Ready, Fire, Aim
by Dermod Travis,
It takes a certain skill set to try and fix a problem and possibly botch it up even more, but the B.C. government is certainly testing the idea as it flails about hoping to cool Vancouver’s red hot housing market.
For months the government had been in denial over the issue: overblown, isolated to a few neighbourhoods it said.
Since then its approach has gone from the market will correct itself, to a “bold action plan,” to legislating a retroactive 15 per cent tax on foreign ownership.
Along the way the government bought time by setting up a panel to investigate allegations of questionable practices in the real estate industry and retaining the Conference Board of Canada “to conduct a research study on housing affordability.”
It did seem impatient, though. In a few areas under review, the government acted first, final reports be damned.
It muddied the waters in early July by releasing 19-days of data on foreign home ownership transactions.
Finance Minister Mike de Jong was left flat-footed when asked why he didn’t wait a day or two to include transactions from June 30, when a significant number of home sales would have closed.
Despite cautions over the data, it didn’t stop the self-interested from embracing the numbers, “see, no problem.”
Then two weeks ago a new data set. There may be a problem after all.
The self-interested switched tack fast.
Suddenly five weeks of data was insufficient to form any real conclusions, even though the caveat-laden 19-day data set had been just fine.
It left more than a few pundits dizzy.
The only person who may not have been surprised by the twists and turns was Vision Vancouver and B.C. Liberal party bagman Bob Rennie.
Rennie holds the distinction for setting B.C.’s record for the most expensive political fundraising lunch at $25,000 a plate for Vancouver mayor Gregor Robertson’s 2014 re-election campaign.
In a July interview with the Globe and Mail, Rennie claimed to have known about the impending tax three weeks before legislation was tabled.
A statement that didn’t go over so well with his developer buddies or government pals.
It was backtracked fast to an “educated guess.”
For someone who was quite vocal on the issue in June, the media saavy Rennie was uncharacteristically quiet in July, particularly given his educated guess and the means available to him to raise the alarm.
While most of the government’s effort has focused on home prices, it’s not all about flipping, buying and selling.
A lot of the debate surrounds what the government means by affordable?
Some of the one-bedroom units in Victoria’s “affordable rental-housing” project – the Azzurro – will go for $950 per month.
The average rent for a two-bedroom apartment in Metro Vancouver is $1,410. In Sudbury, Ontario the average is $953, a difference of $5,484 per year.
Why a comparison with Sudbury?
Out of 28 census metropolitan areas, Sudbury had a higher median family income in 2014 than Victoria, Vancouver and Abbotsford-Mission.
The difference with Vancouver was $11,410.
Many may be under the mistaken impression that the government is building far more affordable housing than it actually is, given the plethora of news releases that accompany each project.
There’s the announcement of a housing program, followed by expressions of interest sought, then the successful sought seeker selected release, project and price tag announced, project breaks ground, project opens and, for some, project celebrates one-year anniversary.
A problem 30-years in the making doesn’t get solved on the fly and that’s part of the problem with the government’s recent initiatives.
You don’t get the sense of a comprehensive housing policy, but a mishmash of knee-jerk reactions.
Case in point? The tax on foreign ownership.
Compliance with Canada’s obligations under NAFTA, Charter issues, scuttled home purchases have been raised as potential risks.
There are possible workarounds. One real estate agent has already advertised the 15 per cent equivalent to “We pay the GST” sales.
The biggest worry, however, may be its regional nature. The tax may simply push the problem down the road.
It seems Prime Minister Justin Trudeau’s warning – following a Vancouver housing roundtable in June – fell on deaf ears: “There’s no question that concerted, thoughtful effort is going to be needed to address the situation but we have to be very wary of unintended consequences.”
Dermod Travis is the executive director of IntegrityBC www.integritybc.ca
Only buyers were complaining about the increasing prices, the sellers were happy they could sell, downsize or move to the suburbs and still have a little retirement nest egg to live off of.
It’s a good thing that there aren’t any close cities to Vancouver where foreign buyers could purchase houses and avoid the tax.
A family member sold her modest home (worth about $250,000 here in PG)for $1.4 million to a Chinese.
Which would have sold for… 1.1 million without the Chinese influence?
The situation in Vancouver can be summed up quite simply; BC residents cannot afford to buy or rent there. We now have one of the best places to live in Canada majority owned by foreign investors, ironically because it is foreign investor demand that has driven the price of Vancouver real estate into the stratosphere.
Thanks Christy Clark for ignoring and doing nothing about this for so long, but hey… at least your frequent trips to China accomplished something!
Stuff a sock in your Liberal bashing, you do know that the market in Vancouver has been selling to foreign buyers since the 80s right? This is not a new thing just someone decided to try and do something about it. Vanderzalm sold his Fantasy Gardens to a Chinese investor before the NDP even got in to the big house.
If that were the case then why didn’t Vancouver housing prices skyrocket in the 1980″s? But we do know why those housing prices rose over the last 16 years under the BC Liberal Government’s watch, don’t we!!!
Here read something on the subject and get more informed.
They were skyrocketting in the 80s. Small hovels were selling for 500k that would maybe fetch 30 or 40 here at the time. I rented a basement of a house that was a 2 bedroom little house in New West on the market at that time for 540,000, moved to a house in White Rock with the owner just purchased for 450k when that one sold. Sure they are 1.5 million now. Just like cluculz lake, 40k cabin and lot in the 80s is now 250 if you are lucky (pretty much the same in areas of town). More demand for housing drives prices up, Richmond was already known as Hongcouver in the 80s when I was there. Waited in line ups for the ferry on 3 sailing waits back then, not much different now there either.
What a bunch of fools this provincial government has. For years they watched housing prices rise, all the while sticking to their capitalist right wing ideology which was; “let the housing market correct itself”… there should be no government interference!
Then the homeless in the lower mainland started to grow, even the ones who were working, in some cases 75% of monthly incomes went towards rent, as this incompetent government stood by and watched.
Now Vancouver has become the most expensive city to live in North America…. and finally this Christy Clark Government takes a break from their free market, hands-off, ideology and actually tries to do something about, albeit way too late!!!
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