Perhaps you don't about the situation in Vancouver BC, but it is a very common place for wealthy Chinese nationals invest in a "safer" place outside their country. This is well known to the locals and those in the region.
Do you have evidence that it is true in large numbers?
Secondly, even if the money is legitimate, Canada does not tax capital gains on residences that are your primary residence.
So if one wants to buy 5 homes, one could buy 1 yourself, and find stand-ins for the other 4. Or if one doesn't plan on living in any, 5 stand-ins.
If other people keep doing that in their lifecycle (move further out when deciding to have kids), you end up with many homes as investments where the home owners have no intention to combat high housing prices, as that only leads to higher rents and more profits.
[1] Boston Residential Exemption https://www.boston.gov/departments/assessing/how-file-reside...
In any case, suppose you are right. Why not keep building homes and selling them to those dirty chinamen? They want to throw money at Canada, why not take as much of it as possible?
Oh right, exclusionary zoning. Which I'm sure is also somehow the fault of evil foreign scapegoats rather than nice white middle class Canadians.
Maybe you guys should build a wall, and make the Chinese pay for it. Make Canada Great Again!
China has 1M+ millionaires. Assume 10% have enough disposable cash and motivation to go shopping for foreign real estate. It doesn't take much effort to look across the Pacific and home in on the politically easiest place to escape to. If 10% of those people choose Vancouver that's 10K units locked away from local residents.
If all these evil Chinese folks are going primarily to Vancouver, what's the cause of SF, NYC, Boston, Mumbai, Delhi, Bangalore and London's high housing prices?
And why is Houston somehow immune to this global phenomenon?
This is nothing to do with evil. It's just business/common sense. If I had a lot of money and I was living in China where there's a large risk and I was looking to make a similar investment I'd probably go the same route. A lot of wealth was created in a short time and those wealthy people like any normal person are concerned about preservation of that capital and some sort of safety net.
But why is the inventory not high enough? Certainly we could easily build more.
Oh yeah, exclusionary zoning in NYC and SF. FAR limits of 1.33 in Mumbai. Mumbai and Delhi have half the density of Brooklyn, Vancouver about a third - there's plenty of room for more inventory. Even in Manhattan we could fit a lot more inventory in.
We don't do this because the middle class don't want it.
Canada isn't densely populated so why should the Vancouver people need to squeeze into apartments while houses are sitting empty? So you're right. The middle class doesn't want it.
It's true that not everyone can have the "American Dream" house/garage/car any more but at the same time having a bunch of expensive houses sit empty is worse than them having someone live in them.
I think part of the solution might be building new cities, something that doesn't seem to be happening.
When the market prices are high, and land is expensive, and you have the slow zoning/permitting process of Boston, developers are going to only build luxury housing, until the city changes the permitting/zoning process and requires them to build more affordable housing units.
See this detailed article [1]
[1] http://www.bostonmagazine.com/property/article/2016/02/21/bo...
There are also a good number of wealthy Russians and Middle Easterners paying cash in the cities listed. If you've followed NY or London real estate news for the past decade, you would know that what's happening in Vancouver has been happening in other cities as well.
"We don't like yer kind 'round here."
China owns $1.25 trillion of US debt. I think this gives a window into the amount of money sitting there. That's a million $1M houses. Vancouver has 47K houses...