The polls show 40% of Vancouver respondents name unaffordable housing as their No. 1 issue, far ahead of second-ranked 17% for transportation. But enduring solutions are as hard to find as the sasquatch. Plan A is to increase supply. Plan B is, well, no one is exactly sure.
We’ve now got websites with pictures of empty homes, resentment over foreign owners pushing out locals, talk of squatting in unoccupied homes, and young people leaving their extended families to get good jobs elsewhere. Vancouver’s inability to build and attract larger companies is directly related to the high cost of housing.
Unaffordability is further squeezed by our low incomes. Bing Thom Architects planner and researcher Andy Yan notes that median incomes for people with university degrees in Vancouver are so low compared with other major cities in Canada that, in his words, we’re “in another solar system.”
Nothing will be done about unaffordable housing until we accept that housing is at least as much about building strong cities and communities as it is about building equity. Vancouver’s centuries-long affair with open-market real estate fortunes is a hard habit to break, but the downside of those fortunes is fast becoming “unaffordable.”
Is there a Plan B? In Vancouver, Coalition of Progressive Electors and the Green Party want a vacancy tax (as did Vision for a while in 2008), but defining “vacancy” is a rat’s nest. Says who? For how long? As of what date? Only in Vancouver? I don’t think so.
Three years ago, someone at Black Press wrote an insightful editorial suggesting a preferential TransLink property tax, with second homeowners, non-Canadians and non-landed immigrants paying a higher rate than resident homeowners. It might work, but TransLink has enough funding problems that I can’t see it getting tangled up in non-resident-ownership issues.
A more practical and multi-purpose proposal has come up through the BC Chamber of Commerce, one that really could work.
It starts with fixing the out-of-control property transfer tax (PTT), which has been screaming out for reform. Lower housing prices for resident homeowners are a byproduct. When the PTT was introduced in 1987, the average price of a home in Greater Vancouver was just over $100,000. The tax was designed to hit just luxury home purchases – about 5% of all purchases. Now, with 96% of homes in Metro Vancouver priced over $200,000, pretty well everyone pays it – and it’s the highest property transfer tax in the country by a mile. In Alberta, the sale of a $350,000 home would cost $120 in property transfer tax; in Ontario (second-highest in Canada), it’s $3,725. In B.C. the take is $5,000. This is a measurable contributor to housing affordability.
Scrapping the tax altogether would be tough, because it brings in $750 million a year to the provincial coffers. The chamber is proposing that it be lowered for any Canadian citizen who is buying a home in B.C. as a primary residence, kept the same for Canadian real estate investors and raised for foreign-based buyers.
Administration would be as simple as adding a line to the current property transfer tax return declaring the citizenship and place of residence of the purchaser. The provincial government would keep the same revenue flow, people who are first-time buyers or living in their homes would pay less, and investors and speculators (from anywhere, including locals) would take a hit. Eliminating the tax entirely on an $800,000 home would drop its price by $14,000. It’s a start.
Making housing affordable is not just about restricting foreign investors, although that’s far more common around the world than the open market we offer. It’s about giving first-time and resident homeowners preferential tax treatment over any investor or speculator.
If someone has a better idea for instantly lowering housing prices for resident homeowners who in turn invest in local businesses, neighbourhoods, schools, families and communities, let’s hear it. •
Peter Ladner ([email protected]) is a co-founder of Business in Vancouver. He is a former Vancouver city councillor and former fellow at the SFU Centre for Dialogue. He is the author of The Urban Food Revolution.
