Are our homes too often investments?
Are our realtors too often marketing speculators?
It is striking and too often frustrating to read last week’s insightful review led by Carolyn Rogers, the BC Superintendent of Real Estate, on how far the process of buying and selling property has strayed from its principles.
When a market is stagnant, the abuses that were chronicled in the review are somewhat less objectionable – they’re survivalist measures, not the predatory and ill-gotten tactics we are seeing too regularly in a housing sector desperately in need of climate change.
We can trace the dilemma back and back and back, and on and on and on: Expo 86, the 2010 Olympics, every glorious far-flung advertisement that told the world about Beautiful British Columbia, the initially feeble immigrant investor program, low interest rates, currency devaluation, easy down-payment terms and comparably cheap real estate considering its finite supply.
But if B.C. can’t rout the cheaters, it stands no chance of finding a rational strategy on the larger frontier, so we should be grateful the Rogers report got us out of the starting blocks.
The provincial government was handed the baton and within 24 hours had determined that the panel under Rogers had not gone far enough. The BC Real Estate Council’s privilege of self-regulation was rescinded.
For no particular political cost and potentially some political gain, the Liberals will take back regulation, presumably under a fortified and focused superintendent’s office. It will end double-ended transactions, when one agent represents the buyer and seller, toughen the fines for bad apples and broaden the composition of the council to include more people outside of the business. A larger provincial plan is forthcoming, presumably before NDP housing critic David Eby and his leader John Horgan can hold many more free-shot news conferences, in which Premier Christy Clark will expand on policy-by-YouTube and put something to paper to deal with first-time buying and further supply. We already have the gist of the consumer protection strategy – shadow-flipping, be gone – and know all too well the quagmire of public transit development.
Once she gives the portfolio the once-over, the baton gets handed to the federal government, which also last week indicated something serious is coming along the track.
Evan Siddall, the head of the Canada Mortgage and Housing Corp. and no shrinking violet on policy, has been given the task of lassoing the urban cowboys. Akin to the provincial challenge: if the federal government can’t deal with the wild west, it has no prospect of settling the land.
Ottawa wants a national housing strategy. Canada is the only G7 country without one. It’s also clear that the country’s vulnerability to global capital is a major distraction on the social objectives, so it will have to examine how to deal with such transactions as it develops a plan to increase supply for lower-income housing.
It is, as one analyst put it to me last week, having to deal with a rich person’s problem now, too. It wants the world’s capital for industry, but not the industry of buying large swaths of property and keeping them vacant, so we might expect a surcharge or conditions on foreign ownership by next year. But that brings us back to the city, where the issue is most acute considering our market size, but where the baton ultimately might get dropped. The city is intent on imposing a new tax on vacant property, ostensibly a side-door way to deal with the perception by some that foreign ownership has decamped some neighbourhoods and driven prices skyward.
Yes, our homes are too often our investments, but Canadian case law largely recognizes them as ours to use or not as we wish. At first blush it feels like a tax on vacant property will be hard to define, preposterous to enforce and costly to administer. It seems an inelegant instrument likely to most benefit the households of lawyers who will represent homeowners challenging its discriminatory provisions in court.
We are on some good tracks to deal with our housing insanity. We need to regulate, not participate, in the silly season.
Kirk LaPointe is Business in Vancouver’s vice-president of audience and business development.
