Conversations in Vancouver tend to revolve around the same three subjects: rain, dating, and real estate. Anyone worth their Hunters and steamy London Fog however, knows that the sizzling price of real estate in the GVA has trumped the trifecta’s other subjects for some time now.

After years of high-profile stories covering much public (and very vocal) embitterment over foreign buyers snapping up real estate and driving prices through the proverbial roof, B.C.’s provincial government has finally made moves to snuff out Vancouver’s real estate fire. On August 2nd, a new 15% tax on non-resident foreign buyers was introduced to help curtail a market that many say, was spiralling completely out of control.

In just a little over a month (between June and July), data suggests that foreign nationals were responsible for spending $1 billion on property in BC. Of that $1 billion, the Vancouver area alone took the lion’s share with 86%. Other shake-your-head-at numbers have come from sources such as a recent Simon Fraser University study, which found homes with a pricetag of over $1 million increased from 19% of the market in 2006 to a staggering 91% in 2016. Together with a wealth of other data, these numbers clearly show us why the tax has been implemented; the big question now is how?

Sidelined with the speed by which this new tax was pushed through, homebuyers are now left with the challenge of figuring out how to pay this large sum. In other words, the most obvious question seems to be the one nobody is asking.

Exactly where is the money going to come from?

Despite public perception, the reality is that many of non-residents who invest in real estate here in Vancouver hold mortgages with Canadian banks. Though some may have the ability to plunk down a cool million in cash, a great many still have a relationship with Canadian lenders. Just lump it onto the mortgage, you say? Not so fast.

This foreign tax–and at 15% it is far from chump change–cannot under any circumstances be applied to a mortgage. That means homebuyers will need extra cash, and a whole lot of it too, if they want to close the deal. To look at it in hard numbers, 15% of an $850,000 home, which is fairly modest by Vancouver prices, clocks in at $127,500. And this in addition to regular closing costs such as legal fees, home inspection, appraisal and property transfer tax.

To complicate matters further, the 15% tax focuses only on non-residents, which are not exclusively to blame for current market conditions. As reported by The South China Morning Post, earlier research into the subject linked Vancouver’s soaring real estate prices to “the presence of rich and foreign-earning immigrants, including millionaire immigrant investors, mostly from China, who have flocked to the city in their thousands.” In other words, these wealthy individuals are already permanent residents, make their fortunes outside BC, and can afford to continue buying real estate if they desire. Focusing on whether the buyer is a non-resident does not address the issue of foreign capital flooding in from overseas.

As the issue continues to hammer out in the press, even Prime Minister Justin Trudeau has stated publicly that an influx of money from Asia is at least partially responsible for the climbing housing prices in both Vancouver and Toronto. However, according to a local trade lawyer who was quoted in an article published last month by The Economist, the new tax apparently violates the North American Free Trade Agreement.

While the provincial government finally decided to give the squeaky wheel the grease, it remains to be seen how smooth the ride ahead is going to be.