t making Vancouver more affordable](http://www.macleans.ca/opinion/why-the-foreign-buyers-tax-isnt-making-vancouver-more-affordable/).

Here’s an excerpt:

> _One year after the implementation of the foreign buyers tax, monthly sales to foreign investors now hover around 4 per cent of all sales. But our latest Housing Market Assessment, released in July, still shows a red flag for Vancouver—with particular concern given to overvaluation and price acceleration. Average prices in Vancouver have rebounded to where they were before the tax’s implementation. In between, there was a marked drop, but it appears to have been temporary. In short, Vancouver is largely right back to where it was before the tax._

He goes on to argue that while there are many factors affecting home prices, “supply is by far the chief factor.” This, of course, is a refrain you hear from everyone in the real estate business, so I’m not going to belabor the point.

But I would like to point out some of the percentages. 

Before the tax, foreign sales in Vancouver (to buyers who do not have a permanent address in Canada) were thought to sit at roughly 10%. Immediately following the tax, when everyone was trying to assess the impact, this dropped to ~0.9%. And now it’s back up to somewhere around 4%, according to the article.

Arguably, there has been a slight reduction. Though who knows how accurate these percentages are. There is now a strong incentive to hide foreignness. 

Regardless, CMHC doesn’t believe it’s working.

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*Originally published on [Brandon Donnelly](https://brandondonnelly.com/supply,-not-foreigners)*