There is not an issue facing Metro Vancouver more multifaceted and complex than the cost of housing, a fact vividly illustrated by the current debate enveloping the topic here.
Recently, the mayor of Vancouver appealed to the province to introduce tax measures aimed at cooling off a red-hot real estate market, which has become increasingly out of reach for many prospective first-time home buyers.
Of course, this situation has been brewing for years. So why the overture to Premier Christy Clark now?
Likely because it has dawned on Mayor Gregor Robertson that the cost of housing is becoming a damaging and divisive political issue. Anger over the perception that rich foreigners are buying up the city and driving prices skyward is palpable. This angst has been simmering for some time, but the mayor’s office has now realized the mood is getting hostile. Some have suggested there is a racist undertone to some of the discussion. I think it’s more accurate to say there is resentment being directed at a specific cultural group – in this case, wealthy Chinese – believed to be creating the afford ability problem.
This is not good on any level.
There has been frustration directed at the mayor, and council, over the fact they have been reluctant to do anything to try to remedy the situation. Among those most upset are young, urban professionals who can’t afford to live in the city in which they work. These are Mr. Robertson’s people; they form a key demographic of his Vision Vancouver party’s network of supporters. (It also has not helped that the mayor has been characterized as a friend of the development community.)
Finally spurred to action by an anguish that is now tangible, Mr. Robertson sent his appeal to Ms. Clark for tax measures that would punish speculators and foreign investors who are buying up luxury property in which they have no intention of living.
It took all of one day for the Premier to dismiss the mayor’s overture. In doing so, she trotted out a questionable analysis done by the finance department that allegedly showed how damaging these types of measures would be to the value of homes in the region. (This proposition is ridiculous. Specific tax measures on foreign investors buying luxury properties as well as some type of surcharge on property speculators would have little deleterious impact on the equity of a person’s home in Vancouver, trust me).
Ms. Clark also said that the foreign investors account for only 5 per cent of purchasers in the region and, consequently, could not be blamed for creating the afford ability problem that currently exists.
In the same way that the cost of housing in his city represents a serious political problem for Mr. Robertson, any recommendations to address the issue that involve messing with free-market principles are a problem for the leader of the province’s purported free-enterprise party. Real estate is a major economic driver in the province. Many of the B.C. Liberal Party’s biggest financial supporters would be people and organizations that would resist any measures to curb real estate investment. Ms. Clark understands this instinctively.
Having said that, this is not an issue that is going away any time soon. While Ms. Clark may not want to tinker with free-market principles, she should at least be backing the mayor’s call to give municipalities more powers to track who, precisely, is driving the insanity in the housing market that we are witnessing. If it’s not Asian buyers, then our political leaders should be trying to dispel that myth as quickly as they can, if for no other reason than to let some air out of the growing antipathy being directed at this community.
That said, I remain skeptical of the notion foreign buyers have little to do with what we are seeing today. For more than a decade now, Vancouver has attracted tens of thousands of rich immigrants under various federal programs tied to wealth levels, most of whom have been Chinese. As Ian Young of the South China Morning Post has written, housing unaffordability in the city is up 100 per cent since 2005. Is the massive influx of wealthy Asian immigrant investors and the paralleled rise in the value of real estate just a coincidence?
There is much we need to learn about what is going on in the Metro Vancouver housing market and the sooner we get the facts the better. Meantime, this is a political issue that will continue to fester and possibly get much, much worse.