Ready, fire, aim — Vancouver's Red Hot Housing Market
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